Car payments: Necessary evil, or intollerable one?

With apologies to Thomas Paine...

I had a car payment after graduating from college - didn't have much savings, and my $900 LeBaron Turbo wasn't holding up too well. Found I hated making payments and paid it off about a year early.

My wife ended up deciding to stop financing cars after overpaying for a Honda Accord, so right now we've both decided that any future cars will be bought 100% down. Saving for more cars can be tricky, but I like having the flexibility of putting how much I want, when I want, in the account.

The lease thread got me wondering - how many people on the forum buy their cars outright, and who finances them?

Never had a car payment in my life.

Only reason I never have car payments is because of the warranty. Though, I usually void those....

I have done both, I prefer to just buy outright. Some times you just gotta splurge to get what you want and I don't know many peopel with 12 grand laying around for a car.

Most of my cars have cost less than $3000. The car I have now is financed, but I'll tack on an extra payment to put down on the balance every month, and any extra money I get goes towards paying it off. I also self impose a "no upgrades" discipline till it's payed off, any money I would have spent on parts like some Koni's or such goes into paying it off. No use putting parts on a car that's not owned by you yet, and could easily get totaled by one stupid move. (yours or another persons)

Haven't had a car payment for 20 years. OK, not the fanciest fleet, but nothing to ever have been ashamed of. I have better places to spend my money. My step son is super proud of his Mitsubishi , pretty car. But 500.00/ month for it? I don't think so.

I really try to avoid buying vehicles on credit; that said, I financed about 40% of the 911, even though I had the money in the bank. Worked out well given that it needed about $6k worth of repairs that had been "overlooked" during the PPI.

Unfortunately if I can't find some winter wheels within my budget I might have to break this rule and finance a truck or a small SUV.

That said, I really dislike the monthly payments on a (normally) deprecating asset.

Both.

I bought my truck new, and took payments beacause of zero interest. That deal wasn't available for the wifes Cobalt, so I paid cash.

Normally we pay cash. Since we buy new it takes a while to save up enough which is why we usually keep a vehicle for 10 years.

When i bought the Transit Connect a few months ago I could have paid cash but didn't. I figured with the 0% for 3 years offer it was better for me to keep my money in the bank earning interest and use their "free" money to buy the vehicle.

It depends on the situation. I've seen friends of mine take on $300+ montly payments just to have a new car, when a slightly used one would have treated them just as well. But then again, if you're looking at a new car, who has 12k or more just sitting around to spend on a car? Not many people. So its just about making a smart decision, looking at what you can honesty afford, and finding the car that fits that situation.

We financed our Astra. At the time, we didn't have more than about $500 saved up. Since it was cash for clunkers time, it was time to get rid of the Camaro that was getting ready to explode at any moment.

Payment is $264 a month. I can live with that. I'm not a fan of the 8% interest rate (and 72 month term), but that's what our credit was like when we bought the car, total crap. You know, "just married" credit. We could have done better if the wife weren't on the loan, because my credit was good and I had a verifiable job. Since it was C4C and the Camaro was hers, she had to be on the title of the car, and therefore, the loan and such.

Right now, we're working on paying other things off, then we'll work on the car note. Those 23% interest rate cards are insane. Thank you credit card companies for jacking up our interest rates!

I've never had a lease since I tend to keep my cars longer than most and because I've heard scary stories about excess mileage fees, condition fees and the inability to turn it in quicker than the lease period.

BUT if you are definitely going to get rid of the car at the end of the lease period and you are buying new vs. preowned then it looks to me like it ought to be attractive if there is enough payment differential between the two to make it worthwhile.

The reason I said new vs. used was because of the depreciation hit you take on a new one.

I am not against securing a loan for car but I would prefer to be debt free. Right now we are about $31,000 away from being a 0 debt household but I am looking for a house so that will not be the number for long. If you need to rebuild bruised credit or start a credit history a vehicle loan is a decent thing to have. If you can afford to buy it outright I would put the amount in an interest bearing checking account and write the checks to the loan from it. No you don't MAKE money doing this, unless of course you have a 0% loan and are collecting interest.

Yeah, the vehicle loan has improved our credit a bit, and will help come time for us to buy a house. It's a real PITA to get good financing on a house without a credit history.

Home Equity Loan = I'm improving the quality of my garage.

No collision insurance, you can deduct it.

Just refinanced at a lower rate, payments dropped $200/month. Keeping the same amount out of pocket means paying off quicker.

Neither.

I don't particularly like having a car payment, but I chose to out of want, not necessity. Having something with a warranty is nice as well as my last two E30s started to wear me down with the constant tinkering.

I figure I'll keep the current car for a couple years while paying extra, see where I'm at, then either keep it, sell it, get another project car.............who knows.

Whats a car payment?

No car payments for me. I buy the car that I have the cash for, be it a $1400 Miata or a $7500 WRX. I have enough bills to pay with rent, utilities and phone. I want my car to be all mine if I decide to sell it and go with something else.

Debt = EVIL

I mortgaged my house, and I have student loan debt. Nothing else. Ever.

Some of my friends do not understand how I have nice vehicles and never had a car loan. Its called being a cheap-ass. I would rather put money in my pocket every month than in my banker's.

I never understood financing a depreciating asset or buying a new car, but I am glad others do, for without them we would all be SOL on good used cars we can buy for cash.

I'm on the fence about the necessity of loans in general.

My wife and I have 2 car payments right now. Her minivan which will be paid off in a year and my Solstice which has a 3.9% rate. I didn't need my car but in a moment of weakness (turning 35) and driving rusty crap for most of my life I decided I was going to get something I wanted. I also plan on keeping this car far a VERY long time and with that mentality I saw no reason not to take out a loan.

But OTOH I listen a lot to Dave Ramsey and Clark Howard. Both great financial minds but with different philosophies. Dave will say don't buy anything unless you have the money and a FICO score is unnecessary because you should be paying cash for everything.

Clark says a FICO score is a necessary evil and you should have some responsible credit to necessitate that.

While I would love to pay cash for everything I tend to agree with Clark on this one. If a loan is taken out in a responsible manner then I see no reason not too.

Think about this: Work supplies company car - tool for me to cover 15 midwestern states and drive 30-40,000 annual miles for sales.

Company pays approx $575/month lease * 11 years = $75,900. (5 cars now * 2 year leases)

I have always suggested to buy outright a car and sell it after five years. $25,000 Impala worth $1,000 in five years with 175,000+ miles on it. ($48,000 spent. $28,000 left over for repairs?)

Which benefits the company? Which is the better plan overall for the company?

(there are no open options yet to pay me anything or to get an import car)

fast_eddie_72 wrote: Never had a car payment in my life.

x2

I once made two payments of $150 to a guy for a BMW e30... Does that count?

It took me three years to pay for my Dakota. Never again. I've paid cash for all my cars since. Granted... they are beaters.

pete240z wrote: Think about this: Work supplies company car - tool for me to cover 15 midwestern states and drive 30-40,000 annual miles for sales. Company pays approx $575/month lease * 11 years = $75,900. (5 cars now * 2 year leases) I have always suggested to buy outright a car and sell it after five years. $25,000 Impala worth $1,000 in five years with 175,000+ miles on it. ($48,000 spent. $28,000 left over for repairs?) Which benefits the company? Which is the better plan overall for the company? (there are no open options yet to pay me anything or to get an import car)

option a is better for them most likely, which is why they do it. they need you on time, selling for them making money. if you are driving a car with 170k miles it could potentially be a ticking timebomb. or it will need lots of little repairs, maintenance items, suspension rebuild parts. all the time the car is in the shop is downtime you are not selling because the tool to move you from A to B to C is broken.