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I made it a personal policy to always pay cash for my cars.
Case-by-case basis for me - credit is a tool. If I have the cash on hand and someone offers me 0.9% over 5 years (happened last time), I'll be happy to rent their money instead of using my own. Having a comfortable amount of cash on hand is worth something to me.
Of course, I care about as much about what car I drive as I care about what washer/dryer I have. And I will use either until they fall apart. To each their own, I guess.
Dad taught us to NEVER finance a depreciating asset- he also said live below your means and save 10% of your income EVERY YEAR, no matter what. Has worked out very well so far-
The sacrifices you make when young pay off HUGE later in life. Of course most folks now live for today and never think they will get old and have to retire.
I do the same thing with cars as you do- buy a year or two old used one that has great reviews for cash. Keep it for 10 years and do it all over again.
I would argue that a car is not a depreciating asset. People look at what they pay versus what they can trade it/sell it for but they seem to leave out all of the use they got out of it. You used it, dirtied it, repaired it, etc. You have to expect some loss in the value.
Just curious cause I have friends and many people who talk about saving "money" cause they got a lower car payment but all they did is extend their loan and are always negative equity. Don't get me wrong I like vehicles, but I'm not playing that game.
So does anyone pay off their loan and later get a good deal and buy? Not buy upside down.
Only those who like to stay in debt and/or see their car as a status symbol.
Just curious cause I have friends and many people who talk about saving "money" cause they got a lower car payment but all they did is extend their loan and are always negative equity. Don't get me wrong I like vehicles, but I'm not playing that game.
So does anyone pay off their loan and later get a good deal and buy? Not buy upside down.
I always pay off my loans because I drive my cars till they die. If I don't get at least 5 years after the last payment it wasn't a good deal IMO. My last car I bought 5 years old, paid off a 5 year loan, and drove it for another 8 years after the last payment. My current car (used as well) might not be as good as that one was (died at 315,000 miles) but I wouldn't even consider getting rid of it until the loan is paid and I get at least a couple of years more out of it.
Case-by-case basis for me - credit is a tool. If I have the cash on hand and someone offers me 0.9% over 5 years (happened last time), I'll be happy to rent their money instead of using my own. Having a comfortable amount of cash on hand is worth something to me.
Of course, I care about as much about what car I drive as I care about what washer/dryer I have. And I will use either until they fall apart. To each their own, I guess.
That’s the big if isn’t it. The thing is that most people do not have cash on hand nor can they qualify for a 0-1% loan. That’s the problem when someone throws out you can get a loan for 0-1% and save your money. Ok yes there are a few people who meet that criteria. But it’s a small group. So IF you have all that money saved strictly for a car purchase AND the rates are high enough to warrant saving that money and IF you have the credit to qualify for such low rate and IF you have the financial and job stability to make 5/6 years of payments without straining at any time then yes you can buy on credit.
Most people buy on credit because that’s the only way they can afford to buy the car they want/need/desire. Sure there are people who can drop 50-90k on a car without batting a eye. But that’s not the norm.
I guarantee you if you had the cash in hand to buy a car you’re gonna be relatively frugal in what you’re buying ( frugal as in I’ll pass on the Cowboy Lariat package for 10,000 dollars Alex) where as buying in credit the sky is the limit ( as in I’ll take the Cowboy Lariat in Platinum package for 18,000 Alex) It’s been proven over and over when buying on credit people spend more than if they handed over actual cold hard cash.
“ Hey after all it’s only another $80 a month....surely you can afford that. YOU deserve it my friend. Treat yourself......you only live once” says the man in the shark skin suit with a gold tooth and plastic smile on the car lot.
I paid off my truck after the hail storm. Very convenient that I had just enough to pay off the loan and repair the windshield. I wondered if State Farm had access to my loan papers, but I was happy it didn't get totaled. I sprang for a new hood because I didn't want to get distracted feeling like I was driving around on the surface of mars. The roof is a mess but I can't see it. The other dings look like ordinary wear and tear.
Usually I would pay off cars and then put that money in a savings account for a down payment on the next one.
Why do you have to sacrifice everything just to spend it when you're too old to enjoy it? I almost died in my '20s (I was a passenger in a car that exploded and burned to the ground. I almost didn't make it out). I realize that life is not a given and I want to live it while I CAN. I save for the future, sure. As I said, I have a savings account, a retirement account AND a car account. But I'v etaken a couple trips to the UK, a couple cruises, I spend on my car hobby and I enjoy my life NOW.
My folks and my in laws both scrimped and saved for the future and denied themselves enjoyment whole they were younger. Then my dad got post polio syndrome and can't do anything (he's confined to a wheelchair). And my in laws got Alzheimers and died. NONE of them got to enjoy their retirement.
So do what's right for you, but quit acting like it's irresponsible to do anything else.
So true!!! So many people are taking this D Ramsey type approach to live like a peasant, so they can have a great retirement, and fail to realize, it might not be fun to drive a sports car that sits very low to the ground when you are 65 or ride in a speed boat in the Carribean.
I always say enjoy life and live like you will be around in the future at the same time too.
No obituary has ever said: BIGGEST REGRET WAS DRIVING A NEWER CAR, SURE WISH I DROVE A CRAPPIER CAR!!!
I would argue that a car is not a depreciating asset. People look at what they pay versus what they can trade it/sell it for but they seem to leave out all of the use they got out of it. You used it, dirtied it, repaired it, etc. You have to expect some loss in the value.
That would make it a depreciating asset, by definition.
That’s the big if isn’t it. The thing is that most people do not have cash on hand nor can they qualify for a 0-1% loan.
In fairness, the poster I responded to was arguing in favor of buying cash, so in that context... What I'm saying is that the decision to use credit isn't necessarily a bad one, if you're in a position to choose. Then on the third (I think) hand, people who don't use credit to some extent tend to have a bad credit score, so it is a bit of a tough one.
Quote:
“ Hey after all it’s only another $80 a month....surely you can afford that. YOU deserve it my friend. Treat yourself......you only live once” says the man in the shark skin suit with a gold tooth and plastic smile on the car lot.
Yeah, there's probably a reason that "Honest like a car salesman" has never been an idiom in any language, ever.
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