Question of the Day: How do You Pay for Your Vehicles?

Son of a Beach December 31st, 2007 5:14 PM Link

Floriday and Carder: Weakest Question of the Day EVER!

mark d. bell December 31st, 2007 5:22 PM Link

I don’t buy new cars. Haven’t for over 15 years. I like to let someone else take the hit on depreciation.

Generally, we will take out a loan from our credit union or wherever the best interest rate is.

We buy Volvo Wagons that are typically 2 years old, usually ones that are part of Volvo’s Select program. We seek out the best ones we can find and keep them…sometimes for well over 10 years.
Currently we have a 1992 240 sedan and a 1996 850 wagon…both with approx. 200,000 miles, but in excellent shape. We will be replacing the 240 within a year and will probably continue the same pattern. Unless the 240 continues to roll, which it appears to have every intention of doing.

In the long run, we have found this to be the best way to own a high quality car at the lowest posible cost. I used to buy new cars every year or two, but now enjoy owning a car for a long time.

Son of a Beach December 31st, 2007 5:25 PM Link

Gee, you thought about this, didn’t you.

mbslrm December 31st, 2007 6:16 PM Link

I would buy with cash, or shop around for the best financing options. Those Islamic banks offer really nice rates…

southern December 31st, 2007 6:43 PM Link

I buy new cars and I pay cash and have for the last 15 years or so.
This is generally not an option for the average young guy.

I have never had a shot at one of those of those 0% finance deals……….if I did, I would suspect that I was paying too much for the car……… But if not……….I would probably take the deal. I can make money on my money.

JohnD December 31st, 2007 7:05 PM Link

Finance, I’m not independently wealthy enough to pay cash, and I drive way too many miles to lease a car.

SCOTTL December 31st, 2007 8:10 PM Link

I generally go to a FLEET dealer, usually one of the senior sales guys. I know what I want. I do my research and know what they paid for it. The FLEET GUYS KNOW THIS, generally they will give you the best possible price. They will even find your car anywhere in the U.S. I pay cash. Drive what you can afford to pay cash for. As soon as you have a car, start saving for the next one.

blue-coupe December 31st, 2007 8:34 PM Link

I typically buy cars that are 3-4 years old, and finance them. I jsut leased a 2008 Jeep Wrangler. I figured I’m going to own a bunch of cars in my lifetime, so I’d try leasing one. I’m pretty happy with leasing, but not for the right reasons. I don’t like the Jeep at all, so I’m pretty happy to know it’ll be gone relatively soon.

I’m hoping to buy my next car for cash. Now all BMW needs to do is bring over the 335 Wagon, in gasoline or desiel form.

mo December 31st, 2007 9:06 PM Link

i sleep with the hot dealer employee, she then gives me a new car because i can always give a good night of sex.

Jeb December 31st, 2007 9:10 PM Link

The last one we bought, we paid cash drawn off our home equity line. That way, the interest is tax-deductible and there isn’t an additional payment book or anything to maintain.

Paul In Jersey December 31st, 2007 10:31 PM Link

Slim jim works great.

archey January 1st, 2008 5:59 AM Link

tell me where to get money for car?
to get it without credit?

jsharnik January 1st, 2008 2:57 PM Link

I use cash to buy certified Saabs

Landcrusher January 2nd, 2008 12:29 AM Link

Cash.

If you can’t pay cash, don’t buy the car.

The only person I believe should take out a car loan is a recent college graduate who has taken a job where non dependable transportation would hurt career prospects, or someone who actually needs a certain level or type of car because they have to haul customers or goods. These people should go for a really low special lease deal and start saving for the replacement in cash, or buy as cheap a car as will meet the needs of the job.

Everyone else should only drive what they can afford to pay cash for. If you can stick it out for only a few years while saving the money you would have been paying in payments, you will be able to buy new or nice used with cash for the rest of your life. Furthermore, you will be able to afford nicer cars (though I have found that people spend less when paying cash, even furthering their savings).

Do the math! A decent used car can be owned and operated for peanuts. Meanwhile you are gaining interest rather then paying it!

Leo H January 2nd, 2008 1:29 AM Link

2nd hand cash !! You can get 2year old for superb prices and after a model change or cosmetic change you can normally get cars at great prices. Lease a new car but only if that is the last option !!!

Son of a Beach January 2nd, 2008 10:56 AM Link

New cars rule. The smell, the integrity of structure and tightness of components, the crispness of chassis dynamics, and the sense that you have “the latest technologies and style” are all reasons that new cars are the only way to go. If you can pay cash, your an idiot if you by used. Put in a large down payment, then you have a small financial burden that improves your credit status. If you don’t think you need good credit, you are truly stupid, or very, very rich(or both).

Mena January 2nd, 2008 1:47 PM Link

“If you can’t pay cash, don’t buy the car.”

So only the rich and those that like to save money for 20 years can only buy new cars? Right! I agree, people should be realistic when choosing their cars but buying only cash is not realistic. I guess I should only live in an apartment too since I can’t afford to pay cash for any house.

David January 2nd, 2008 2:14 PM Link

all 3 cars in our current fleet were bought new for cash. Previously we have bought both used for cash and new for credit. NEVER buy a new car with a loan longer than the warranty!

There are lots of reasons (some good, others not) for buying new cars versus used. The least expensive car per mile we ever owned–by a very wide margin–was a Volvo wagon we bought 5 years old and drove to the ground.

Looking back, borrowing money on a car is a bad idea from a financial perspective–cars are not investments but depreciating assets. It makes sense to know how much you will drive, and buy used accordingly.

I’m with the earlier poster who said to buy used and own it till it falls apart.

Kelly January 2nd, 2008 3:08 PM Link

Cash only and always on cars that are either a the depest depths of depriciation or are on the way back up. Cars are mostly liabilities anyways, so i try to minimize it.

Brandon January 2nd, 2008 11:57 PM Link

“…cars are not investments but depreciating assets.”

Exactly right (unless it’s like the first GT500 ever built)…pay cash, if you can’t afford it then don’t buy it, stop giving in to the mainstream society, you don’t need a new car every year! Buy what you can afford!

Landcrusher January 3rd, 2008 1:14 AM Link

Mena,

If you buy a new car for $20,000 and buy it on time, you will have spent more than if you bought a used car cash, and saved the $20,000 over the same five years.

It takes LESS money. Now, once again, DO THE MATH. You won’t really learn what I am saying unless you DO THE MATH.

If you can’t figure this out, your odds of ever being financially successful are rather slim - no matter how much money you ever earn. Once you live this way, your chances of retiring comfortably are actually pretty good, even if you never earn more than a below average salary.

GRP January 3rd, 2008 10:39 AM Link

Landcrusher
The reason used cars are cheaper is a lot of the useful lifecycle of the car is used up. You are figuring a five year life cycle before you would need to repurchase. With intrest rates at historic lows, it may be not as smart as you think to by used. To make things simple say the used car is half the price of new, $10,000 That price says half the lifcycle of the car is used. Your lifcycle is five years for your used car witch is very long. If you take the $10,000 you are paying cash for your used car and apply it to a new one your balance is $10,000. To end up at the same point you would need to buy two used cars. You would get no advantages of a new car, your vehicles would never be under warranty. With a new vehicle you have the knowlege of the history and if you planned on keeping your car for ten years(your lifcycle) you can properly maintain it. The driver of the new car has to drive a 8 year old car only one year, The used car buyer has to drive one two years in two differnt cars. It would probably be safe to say, that driving used cars the extra repair bills would more than offset a 2-3% inital intrest rate on $10,000.