My car-2013, 0% for 3 years, paid off. Husband’s car, 2012, 0% for 4 years, will be paid off in May. Girls’ car, 2008, 0% 3 years, paid off in one. My car was new, H’s car was CPO 1 year old, Ds’ car was 8 years old when we bought it (diesel tank SUV, should live forever if they stop grinding the tires and brakes off of it).
We plan on holding onto my car until 125k miles when the warranty runs out (it is a twin turbo Ford, so expensive to fix). H will possibly hold onto his forever (diesel MB, last car was a manual Corolla that he kept for 10 years), the girls’ car will be sold when they go to college to help fund their college.
I like cars. A lot. I love tech on cars, I love to do spreadsheets on deciding which car to buy. I also love to keep our cars running for a really long time and looking good. I’m a nurturer, and that extends to inanimate objects. I spent five hours each day over two days washing and detailing both H’s and my car last week. Because I’m weird that way.
I spend hours and hours and hours in my car, so I like it to be clean, I like it to run like a top, and I like that it runs all my podcasts bluetooth from my phone, and has adaptive cruise control. It makes life better.
Our first car together was purchased from the junk yard with a salvage title for $800. We drove it until it caught on fire a few years later. Our second car was a Toyota pickup with manual transmission and no ac or radio. We drove that for 10 years (our only car) until we had our first daughter and had to trade it in for the dreaded minivan. It’s only lately that our cars have had tech, automatic transmissions, and radios :D.
The interest rates on car loans are really low right now. I can’t imagine that the car dealer is making much money on a less than 3% loan for 60 months. My D bought a new car in December with a less than 2% loan. She put a sizable down payment but decided to invest the rest of the money she saved as she felt she could do better investing the money than using it on the car.
We buy our cars, mine was used, H’s was new. We drive them to the junk yard. In our entire marriage we have traded in exactly 1 car. We finance them, his is paid off, I owe very little on mine. We’ve decided the interest rate is so low, our money is better served paying other debt (we pay our kids Stafford loans, the interest rate is considerably higher).
I know my socioeconomic status is much different than most here.
Edited to say that the past 3 cars we bought, the dealer financing was lower than our credit union. We checked.
“My 2003 model car is at 115,000 miles and I am wondering how long it will last and what to do with it. The last two years I have been pouring money into repairs and they have been expensive. Should I trade it in and buy a used car? Should I lease? I have always bought cars with full payment in cash but at this time I am not able to do that.”
My 2005 Lexus has 135k on it and I’m sure I could drive it another 5 or so years (I put about 10k miles on it a year) but we will likely get another pre-owned Lexus in 2 years. It’s rarely needed anything but new brakes and it’s been awhile for that too.
S is looking at cars right now and found an 2012 Audi - either an a4 or a6 (I wasnt paying that close attention to the convo he was having with H) for $13k. I think he said it has 70k on it. He has $5k to put down plus an Outback to trade in and can finance the rest through our credit union @2.3%. S is a car guy so I trust his judgement regarding the car. And If it’s a dud it will a good learning experience for him.
@mom60 I am considering getting rid of my 2003 BMW with 115,000 miles. Very high maintenance costs. I have had a Camry and a Honda Civic and will gladly go back to one of those low maintenance cars. I consider my BMW an expensive civic. The synthetic oil changes and gas cost more. Let your son know that no repair is going to be less than $500 to $1000. Advice him to get a practical low cost vehicle. He has his whole life to earn and save for a BMW.
H’s 15yo Sonata just passed 234,567 last week. We paid $4K for it back in '07. We also have a 15yo Elantra with about 180,000 on it. Donated a '99 GMC van last year. Our good cars are an '09 Sonata (got it lightly used in '10) and '12 Honda Pilot (replaced the van). Over the years we’ve owned a lot of different cars–mostly paid cash for well-used cars. The last few we’ve financed and found that the dealers had very good rates. We’ve been impressed with how reliable the Hyundais are.
@raclut -my last car was a BMW that I replaced at 75000 miles. I was facing a repair bill that was almost as much as the value of the car. I loved the way that car drove but when I looked at a new car I passed on the BMW. We have shared with him our experience with owning a BMW. I hope he listens but he has always been my kid who has to learn everything by doing. He has been frugal and has plenty of cash in the bank and is at a stage of life he has few expenses beyond his living costs. It will be an expensive lesson but one that he can afford. He is starting a new job and we have convinced him to at least wait and make sure the job is a good fit before making a big purchase. I am also having him talk to the insurance agent and find out what the difference will be in car insurance.
@mom60, I test drove a BMW a few years ago. That car did indeed drive “very well.” I passed because I couldn’t really justify the expense in my mind, though I do have a pretty nice car in spite of that. But yeah, that car could move.
The dealers don’t make money on car loans, they are usually financed through the manufacturer’s credit arm, or they have local lenders they work with. Dealers make money on the difference between what they paid for a car, and what they sell it for, including all the fees, add ins (often useless, like rust preventative or ‘paint sealer’ and the like).
The lenders make money because the cost of borrowing to them is small. They pay almost zero to people with savings or checking accounts, and their cost of borrowing these stays is barely about zero, so on a 3% loan their profit is pretty decent, well above the cost of borrowing or what they pay in interest (if a bank).
“All these people of privilege paying cash. No wonder there is so much talk of income inequality.”
I worked hard for my “privilege”, thank you very much.
Re keeping cars over 150k miles - no reason not to with a well made Japanese car (Honda, Toyota). It would take me a a LOT to go back to an American car given how cruddy they were when I was in the initial car- buying stage of life. Don’t care if they improved; they poisoned the well beyond repair in my book.
The answers here may be biased in favor of paying cash because:
a. The forum demographic is significantly higher income/wealth than is typical in the US.
b. Lots of people (even those with plenty of money) do not have tastes in cars that lead them to very expensive cars.
c. Those who are less careful with their money (at least in the car aspect) may not want to admit that in a forum reply.
Never thought of this before but purchasing a car is like paying one year’s college tuition, room, and board at some places. If it was just me I would have replaced my car but kids expenses have to be paid first.
Some people can pay cash because they are buying less expensive cars, whether new or used, not everyone is buying even what is considered the average price of a car, which is around 35k. Someone might buy a car for 15k with 50 or 60,000 miles on it and run it into the ground. Or if someone tends to hold onto a car for a long time, by the time their old car breaks down for good, they might have saved the cash to buy it. These days, with cars lasting as long as they do (I have a honda oddysey with 207k miles on it, still running strong). Doesn’t mean people are shelling out 50k on a Lexus or something shrug. Other people like to lease cars, because they like having a new car every couple of years, or buy it then when it is paid off, get a new one, everyone is different.
To those of you who buy used, how did you do it? Through a dealer? Privately? Did you have the car inspected by a mechanic before you made the purchase? If you did it through a dealer, did you get any kind of an additional warranty?
I’ve always bought cheap new cars - cash - and drive them into the ground. But my daughter, a grad student, will need a car soon and may not be able to afford to buy even a cheap new car… used are more in her price bracket but I can’t advise her on how to proceed.
@raclut, a friend of mine used to say that sending your kid to college is like buying a new Mercedes every fall, and running it off the cliff by spring, then repeating the process 4 years in a row…
Lots of us who finance our cars also work very hard.
Most everyone I know leases luxury cars. A lot of people hate having to deal with repairs. Anymore cars have lots of electronics that you need expensive equipment to diagnose. So the car manufacturers, in my opinion, have made cars so complicated, that most of the time you are tied to the dealer for fixes. In my Subaru, I had to go to the dealer to have the headlights changed and adjust. You would think that your local place could change the headlights but it wasn’t to be. The dealer charged me a fortune also.
