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Post by walkerdill on Feb 14, 2019 14:14:05 GMT
I just bought a new car 2 weeks ago. Financed it for 7 years but it's no luxurious car it's an Hyundai Elantra. I figure its a pretty safe bet that the car will still be around in 7 years just based on the warranty. I don't drive that much so it wont be getting a whole lot of miles on it. Plus my monthly payments are under $250. I have had all older cars my whole life. I was so sick of breaking down constantly that it's worth the car payment to not be sitting on the side of the road a few times a year & paying out the money for the repairs.
I don't understand people who have $500+ mo. payments but that's just because I could never afford that. On top of that the insurance has to cost a pretty penny.
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Post by bigbundt on Feb 14, 2019 14:30:51 GMT
Cars and trucks seem to be a lot more expensive than they were even ten or fifteen years ago. But people are buying them because they can get "reasonable" monthly payments spread out over an insane amount of time. I saw one not too long ago for 96 months. 8 YEARS! We don't have an issue buying new because we keep our cars for a long time (and we know the maintenance history) but we put a lot down and don't finance for more than three years and usually pay it off early anyway.
Seems like a lot of people are living too close to the edge because with payments, they can "afford" these things. I see it all the time with friends buying houses too. "Our mortgage broker told us we could afford $X amount!" and they buy houses at the top of their budget range and then complain they have no money for improvements or furniture. And if some system goes down? Roof needs to be replaced? They simply can't afford to replace it without getting a loan. We had friends we thought were in a similar financial situation buy a house about a same time that we did but they bought at nearly twice what we did with very high HOA dues. Within a year they had a new golf cart, boat, new SUV, new Jeep for teenage child, replaced all carpet and hardwood in a 4,000+ square foot house, went on a few expensive vacations, etc. We couldn't understand how they were able to afford everything but just chalked it up to not ever knowing others' finances. But then their dishwasher went out and the wife was stressing about finding the money to replace it. It really spoke to me that although it appeared they had this great lifestyle, an unexpected $1,000 expense was enough to create stress. Now the husband is constantly bragging about the Zillow value and talking about rolling over equity in the house to get into something even bigger (while not knowing even the basics of taxes and real estate restrictions) and they fight a lot about it. The wife works way than she used to as well.
That isn't how I want to live. We under buy and pay cash for as much as possible while building savings.
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Post by 16joy on Feb 14, 2019 14:35:37 GMT
I'm not surprised considering the way they appear to hand out loans. Unemployment is very loan and it's a car salesman paradise. One commercial on an Atlanta radio station advertises putting someone in a brand new car with a credit score in the 500s. Yikes.it seems people aren't thinking long term. Do public schools teach personal finance these days?
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Post by warrior1991 on Feb 14, 2019 14:46:25 GMT
I knew a guy years ago who wanted to buy a new car but he had horrible credit, so he begged his grandfather to co-sign. Promised his grandfather he would make the payments, etc, etc. Drove the car from the dealer and life went on. Well, as far as I knew. A few months later, his friend and I were getting ready to go out to a comedy club for his birthday that night. He calls us screaming mad because someone stole his car. He went out after work and his car was gone. We drove to his work to pick him up and when he got home, there was a message on his machine (this was before cell phones) from the bank that they were picking up his car that day. He was mad, why would they take his car when his grandpa would cover the payment. We still went out to the comedy club anyway and the friend and I had a great time, but the car owner was fuming the whole time. Oh and guess who didn't have money with him, and needed us to pay for his ticket and meal. Needless to say the friendship ended shortly after.
Turns out the guy never made the first car payment (over $600). Never planned to. When the bank called the grandpa about the missed payment, the grandpa said to repo the car. The guy had his car repo'd on his birthday.
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Post by Merge on Feb 14, 2019 14:52:44 GMT
Wow, $70K for a truck! That's insane.
Personally, here in Texas, I see lots of people driving expensive trucks on their daily urban commute. These are probably not people who need a big pickup truck for work purposes. Making that choice just because you like driving a truck is fine, I guess, if you can afford it, though I personally would like to see people who don't really need hauling capacity make a choice to buy more fuel efficient vehicles. Based on the the info in the OP, though, it seems a lot of those people may not actually be able to afford the truck, and they are definitely a status symbol among some people here, as are high-end, large SUVs. I drive a 2015 Kia Sorento that I bought last year for $17K, less the $5K we got for trading in my old Mini. So I paid $12K for a car that makes me happy and meets my needs. I don't see any need to upgrade, though we could certainly afford it. On the rare occasion that we need to haul something that won't fit in the Kia, I think it makes more sense to rent a truck for the day than to pay every day for a giant truck and its gas.
People make lots of bad financial choices, though - including buying homes and paying for vacations they cannot afford, or taking out enormous student loans to go to an 'elite' school and get a degree that will not allow them to pay off the loan - so it doesn't make sense to me to pick on car owners specifically. I'm not a Dave Ramsey "debt is always bad" person, but I do think as Americans we don't understand how to use debt effectively and with minimum risk to manage cashflow. It does take some discipline, but I think the takeaway here is that we can't always judge someone based on their use of debt.
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Post by papercrafteradvocate on Feb 14, 2019 14:55:47 GMT
I was an executive at my last job. The executive parking area was full of luxury vehicles and my little Saturn. Everyone - even some of our warehouse employees - liked to tease me about my car. I would smile and not mention the fact that I paid cash for my car. When I quit that job, I had enough money in the bank to live off of for at least two years. That was so much better than driving a luxury car to work every day. We just bought a new car last week. Well, new used! (2018). Brand new, the car I bought sells for $35,000. It’s not a luxury car by any means. We put half down and financed the rest (to build credit as we had been debt free for 10 years and had ZERO credit which is “worse” than bad credit, lol). The norm now is 72 month financing—when we went to sign they had us at 72 months when we specifically requested 48 months. I made sure that the final loan papers clearly stated that we had no penalty for early pay off (they did) so we signed a 72 month no penalty loan (we have the payment set up from our bank account to pay $X a month automatically for 40 months to pay it off early). I asked the Finance guy why they automatically did 72 and he said it’s rare that people want less months—they’re going for the least monthly payment possible. (Therein lies part of the problem, doing that makes one think the car they are buying is affordable and not beyond their means) I live in a neighborhood where it’s not uncommon everyday to see Mercedes, BMW, Ranger Rovers, Cadillac and several other “exotic” cars and tons of SUV’s and the average home cost is over 1/2 million. (Definitely not ours!!) that is more the norm than the exception. I swear it’s rare to see a Ford or Chevy pick up unless you’re a contractor. I see all this on display every day and take comfort that I don’t feel any need to compete with that—We are likely considered outliers here! 🤣 I drove my previous vehicle 16 years and took good care of it. Our other vehicle is 19 years old and we just had all that rebuilt to 98% brand new. They may as well be able to afford it, and I’m not judging based on their cars or homes, but seeing what real estate goes for here and knowing the cost of these vehicles—I know that there are a crap ton of things I know I’d rather do than have house payments in the $3000, $4000, $6000 range or a car payment over $400!!! I have a sibling who purchased a new truck, and their payment was $700 a month—-YIKES!!! Cars ARE expensive and I’m thrilled that I have no regrets in what I chose, what we paid, and isn’t going to break us!
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janeliz
Drama Llama
I'm the Wiz and nobody beats me.
Posts: 5,633
Jun 26, 2014 14:35:07 GMT
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Post by janeliz on Feb 14, 2019 15:19:56 GMT
Cars are damn expensive. I don’t count other people’s cash, though, so I assume if you’re driving it you can afford it.
My husband would happily drive a piece of wood attached to 4 wheels. I like pretty things and I’m perfectly comfortable with the idea of financing a car. Shopping for a car together is like our Vietnam.
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johnnysmom
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Posts: 5,682
Jun 25, 2014 21:16:33 GMT
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Post by johnnysmom on Feb 14, 2019 15:24:48 GMT
Cars are damn expensive. I don’t count other people’s cash, though, so I assume if you’re driving it you can afford it. My husband would happily drive a piece of wood attached to 4 wheels. I like pretty things and I’m perfectly comfortable with the idea of financing a car. Shopping for a car together is like our Vietnam. lol, here too. Though we're both ok with financing I'd rather finance something smaller. We're hoping to soon be in the market for a (lightly used) SUV for me.....my only "need" is a 3rd row. He is really pushing for a Yukon or Tahoe for the extra leg room for 6' tall ds; I'd be fine with a Toyota Highlander at half the price He'll likely win, but man I could think of better things to spend that couple extra hundred on each month
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sassyangel
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Posts: 7,456
Jun 26, 2014 23:58:32 GMT
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Post by sassyangel on Feb 14, 2019 15:27:05 GMT
I’ve already been looking at cars for my next one. I want to make a smart choice, this time. *glares at the money pit Blazer out front*. Living where I do, 4WD/AWD is a necessity. But I’m quite happy to downgrade to a small SUV to be able to get a much newer, certified used vehicle for a more friendly price.
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sassyangel
Drama Llama
Posts: 7,456
Jun 26, 2014 23:58:32 GMT
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Post by sassyangel on Feb 14, 2019 15:31:46 GMT
Listening to Dave Ramsey you hear callers every day that owe $35k+ in a car and only make $35k/year. It’s unbelievable the amount of money people spend...money they don’t have so they end up with $500-800 car payments and wonder why they’re broke. BTW, his guidelines for vehicles are pretty good: all of your cars, and anything with a motor, should not equal more than half your annual salary because you don’t want your money tied up in things that go down in value. We like Dave Ramsey's advice. I was in agreement with his car-debt advice for years until it hit me one day...my paid-for Dave vehicle was nowhere near as safe as newer models (5 years and under). So my new stance is, at what point do we consider a newer vehicle safety "insurance?" Is it an investment in your own life? I read a statistic recently that said something like 70% of auto fatalities are from vehicles older than 2005 or something. In other words, modern technology has come a long way in safety, and in my opinion it's foolish of Dave to look at it only as a depreciating asset and not consider how important the safety aspect is (even if that means financing part of it). Watch this video. Toyota Corolla 1998 vs 2015 youtu.be/xidhx_f-ouUThat’s actually a good point about newer cars being much safer.
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freebird
Drama Llama
'cause I'm free as a bird now
Posts: 6,927
Jun 25, 2014 20:06:48 GMT
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Post by freebird on Feb 14, 2019 15:40:20 GMT
You would (or not) be surprised by the amount of ppl that don't even have insurance. I once took a call for a guy that had a newer escalade, needed a windshield, no insurance *at all*. wtf.
We can't register our cars in Texas without proof of insurance. Is it not like that up there?
You have to have insurance, so some ppl will get it, then drop it after they register the car!
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freebird
Drama Llama
'cause I'm free as a bird now
Posts: 6,927
Jun 25, 2014 20:06:48 GMT
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Post by freebird on Feb 14, 2019 15:51:42 GMT
Lot of new car hate here. LOL I drive a KICK ASS car, that I don't "need", can't drive when there's snow on the ground (lol - I live in Mo), and that is completely ridiculous and impractical at times. But it's my dream car and I love it. It also HAULS ASS. It's also brand new (well, almost, it's an 18 now). The perks you get from buying a new car are great and I'll probably drive a new car the rest of my life. I love not having to have an inspection (missouri), having a warranty, not having to worry about little crappy stuff breaking or going wrong, having something dependable. I have no house payment, so screw it, I want it, I'm having it. And it's a tax write off because I use it for business.
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smartypants71
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Posts: 5,706
Location: Houston, TX
Jun 25, 2014 22:47:49 GMT
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Post by smartypants71 on Feb 14, 2019 16:01:18 GMT
Well, I am totally fine with financing my cars. I love having a new car with all the bells and whistles and I don't really give a sh&t what Dave Ramsey says. I feel safer in my new car. I don't have much debt other than my mortgage, my retirement is in a good spot, and I make more than enough money to afford the car I have.
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Post by crazy4scraps on Feb 14, 2019 16:04:11 GMT
DH manages two auto repair shops and has been in a industry for over 30 years. It baffles him the number of people who will walk away from a $3000 repair and buy a new car and sell the old one. People figure out a way to fork out a few hundred bucks every month for the payment but aren't prepared for the repair bills This was us a couple years ago, and I’ll tell you why. DH had been driving a 2004 Silverado with a diesel engine that would easily run for another 150K miles that we bought new back in the day. He maintained it well the entire time, kept it clean, etc. In spite of all that the cab corners were rusted through, brake and fuel lines needed to be replaced, injectors were on the way out, and, and, and. When it was all added up the cost to fix it was between $5-8K depending on which things we picked to repair. Before doing anything, we took the truck in to our friend at the dealership and asked her what the retail on it would be if we fixed it. The total retail value of the truck wouldn’t even be worth the cost of the repairs! And the worst part is, the truck was 13 years old, so spending that money wouldn’t be the end of it because with something that old there is always another shoe waiting to drop. We ended up keeping the old truck because it has a plow on it that we still use occasionally, spent some money getting the brake and fuel lines replaced but that was it. He bought a two year old truck for something like $53K which we both thought was absolutely insane, new it would have been over $70K. When we were in the looking phase, we’d be driving down the road and he would say, “There’s fifty grand, and there’s fifty grand, and THERE’S fifty grand...” every time we passed a truck. It’s totally nuts. Our first HOUSE was $55K!
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Gennifer
Drama Llama
Posts: 5,002
Jun 26, 2014 8:22:26 GMT
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Post by Gennifer on Feb 14, 2019 16:30:32 GMT
This was us a couple years ago, and I’ll tell you why. DH had been driving a 2004 Silverado with a diesel engine that would easily run for another 150K miles that we bought new back in the day. He maintained it well the entire time, kept it clean, etc. In spite of all that the cab corners were rusted through, brake and fuel lines needed to be replaced, injectors were on the way out, and, and, and. When it was all added up the cost to fix it was between $5-8K depending on which things we picked to repair. Before doing anything, we took the truck in to our friend at the dealership and asked her what the retail on it would be if we fixed it. The total retail value of the truck wouldn’t even be worth the cost of the repairs! And the worst part is, the truck was 13 years old, so spending that money wouldn’t be the end of it because with something that old there is always another shoe waiting to drop. We ended up keeping the old truck because it has a plow on it that we still use occasionally, spent some money getting the brake and fuel lines replaced but that was it. He bought a two year old truck for something like $53K which we both thought was absolutely insane, new it would have been over $70K. When we were in the looking phase, we’d be driving down the road and he would say, “There’s fifty grand, and there’s fifty grand, and THERE’S fifty grand...” every time we passed a truck. It’s totally nuts. Our first HOUSE was $55K! Yeah, I think people have unrealistic ideas about trucks, and how expensive they are. We had to replace ours because our daughter rolled it last month. It was a diesel, with low miles... we drove it something like 6K miles a year. We really expected to keep that thing forever. ¯\_(ツ)_/¯ We debated buying something comparable, but couldn't find anything in as good of shape. Plus, the newer model years has an aluminum body, which was a big selling point. I live in a remote area with extreme weather. My kids drive 20 miles to school/work, and 10 miles of that is in a canyon that isn't regularly plowed... we got 12" of snow overnight. There's also no cell service for the last few miles. We NEED reliable, safe vehicles. We need 4WD. We need expensive tires. We need a truck bed, because we also have to haul our garbage to dumpsters 5 miles away. (Having said that, I also have a "fun" summer car. It's frivolous and impractical, but dammit. It's fun.)
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Post by crazy4scraps on Feb 14, 2019 16:45:04 GMT
I also want to say that $35K these days isn’t truly getting you into anything luxury. For a passenger car or small SUV, it gets you something a little better than the base model. My Escape is nice, but it’s by no means a luxury vehicle. Sorry, it’s just NOT. I’m not even really a ‘bells and whistles’ kind of girl since most of that stuff I never bother to take the time to learn how it all works, so why would I pay extra for stuff I’m never going to use? (Moon roof and worthless navigation system, I’m looking at YOU.) I also think part of the issue is that to get the features you actually do want or need, they come bundled with a bunch of other crap you don’t want or need. That’s how they hook you.
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Deleted
Posts: 0
May 11, 2024 6:17:42 GMT
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Post by Deleted on Feb 14, 2019 16:49:13 GMT
We wanted a Honda truck.
We could have bought used, 2 years old, 50,000+mikes and $25,000 or buy it new, no miles and $38,000. Used car prices are outrageous here. There is no way that I am paying over $10,000 for a high mileage used car.
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Post by FuzzyMutt on Feb 14, 2019 16:56:11 GMT
DH manages two auto repair shops and has been in a industry for over 30 years. It baffles him the number of people who will walk away from a $3000 repair and buy a new car and sell the old one. People figure out a way to fork out a few hundred bucks every month for the payment but aren't prepared for the repair bills I had a car I absolutely loved. I drove it for over 10 years. When I bought it, it had 13 miles on it. I "traded" it in at over 265,000 miles. Over the years I'd had some piddling repairs (leaks, sensors, batteries...) at some point a water pump and at 140,000 I had the transmission rebuilt. I ONLY traded it in because I'd put off alot of deferred maintenance, and it would have been about 4000 to pass inspection and get it right. I loved that car. Every day, it started. Never ever not once did it leave me stuck somewhere (transmission went at home.) The day I traded it, the engine and transmission were just fine! But doing the math, I could put that money into a bunch of repairs, or a downpayment on a small sedan and be a quarter of the way to paid off... on a new car. I still miss it. I would have bought the exact same car brand new if I could have. The car I bought is coming up on 100,000 miles. It's been a good car, but it isn't my Impala.
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Post by crazy4scraps on Feb 14, 2019 17:05:50 GMT
Yeah, I think people have unrealistic ideas about trucks, and how expensive they are. We had to replace ours because our daughter rolled it last month. It was a diesel, with low miles... we drove it something like 6K miles a year. We really expected to keep that thing forever. ¯\_(ツ)_/¯ We debated buying something comparable, but couldn't find anything in as good of shape. Plus, the newer model years has an aluminum body, which was a big selling point. I live in a remote area with extreme weather. My kids drive 20 miles to school/work, and 10 miles of that is in a canyon that isn't regularly plowed... we got 12" of snow overnight. There's also no cell service for the last few miles. We NEED reliable, safe vehicles. We need 4WD. We need expensive tires. We need a truck bed, because we also have to haul our garbage to dumpsters 5 miles away. (Having said that, I also have a "fun" summer car. It's frivolous and impractical, but dammit. It's fun.) DH bought his current truck (was two years old when we got it) thinking he would make double payments to pay it down quicker (it’s a work vehicle paid for by the company, but not the primary one he uses for his business). His thought was that he would turn it over within 1-2 years, trade it in or sell it while it still has decent value and get another two year old used truck and hopefully be a bit ahead of the game since we obviously held onto the old one for way too long. Yeah, no. When he asked about the value of it recently, thinking the extra payments should have netted him at least a little equity, that wasn’t what happened. Our friend basically said even if he sold it outright himself, the blue book on it wasn’t much more than the amount still on the loan and that was WITH us making extra payments since we got the thing! Ouch.
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Post by gmcwife1 on Feb 14, 2019 17:40:31 GMT
DH manages two auto repair shops and has been in a industry for over 30 years. It baffles him the number of people who will walk away from a $3000 repair and buy a new car and sell the old one. People figure out a way to fork out a few hundred bucks every month for the payment but aren't prepared for the repair bills This was us a couple years ago, and I’ll tell you why. DH had been driving a 2004 Silverado with a diesel engine that would easily run for another 150K miles that we bought new back in the day. He maintained it well the entire time, kept it clean, etc. In spite of all that the cab corners were rusted through, brake and fuel lines needed to be replaced, injectors were on the way out, and, and, and. When it was all added up the cost to fix it was between $5-8K depending on which things we picked to repair. Before doing anything, we took the truck in to our friend at the dealership and asked her what the retail on it would be if we fixed it. The total retail value of the truck wouldn’t even be worth the cost of the repairs! And the worst part is, the truck was 13 years old, so spending that money wouldn’t be the end of it because with something that old there is always another shoe waiting to drop. We ended up keeping the old truck because it has a plow on it that we still use occasionally, spent some money getting the brake and fuel lines replaced but that was it. He bought a two year old truck for something like $53K which we both thought was absolutely insane, new it would have been over $70K. When we were in the looking phase, we’d be driving down the road and he would say, “There’s fifty grand, and there’s fifty grand, and THERE’S fifty grand...” every time we passed a truck. It’s totally nuts. Our first HOUSE was $55K! This is my parents too Their 2003/2004 truck just died. The estimates to fix it was over $6,000. The truck isn’t worth putting that much into. It’s great on the outside, but really high milage. They’ve driven it from Washington state to North Carolina twice and toured the US on the way back both times! I think they’ve also driven it to Arizona a few times. My mom doesn’t overpay for anything. They just bought a newish car to replace the truck. Trading the truck in was the best way to get rid of it. In my town we see more small houses and nicer cars. We bought a smaller house so we wouldn’t be house poor and could afford other things. We don’t have fancy cars (2005 Toyota Tacoma, 2007 Toyota 4Runner, 2013 VW Jetta), but we do each have a car. We bought both Toyotas used and have had them for many years. The Jetta was also used and our price was $3000 under blue book. For me it’s not a one size fits all situation. I remember being so poor I owned a beater car that didn’t even have working reverse. Dh and I take very good care of our cars, many people have no idea how old they are.
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Post by karinec on Feb 14, 2019 17:47:54 GMT
I think a lot of people don't investigate the long-term reliability of cars when they buy - they just buy based on looks or trends. It's one thing to want to own a car forever, but will that car actually last forever?
The vehicle I purchased in 2013 turned out to be a lemon. I had it for four years, after two broken axles and countless trips to the dealer, I asked the manufacturer to buy it back, which they did. I bought a new car in 2017, and I researched the hell out of it before I bought. My number one criteria was reliability. I'm pushing 54, don't drive a whole lot, but I don't want a car payment when I'm in my 60s or 70s. I intend to keep my car for a very long time and I think that this model is up to it.
I totally get wanting to have a fun or exciting car when you're young...but paying what ultimately amounts to a down payment on a new house? No thanks. I think the other thing not being addressed when these studies are published, is the gap between wages and inflation. Everything costs so much more now and wages are not keeping up with the cost of living.
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Gennifer
Drama Llama
Posts: 5,002
Jun 26, 2014 8:22:26 GMT
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Post by Gennifer on Feb 14, 2019 18:10:00 GMT
Yeah, I think people have unrealistic ideas about trucks, and how expensive they are. We had to replace ours because our daughter rolled it last month. It was a diesel, with low miles... we drove it something like 6K miles a year. We really expected to keep that thing forever. ¯\_(ツ)_/¯ We debated buying something comparable, but couldn't find anything in as good of shape. Plus, the newer model years has an aluminum body, which was a big selling point. I live in a remote area with extreme weather. My kids drive 20 miles to school/work, and 10 miles of that is in a canyon that isn't regularly plowed... we got 12" of snow overnight. There's also no cell service for the last few miles. We NEED reliable, safe vehicles. We need 4WD. We need expensive tires. We need a truck bed, because we also have to haul our garbage to dumpsters 5 miles away. (Having said that, I also have a "fun" summer car. It's frivolous and impractical, but dammit. It's fun.) DH bought his current truck (was two years old when we got it) thinking he would make double payments to pay it down quicker (it’s a work vehicle paid for by the company, but not the primary one he uses for his business). His thought was that he would turn it over within 1-2 years, trade it in or sell it while it still has decent value and get another two year old used truck and hopefully be a bit ahead of the game since we obviously held onto the old one for way too long. Yeah, no. When he asked about the value of it recently, thinking the extra payments should have netted him at least a little equity, that wasn’t what happened. Our friend basically said even if he sold it outright himself, the blue book on it wasn’t much more than the amount still on the loan and that was WITH us making extra payments since we got the thing! Ouch. Really? I wonder if it’s regional. There’s a big variance based on gas vs. diesel, and smaller full-size vs larger ones, but they seem to hold value really well in my area. Almost TOO well. Same thing with Subarus in Utah. Used ones are a lot more expensive than they are in other states.
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Post by jemali on Feb 14, 2019 18:10:51 GMT
One of my coworkers traded in her car for a newer one. She bragged the new one was “only” however much more per month. Yeah, but how many more months did she add?
Another friend who buys and sells cars very frequently says “You just have to accept that you will always have a car payment”. Oh no I do not!
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pyccku
Pearl Clutcher
Posts: 2,817
Jun 27, 2014 23:12:07 GMT
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Post by pyccku on Feb 14, 2019 19:13:27 GMT
One of my coworkers traded in her car for a newer one. She bragged the new one was “only” however much more per month. Yeah, but how many more months did she add? Another friend who buys and sells cars very frequently says “You just have to accept that you will always have a car payment”. Oh no I do not!I worked at a car dealership for about 5 years. I said something about leases not making sense to me because you would never actually own the vehicle. The finance manager said "well, you just have to accept that you'll always have a car payment - it's like rent or food, just something you'll always pay for each month."
Yeah, that is the sort of belief that allows him to lease cars - but I don't accept that you'll ALWAYS have a car payment. My own car (2013 Prius) has been paid off for about 2 years now. i just paid off DH's car (2015 Sienna). Both should last us another 5+ years, hopefully more since they are Toyotas. We will be retiring about that time and that may be in Europe, where we hope to not need a car at all.
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AmandaA
Pearl Clutcher
Posts: 3,502
Aug 28, 2015 22:31:17 GMT
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Post by AmandaA on Feb 14, 2019 19:21:22 GMT
DH bought his current truck (was two years old when we got it) thinking he would make double payments to pay it down quicker (it’s a work vehicle paid for by the company, but not the primary one he uses for his business). His thought was that he would turn it over within 1-2 years, trade it in or sell it while it still has decent value and get another two year old used truck and hopefully be a bit ahead of the game since we obviously held onto the old one for way too long. Yeah, no. When he asked about the value of it recently, thinking the extra payments should have netted him at least a little equity, that wasn’t what happened. Our friend basically said even if he sold it outright himself, the blue book on it wasn’t much more than the amount still on the loan and that was WITH us making extra payments since we got the thing! Ouch. Really? I wonder if it’s regional. There’s a big variance based on gas vs. diesel, and smaller full-size vs larger ones, but they seem to hold value really well in my area. Almost TOO well. Same thing with Subarus in Utah. Used ones are a lot more expensive than they are in other states. Your assessment holds true where I am in the Midwest. DH has seriously been looking for a new to him work truck for over 2 years and cannot find one (diesel but no other frills) for under $30k that doesn’t have at least 150k miles regardless of the year. And I am guessing quite a few people here would be pretty judgemental about what we paid for the “good” truck used.
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PrettyInPeank
Pearl Clutcher
Posts: 4,691
Jun 25, 2014 21:31:58 GMT
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Post by PrettyInPeank on Feb 14, 2019 19:24:20 GMT
We like Dave Ramsey's advice. I was in agreement with his car-debt advice for years until it hit me one day...my paid-for Dave vehicle was nowhere near as safe as newer models (5 years and under). So my new stance is, at what point do we consider a newer vehicle safety "insurance?" Is it an investment in your own life? I read a statistic recently that said something like 70% of auto fatalities are from vehicles older than 2005 or something. In other words, modern technology has come a long way in safety, and in my opinion it's foolish of Dave to look at it only as a depreciating asset and not consider how important the safety aspect is (even if that means financing part of it). Watch this video. Toyota Corolla 1998 vs 2015 youtu.be/xidhx_f-ouUITA with that (though I think cars up to 10-12 years old are still reasonably safe). We're car shopping for ds right now (he hit a deer last month) and he was finding 1989 Jeep Wranglers (his dream car), I was like no way in hell. Anyhow, we gave him a budget ($8k), mileage max (125k), age (newer than '11) and distance from us. Gotta say, there's not a lot out there with those perimeters. One we went to look at, drove 2 hours, got there and the mirror was taped up with duct tape.....this was a large dealership, wtf. I can see why people take out car loans, we do (though we try to keep it to one loan at a time) but you gotta keep it reasonable. Btw, thank you OP for posting this article. Each week I have to find an economics/business article for my economics class, this week I'll be adding this one to the discussion forum. I'll be curious to see if I get any comments from the typical college kids and how they feel about this. If I do, I'll share. ETA: here's what I posted in my economics class forum: I completely agree it's all within reason (age of car/safety/price). I did a lot of research and watched a lot of crash videos to help make our decision.
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Post by needmysanity on Feb 14, 2019 19:27:19 GMT
What else is shocking is how many people have these luxury vehicles but can't pay the $500 deductible when they get in an accident. I worked for a collision center for 6 years and at least once a month we would have a high end car sit in our lot for weeks because the person couldn't pay the deductible.
You would (or not) be surprised by the amount of ppl that don't even have insurance. I once took a call for a guy that had a newer escalade, needed a windshield, no insurance *at all*. wtf.
I'm not shocked - we saw that all the time at the collision center. My best friend is a fraud investigator for Progressive so I get all the stories - it's rampant in California.
Same here. BUT in my neck of the woods, people grab insurance to get the registration and then drop the insurance. Time for renewal? Rinse and repeat.
Yup - they get it for a while then stop paying. It's too normal.
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Post by crazy4scraps on Feb 14, 2019 21:03:22 GMT
Really? I wonder if it’s regional. There’s a big variance based on gas vs. diesel, and smaller full-size vs larger ones, but they seem to hold value really well in my area. Almost TOO well. Same thing with Subarus in Utah. Used ones are a lot more expensive than they are in other states. He was very surprised to learn it had gone down in value as much as it did. We’ve paid down about $10K on the principal of the loan, have three years left, and the value she gave him on trade was about what we still owe. If we sold it ourselves we would get more out of it of course but then you’re dealing with that. We didn’t trade anything in, and the interest rate was low enough that it didn’t make sense to pull money out of our investments to put a big chunk down because he planned from the start that he wasn’t going to keep it very long. What sucks is that he really likes the diesel and they are so hard to find used and in good shape around here.
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mallie
Pearl Clutcher
Posts: 3,253
Jul 3, 2014 18:13:13 GMT
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Post by mallie on Feb 15, 2019 15:14:14 GMT
Timely thread in that we just saw a new financial advisor and one of his offhand comments was that one of the main ways he sees people overspending is on their cars. He says he is amazed at how much people will spend on their cars and the loans dealers will make to people who really cannot afford them. He said he has tried to counsel people that if they bought a reasonable car and banked/invested/put in their retirement fund the difference between that payment and the payment on an expensive car, they would have a tidy nest egg, but people don't want to worry about the future.
I had a young guy at work, turned 18, who was able to get a car loan from the dealer for a massively tricked out muscle car -- brand new. Kid was a college student, worked no more than 20 hours per week and somehow he got a loan for $32K. And that is one way people get into trouble.
I also know that people have no concept of math, real cost or the opportunity cost of spending money that could be used for other things. Saw it last year at the store when the tax refunds came in and people are coming in to blow $500+ on crappy discount junior clothes. Even if you ignore the idea of saving the money or paying off a bill, what about wasting that much money on disposable clothes? They also do not get that the tax refund is not "free money" -- I can assure you from listening ot my customers, that the majority of them think it is FREE money from the government. They do not get that it is their money that the goverment is returning to them. No idea.
At the heart of it is, IMO, that people are not being taught basic, financial competency or even more basic life-necessary math skills.
When a customer comes up to me with two items and asks how much they would cost because they cannot add the two items? And it happens all the time? We have failed generations of people with "new" math. When I say, " Well, you have two items that cost $5 each, so that is $10." They are flummoxed because, "But they are $4.99, no t $5." I say, "Just round up to the nearest dollar--" "What does round up mean?" ANd on and on and on. When people cannot do that kind of math, they cannot understand what their spending choices are going to cost them long term.
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Post by crazy4scraps on Feb 15, 2019 15:43:24 GMT
Timely thread in that we just saw a new financial advisor and one of his offhand comments was that one of the main ways he sees people overspending is on their cars. He says he is amazed at how much people will spend on their cars and the loans dealers will make to people who really cannot afford them. He said he has tried to counsel people that if they bought a reasonable car and banked/invested/put in their retirement fund the difference between that payment and the payment on an expensive car, they would have a tidy nest egg, but people don't want to worry about the future. I had a young guy at work, turned 18, who was able to get a car loan from the dealer for a massively tricked out muscle car -- brand new. Kid was a college student, worked no more than 20 hours per week and somehow he got a loan for $32K. And that is one way people get into trouble. I also know that people have no concept of math, real cost or the opportunity cost of spending money that could be used for other things. Saw it last year at the store when the tax refunds came in and people are coming in to blow $500+ on crappy discount junior clothes. Even if you ignore the idea of saving the money or paying off a bill, what about wasting that much money on disposable clothes? They also do not get that the tax refund is not "free money" -- I can assure you from listening ot my customers, that the majority of them think it is FREE money from the government. They do not get that it is their money that the goverment is returning to them. No idea. At the heart of it is, IMO, that people are not being taught basic, financial competency or even more basic life-necessary math skills. When a customer comes up to me with two items and asks how much they would cost because they cannot add the two items? And it happens all the time? We have failed generations of people with "new" math. When I say, " Well, you have two items that cost $5 each, so that is $10." They are flummoxed because, "But they are $4.99, no t $5." I say, "Just round up to the nearest dollar--" "What does round up mean?" ANd on and on and on. When people cannot do that kind of math, they cannot understand what their spending choices are going to cost them long term. I have to disagree with part of that last statement in your post. I don’t think we can blame people being dumb on new math. My third grader has successfully learned how to add numbers together (even big numbers), has learned to subtract, multiply and divide, how to round up (and down) and is currently learning fractions all with “new” math instruction techniques. I worked at a bank for almost a decade (in the 80’s and 90’s), and I’ve come to the conclusion that there are just a lot of dumb people walking around out there.
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