Lease or buy new car

[HoughMade]

....If they don't have $1000 to buy the beater they sure as heck don't need a car payment...

Well, that makes sense.

Patience and delayed gratification are a couple of values we could all stand to work on. I have had 2 cars loans in my life and I am not against them philosophically, but even back then, I made some rules for myself (or rather, adopted my Dad's sound wisdom for myself): 1) Buy what I need, not what I want, 2) Have enough saved to put down that I am NEVER upside down in the car, even the day I drive off of the lot (this requires at least 25%, maybe more, down and financing for a relatively short period), 3) pay it off early. Both of the cars I financed were paid off in under 2 years. The last one, bought in November '98, paid off in September 2000.

We then saved, and saved and saved, and the next vehicle I bought was a 2003 minivan that I bought used in late 2003 with 16,000 miles on it. Paid cash. After that, I needed a commuter car in about 2005, so we paid cash for a 1997 Grand Am with low mileage. It was a nice driving car (for several years), but no one was ever going to be jealous of me over that car. The next vehicle I bought wasn't for years- in late 2011, I bought an "old man" 2007 Silverado with 20 something thousand miles and that is what I drive today. Paid cash. It still looks and drives like brand new. We finally used up the 2003 minivan in 2013 and we bought a 2012 Town and Country....this is where I broke a rule.... no one needs a DVD player and leather everything. Anyhoo, I paid cash for that too.

I say all that to say this- in my 20s, I drove a lot of crap, but in my view, your 20s are for living poor and building for the future. Now in my 40s, I can buy what I want, as long as what I want isn't too extravagant. The freedom is glorious. I'm not telling anyone here what to do or how to live, I'm just reporting what I have done and I'm happy with the results, that's all.

 

[looney2ns]

Doc, What nerve you have to come along and talk sensible.

Its simple, if you can't pay cash, you can't afford it.
Leasing is absolute proof that loan sharks are alive and well.

Get rid of that $150 cell phone bill and the $150 cable bill, and save to buy a car.

How about this math, even young people with kids in the home can play along.

pretend you want a $300 car payment (low, I know). First car: buy a $1000 beater and have min car insurance on it. Save $300/mo in an account. After six months, take that $1000 car and sell for $1000, add your $1800 and get a $3000 paid for car. Drive that for 12 months with min insurance sell the $3000 car, add your $3600 you saved and get a $7000 paid for car. Drive it for 12 months, then sell it for $6000, add the $3600 you saved and buy a $10k car outright.

Now you're in a nice car after 30 months you own a $10k car outright, have no payments, and can be saving $300/mo towards retirement. Invest your $300/mo you are saving for 40 years at 8% return and that alone is worth a miion dollars at retirement. Or... Keep a car payment your whole life and whine that you just can't get ahead.

avoiding car payments and investingit will give you a $40,000/year income in retirement, minimum. With ZERO other investments. But I know, you have to wait 30 months to drive a $10k car... For the record, I drive an $8k car and have no car payments.

 

[hooky]

I drive a 12 year old vehicle right now. I bought it when it was 3 years old and took care of it. I've replaced the timing belt twice as a PM measure and everything else has been just regular wear and tear. If a car is costing you an arm and a leg to drive due to repairs, it's time to get rid of it. If it's just regular maintenance and repairs, keep it. My current car is going to go to my son soon and then I'll go pay cash for another 3 year old vehicle.

I've heard this and agree with it. Wealthy people ask "how much?" and pay cash. Poor people ask "what's the monthly payment?" and finance. I decided to start acting like a wealthy person. Anyone can if they'll just follow Doc's 36 month, $10K car advice.

 

[HoughMade]

...Get rid of that $150 cell phone bill and the $150 cable bill, and save to buy a car.

Funny you should mention that- I got rid of the satellite TV in 2008. I do have broadband internet, but I locked into a deal 5 years ago that promised $15 for life....and I plan on living a while. I have an antenna and a Netflix subscription. As for the cell phone...this is where my base cheapness really shows- I have a Tracfone and I only use it when I really, really need to. I pay :drumroll: about $100....per year.

Now, again, people can do what they want, but I hear a lot of complaining in the world about wages and everything else, and then I hear that people who make these complaints and claim to have no margin have deemed a lot of things necessary that I simply live without. You make your choices and live with the results.

Now to put it in terms INGO can get behind: think of the gun money.

 

[Oresti]

Can you imagine if Americans decided they would not have car payments? The average family would probably get a $7000/raise annually for the rest of their life.

I know a lot of people who live paycheck to paycheck just because of their vain need to get a new vehicle every two years.

 

[Mr Evilwrench]

I know a lot of people who live paycheck to paycheck just because of their vain need to get a new vehicle every two years.

Ya pays yer price, and ya takes yer chances. That's how it works. That's how it should work. Of course, you should learn your lessons, but there are so many things shielding us from that, that most don't.