Are cars making folks broke?

VanillaSky wrote: We bought out 2008 Astra during Cash for Clunkers. We got $3500 for our Camaro (the Astra gets an EPA estimated 27MPG, not 28MPG, which would have been the minimum for the $4500 rebate), and because the car had been sitting FOREVER on the car lot, we got another $2000 GM cash back plus $2500 from the dealer. Now we're talking a $22,000 car for $13,000. We took out a loan for the car. We financed about $15,000 by the time taxes were included. Total cost for the loan is just a tad over $19,000. The Camaro had a slipping transmission, a knocking motor, a completely worn out suspension, rust, a beat to crap interior, and the AC had stopped working AGAIN. By the time I had the transmission rebuilt (I got a couple of quotes, the cheapest one was $1500 with me pulling and installing the transmission), the motor replaced (why rebuild a bad 305 when a good running 350 is $500?), fixed the suspension, and fixed the AC, we would have needed to put upwards of $5000 into the car to get it reliable again. We plan on driving the Astra into the ground. There's no reason at all to get less than 200,000 miles out of the car, which at our current rate, puts us at around 9 years. We have a 72 month term, so that gives us 3 years to save for a down payment. That's not considering any effects of the debt snowball we're implementing right now. Buying a new car isn't always a bad thing. It's trading it in after a year or two that bites you in the ass. My mom has a 2007 Honda Odyssey. $700+ a month payments on it, with a 7 year term. They traded in a 2000 Mazda 626 with a bad transmission on a 2005 Honda Accord in 2005. They still owed about $7000 more than the Mazda was worth when they traded it in (refinanced it, rolled some other debt in there as well somehow I think). When the Accord was just about ready to come out of its 3/36, they decided they needed a van. They impulse purchased the Oddy. Got an EX-L, which meant that it was a $32,000-ish van. They were still about $7,000 upside down on the Accord. Now she wants a new van. Some people never learn.

You had me until you said 72 months. If you can't afford it in 48, you can't afford it.

ddavidv wrote: I've never bought a new car, and never will........

Same here, but the Mrs. has a differing view.In April of '05, she bought a new Jetta for $15k She was able to sell it Sept. '08 for $13.5 with 36k miles. Nov.of '08 she bought a new Mazda3. Nice "base" model with 5speed. It came surprisingly well equipped just no power windows or locks. She bought it off the floor for $13.7k. Last month she sold it with 16K miles on it, for $13k. In March she bought a well equipped Versa Hatch for UNDER $12K. Her thinking, and I'm beginning to agree, is when you get a good deal on a new car, buy. The Jetta still had a 12k bumper to bumper and 24k warranty remaining. The Mazda still is covered for 20k bumper to bumper, and to 60k powertrain. The Versa has a 36K bumper to bumper. All of the warranties transfer at no cost. She has to travel for work and is on the road a lot. This way she is covered by the factory bumper to bumper should anything happen to the car, costing us only for oil changes(which I do)and when she decides to sell, because she was able to buy right, recovers most of her money. Me OTOH, drive a 1984 733 and during winter a '98 Forrester. And I'm on the hook every time something needs to get fixed. The heater core went last fall on the 7. Did you know that the car was built around the heater core and the entire dash has to come out? The core itself is $300? Good thing I'm cheap..I mean frugal, and figured out that a Ford Granada has almost the right size core. Some fancy soldering and I'm back in business for about $80 and three days. I'm getting too old for this.The point being, it's not a bad thing to buy new every other year or so either, if you do some homework.

I used to share your perspectves on buying new/newer. I have discovered that I'm spending about the same on car payments/insurance as I was on the E30 + maintenance/modding.

Now that I've got a car with a warranty I'm not tempted to mess with it like my previous cars.

Some of you though seem to have an air of self-righteousness about your choice to drive old jalopies. That's what seems funny to me.

I spend a hideous amount on cars... just not in the way normal people do.

The money isn't even the whole picture - if I had a penny for every hour I've spent doing something in, on or to a car I'd have, er... um... enough to buy another car!

I don't mind paying to buy a new car if I'm going to keep it a LOOOOONG time. And the warranty is nice for as long as it lasts. If left to my own devices, I would happily drive junk, but with a family to consider, new is better. I kept my last new car for 14 years, but my wife made me get rid of it.

Be careful... somebody is going to determine that the US spends more on cars than any other civilized country and has less to show for it.... and that we don't even get the coolest cars that are available elsewhere. And the worst part is, not everyone has a car.

The solution? A tax on all of those fancy cars, criminization of non-car ownership, subsidies for the poor, and a "Government option" to compete with the commercially available cars.... with the goal being that eventually everyone would chose this 'single payer' approach and only buy the Govenrment model.

I understand they'd like to call the Government car the "Satelite"... or maybe the German translation "Trabant".

;-)

Seriously, I agree that this is likely the single largest waste of money for most Americans... but $150/month cell phones, 50" flat screen TVs, annual $5000 Disney vacations, and a daily $5 cup of coffee (along with the daily $5 lottery ticket) surely can't be far behind.... being able to make bad decisions is a key part of a free society.

z31maniac wrote: Some of you though seem to have an air of self-righteousness about your choice to drive old jalopies. That's what seems funny to me.

It's the typical air of self-righteousness people like to have about their own decisions. Nothing new.

I like driving old junkers, and don't need anything else, but when I was truck shopping, there was almost nothing available used, and what was out there was way overpriced. In the end, I bought a new truck for a little more than used, with 0% financing over 4 years. Sometimes it does make sense. The wifes car was 2 yrs old, with 18k on it at 50% of the new price.

When I was a kid, it was a rarity to see a Mercedes, BMW, Porsche, or other high end car. They were generally reserved for high income earners. Now everybody's driving them.

wcelliot wrote: Seriously, I agree that this is likely the single largest waste of money for most Americans... but $150/month cell phones, 50" flat screen TVs, annual $5000 Disney vacations, and a daily $5 cup of coffee (along with the daily $5 lottery ticket) surely can't be far behind.... being able to make bad decisions is a key part of a free society.

Excellent point.

Like the doc, I'm grudgingly coming to see there's some definate merit to buying new. His wife is driving new cars for less per year than I am buying decades old bombs. And my bombs require constant maintenance.

I have some toy cars. I'd like to spend some time playing with my toys. But I can't because my time is eaten up by the regular cars. As well the house, the yard, etc.

The original article about people making themselves car poor was quite refreshing in my opinion. I was expecting some lambasting of evil car companies making us buy expensive cars. Instead, it was directed right at the buyers for foolishly spending money they didn't have. Bravo for an article promoting personal responsibility!

As pointed out above, there are so many more things to spend money on now that didn't exist years ago, and new cars now cost more in comparison to the average family income than they did years ago too. Out of all the cars I've owned, I've only bought one new one, and most likely will never buy another one.

It took a long time to convince my wife that upkeep on an older car is cheaper than car payments. All she saw was maybe a $1,500 dollar a year bill on the Porsche I was driving at the time. Once I showed her how much she would spend a year if we went out and bought a new car, she began to see the wisdom of just doing maintenance.

My "new" car now that I bought a couple of weeks ago is 5 years old and cost a fourth of what it did new, and it should run fine in the time I will own it without too much trouble. Buying new all the time is simply a waste of money for most people.

CARS do not make people broke. STUPID FINANCIAL DECISIONS make people broke. I had a car loan, the car broke. I was forced to get another loan for a car to cover the costs of both cars. My new car is still worth more than my loan. While I would prefer to be debt free I am okay with this decision because I know the value of my car will not outpace the aggressively paid down loan.

John Brown wrote: CARS do not make people broke.

I have a big lump in my collar bone that says you are wrong.

I guess I'm "brainwashed" because I like my cars.......so I guess this means that artists are "brainwashed" because they like their paintings.....

I've been arguing with people for years to stop buying new cars. Unless you have lots of money and a busy life, there is no point in wasting the money on a new car. Even when MPG is a factor it's not even worth it. You could get a new car that gets 40mpg and I would still spend less than you in one year with my 16mpg 86 Crown Vic. I'd probably do even better with my 12mpg 61 F100 (given parts are even cheaper, and fewer, and I don't burn through a set of tires every 10-12 months).

blaze86vic wrote: I've been arguing with people for years to stop buying new cars.

Stop doing that. If they don't buy them - I can't buy them from them at a significantly depreciated value. Thats bad for me, the economy and dammit... America.

Don't listen to him. Buy new cars or you are a commie pinko swine who is ruining this great country. If you don't buy a new car (with specific options I like) then the terrorists win.

New cars stop Communism, just look at Cuba.

John Brown wrote: CARS do not make people broke. STUPID FINANCIAL DECISIONS make people broke.

+Billion for Truth.

IMO

Car loan are not evil, taking out more then you can afford is a personal choice, and people are stupid most of the time.

Also taking out a 72 month loan is not bad if the interest rate is low 0-4% to keep liquidity high and invest off the rate. Rolling debt into a loan is not bad 7K at 4% is a heck of a lot better then 19.99% that a credit card would take. Now the lifestyle choice is terrible but its not a unwise thing to do to support that life style.

Dave R. Has some good idea's and they work but they are by no mean tax or rate efficient. And I have no idea where he gets 12% in this market.

I had a car payment once, just after getting out of college. Couldn't stand monthly car payments and paid it off early. Haven't financed a car since. Took me a while to persuade my wife this approach makes financial sense, but she's started to see the point now. I can't see spending more than three months' pay or so on a car. Well, not including adding some mods later...

ignorant wrote: ahh mr dave ramsey... The "I'm going to teach you how to save money through common sense, rational thinking, and stuff your dad should have taught you.. Ohhh and I'll charge you for it.." guy.

That depends on your father... my father has the financial responsibility of a 12 year old... and that could be considered an insult to some 12 year olds... Everything I know, I learned from my mother... and even she isn't perfect... after all... she married my father...

The only new car I've purchased on my own was my TDI. This is mainly because used ones in 2002 were pricey... and because maintenence on them is so important, risky as well... 7+ years and ~219K miles later, I don't regret the choice. That said, I plan to keep the car for another 200K+ miles at least...

Of course, the '07 MINI we're still paying for that sits in the dirveway and never gets driven is another matter entirely... we need to cut our losses on that one...

And I have no idea where he gets 12% in this market.

I believe he is quoting the stock market averaging 12% since it's inception. Yeah, In this market 12% is a joke.

Ian F wrote: The only new car I've purchased on my own was my TDI. This is mainly because used ones in 2002 were pricey... and because maintenence on them is so important, risky as well... 7+ years and ~219K miles later, I don't regret the choice. That said, I plan to keep the car for another 200K+ miles at least...

Time for a cam and followers ;)

All the vehicles I have owned, only one was new, have had some sort of payment attached to them. But then again, I have had all but one last well past the loan payoff date, which I rolled into another.

Right now, I have my 95 Dakota that barely runs decent but it is free and clear. I just normally put gas in it and go. Now the wife on the other hand, bought exactly what she wanted and it eats half of her available money a month for at least another year. SIGH

Brian

jlm_photo wrote:

And I have no idea where he gets 12% in this market.

I believe he is quoting the stock market averaging 12% since it's inception. Yeah, In this market 12% is a joke.

Sure since the inception of the market but not in the last say 30 year.

I swear he is factoring in the savings from the people paying down there credit cards in a lot of his numbers. Paying your credit card off to save 19-27%. is all fine and good just don't count the interest as investing.

John Brown wrote: Time for a cam and followers ;)

maybe... although they looked fine when I changed the TB a few months ago. If it does need them, I'll probably get a whole head and do some FSP-legal port matching...

I do think I may need injectors... it's starting to smoke a bit more than I'd like... and all of the other usual suspects have been checked or replaced. So the INJECTOR spray pattern may have gone ca-ca and the fuel isn't getting atomized well enough any more. New injectors would also send me down that slippery mod-path that is so financially dangerous if you own a TDI...

12% does seem rather optimistic... Hell, if my 401K was doing 12%, I could retire in a few years...

Giant Purple Snorklewacker wrote: Stop doing that. If they don't buy them - I can't buy them from them at a significantly depreciated value. Thats bad for me, the economy and dammit... America.

As I mentioned before, if people don't buy them new, then you can't buy them used. If people didn't buy them new, then there woudn't be any money to pay those that build them new, and we'd see a huge hit in the job market, in every industry. Buying old houses and fixing them up yourself doesn't keep construction contractors in business, andy more than buying a 10 year old car and working on it in your driveway keeps autoworkers in jobs.

If you can't or don't have time/space to work on a car yourself, it may NOT be cheaper to buy used an maintain them. Same thing with houses: buying vs renting these days.

I bought new 3 times in the past, and would do it again if it was a car I wanted. Did it cost me? Yes. As I said, it's why I worked hard and got a job making more than minimum wage. How come if I made $25k a year and drove a 200k mile beater, I'd be financially smart, but if I make $90k a year and driven a $30k new car, I'm financially irresponsible? Sorry, but the "I buy used and maintain it because I'm not stupid" is really just spewing Prius owner levels of smug and it's just as repulsive. I've been poor, eating Top Ramen and driving a $100 car held together with bailing wire, and I was MUCH better off financially when I had a good job and was making payments on a new SVT Contour.

ddavidv wrote: I buy lower than average price in case they get totaled, stick some money away for repairs and only purchase cars that have stellar reliability.

And here I thought you bught British and Italian cars...

Chris_V wrote:

ddavidv wrote: I buy lower than average price in case they get totaled, stick some money away for repairs and only purchase cars that have stellar reliability.

And here I thought you bught British and Italian cars...

I know Per hates this... but that sh!t right there is funny.