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(Yahoo)   Smart: Avoiding a big car payment by buying a nice used car. Dumbass: Avoiding a big car payment by taking out a 97-month long car loan on a new car   (finance.yahoo.com) divider line 109
    More: Dumbass, consumer credits, negative equity, financial institutions, payments  
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3691 clicks; posted to Business » on 10 Apr 2013 at 6:25 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-04-09 11:46:00 PM
$480 a month for 75 months for a $23,000 car?????????  I'd like to know how much extra she was paying off on the old car, because damn.
 
2013-04-09 11:54:41 PM
The average price of a new car is now $31,000

That seems very high. My parents bought a new one last year (late last year so they got a bargain combined with superb credit history) and it cost a little less than 19,000 for a 2012 Ford Focus hybrid with a crapload of add-ons with less than 200 miles on it.

Unless the number is including luxury classes and trucks/SUVs in that mix, I'm skeptical.
 
2013-04-10 12:03:32 AM
Rising new-car prices and competition among lenders to attract borrowers is pushing loans to lengthier terms.

Or we could all be smarter about it, and avoid buying new cars at these prices. A few quarters of bad sales might convince the shareholders that 100,000 sales at $20k are better than 50,000 sales at $30k.

It's still better than Singapore though -- You need an $80,000 "Certificate of Entitlement" just for permission to buy a car. And then with import taxes the prices are skyhigh, so your Honda Accord could be $120,000 for 10 years
 
2013-04-10 12:06:00 AM
If you're paying almost $500 a month for your car, you're probably driving a car you can't really afford.

If you require more than a 3 year loan for your car, you're probably driving a car you can't really afford.

If you're paying almost $500 a month for your car *and* require more than a 3 year loan, you should probably let someone else handle all your finances.
 
2013-04-10 12:37:09 AM

Snarcoleptic_Hoosier: The average price of a new car is now $31,000

That seems very high. My parents bought a new one last year (late last year so they got a bargain combined with superb credit history) and it cost a little less than 19,000 for a 2012 Ford Focus hybrid with a crapload of add-ons with less than 200 miles on it.

Unless the number is including luxury classes and trucks/SUVs in that mix, I'm skeptical.


I would assume it does since it says plain old new car and not "new compact cars"  And any mileage off the lot even 200 takes a big chunk off the price.  I'm getting only one completely new Ford Fusion hybrid within 500 miles of me listed on cars.com for under 25k.  The "titanium" edition whatever the hell that is is being listed in the upper 30s.

/and yes I understand you could probably get a chunk of that money off with some negotiating especially with good credit but the point still stands your 19k is used and probably got a really good deal too
 
2013-04-10 12:46:28 AM

Pocket Ninja: If you're paying almost $500 a month for your car, you're probably driving a car you can't really afford.

If you require more than a 3 year loan for your car, you're probably driving a car you can't really afford.

If you're paying almost $500 a month for your car *and* require more than a 3 year loan, you should probably let someone else handle all your finances.


What a lot of people overlook is the increased predictability of car costs. A typical new car will last close to 200,000 miles, and is expected to have almost zero maintenance costs for the first 3-4 years. In the 1970's, it was expected that a car would need mechanical attention within 10k miles, some rebuilding at 35k, body repairs by 70k, and "rolling over" the old 5-digit odometers was a rarity.

Even tires are expected to last incredibly longer. My wife's car has 25k miles on it and the tires only show mild wear. The (ironically) more expensive, shorter-lasting, ultra-sticky dunlops on my car will last 20k, and pull 1g in corners all day long, and even they cost less (in adjusted dollars) than a set of economy tires in the 70's which *might* get 12k miles, and would go flat at the sight of a thumbtack.
 
2013-04-10 01:08:08 AM

Pocket Ninja: If you're paying almost $500 a month for your car, you're probably driving a car you can't really afford.

If you require more than a 3 year loan for your car, you're probably driving a car you can't really afford.

If you're paying almost $500 a month for your car *and* require more than a 3 year loan, you should probably let someone else handle all your finances.


Driving my car is loads of fun so I will fart in your general direction.
 
2013-04-10 01:15:35 AM
Her interest rate must be around 9-10%. She must have horrible credit for it to be that high on a new car.
 
2013-04-10 02:12:51 AM

Pocket Ninja: If you're paying almost $500 a month for your car, you're probably driving a car you can't really afford.


I was going to say "not if you make a lot of money" but then if you made a lot of money, you wouldn't have to finance your car. Of course one could say "yeah, but if you take the loan, you could invest the money at a higher ROI than the interest rate," but that hasn't been true for years. At least not in a "this is reliable, trust me" sort of way.
 
2013-04-10 02:28:49 AM

Pocket Ninja: If you're paying almost $500 a month for your car *and* require more than a 3 year loan, you should probably let someone else handle all your finances.


Your numbers mean nothing without a salary attached. In this lady's case, I'm pretty sure she is over her head, but some of us can afford $500/mo car payments.

impaler: I was going to say "not if you make a lot of money" but then if you made a lot of money, you wouldn't have to finance your car.


Why is it so important to pay cash for a car? I just finished up a 60-mo loan and I'd rather have the car I do, rather than the Hyundai Elantra I could have paid cash for in 2008.
 
2013-04-10 02:49:09 AM

Gig103: Why is it so important to pay cash for a car? I just finished up a 60-mo loan and I'd rather have the car I do, rather than the Hyundai Elantra I could have paid cash for in 2008.


Because you could have bought a good used car and drove it for a few years until you could buy the car you have now, 2 years used, for a 25% savings, and not have 5 years of parasitic interest.

Math, how does it work?
 
2013-04-10 03:19:39 AM
I tried car payments once back in the 80s.  Didn't like 'em. Had to mess with coupons and checks, envelopes and stamps in those days. Oh, and calendars, those sneaky things.  Got busy, made enough extra money to pay off the loan.  Paid cash thereafter.
 
2013-04-10 03:42:07 AM

impaler: Because you could have bought a good used car and drove it for a few years until you could buy the car you have now, 2 years used, for a 25% savings, and not have 5 years of parasitic interest.


But then I would have had to drive a Hyundai for 2 years and had to hunt across the country to find the exact car I wanted (hoping that someone ordered it from the factory the way I did). No thanks! Besides, by your logic I should be living in a slum until I can buy my house for cash too, but I don't. Interest is a convenience fee I'm willing to pay for my luxuries, especially in this economy with low rates. Blanket statements of "this is the only way to be responsible with money" are stupid and that was my point to Pocket Ninja.

Parasite (n) One who habitually takes advantage of the generosity of others without making any useful return. (Cite)

I deem the ability to drive the car I want, and live in the home I want as a useful return. Do I have less money in my pocket than by your plan? Yes. Did I decide it was worth it? Yes, because I have enough disposable income to make it possible - I'm lucky in that regard :)
 
2013-04-10 05:26:15 AM
Is this the thread where I talk about how I paid cash for my Bugatti, never carried a balance for more than four hours on my Amex Jadeite card (even though my credit limit is "Do not purchase a country larger than Belgium without pre-approval"), and how my penis is so big I've only seen the tip via webcam?

Seriously, though, I've had good luck with buying lease returns. Low miles, all maintenance performed by the dealer and I paid less than half of original sticker price while still getting a very low-interest loan.
 
2013-04-10 06:44:38 AM

impaler: Gig103: Why is it so important to pay cash for a car? I just finished up a 60-mo loan and I'd rather have the car I do, rather than the Hyundai Elantra I could have paid cash for in 2008.

Because you could have bought a good used car and drove it for a few years until you could buy the car you have now, 2 years used, for a 25% savings, and not have 5 years of parasitic interest.

Math, how does it work?


0% to 0.9% interest for 5 years is parasitic?

/Ford, Nissan, Mazda, Toyota
 
2013-04-10 06:44:38 AM
To hell with buying a car period. I lease cars now. Don't take the depriciation hit driving off the lot. Get a cheaper payment and the car is never out of warranty while it is in my possession.
 
wee [TotalFark]
2013-04-10 06:46:59 AM
I'm sorry Nakisha, you're a complete farking moron.

"Consumers tend to be monthly payment buyers. One way that lenders compete is to offer longer term loans," Ms. Zabritski said.

Retards.
 
2013-04-10 06:49:50 AM
With no mention of the interest rate had to say if its a bad deal (sure I could have calculated it based on the payment and length but Im on my first cup of coffee).

If someone wants to loan me $25k to buy their car for practically zero interest I have no problem taking their money.
 
2013-04-10 07:05:05 AM
Bought my first new truck in 1973, a Chevy 3/4 ton, with 4 speed manual and AM radio. Cost $3500 and I put $500 down. Payments were $97 a month for 3 years. Had all kinds of trouble with that truck, drivers side window kept falling out of the track, even after repeated trips back to the dealer. I finally fixed it myself. Holes rusted in the fenders above the tires after 18 months.

I paid cash for my current 2003 GMC, and I will have owned it 10 years this September. It only spent 3 months in Ohio and the rest here in Florida. Truck is in pristine shape, with 118K on the odometer. Every time I drive it up to Ohio, I get 3-4 offers on it, even though it's not for sale.
 
2013-04-10 07:08:23 AM

impaler: Gig103: Why is it so important to pay cash for a car? I just finished up a 60-mo loan and I'd rather have the car I do, rather than the Hyundai Elantra I could have paid cash for in 2008.

Because you could have bought a good used car and drove it for a few years until you could buy the car you have now, 2 years used, for a 25% savings, and not have 5 years of parasitic interest.

Math, how does it work?


Parasitic interest rates? My current car loan is %2.44. It's almost free money.
 
2013-04-10 07:17:02 AM

impaler: Gig103: Why is it so important to pay cash for a car? I just finished up a 60-mo loan and I'd rather have the car I do, rather than the Hyundai Elantra I could have paid cash for in 2008.

Because you could have bought a good used car and drove it for a few years until you could buy the car you have now, 2 years used, for a 25% savings, and not have 5 years of parasitic interest.

Math, how does it work?


If you're looking at 2 year old cars, it is usually cheaper to buy a new one because of the better interest rates.
 
2013-04-10 07:27:52 AM
Mr. Coffee Nerves:
Seriously, though, I've had good luck with buying lease returns. Low miles, all maintenance performed by the dealer and I paid less than half of original sticker price while still getting a very low-interest loan.

Depends on what the car is.  Many of the "dealer service programs" are only geared toward limping the car through the first three years of service, at which point the leaser (lessor or lessee? CURSE YOU, LANGUAGE) dumps the car for a new one.  Everybody wins except for the sucker who buys the used car.

Extended oil change intervals will bite you in the ass once the engine is over about 80,000mi.

Fill-for-life fluids aren't.  Many people say that transmission fluid never needs changed.  This is true in that once the transmission dies, then you put new fluid in it.  Transmissions that normally are lucky to go 100,000 miles (ZF) will go three times that long with ease if you do regular fluid changes.

Long-life coolants also, generally, are not.  There is a simple test you can do on the coolant with a voltmeter.  Ground one lead and dip the other lead in the coolant.  If you are reading over .200v then the coolant is acidic enough to cause problems.  I've measured half a volt on certain models that were only halfway through the recommended interval.

You can *try* to get 100,000 miles out of a set of spark plugs, but usually by 80,000 the worn plugs will cause a coil failure.  Coils are a lot more expensive than spark plugs.  And then the plugs have so much carbon on the end of the threads, sometimes they damage the cylinder head on removal.

Saturn had the right idea IMO.  They didn't push extended service intervals, they pushed regular maintenance.
 
2013-04-10 07:30:14 AM

dumbobruni: impaler: Gig103: Why is it so important to pay cash for a car? I just finished up a 60-mo loan and I'd rather have the car I do, rather than the Hyundai Elantra I could have paid cash for in 2008.

Because you could have bought a good used car and drove it for a few years until you could buy the car you have now, 2 years used, for a 25% savings, and not have 5 years of parasitic interest.

Math, how does it work?

0% to 0.9% interest for 5 years is parasitic?

/Ford, Nissan, Mazda, Toyota


This.  I had no credit when I bought my 2008 Fusion as a dealer demo.  I ended up with a 72 month loan but with a co-signer the interest is 0.9%.  I made early/extra payments and I think the total interest I paid over the course of the loan might have added up to one or two payments.
 
2013-04-10 07:56:48 AM
Farkers are quick to forget they are smarter than the average bear. Sure, you wouldn't fall for this nonsense. TFA is another fine example of how people who can't afford something get screwed by whitey. Some don't make much money, some are in debt, some are not so bright, some make bad decisions regularly. No reason they should be taken advantage of and farked over. Repeatedly it appears those who have the least get kicked in the mouth most often and hardest.
 
2013-04-10 08:13:32 AM

KrispyKritter: Farkers are quick to forget they are smarter than the average bear. Sure, you wouldn't fall for this nonsense. TFA is another fine example of how people who can't afford something get screwed by whitey. Some don't make much money, some are in debt, some are not so bright, some make bad decisions regularly. No reason they should be taken advantage of and farked over. Repeatedly it appears those who have the least get kicked in the mouth most often and hardest.


This woman was apparently "several thousand dollars" upside-down on her previous car, decided she still needed a new car and traded it in.  She's blowing all this money because she is making serial bad decisions.  She's not being taken advantage of, she's Farking herself.

You say, "Repeatedly it appears those who have the least get kicked in the mouth most often and hardest."

Nakishaw Bishop is a public employee, which means her pay is public information.  She made $73,857 in 2009.  She also gets a retirement plan that guarantees her 75% of her pay for life.  I'm not going to feel bad for deputy Bishop if she is making $75k/yr yet managing her finances this poorly.
 
2013-04-10 08:17:01 AM
\impaler: Pocket Ninja: If you're paying almost $500 a month for your car, you're probably driving a car you can't really afford.

I was going to say "not if you make a lot of money" but then if you made a lot of money, you wouldn't have to finance your car. Of course one could say "yeah, but if you take the loan, you could invest the money at a higher ROI than the interest rate," but that hasn't been true for years. At least not in a "this is reliable, trust me" sort of way.


The interest rate on my car is 1.75% for a three year loan (and this is just the credit union rate, no crazy promotion).  I'm much better off doing that and using the extra money up front to pay off student loans early (over 4%) and then a larger house downpayment (3% at a minimum for a mortgage).
 
2013-04-10 08:19:41 AM

Snarcoleptic_Hoosier: The average price of a new car is now $31,000

That seems very high. My parents bought a new one last year (late last year so they got a bargain combined with superb credit history) and it cost a little less than 19,000 for a 2012 Ford Focus hybrid with a crapload of add-ons with less than 200 miles on it.

Unless the number is including luxury classes and trucks/SUVs in that mix, I'm skeptical.


Statistics abuse. I mean, the figure is probably true but the conclusion is misleading.

Those Cadillac SUVs are the price of small houses, for example.

To your point, I had no trouble finding a new car for under $15,000.

/yes, it's a Hyundai and I like it
 
2013-04-10 08:23:47 AM
So some friends and I have started a business.  As I was driving to our new offices, I drove past a Titlemax which was full of customers (re: marks)  at 8pm on a Wednesday.

That's the business I should be getting into.
 
2013-04-10 08:26:51 AM

MusicMakeMyHeadPound: Statistics abuse. I mean, the figure is probably true but the conclusion is misleading.


Pretty much.  $31k will buy you a damn nice new car.  It's also not what most people are paying for new cars because one person buying a $75k car will completely skew the sample for the other 3 buying cars for $15k.
 
2013-04-10 08:27:44 AM

MusicMakeMyHeadPound: Snarcoleptic_Hoosier: The average price of a new car is now $31,000

That seems very high. My parents bought a new one last year (late last year so they got a bargain combined with superb credit history) and it cost a little less than 19,000 for a 2012 Ford Focus hybrid with a crapload of add-ons with less than 200 miles on it.

Unless the number is including luxury classes and trucks/SUVs in that mix, I'm skeptical.

Statistics abuse. I mean, the figure is probably true but the conclusion is misleading.

Those Cadillac SUVs are the price of small houses, for example.

To your point, I had no trouble finding a new car for under $15,000.

/yes, it's a Hyundai and I like it


I can't find the median price of a new car at all.  I keep finding sensational articles like this:

Median-income families in only one major city can afford the average price Americans are paying for new cars and trucks these days.

WTF is this shiat?  It's like the auto industry wants us to think it's OK to splurge and journalists are more than happy to go along with it.
 
2013-04-10 08:31:22 AM

Pocket Ninja: If you're paying almost $500 a month for your car, you're probably driving a car you can't really afford.

If you require more than a 3 year loan for your car, you're probably driving a car you can't really afford.

If you're paying almost $500 a month for your car *and* require more than a 3 year loan, you should probably let someone else handle all your finances.


Uh, when you can get a car loan for 0-3% why does the term matter? It's practically free money why not spread it out as long as possible and keep more cash in your bank account?
 
2013-04-10 08:36:07 AM

Rapmaster2000: MusicMakeMyHeadPound: Snarcoleptic_Hoosier: The average price of a new car is now $31,000

That seems very high. My parents bought a new one last year (late last year so they got a bargain combined with superb credit history) and it cost a little less than 19,000 for a 2012 Ford Focus hybrid with a crapload of add-ons with less than 200 miles on it.

Unless the number is including luxury classes and trucks/SUVs in that mix, I'm skeptical.

Statistics abuse. I mean, the figure is probably true but the conclusion is misleading.

Those Cadillac SUVs are the price of small houses, for example.

To your point, I had no trouble finding a new car for under $15,000.

/yes, it's a Hyundai and I like it

I can't find the median price of a new car at all.  I keep finding sensational articles like this:

Median-income families in only one major city can afford the average price Americans are paying for new cars and trucks these days.

WTF is this shiat?  It's like the auto industry wants us to think it's OK to splurge and journalists are more than happy to go along with it.


Look at the ads which pay the journalists salary. Most of them are for new, expensive cars.
 
2013-04-10 08:39:11 AM

SDRR: Pocket Ninja: If you're paying almost $500 a month for your car, you're probably driving a car you can't really afford.

If you require more than a 3 year loan for your car, you're probably driving a car you can't really afford.

If you're paying almost $500 a month for your car *and* require more than a 3 year loan, you should probably let someone else handle all your finances.

Uh, when you can get a car loan for 0-3% why does the term matter? It's practically free money why not spread it out as long as possible and keep more cash in your bank account?


Not much point in keeping too much in your bank account.

/0.75% at INGDirect CapitalOne360
//Misses the days of 4% interest in an online savings account
 
2013-04-10 08:40:38 AM

impaler: Pocket Ninja: If you're paying almost $500 a month for your car, you're probably driving a car you can't really afford.

I was going to say "not if you make a lot of money" but then if you made a lot of money, you wouldn't have to finance your car. Of course one could say "yeah, but if you take the loan, you could invest the money at a higher ROI than the interest rate," but that hasn't been true for years. At least not in a "this is reliable, trust me" sort of way.


That's not true.  I financed my car because I got an actual 0% loan (and no typical dealer front-load cost deal nor sketchiness, had the full amount detailed out for comparison before purchase), and I leave the money I would have dropped to pay cash for it in an investment account.  A little over two years in on a five year loan, I have earned 6 car payments on that principle.

If you can swing that and tolerate a small amount of risk, it makes more sense to go that route.  If you can tolerate a larger amount of risk, it even makes sense to do it at 2 - 3%, though at that point it becomes harder to both beat inflation and justify the increased interest.

The one major exception on this is that if you have no intention of carrying full coverage on a new car, it never makes any sense to finance it and it's better to pay cash, unless you're up in the $120k range on the vehicle.
 
2013-04-10 08:46:07 AM

SDRR: Pocket Ninja: If you're paying almost $500 a month for your car, you're probably driving a car you can't really afford.

If you require more than a 3 year loan for your car, you're probably driving a car you can't really afford.

If you're paying almost $500 a month for your car *and* require more than a 3 year loan, you should probably let someone else handle all your finances.

Uh, when you can get a car loan for 0-3% why does the term matter? It's practically free money why not spread it out as long as possible and keep more cash in your bank account?


I agree with the first part, but keeping your cash in a bank account is currently an awful idea, unless you have snagged a great deal on interest, or you expect to need the money in less than 1 business day.  Savings accounts are currently paying such low amounts that you are better off putting them in the most conservative funds on Earth, or even money market accounts (though you may have meant that with bank account), or, barring that, dropping the money into a ROTH IRA (bit more complicated on where that balances, though).
 
2013-04-10 09:06:08 AM

FitzShivering: SDRR: Pocket Ninja: If you're paying almost $500 a month for your car, you're probably driving a car you can't really afford.

If you require more than a 3 year loan for your car, you're probably driving a car you can't really afford.

If you're paying almost $500 a month for your car *and* require more than a 3 year loan, you should probably let someone else handle all your finances.

Uh, when you can get a car loan for 0-3% why does the term matter? It's practically free money why not spread it out as long as possible and keep more cash in your bank account?

I agree with the first part, but keeping your cash in a bank account is currently an awful idea, unless you have snagged a great deal on interest, or you expect to need the money in less than 1 business day.  Savings accounts are currently paying such low amounts that you are better off putting them in the most conservative funds on Earth, or even money market accounts (though you may have meant that with bank account), or, barring that, dropping the money into a ROTH IRA (bit more complicated on where that balances, though).


Yep, you are right. I meant that sort of metaphorically, maybe I should have said "wallet" or "use that money for something else" instead of "keep more cash in your bank account".
 
2013-04-10 09:10:06 AM
I just rolled over my '82 Ford Fairmont again, so I'm getting a kick out of these replies.
 
2013-04-10 09:38:39 AM

45cal: To hell with buying a car period. I lease cars now. Don't take the depriciation hit driving off the lot. Get a cheaper payment and the car is never out of warranty while it is in my possession.


Newsflash: Either you or the dealer is paying the depreciation, and it's not the dealer. Otherwise they would stop leasing cars. You are just paying the depreciation on a different car every few years.
 
2013-04-10 09:46:02 AM
A Harley dealership around here was advertising 120 month loans back during the housing bubble.
 
2013-04-10 09:46:24 AM
You know this reminds me. Supposedly economically it's better to buy a car and own it at the end of the loan. I call bs on that. Buying a car, even used can be really expensive, and the costs aren't always fixed. I don't drive a lot, leasing makes sense for me probably in large part because of this. My family's drivers average 17k miles between two cars annually.

Your average American buyer is not buying a car and holding on to it for years and years after it's paid off, because by the time it's paid off, it's starting to get worn out. It's a mechanical contraption with moving parts, who would have thought that eventually it would wear out?! The last time I looked the average loan length was about 6 years long, and people are keeping their cars for about 6.5 years which means they're trading it in when it has an average of 97.5k miles on the odometer. (15k miles driven a year is supposed average).

So why again is leasing a car so much worse when the typical buyer is basically de facto leasing? If you're trading in your car shortly after you paid off your loan, why bother with the higher monthly payments that even the longer loan terms offer? You've only "owned it" for a tiny amount of of the time you've had it if you're paying it off and trading it in in 6 months after pay off. If you're putting down 10% on a new car, your monthly payments are going to be lower if you're leasing than if you buy, you can still theoretically buy at the end of a lease if you decide you really want to keep that car.

I also don't understand this fixation on "ownership" of a depreciating commodity. It sort of strikes me as "Hey, I'm holding on to this steaming puddle of diarrhea that gets more rancid by the minute, but by golly it's my steaming puddle of poo!" Unless the car is somehow broadly recognized as being special or rare, it's not gaining or keeping value.

I lease cars, and yes, I've owned cars in the past. I've found that leasing means I don't get any unexpected extra costs over gas, insurance, basic maintenance which includes precisely oil changes and tire rotations and then the monthly payments. I have a '12 Mazda 6 with a monthly payment under $140, and a '13 VW Jetta with a payment of $170/month. I've never bought even a used car at that low a monthly payment compared to the Mazda, and I've never bought a new car. $145 was the lowest payment I ever had. It was for a car that was seven years old when I bought it, it's initial cost was $4.5k, and that thing ended up costing me more than $4.5k in repairs alone. A month after it was paid off, the timing belt broke (which had previously been changed according to the maintenance logs written in by a prior owner), and the car required an engine rebuild. It ended up that leasing a car for $170 a month was going to be cheaper than the repairs had averaged out in the three years since it had been paid off. With leasing I don't have to worry about doing anything but oil changes and tire rotation because not only are bigger cost maintenance things not needed until after the lease is typically up, the cars are always under warranty if something does go boom.

The routine maintenance alone when a car gets higher in miles makes it cheaper to lease than buy, this isn't even taking into consideration the inevitable breakdown.
 
2013-04-10 09:46:32 AM
1 Year Old Used Dodge Challenger R/T <32,000km
$18,500

2 Year Old Used Dodge Charger R/T <49,000km
$15,000

Both cars have remaining factory warranties.  There was a paint chip missing on the Charger, fixed with a 9 dollar scratch remover from Canadian Tire.  I'm not sure why anyone would buy new frankly, you can save yourself the depreciation if you buy slightly used.  If you do your research there are some great deals out there, and buying 1 to 3 years used gives you a car that will most likely be highly reliable for the entire term of you paying it off.
 
2013-04-10 09:50:00 AM
The average price of a new car is now $31,000
Think of this any time someone talks about these "tough economic times."

So an average car is $31,000, these are essentially throw-away cars. Toyota Camrys, Nissan Altimas - cars that people buy and keep for a few years and trade on. Why are people ok with spending that much?
 
2013-04-10 09:50:44 AM
Wife and I got a 0% interest rate on a 4 year old (at the time of purchase) Prius with 60K miles on it and an official dealer-certified warrenty to cover it until 100K.  Best damn deal we've made, our car payment is almost exactly equal to the amount we save on gas over our previous car.  We essentially upgraded to a 12 year newer car with 120K lower mileage on it for free.

/Had a bank guy on the phone once ask if he could talk to me about lowering my interest rate on my car payment.
//I asked if he could go lower than 0%
/He could not.
 
2013-04-10 09:52:55 AM
I'm paying 0% interest on 2 cars.  If I could have gotten longer loan terms I would have.
 
2013-04-10 10:00:45 AM

ohokyeah: You know this reminds me. Supposedly economically it's better to buy a car and own it at the end of the loan. I call bs on that. Buying a car, even used can be really expensive, and the costs aren't always fixed. I don't drive a lot, leasing makes sense for me probably in large part because of this. My family's drivers average 17k miles between two cars annually.


If you're driving less than 17k between two cars then leasing can make a whole lot of sense.  If you are driving 17k a year on one car then it does not.

There is no right financial decision especially regarding lifestyle financial decisions like housing and cars.
 
2013-04-10 10:08:25 AM

ohokyeah: Your average American buyer is not buying a car and holding on to it for years and years after it's paid off, because by the time it's paid off, it's starting to get worn out.


As Dave Ramsey would say, I am weird then.  2 trucks and 1 car all paid for in less than 1 year after owning them.  Haven't had a car payment in 3 years.  Car has 240K, smal truck is a mid 90s with 220K and the 'fancy' truck is a 2005 with about 90K.  I'll take that $1000 that would be going to car payments and put it toward something that I like to do and just keep the cars I have or save up for when the old Buick finally gives up.
 
2013-04-10 10:09:11 AM

Rapmaster2000: ohokyeah: You know this reminds me. Supposedly economically it's better to buy a car and own it at the end of the loan. I call bs on that. Buying a car, even used can be really expensive, and the costs aren't always fixed. I don't drive a lot, leasing makes sense for me probably in large part because of this. My family's drivers average 17k miles between two cars annually.

If you're driving less than 17k between two cars then leasing can make a whole lot of sense.  If you are driving 17k a year on one car then it does not.

There is no right financial decision especially regarding lifestyle financial decisions like housing and cars.


To take it further, if you are going to trade in your car immediately after or even before(!!!) it is payed off then leasing makes sense. If you are fine with driving the same car for 10 years, then find one with a good warranty and buy it. You can get a warranty long enough that you don't have to worry about major repair bills, and you can pay it off and have no car payment for years. It depends on what you want and can afford.
 
2013-04-10 10:11:25 AM

ohokyeah: I also don't understand this fixation on "ownership" of a depreciating commodity.


Most of that is so you don't have to pay the bank when you sell it.  I don't understand this aversion to equity.
 
2013-04-10 10:21:50 AM

ohokyeah: You know this reminds me. Supposedly economically it's better to buy a car and own it at the end of the loan. I call bs on that. Buying a car, even used can be really expensive, and the costs aren't always fixed. I don't drive a lot, leasing makes sense for me probably in large part because of this. My family's drivers average 17k miles between two cars annually.

Your average American buyer is not buying a car and holding on to it for years and years after it's paid off, because by the time it's paid off, it's starting to get worn out. It's a mechanical contraption with moving parts, who would have thought that eventually it would wear out?! The last time I looked the average loan length was about 6 years long, and people are keeping their cars for about 6.5 years which means they're trading it in when it has an average of 97.5k miles on the odometer. (15k miles driven a year is supposed average).

So why again is leasing a car so much worse when the typical buyer is basically de facto leasing? If you're trading in your car shortly after you paid off your loan, why bother with the higher monthly payments that even the longer loan terms offer? You've only "owned it" for a tiny amount of of the time you've had it if you're paying it off and trading it in in 6 months after pay off. If you're putting down 10% on a new car, your monthly payments are going to be lower if you're leasing than if you buy, you can still theoretically buy at the end of a lease if you decide you really want to keep that car.

I also don't understand this fixation on "ownership" of a depreciating commodity. It sort of strikes me as "Hey, I'm holding on to this steaming puddle of diarrhea that gets more rancid by the minute, but by golly it's my steaming puddle of poo!" Unless the car is somehow broadly recognized as being special or rare, it's not gaining or keeping value.

I lease cars, and yes, I've owned cars in the past. I've found that leasing means I don't get any unexpected extra costs o ...


You're paying interest and depreciation on your leases, just like you would if you buy a car outright and sell it after three years.

For instance, you are paying $170/mo for a 2013 Jetta.  Assuming that's for 36 months and a couple thousand due at signing, you'll pay about $8000 to have the Jetta for three years.

You can buy a new 2013 Jetta for about $17k and if you're only driving it about 8500 miles per year it will have something like 25k miles on it after three years.  After the three years it's likely to be worth >$12k with such low miles, so you'll pay less than $5000 in depreciation and whatever you spend on interest on the loan.  At 3%, it would be less than $1500 over the three years, so you're looking at under $6500 to have the Jetta for those three years.

You can obviously play with the assumptions and move those numbers around a bit.  If you put nothing down to start the lease, then it's probably close to a wash between buying and leasing for those three years and you would have a lower payment in the meantime.  However, the nice thing about buying is that if the Jetta is treating you well in three years you can just keep driving it and the depreciation will be way lower each subsequent year.
 
2013-04-10 10:23:52 AM

HeadLever: ohokyeah: I also don't understand this fixation on "ownership" of a depreciating commodity.

Most of that is so you don't have to pay the bank when you sell it.  I don't understand this aversion to equity.


Exactly. Drive a car for 5 or 6 years after you pay it off. Very nice.

The same fallacious (IMHO) argument gets made in all the home rent vs. buy threads. Once you pay the farker off you're living rent free. Taxes, insurance, and repairs on the home are nothing when you have no freaking mortgage payment!
 
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