Afraid of not having a car payment

[bjl584]

I was at a gathering at New Years and I overheard a girl saying that she was afraid to own her car outright.
She said as soon as a car gets close to being paid off she trades it in on another.
Her logic was that if it is paid off, then it is probably out of warranty.
She feels "safer" having a newer car under warranty.
She is a single mom who doesn't know anything about working on a car, so I can sympathize with that part of her argument.
It was a party, so I didn't say anything, but I guess the automotive industry loves people who think like this.

[myrdale]

She feels "safer" because the car is under warranty. Does she think it is less likely to break down or is it a matter of the repairs being covered?

My mother has had two separate cars that catastrophic engine failures at 90-99k miles and were covered by the warranty. I pushed the Frontier to 319 miles and did repairs as they arose.

When I purchased the Tacoma, my intention was to pay cash, but instead I ended up paying it off over a 3 month period. There is no car payment, but I still have several years (10's of thousands of miles) of warranty left.

My personal view is a car payment is $320 and the average repair bill is $1,200 annually. So after just 4 months of no car payments I've saved the cost of my expected expenses for the year.

Actually when I google average car payment I got $575!! So that's just two months.

From my limited experience with the dealership sales and finance folks, they are pretty sleazy. Well at least they are there to make as much money off of you as they can. She'd best educate herself on car prices and basic finance or she will pay an awful lot in stupid tax for the foreseeable future.

[disneysteve]

So not only is she having a constant car payment, she's buying a brand new car every few years. Maybe she should just buy an extended warranty and keep the cars longer.

[bjl584]

So not only is she having a constant car payment, she's buying a brand new car every few years. Maybe she should just buy an extended warranty and keep the cars longer.

That would be smart. Like I said, it was a party, so I didn't say anything.
Apparently, she also just secured a debt consolidation loan to consolidate a bunch of credit card debt.
So, multiple financial problems happening with her

[disneysteve]

Of course, the best moves would be to either pay off her car and keep setting aside that monthly payment in a savings account so that if a repair is needed, she has the money all set, or buy a cheaper used car and put the money she saved into that savings account.

But yes, we all hear conversations like this every day. It's hard to bite your tongue and keep your mouth shut sometimes, especially when you know the person. Happens to me at work all the time.

[Fishindude77]

A friend of mine (late 50's) told me a while back .... "If you're going to drive anything decent, I figure you'll always have a car payment".