[QUOTE=gigi]
Do you think it’s a good idea to consider cars that were leased for three years and are being sold used? Or would they have as a rule not have been as well cared for?
[/QUOTE]
I had a couple of cars that were leased for three years or so and then returned. At least one of those I loved the car, but we were moving overseas and would have a vehicle provided, so no reason to keep the car at the end of the lease. It probably varies a lot from car to car, just like regular used cars.
[QUOTE=lieu]
Good advice, some appropriate modification of which could probably work for most people. Buy less than 3 y.o. and get a newer car with more warranty time left, later and you pay even less. Let someone else take that huge “off the showroom” hit. Just, as Shag says, be patient and make well-maintained another priority.
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Good advice, but not the only good advice. We bought our Honda Civic new and paid cash. For the first three years, maybe four, it was essentially maintenance free – warranty and sound construction ensured that we paid essentially zip for repairs the first four years or so. We paid for oil changes, nothing more. You generally don’t get that repair-free “grace period” with a used car. In addition, a Honda Civic doesn’t appear to be a very quickly depreciating asset. Sure there’s an immediate hit the second you drive it off the lot, but it retains a big resale value at all times. Maybe the ideal compromise is to buy a Civic that’s been used for about twelve months, if you can find one.
As to the OP, I wouldn’t be surprised if your friends are paying $1000/month for their cars, instead of contributing to their retirement funds. Lots of people do it. Every financial mag and newspaper states that most people don’t begin to save for retirement until it’s way too late.
Car payment $0 per month. 2001 Subaru that I bought new in November 2000, with cash. I’m keeping it unitl it’s pretty close to used up, because I won’t be able to pay cash for the next one. I may shop next year, and if so will most likely go with a lightly used vehicle, with a payment target of $300 or less on a four-year note.
I’d amend the comments concerning new vs. used to say that while I agree that from a purely economic standpoint, a 3 year old used vehicle is a better choice than new, and that probably the worst is to buy new vehicles that can last ten years or more and get rid of them after three years, I don’t have much of a problem with getting a new vehicle and keeping it for something closer to its natural lifespan. I wouldn’t (well, couldn’t) buy two new vehicles simultaneously, and even at my reasonably comfortable income level, paying out a grand a month on car payments would be wildly excessive.
Oh, wait, there’s a worse deal. Leasing two expensive vehicles (a Hummer H2 and a Chevy Tahoe), and then running way over the allowed mileage, like a frend has done. Apparently, friend is paying close to $1500/month, and, not having the cash to cover the mileage overages, can only roll them into other leases at the end of the terms. Haven’t a clue what possessed my friend to think this was a reasonable thing to do.
Nada. I got rid of it. I was paying £420 a month (~$850) and frankly I couldn’t afford it. I was getting sick of half my paycheque disappearing in various standing orders (car, loan, credit cards…) on the first couple of days of the month. I earn a decent wage but I had been overspending for years. Sure, I could always meet the bills, but I never seemed to have any spare cash while people earning half my salary did.
We’re now a one-car household and I commute by bike. Hopefully another few months of living frugally and I’ll be debt-free, and then maybe buy a cheap runabout in cash. Debt sucks. Living within your means is good.
$0–car was paid for in cash, when new, which seven years later it no longer is(duh!) Am hoping not to need a new car anytime soon.
Can’t imagine paying $1000 a month for a car–count me in the “that’s more than my rent” camp.
[QUOTE=Shagnasty]
Mine is $0 because I paid for mine used in cash and my wife got hers as a work bonus. Cars are a quickly depreciating asset and I don’t really know why people by the new ones. Used cars aren’t all about $1000 Ford Tempos with 200,000 miles. If you buy somewhere around the 3 year sweet spot or maybe even later, you can have a very nice car for a fraction of the price whether it is a Lexus or a Nissan. Only fools buy new cars (no offense to the fools around). It is just a needless money drain that literally gains you almost nothing if you are careful about the used car you get.
[/QUOTE]
I’ll tell you why I buy new cars. Every used car I have ever had has had some problem with it. Even the ones bought from dealers with a billion point inspection. I don’t know what the last person did to the car, I don’t know how it was driven, what kind of oil changes were done to it. With a new car I know exactly what’s happened to it.
I also keep my cars for a long time, I kept my last car for 11 years and had only two problems with it, one was my fault, the other was a leaky radiator that I don’t know how it happened. To me it doesn’t matter how much the car goes down in price since I’m driving it until it dies or it’s time for a new one. I would have kept my old car, but we have a baby and it was hard to put her in and out.
I can see if people keep buying cars every couple of years that it’s bad, but for people who keep their cars I find it better. I also don’t get why one would buy a used car for 15k, when a new car costs 17k. I’ve been looking, quickly, on carmax, at new and used Camerys, a bottom new car is 17,500, used that are close, though probably have a few more features, cost 16,000, it’s worth it for the extra 1500.
I hope these work:
New Camery CE $17,500
Used 04 Camery LE $15,500
I don’t know the full difference between the two, but the new one has ABS and side and overhead airbags. The used one has 61,000 miles.
2002? Is something wrong with your car(s)? Ours is from 1998 and unless it completely dies it will be around another 7-8 years, who cares what other people are buying? We think of it as transportation not status. (Nissan Altima)
My son just bought a new jeep wrangler and pays about 380 a month. Nothing down and 0% that’s zero interest. If you have to have a new car, I reccomend that interest rate.
Another person with no car payment.
We paid cash for 4 of our last 5 cars - the only exception was when they were offering 0% financing.
If your cars have been well cared and suit your needs for I can’t imagine any economically sane reason to get rid of them and assume more debt.
If someone is paying a grand a month for cars and they aren’t filthy rich, they are - IMHO - fucking idiots.
(Of course, our house is paid off as well and I have never carried a credit card balance, so I guess I’m an un-American freak.)
Bought a 2000 BMW 328Ci new in 1999 for $41k. Put $17k down and my payments were $478 per month. I paid it off in 3 years. Still have it.
Never again will I do anything like this.
[QUOTE=Dinsdale]
(Of course, our house is paid off as well and I have never carried a credit card balance, so I guess I’m an un-American freak.)
[/QUOTE]
You’re the American financial system’s worst nightmare. Sure you don’t want to mortgage your house, put the cash into mutual funds, and take advantage of some no-cash-down special offers? Just think of it – all that equity tied up in your house earning nothing! The horror! Bank presidents will go to bed hungry tonight because of you.
I pay about half what my mortgage is for my cars. I only have one car payment, but that plus insurance for a total of six cars adds up. 
I bought a 2004 Escape new in Nov. 2003.
4-year loan from Ford Credit at 4.75%. Put $4200 down and had the Ford A-Plan.
I pay $351.92/mo (only 6 months left!) and will end up having paid about sticker price when I’m done.
My brother did something similar, except for a Focus with a 6-year loan and some oil change plan. His is about $260/mo I believe.
I have 2 cars (a 1991 Mustang GT and 1998 Contour), a truck (1995 F-150), and motorcycle (2006 Honda Shadow) and my payments are $0 a month. The Mustang, F-150, and Shadow I paid cash for (I had a lucky real estate transaction and used the money to get out of debt plus by the Shadow.) Before I paid it off the Contour was $213 a month for I believe 5 years, but I paid it off early.
Back around 1999 before the Contour I had a loaded Explorer for about 6 months that had a ~$450 a month payment. Nice truck but wasn’t worth it.
My strategy for my next car will be to buy a car 2 or 3 years old and put as much cash down as possible.
Our 2004 Malibu has a couple years left @ $300-something a month, and the 2007 Impala is $175/month (we put down a large downpayment). We weren’t planning to buy another car until we had the Malibu paid off, but my '95 Buick Roadmaster finally bit the dust after 12 years of faithful service. We’re not frequent trade-in kind of people.
$1000 strikes me as a pretty big monthly payment, even for two cars.
[QUOTE=Autumn Almanac]
$1000 strikes me as a pretty big monthly payment, even for two cars.
[/QUOTE]
Not so much if you think about it. You can figure it like this (usually): For a 5 year loan, it usually works out to about $200 per month for every $10,000. So a $20,000 car is about $400 a month; a $25,000 car is about $500 a month. Multiplied by 2, and you got your $1000 a month in car payments. This is of course with putting nothing down.
It’s not fiscally intelligent by any means, but you can see it happening rather easily.
$314, with a 7 year everything but tires and wipers warranty. Currently on payment 33 of 42.
Sheckstress got 0% financing, and is on 45 of 60 at $320/mo, same warranty.
I’d also like to thank Jeep for replacing BULBS and brakepads as well as a busted seat and 2 rear windows because we didn’t like their squeaking for 0 dollars. Much obliged sirs.
[QUOTE=Shagnasty]
Cars are a quickly depreciating asset and I don’t really know why people by the new ones. . . . Only fools buy new cars (no offense to the fools around). It is just a needless money drain that literally gains you almost nothing if you are careful about the used car you get.
[/QUOTE]
Gosh, good thing you included the “no offense” to the people you insulted. :rolleyes: (Why do people do that, anyway? Does any one seriously think that if you say “No offense, but you’re a big jerk,” the insult is negated?)
I drive Honda Civics. Very unusually among cars, they do not depreciate precipitously; instead, they hold their value remarkably well. Furthermore, because Hondas run until the wheels fall off, people tend to drive the snot out of them instead of trading them in. The Therefore, if you are in the market for a Honda Civic, you will not have much luck finding one on the used market, because (a) they are very high-priced for used cars and (b) there are very, very few low mileage used Civics available. For a premium of as little as 10 to 20% over the cost of a low-mileage used, you can get a brand new Civic with zero miles on it, where no one’s ass has touched the seat except your own – and you get the car you want (trim level, color, etc.).
I have a very specific car I drive: The highest trim-level (EX) Civic Coupe (two-door), automatic (because I don’t drive stick). On any given day, there are ZERO used Civics meeting those specs in my tri-state area. Under those circumstances, I am not a “fool” to buy a new car. I get the enjoyment of having a new car, I get the exact car I want, and I bypass the aggravation of trying to find the same car as an acceptable used, which is extremely difficult to do anyway. Now, you might make a different choice for yourself under similar circumstances, but that hardly makes me a fool for making the decision I have made.
The Civic I’m currently driving has 148,000 miles on it. When it dies, I will buy another NEW Civic.
As to the OP, when I had a car payment, I paid nearly $400 a month on a car I purchased for just over $15,000. This was in 2001. That was a high payment for the car at the time, but I had 0% financing and a 3-year pay-off plan.
Might I suggest that it may make more sense to buy one car at a time than to contemplate adding two payments to your budget at once?
I have a 2005 Honda Civic that I’m leasing for $250.00 per month. Insurance is about $450 every 6 months.
When the lease runs out in a year, I intend to buy a Jeep Wrangler (always wanted one) and keep it for a long time. The idea behind the lease was that it would allow me to get a new car after just three years, and never have to worry about repairs or too much upkeep (besides an oil change every 5K miles).
The problem with a lease, however, is that I’m penalized for any miles over 12K a year. Plus, I’ll have nothing to trade in when I get a new car. I don’t anticipate leasing in the future.
[QUOTE=Edward The Head]
I also don’t get why one would buy a used car for 15k, when a new car costs 17k.
[/QUOTE]
Neither can I and Jodi makes some further excellent points about when buying a new car may actually be prudent. Like anything else though, rarely will any hard and fast rules apply to everything across the board. I tend to buy a different kind of car. I’ve saved 44, 34 and 22K respectively on my last 3 by buying carefully researched, used cars. One I’ve had for 11 years now and I’m pretty sure I’ve never spent a dime on any of them due to any neglect from the previous owners.
For some the used approach makes sense, for some it just doesn’t. It’s an option, not a rule.
[QUOTE=DudleyGarrett]
Bought a 2000 BMW 328Ci new in 1999 for $41k. Put $17k down and my payments were $478 per month. I paid it off in 3 years. Still have it.
Never again will I do anything like this.
[/QUOTE]
I’d say you got the deal of the century.
$41K car - $17K down = $24K car.
$478/mo. * 36 months (3 years) = $17,208