Buying cars

[pearlieq]

I HATE the thought of car shopping. We own both of ours outright now, and I'm just dreading the day we need to replace them.

DH drives a 2002 Hyundai Elantra. It's a decent car, has been fairly reliable, and gets decent mileage. However, he's really hard on cars. He drives a ton (his car already has 90,000 miles on it), has gotten into a few fender benders (not his fault yet, but he drives a lot and usually during heavy traffic periods, and that just ups his chances of getting into something), and once pulled the entire piece of side trim off of the door of his car while pulling out of the garage too fast in a fit of pique.

I know we're going to have to replace his car in about 2 years, and with the way he drives I certainly don't want to invest any kind of money into it! Unfortunately, I think it's going to be an uphill battle with him as he's into cars. I keep seeing him eyeing a few Mercedes models, but I'm really not willing to go along with that. Can't wait to see what happens when we actually get to having to buy his car!

I drive a 2000 Mercury Sable. I work from home and don't get out much, so it has about 55,000 miles on it. I'm hoping to hold on to it for another 4-5 years at least. When it comes time to replace it I'll either get a compact sedan (Corolla is the front runner now) or a mid-size sedan (Accord or Camry) if kids are in the picture. I really, really, really don't want a mini-van!!! Aside from that, though, I really don't care for cars. I just want something reliable and economical.

My goal is never to finance another car. Right now I set aside $350/month plus 1/2 of my paycheck toward future car purchases.

[Ima saver]

sounds like you have a good plan, pearl! My husband is a car nut. he is already talking bout buying our next car and I haven't paid for this one yet!!

[Snoopy2645]

Your dh sounds like mine he wants to buy another new truck he is a truck nut his is only 2yrs old this month & my van is a 99 so it kinda irks me!! I wouldnt buy brand new but I think his money could be saved or put toward a better bigger house. ANd I would like a little newer car but I dont bite of more than I can chew in otherwords I wont buy a car I cant buy outright I think loans for cars are a huge scam!!!

[MarianneJ]

In the past I always looked at a car as just a necessity to get me to school/work/etc, and when I bought my first car in 1999 (which I still drive) my main concern was that it was an American product and that I would not have to worry about it breaking down. So, I bought a new 1999 Saturn.

I could not be happier with my car. It has a little over 131,000 miles on it. I drive it an hour to school and back each day with no problems, *knocking on wood*, and have put next to no money into it aside from regular maintenance stuff. It gets about 28-32mpg. Just an absolute joy.

I love my car, but I must admit that I love the idea of buying a new car after I graduate and have a steady job. A part of me wants a hybrid just because it seems more environmentally friendly, but another part of me remembers that the car I drive now already gets great mileage without all the hype. So I am a little bit torn, but I have alot of time before I will actually be in the market so it's not weighing too heavily on me yet!

What are your thoughts on hybrid vs regular cars? Are they all overpriced "status" or truly helpful for the environment?

[cschin4]

Because a car is a depreciating asset, I would personally feel uncomfortable using an asset such as my home to bankroll it. Why not just get a traditional car loan instead? If unforseen events happen, then they just reposses the car and it isn't tied to your home as in a HELOC. And, the interest rates on new cars can be as low as 0% anyway.

[disneysteve]

Originally Posted by cschin4

Because a car is a depreciating asset, I would personally feel uncomfortable using an asset such as my home to bankroll it. Why not just get a traditional car loan instead? If unforseen events happen, then they just reposses the car and it isn't tied to your home as in a HELOC.

When I bought my last car, I financed at the dealer. Then 2 months later, I took out a HEL and paid off the car. The rate on the HEL was 2% lower than the car loan, plus it was tax deductible which made the effective rate even lower. I had plenty of money in savings to pay off the loan at any time, but my investments were far outperforming the interest I was paying so there was no reason to pay it off early.

[Ima saver]

Disneysteve, i think that is a very smart idea. I will really do my research before I buy my next car to get the best rate possible.

[LuxLiving]

We've bought 4 cars this year w/cash! OUCH! -BUT, I think we are exceptions not the rule - I think most Americans finance, we always have up until this time. I always rush to pay them off ASAP!!! Hate car payments!!

We bought The Hubster a 2005 Neon - 8000.00 - pd cash - we'll be getting 2900+interest back on towards this car when fil's estate settles - we sold his old car to his brother for no cash - but payoff when house sells. Neon has full warranty.

On the same day at same dealer we bought me a 2001 Dodge Truck 7000.00 pd cash - had sold my old truck for 6400, had to come up w/600 additional. I didn't buy the warranty.

We did get extra good deals - bought at the end of the month, buying two the same day made the sales manager very happy and easier to deal with.

Also now this wasn't planned but worked to our advantage - there was a 2004 Neon down the street that T.H. was also interested in...he kept talking about going back down there and buying it instead...in fact at one point he left and went down there!! Told that guy he wanted it and came back to pick me up while I finalized on my truck. The manager got real friendly (yeah right) and wanted to make us a deal on both of them. I tore up my check which was for a bit more than 7500 (we'd already talked them down from 11,900) and wrote out a check for both!! We patted ourselves on the back and went home happy!

My old truck was a green dodge 99 shortbed -sexy as all get out!! CUTE lit'l truck I miss you! It was paid for - EVEN SEXIER!!! There was nothing wrong with it - had 75000 miles on it. Never had it worked on once, only oil changes & tires rotated - I had bought it in 2000 from my sister. I didn't want to sell it but car trader T.H. did it anyway. BOO HISS

Come to find out later that he sold it because he thought I had parked it because it was too expensive to drive. NOT AT ALL - the case was I had parked it so that I could take all the extra dollars I could get so I could pay it off!! SHEESH!!

I didn't put it on blocks or anything - just didn't go anywhere very often. More dollars for payoff!! What is funny is that my new truck is a 2001 dodge shortbed w/35000 miles on it and is the exact same color - I don't know if anyone in the neighborhood even realizes I got a different one!! This one doesn't have exactly all the same bells & whistles and I now have shee-rah thighs from it being a standard but I'm happy. 3 years newer, 40000 fewer miles and still paid for!

But moral of the story for me was NEW truck is in my name only. Nobody and I mean nobody is selling my paid for truck!!! God I love him, but that was not nice!! 2 points off. And - we have vowed to be more communicative about the whys and wherefores of what we are doing!!

a month or two later Frugal son bought longed for truck/camper - pd cash
a month or two later Cashhappy son bought starter car - pd cash

*note frugal son didn't have quite enuff from sale of last car (although he made 1000 over what he'd paid for the car 10 months previously & savings on hand to buy the truck outright himself so borrowed $'s from mom & dad.

Cashhappy had the money cuz Momma made him save it!

We do have Next Car Funds in our budget!! We have got the money put back already! YEAHHHHHH!!! We plan to drive these until The Hubster retires and may possibly then go to one car. We stick back until we have enuff then put it into a CD maturing at that time. Some people use zero coupon bonds to execute this plan.

So - Using the Neon as an example: after figuring 'THE FUTURE VALUE OF MONEY' (find yourself a calculator) that we'd need at least $5000 in 5 years time, we put 3850 in a CD paying 5.30%. On a certain day in 5 years it will mature and we'll cash it out and decide if we need to trade at that time or see exactly where we are. Perhaps we won't need it right then and we'll decide where to park it for 3 more months, 6 months or a year. Depends on how much we baby the thing doesn't it?

How did we come up w/the magic 5000 figure? The Hubster thinks that he'll need to add about 5000.00 to whatever he can get out of the Neon when he sells it. Sales Price of Old Car + 5000.00 = New or Newish Car in 2011 or thereabouts.

That's the plan!

[Ima saver]

Wow Lux, you reallly have things planned out. I started a car fund when i got my dh work van paid off. I put the old van payment in there every month. Plus, I have a picture of my vette on a canister, I try and put a dollar a day in that can ! I have almost $9000 in my car fund, but I know that is not going to be enought because I married a car nut! Shat can I say, if dh wants to work 7 days a week to pay for his toys, then he deserves his toys!

[LuxLiving]

Originally Posted by cschin4

Because a car is a depreciating asset, I would personally feel uncomfortable using an asset such as my home to bankroll it. Why not just get a traditional car loan instead? If unforseen events happen, then they just reposses the car and it isn't tied to your home as in a HELOC. And, the interest rates on new cars can be as low as 0% anyway.

Good thoughts - I had the idea at one time of paying off the car financed at credit union 10% {OMG how ridiculous is that rate - especially as our FICO is excellent!!... by doing a balance transfer to our 0% CC. We didn't do it, but it still would have worked out well for us - We have excellent credit and the 0% offers come in the mail every day so when the promotional rate would be going away we could have easily rolled it somewhere else.

Have actually considered doing this w/my mortgage! Our credit limit is high enough on one card to not even put us close to the limit so I could get rid of the 6.75% on it!

[Ima saver]

i never thought of that! Putting your car payoff on your credit card!!

[LuxLiving]

Originally Posted by Ima saver

i never thought of that! Putting your car payoff on your credit card!!

Unfortunately that would only be good for those who are VERY DISCIPLINED w/their money. It would work for you Ima, but not for everyone!!

Don't scare me like that!! I wouldn't want someone who had no control to go out and do this unadvisedly!! Twouldn't be purty!

[Ima saver]

No you are right, it is not for most people. Plus you have to have a really high credit limit. My husband was going to have a hot rod build. I was going to put that on my credit cards so I could dispute if we were ripped off.
Fortunely, I talked him into building a spec cabin instead!!

[Great to be Debt Free]

I do have a car fund. DH and I have separate checking and savings account. We have just moved his savings account money to an ING account. That is our Emergency fund ($10,000). And my car fund is being moved to an Emigrant account this week. It currently is about $2800 strong, but that should be about 10,000 by the end of the year.

I need to replace my 98 Saturn. I cry when I think of what I paid for it. I got it in the middle of my downward debt spiral in 1998 and had to lease b/c my credit was, uh, well, the pits! Then, when the lease was up, I was working so hard to get out of my even worse debt situation that the best I could do was to finance the purchase of the same leased car. Basicallly, I paid $220 per month for 8 years PLUS the initial downpayment for a $13,000 car. Almost double! Egads!!! Needless to say, I only want to dump her when it no longer makes sense to keep her. And we're about at that point. She has 108,000 miles and we're soon going to be moving across country. She's had some problems and I don't know that she'll make the trip.

I was planning on waiting until we got out to Colorado to buy one from Carmax or something, but honestly, there's a better selection and prices out here on the East coast. So, we'll see. It also depends on the timing of the move.

But yes, I do have an actual car fund. And now that the ER fund is fully funded, that's where the cash is going. As soon as we move (and it will be between Nov and March) we'll get reimbursements that will cover my and DHs $4000 Roth IRA depostis for this year. And that's how we're doing it.

[disneysteve]

Originally Posted by Ima saver

No you are right, it is not for most people. Plus you have to have a really high credit limit.

I've tried to buy our last 2 cars with my credit card but the dealers wouldn't go for it. I assume it is because of the fee they would have to pay Visa.

[Ima saver]

Well, I never thought about that. I guess I would go with a car loan and then use one of those checks they give you to pay the car off and have the balance then on the credit card.


I try and pay our materials bill with my credit card so I can earn the 1% back. sometimes our bill is $30,000, but they will not take visa or master card because of having to pay the fee. That is probably what the car dealers are doing!

[disneysteve]

Originally Posted by Ima saver

Well, I never thought about that. I guess I would go with a car loan and then use one of those checks they give you to pay the car off and have the balance then on the credit card.

That would work, as long as the transaction fee on the check isn't too much to make the deal not worth it. You also have to be sure that purchases made with those checks qualify for reward points. Maybe I'll try that next time I buy a car. I wouldn't mind an extra 20,000 rward points.

[ummabdullah]

It seems to me that cars are a waste of money! I don't understand why they are so expensive in the first place really! My hubby paid £15,000 cash for his nissan primera about 6 years ago. It has 126 thousand mile on it.. and the mechanic says that its breaking down.. and we need to sell it pretty soon. Gas mileage sucks at 35 mpg. So I'm hoping on buying a smaller used hybrid car for £5500.

I feel so annoyed that £15k is down the drain.. 5k sounds much better..

I vow never to buy an expensive car until we need the extra room.. and then only to buy a gas efficient one.

[twins0203]

Cars mean different things to different people. To 95% of people, it is just a way to get from Point A to Point B. It doesn't matter what it looks like as long as it gets you there. To the remaining 5%, it is much more. It's a hobby or passion for them.

[Great to be Debt Free]

Ok, so someone remind me, if you will. What is the site to go on to check a cars VIN number to see if it has been in any wrecks or floods or whatever. My friend who was in an accident is going to buy used (smart girl), but I can't remember the site to tell her.

Thanks in advance!