who has car payments?

[frorider]

I think Steve made a comment ("vibes" to someone about to have car payments) that got me thinking...it is unusual these days to only buy cars that you can pay cash for?

never really thought about it much before, but growing up in a middle-class family, I absorbed the approach of my dad i.e. a car is like any appliance...if you can't pay cash for it, you can't afford it. none of my siblings have car payments, come to think of it. and they're not in the 1% wealth bracket. they just buy cars that are 3-4 yrs old with low miles.

[grskier]

I take on the payments, but usually pay about 2x what the payment is and pay off the vehicle in 2ish years...

[SkiCougar]

i dont mind the payments as 7% is pretty good loan rate, but if you do the math; you'll be better off if you pay it off and can get to where youre paying cash for cars going forward.

[4matic]

Dealer gave me 2% loan rate on a used car this month. Why pay it off? I typically pay cash for cars but at that rate why?

[systemoverblow'd]

I don't buy anything I can't pay for now. I see no reason to pay more for something with interest payments if you can't even afford it to begin with. 1 caveat was my education.

[HankScorpio]

Nothing wrong with car payments. Just don't be a meathead and up owing more than the car's worth. There's nothing wrong with financing as long as you put some decent cash down to keep some equity in the vehicle.

I bought a new VW last year with a (paid off) trade and put down $3k in cash. My payments are a couple hundred bucks a month.

Just don't be that guy paying $600 a month for a Civic.

[frorider]

Dealer gave me 2% loan rate on a used car this month. Why pay it off? I typically pay cash for cars but at that rate why?

yeah that's kind of the point of this thread. it's hard to define 'why' pay it off, other than to say that doing so (at least for me) helps keep the total expenditure low.

i'm not saying my approach is better or worse. just curious how others feel.

[montanaskier]

no payment on either car....not having a payment for something that goes down in value everyday rocks!

[4matic]

no payment on either car....not having a payment for something that goes down in value everyday rocks!

If you have a low enough interest rate isn't it better to not pay it off? It's depreciating whether it is paid for or not.

[pointemstraight]

Just bought a car and paid cash. I'm of that "if I can't pay for it all now, don't buy it" mentality. I had anticipated needing a new vehicle a few years ago, so was saving specifically for it. My credit union offers a checking about with a 3% rate of return, which isn't bad in this market.

[ass-to-mouth]

TFS gave me 1% on a new Taco a couple of years ago. I was gonna pay cash, but 1% is tough to pass up.

[Sirshredalot]

If you have a low enough interest rate isn't it better to not pay it off? It's depreciating whether it is paid for or not.

Depends on what else you're doing with the money, obviously.

[4matic]

Depends on what else you're doing with the money, obviously.

And carrying a loan can negatively affect your credit score and ability to borrow if you need it for something else.

[13]

If you have a low enough interest rate isn't it better to not pay it off?

Explain?

[Dantheman]

it's hard to define 'why' pay it off, other than to say that doing so (at least for me) helps keep the total expenditure low.

The "why" essentially comes down to what interest rate you can get. At a low enough interest rate (2% definitely qualifies), the cost of financing becomes so negligible that it's little different from saving money to pay cash later. Plus you get the benefit of getting your car right now, which can be significant depending on your situation.

[HankScorpio]

Explain?

You get a loan for 2% and let your money sit in your bank account with a larger interest rate.

[Dantheman]

My credit union offers a checking about with a 3% rate of return, which isn't bad in this market.

Not bad? No, that's fucking stellar.

[bagtagley]

You get a loan for 2% and let your money sit in your bank account with a larger interest rate.

Not to mention the benefit of having some easily accessible cash on hand.

[PNWbrit]

The "why" essentially comes down to what interest rate you can get. At a low enough interest rate (2% definitely qualifies), the cost of financing becomes so negligible that it's little different from saving money to pay cash later. Plus you get the benefit of getting your car right now, which can be significant depending on your situation.

Life is too short to drive around in a shitty car simply because you're saving to avoid minimal % car payments.

[13]

You get a loan for 2% and let your money sit in your bank account with a larger interest rate.

A. 5% APY, 2% car loan:
5-2 = 3%

B. 5% APY, no loan
5-0 = 5%

I'll take door B

[Alaskan Rover]

Not me. In fact, my main vehicle has increased in value substantially in the nearly 25 years I've owned it. And the collector car I'd owned 15 years ago had also increased in value substantially in the period I'd owned it....although it was a very low mileage (11,000 orignal miles), unrestored concours vehicle, so I only drove it 400 miles in the 10 years I'd owned it...so that doesn't really count as transport.

I don't really like regular cars....

But for regular cars if you MUST: The best way is to get something maybe 5 years old that is well cared for and in excellent shape. You can get AMAZING deals this way!

A friend of mine was in the market for a BMW...he wanted to pay no more than $50,000 total for a new vehicle. I talked him out of it because he'd lose thousands just driving off the lot...and continue losing after that in terms of resale.

Why not by something that has ALREADY lost that resale??

I talked him into buying a 2005 Maserati Quattroporte....a beautiful car with only 18,000 miles in like-new condition. Maserati owners, like Ferrari owners tend to keep their vehicles low-mileage, and in bristol condition.

Car originally cost something like $137,000 in 2005. He purchased it in 2011 in pristine condition for $39,000!!!

Yes, Maseratis DO lose shitloads of resale value!!! Bad for the original purchaser....good for the final buyer on the used market.

Tons of new BMWs in his neighborhood....he's got the ONLY Maserati, though And the 2005 model is nearly indistinguishable from the $145,000 2011 model.

[DJSapp]

Currently paying off my big new truck at a whopping 0% with 0 down. FKNA.

Ford year end specials rock.

[schuss]

A. 5% APY, 2% car loan:
5-2 = 3%

B. 5% APY, no loan
5-0 = 5%

I'll take door B

Except door B doesn't come with capital to get that 5% going. That's the point. You get a loan for $15k, pay $5k down. You're making 3% on the 15k as you pay it down.

[4matic]

Yes, Maseratis DO lose shitloads of resale value!!! Bad for the original purchaser....good for the final buyer on the used market.

The clutch will last 15k miles and the hydraulic system is also at risk. If you can afford $10-$15k in maintenance every 20k miles they are great cars.

From the internet 2005 qp:

"Overall I did not have the car in for unscheduled issues and the car proved exceptionally reliable. Mind you I have put the 19000 miles on the car in the course of a little over 1.5 years. Service Tech thinks I have no problem with the car because it does get used a lot. Maseratis are high performance cars meant to be driven, not kept in the garage.

Anyway, my expenses were:

1. 6,500 mile service (oil change, lube job, general service items, including material and labor) $ 745.00

2. 12,500 mile service (lube, oil and filter change, general service items, plus CHANGE OF CLUTCH, CHANGE ALL TIRES) $ 9,800

3. 18000 mile service (first "big" service, changing all fluids, filters, ...) $ 2,700

So, all in all not too shocking, but more than you would pay with any other German or Domestic luxury brand. I am excited and elated that my QP has a perfect service record though and is always ready to go!

Hope this helps you!"

[Alaskan Rover]

The clutch will last 15k miles and the hydraulic system is also at risk. If you can afford $5-$10k in maintenance every 20k miles they are great cars.

That's probably very true. Mercedses and BMWs keep their resale high because they are still basically quality-built with quality parts.

But with the Maseratis you get that luscious Pinninfarina-designed body. I think the older Quattroportes of the 80s and 90s were really pretty ugly...but the 2005-2012 Pinninfarina version is gorgeous....I mean for a four-door they are a looker and pretty fast to boot, with nice brakes. I like the 2-door Maseratis even better....but you can't pick those up for $39,000 unless they've crashed.



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