Cars versus homes

[Frugal]

I don't know if car payments drive all debt, but I personally would never take out a car loan. I and my spouse both paid cash for our cars. Granted, one was brand new at the time, and I bought mine old a year or so back. It helps a lot to not have other debt on top of a mortgage!

[kalimaniac]

Nowadays there is no point in buying new cars. You can get a basically new car for half the price by getting something two or three years old.

[carolan]

Your house AND your car, the two biggest purchases of your life, should fit into your budget. I drove my last car for 14 years and this one costs me $300.00 per month and I have a business so I can write off some of the loan. The reason so many people are in trouble financially is because they are trying to keep up with others. Who cares what other people do! Do what's right for you and your budget.

[pat_chung]

I would not advise someone buy a more expensive car than what they would be comfortable paying for in cash.

Loan:
I've used car loans, but only because the interest rate the manufacturer was offering was low for the 2 cars I've bought (3%, 0.9%)

New vs Used:
There is not a straightforward answer. If you have alot of time, and can wait for a great deal to come by, then buy used and wait for the deal.
I've owned japanese cars (honda/toyota), and used prices on these cars don't seem to be good deals relative to new prices -- so I've bought new. If I could save 40% on a 3 year old japanese car, I would; but you really can't (if you compare used negotiated price to new negotiated price; not to new msrp)

[Bud1225]

yes, you are right brother thanks for sharing this beautiful forum about the living almost and income here on this thread.Because now these days every thing is increasing rapidly we don't know what will be happened to us in future.

[Goldy]

I used to say that I would only buy used cars but we got a fantastic deal with our new subaru when we traded in our old clunker mini van. The van was needing some moderate repairs so we started looking to get in the cash for clunkers deal. The car was listed at 23k and we were able to get the VIP discount by being a member to a scientific conference. At the end of the day that car only cost us 16.5k and they threw in a 0.00% loan for the life of the 4 year loan. Needless to say we jumped on that deal. We paid the same price for a brand new car as we would have paid for a 4 year old car.

Unless we get a similar deal in the future we will be buying used cars with cash.

[dawnwes]

Most people look at the payment amount and ask themselves, "Can I make this monthly payment?" This is NOT the question those of us who are financially savvy ask ourselves.

And trading in a 3 year old car? Well, our "newest" car is 8 years old and running very well......I haven't had a 3 year old car in a VERY long time.

Dawn

[dawnwes]

This was us too!

Now, please bear with me, we bought this particular car LONG before we cared about not having car payments.

We bought a new Toyota Sequoia in 2004. It was listed as $35,000 on the sticker cost.

We looked at 2002 Sequoias and they wanted roughly $33,000, maybe down to $31,500 if the mileage was higher.

We then went online and got FLEET pricing and the cost was $30,500.

It was CHEAPER to buy the FLEET pricing for a NEW vehicle than to buy used. NOt only that, but the new car came with a 0.9 interest loan where the used vehicle loan was over 5% interest at the credit union I used at the time.

So, it was by far cheaper to get the new vehicle.

We are making this car last FOREVER! We still call it our new car as it is the newest car we own. It drives like the day we drove it off the lot though.

Dawn

Originally Posted by pat_chung

I would not advise someone buy a more expensive car than what they would be comfortable paying for in cash.

Loan:
I've used car loans, but only because the interest rate the manufacturer was offering was low for the 2 cars I've bought (3%, 0.9%)

New vs Used:
There is not a straightforward answer. If you have alot of time, and can wait for a great deal to come by, then buy used and wait for the deal.
I've owned japanese cars (honda/toyota), and used prices on these cars don't seem to be good deals relative to new prices -- so I've bought new. If I could save 40% on a 3 year old japanese car, I would; but you really can't (if you compare used negotiated price to new negotiated price; not to new msrp)

[HousingCounselor]

I am a housing counselor and foreclosure prevention specialist so you know where I'm going with this. A lot of my clients would be able to afford to keep their homes if not for their auto payments. I mean the monthly payments are just killing them. No savings, little to no retirement or in the negative month to month. Then they want a loan modification because if they don't get one, they cant afford their cars and if they don't have reliable transportation they'll lose their jobs, and so on and so on.

I once had a surgical resident making $27k a year drive up to our appointment in his leased late model Lexus. $200k in student loans and he he's driving a luxury car that suggests he's already making the $400k he'll eventually make once he's finished with his sub specialty training. Assuming he doesn't quit or get kicked out of his surgical program. *Sigh*

I don't get it with these cars. I dress, live, and drive modestly because I don't want irresponsible folks asking me for a dime. Assuming that I made it somewhere because of what they see. Not that I have a lot of money but I'd like to hold on to the little bit I have.

[Hector]

Originally Posted by HousingCounselor

I am a housing counselor and foreclosure prevention specialist so you know where I'm going with this. A lot of my clients would be able to afford to keep their homes if not for their auto payments. I mean the monthly payments are just killing them. No savings, little to no retirement or in the negative month to month. Then they want a loan modification because if they don't get one, they cant afford their cars and if they don't have reliable transportation they'll lose their jobs, and so on and so on.

I once had a surgical resident making $27k a year drive up to our appointment in his leased late model Lexus. $200k in student loans and he he's driving a luxury car that suggests he's already making the $400k he'll eventually make once he's finished with his sub specialty training. Assuming he doesn't quit or get kicked out of his surgical program. *Sigh*

I don't get it with these cars. I dress, live, and drive modestly because I don't want irresponsible folks asking me for a dime. Assuming that I made it somewhere because of what they see. Not that I have a lot of money but I'd like to hold on to the little bit I have.

everyone loves getting stuff weather one can afford it or not. Its so easy to take loans for everything including expensive cars and a lot people cant resist doing it. thats the fact about American economy. an average American spends $1.22 for every $1 he makes. without it, economy will do terrible.

Originally Posted by dawnwes

This was us too!

Now, please bear with me, we bought this particular car LONG before we cared about not having car payments.

We bought a new Toyota Sequoia in 2004. It was listed as $35,000 on the sticker cost.

We looked at 2002 Sequoias and they wanted roughly $33,000, maybe down to $31,500 if the mileage was higher.

We then went online and got FLEET pricing and the cost was $30,500.

It was CHEAPER to buy the FLEET pricing for a NEW vehicle than to buy used. NOt only that, but the new car came with a 0.9 interest loan where the used vehicle loan was over 5% interest at the credit union I used at the time.

So, it was by far cheaper to get the new vehicle.

We are making this car last FOREVER! We still call it our new car as it is the newest car we own. It drives like the day we drove it off the lot though.

Dawn

from an average American prospective, 30k car is not cheap regardless you saved 3k on it or not.

[nick__45]

Originally Posted by Hector

everyone loves getting stuff weather one can afford it or not. Its so easy to take loans for everything including expensive cars and a lot people cant resist doing it. thats the fact about American economy. an average American spends $1.22 for every $1 he makes. without it, economy will do terrible.



from an average American prospective, 30k car is not cheap regardless you saved 3k on it or not.

Unfortunately, if we're talking new vehicles, $30k doesn't get us much nowadays. This is why I still drive a Corolla that is almost 20 years old.

[dawnwes]

Yes, I am aware of that, hence the disclaimer that we purchased that car before we got on board with taking better care of our finance.

However, our income is decent.

Dawn

Originally Posted by Hector

from an average American prospective, 30k car is not cheap regardless you saved 3k on it or not.

[dawnwes]

Well, if you can point me to a 2 or 3 year old Honda Accord for half of retail, I would be all over it.

Dawn

Originally Posted by kalimaniac

Nowadays there is no point in buying new cars. You can get a basically new car for half the price by getting something two or three years old.

[SnoopyCool]

We made the mistake of buying a car through a loan. We felt justified b/c our old one died, and I wanted something that made me feel safe with the kids in tow. We bought a used Toyota. Two months later, my spouse lost his job. Although we've been able to make our finances work, it was not the most frugal option (if we had known dh would lose his job, we would have put a transmission in the old van and had the electrical problem fixed). Thankfully, we're set to pay off the van in a couple of months (two years ahead of schedule). This vehicle will be maintained to last FOREVER. And we will resurrect it should it die.

[LivingAlmostLarge]

resurrection isn't always the best option. A used van maybe instead? I wouldn't pay to put a tranny in my corolla either. If I were worried about money i'd buy a used car but not another $2k to put a tranny in and then something else breaks. Might as well get a $2k used car that isn't over 10 years old.

[Hector]

Originally Posted by dawnwes

Well, if you can point me to a 2 or 3 year old Honda Accord for half of retail, I would be all over it.

Dawn

me2.

whats the point of comparing msrp for the old model car like if were new to msrp to current model and ultimately paying MORE sum of money? it is what it is, but people wanna find reasons for paying more! if my budget is 10k, why would not I stick to my budget?

[photo]

Originally Posted by dawnwes

Well, if you can point me to a 2 or 3 year old Honda Accord for half of retail, I would be all over it.

Dawn

If you buy a new, modest, and reliable car (and -- you can afford it!), and keep it for a long time, then you are being very frugal. We keep our cars until they start to cost more to fix than they're worth but always buy new. The only problem with buying used is that you don't know how the previous owner treated the car. I'm always a bit wary of anyone who would sell a car after only 2 or 3 years. Some people are very rough on cars and simply buy a new one before their bad habits cost them.

Also, a way to save $1,000 is to buy a manual transmission.

[tripods68]

Having two cars (Odyssey and Scion) is a requirement for us. We both worked Downtown (live in a suburb) but then I pick up my son every day after work from school. Wife work 12 hours shift; some at night and some on weekends. But then she has to drop off our kids to school every morning. No public transportation can ever work on our daily routine.

Even more better is not having car payment for the last two years (both cars are paid off). Instead of making extra mortgage payment (house underwater) we are saving extra 1K a month building up our savings.

[danieldroga]

Cars are not really considered as the basic needs of an individual. Cars are only considered as secondary our need. if you have a lot of money to spend with the car that you want to purchase then go for it but if you want to be practical then consider forgetting the idea of purchasing a new one.