patrick.net

I have only had one car loan in my life when I HAD to have a car for work in LA. I paid it off in 6 months.

Since then, cash and carry or no car.

I wonder how long you have once you stop making monthly payments.

Is it like real estate where you might be able to live in the property for another 6-24mo depending on how backed up the banks and local sheriff offices are?

Before I purchased my Honda, I was looking at a Repo at my credit union. 2013 Corvette. Three years old.

The salesperson for the credit union would not come down on the price ($35K). I didn't think it was worth it so bought the Honda. I think I made a better choice.

Ironman says

rando says

I wouldn't take 0%.

When was the last time you paid cash for a NEW car?

6 years ago. Only new car I ever bought, because I wanted to buy a new car and could easily afford it. Had only used cars before that.

2016 Accord was a nice choice. Enjoy the new ride!

OK, call it another luxury. I wanted a new car, and I did not want debt.

Made very little difference to my situation overall, but yes, I would have been slightly better off investing that money somewhere. The question is where.

I still have too much cash because I can't find anywhere great to put it. Already maxed out my tolerance for the stock market at about 80% of assets.

BayArea says

I wonder how long you have once you stop making monthly payments.

It varies from state to state, and from one lender to the next, and sometimes from person to person (depending on payment history), although I can't attest to the latter since it was mostly all computerized by the time I got to them. In theory, in some places one can repo car pretty much right away if they really want to. However, a LOT of delinquent borrowers do what's called a voluntary repossession where they turn in the car to the lender. That might sound counter-intuitive but people know that if the bank sends in a repo man, that's actually expensive and only adds to their bill. Some people just want to stop the proverbial bleeding, and others are hoping to get the car back, and don't want the whole getting the car back that much more expensive. Plus the whole voluntary repossession is done at their convenience and their stuff isn't in the car. If you think it's all like certain TV shows, you have been watching too much TV.

rando says

OK, call it another luxury. I wanted a new car, and I did not want debt.

I only buy new cars. I figured it costs slightly more, but you end but driving better quality/newer car and there is less hassle - in purchase and maintenance.

E.g. compare a new car that lasts 12 years vs. two 6 year old cars, each of which lasts 6 years. For the extra cost, for 6 years you get to drive a 6-year newer car. I addition, for the second 6 year period, you get to drive your used car, rather than somebody else's (no hidden problems) + no need to do a second purchase.

FP says

E.g. compare a new car that lasts 12 years vs. two 6 year old cars, each of which lasts 6 years.

Why 6 y.o. used car? 2 y.o. out-of-lease (Japanese) luxury car makes much more sense. And it will last the required 12 years no problemmo.

rando says

I wouldn't take 0%. First, I expect some catch like a "financing fee".

I've done it with Mazda a couple of times. No hidden fees.
Walked away from my CX-9 with two more years to pay on it.
Went in worked a deal on a lease, walked out with a lease on two new Mazdas without paying a penny out of pocket.
Or nothing carried over.

I'm hoping Trump's auto deregulation will bring some class and balls back into cars. Make American cars worth having, and also perhaps they'll even be cheaper or you will get more for what you pay. A crapload of the car cost right now, is eaten up by EPA greenie shit.

APOCALYPSEFUCK_is_ADORABLE says

police auctions

Works if you like Crown Vics and Dodge Chargers with Hemi's and high miles.

when they give you a loan at 0%, lower than inflation, obviously there is a catch:

- it could be a model that has been around for months and the manufacture needs to get rid of it. instead of selling for $1-2K less, they lower the interest to 0%. it's the same deal.
- they could start out with a price higher than it should be, and give you 0% to give you the impression of a "great deal!."

but this financing vs. cash debate is easy. when financing rate is lower than rate of return in the stock market minus taxes, it is definitely a better deal, assuming the negotiated price is the same in both cases.

i think a better (or closer) debate would be lease vs. buy or electric/hybrid vs. gas.

Straw Man says

Why 6 y.o. used car? 2 y.o. out-of-lease (Japanese) luxury car makes much more sense. And it will last the required 12 years no problemmo.

Details.

Then you'll drive for 12 years 2-year olded car than me (or if you prefer, for two years 12-year older) + can have hidden problems + more maintenence costs + less models to choose from + more hassle in purchasing + not sure if you can get 0% financing, which effectively reduces the cost of my car by ~15%.

RealEstateIsBetterThanStocks says

- they could start out with a price higher than it should be, and give you 0% to give you the impression of a "great deal!."

I never hassle with the dealers. First decide the exact car I want - model and all specs. Then check online the actual price it has been selling and get several offers (forgot the name of the site that provides this service). Then call a guy that I've been dealing with and ask him to match/beat it, which he always does. Then I go to his dealership, and drive off the car 30 min later.

Alaws do this at the end of the month. Dealers get incentives from the car companies if they sell certain number of cars, and to reach these number some at the end of the month are sometimes ready to offer you ridiculously good deals.

I have done both, last car I financed through my credit union for 1% but I also get money back each year for being a member and having a loan with them so I come out ahead.

I just financed another car. The dealership lost $4 on the sale, and now their finance guy is out his bonus as I immediately re-financed it at my CU with a lower rate. The CU will finance up to %130 of the cars value, so I tapped some equity as well. At 2.0%, why not?

If you're a good horse trader, you can do really really well with cars. I'm driving a Korean Bentley now, for pennies per mile, thanks to VW getting caught in dieselgate

Paying cash for cars works best when buying from a private seller. If you're good at it, you can drive it awhile, and then sell it for a profit.

Straw Man says

Why 6 y.o. used car? 2 y.o. out-of-lease (Japanese) luxury car makes much more sense. And it will last the required 12 years no problemmo.

Why stop at 12 years? My Ford was made in 1995.

RealEstateIsBetterThanStocks says

- they could start out with a price higher than it should be, and give you 0% to give you the impression of a "great deal!."

This is a great point. I often hear friends bragging about how they are doing 0% financing.

My thought immediately goes to "0% on what price". Dealers who finance at 0% tend to be rigid on price, unless they are trying to clear out model years.

As a side note, I drive older Lexus cars which are second to none in terms of quality. My current car is a 2001 GS430 with 125K miles. I bought it 6yrs ago with 89K miles probably 80-90% depreciated and hope to have it for many years to come. We took a similar approach with my wife's 4Runner. I can afford a new car, but I just can't stomach that depreciation that comes with the first several years. I stress that I wouldn't dare try to follow the plan above with anything outside of Lexus/Toyota.

I guess I prefer to use my disposable income on family vacations and investments.

And Ironman, it's a car, not a mattress (in regards to the sloppy seconds comment) lol.

BayArea says

I guess I prefer to use my disposable income on family vacations and investments.

I prefer to spend my time on family vacations rather than shopping for used cars. Time is more limited than money.

Wiith the cars you drive you use too much of your disposable income on gas.

A used car at 89k miles is probably just due for major maintenance.

Ironman says

That's why you do your negotiating on price BEFORE you tell the salesman your mode of payment.

Agreed.

From my experience one of the first questions the dealership asks when negotiating price, is method of payment. Got to be hip to that questions coming your way and deflect it.

Ironman says

Ha ha... Apparently you don't realize how many people have sex in their cars...

hahaha, you got me, I must not...

FP says

I prefer to spend my time on family vacations rather than shopping for used cars. Time is more limited than money.

I've been involved in both and both can be a massive pain in the ass. My preference is dealing with first owner private party over anything else.

FP says

Wiith the cars you drive you use too much of your disposable income on gas.

Don't be so dramatic. Any combustion engine equipped car I'd buy new today with this size and this power wouldn't vary significantly in gas mileage.

FP says

A used car at 89k miles is probably just due for major maintenance.

I repeat, I drive Lexus and Toyota, so I wouldn't know anything about major maintenance (at least not yet lol). These makes/models routinely show examples passing 200K, 300K even without any major engine/transmission/differential work.

Lexus no longer makes a V8 GS so I can't compare there, but comparing our 2006 4runner V6 to the latest greatest 2017 4runner V6 2WD, here's the fuel savings. So we can't always buy into the fuel savings hype when comparing older and newer combustion examples available:

BayArea says

I repeat, I drive Lexus and Toyota, so I wouldn't know anything about major maintenance (at least not yet lol). These makes/models routinely show examples passing 200K, 300K even without any major engine/transmission/differential work.

Not if it has a timing belt!

FP says

A used car at 89k miles is probably just due for major maintenance.

Like what? You don't really know much about cars, do you?

zzyzzx says

Not if it has a timing belt!

No timing belts in current Toyota lineup. Not that it was such a big deal anyway. I did timing belt job on older Toyota 4.7 V8 in one lazy weekend. Could've done it in half a day really, but I like to do unfamiliar work at relaxed pace.

Our 2001 GS430 is a timing belt car. That's the only major maintenance I could think of. I use "major" lightly as it's not significant more expensive than a 4-wheel brake job. Other than that, on to 300K maestro!

Our 2006 4Runner is a timing chain car, nothing to worry about.

Ironman says

errc says

The dealership lost $4 on the sale,

Sounds like they will go bankrupt on that loss.

errc says

The CU will finance up to %130 of the cars value, so I tapped some equity as well. At 2.0%, why not?

Now there's some amazingly smart financial management, borrow 130% on a instantly depreciating asset.... What could possibly go wrong... (where have we seen that before??)

It's the Credit Unions business model, seems to work alright for them.

For a kick ass Capitalist like myself, it can be very lucrative. I did it with a rx-8 a couple years ago. Sold the car for a 33% gain, and more than tripled the CU's extra money they financed me on FNMA stock.

@Pat - you've heard of the car subprime loan crisis just around the corner. No? I'm looking for a new or slightly used car as well but am considering waiting to see what happens. Since 2008 it seems all car companies have reduced the selection of models they have available though. Not just versions of the same vehicle but selection of vehicles. Lots of what are available seem sort of boring. Even the sport utilities are looking like mini vans to me. Even the BMW X5. I just went to sit in a mustang GT 'premium' and didn't even take it for a test drive. The finish was crap. You could literally see beneath the hood from the cab. The newer ones look great from the outside starting in 2015 though.

I have an uncle who wanted to pay cash for a Subaru but they insisted on a 1% financing deal. So he took out a CD paying 5% with his cash. This is maybe 2006? Definitely before the housing crash.

Silly me. There is a Dave Ramsey video in this thread discussing the crisis.

zzyzzx says

Not if it has a timing belt!

I'm thinking you've never heard the term scheduled maintenance. Breaking one before it's due to be changed is really rare. Having it inspected takes about 30 seconds if you are worried about it. OMG you have to change the belt twice in 300,000 miles. The horror.

BayArea says

I've been involved in both and both can be a massive pain in the ass.

I explained above how I do it. No pain at all when buying new.