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Old 02-03-2008, 04:24 PM   #21
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It's not so much the loan but moreso buying a car way outside of your means (which is perpectuated by the ability to borrow the money for it). People have shifted their mentality to feeling like they're entitled or even required to have a nice new car regardless of their financial situation.

A coworker of mine bought a BMW 527 in 1997 while living in a garden apartment and earning less annually than the car cost. I think he was paying $650 a month on a 72 month loan. He's still in that garden apartment while everyone around him owns a home. So much for impressing everyone.

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Old 02-03-2008, 04:44 PM   #22
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Here's why a lease works for me. Three year lease, Honda exl approx. $25000 fully loaded, $300 per month nothing down, sign and drive (12000 miles per year). To buy would cost $483 amonth for 60 months @ 6% interest with nothing down. The equivalent time to pay off this vehicle @ $300 a month @6% would be 9 years. Then I own a 9 year old car with 108,000 miles on it. After the first three years you start to put money into the car for maintenance, tires, brakes, trans and radiator flushes, tuneups ups etc. Otherwise I can have a brand new car every three years.

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Old 02-03-2008, 04:53 PM   #23
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Or you can own a used one that you arent paying interest on and that is yours to keep. Leasing is like renting, it is throwing money out the window as far as I can tell. You pay $4000 a year to "own" a car basically... whereas it costs me about $1500 a year to actually OWN one that I can sell whenever I like, because it is mine. After paying $12000 over three years you return the car and still have nothing, you have to go get another...

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Old 02-03-2008, 04:55 PM   #24
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Quote:
Originally Posted by joejaz
Here's why a lease works for me. Three year lease, Honda exl approx. $25000 fully loaded, $300 per month nothing down, sign and drive (12000 miles per year). To buy would cost $483 amonth for 60 months @ 6% interest with nothing down. The equivalent time to pay off this vehicle @ $300 a month @6% would be 9 years. Then I own a 9 year old car with 108,000 miles on it. After the first three years you start to put money into the car for maintenance, tires, brakes, trans and radiator flushes, tuneups ups etc. Otherwise I can have a brand new car every three years.
PS. I drive a 97 Ford Taurus. Last year I spent $2800 on the trans. Over $500 on the coolant system. Over $300 on brakes. Right now my Taurus is at R&S getting the radiator flushed and the heater fixed, also backfiring --- I have 108,000 miles on it. Wow, I own it. Lucky I only drive 15 miles to work. You will always have a carpaymt whether it's a lease, new car or used becuse you have to maintain it. The lease eliminates the major maintenance.
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Old 02-03-2008, 05:23 PM   #25
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At the "practical" vehicle level, I think some of the low end cars carrying 100k/10 year powertrain warranties are a nice sweet spot. As an example, the Mits Lancer is under 14k. Sure, it's not a great looking car, can't tow a boat, and you won't impress anyone. Even if you had to finance 100%, pay it off in 3 years and you have 7 more on warranty. What I see more happening is someone that can buy this car and pay it off in 3 years would rather buy something like an Acura TL and rationalize that they can make the same monthly payments and have a nicer car. The part they ignore is that same payments means a 72 month loan and by that time, the car is just about worthless and ready for an overhaul.

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Old 02-03-2008, 05:35 PM   #26
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$4000 a year can rebuild a car... if you pay that EVERY YEAR, then you have a lemon... I always drive cars with >100k miles on them and own them for 5 years or more and only have to pay for regular maintenance. Both of our cars are 100k+ mile cars and we have owned them for years and the most we have spent in any given year was $400... that was last year, out of 6 years on each car.

We all have our own philosophy, but I think we can agree as a whole that the American way is debt... we have less savings and greater debt in the history of our nation at this point than ever before. I never saw my parents buy a new car, never saw my grandparents buy one either... I also never saw them carry any debt other than a mortgage. Which is MUCH more than I can say for my coworkers and neighbors today, who make three times as much annually.

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Old 02-03-2008, 05:50 PM   #27
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No offense Joe, but you are talking about a taurus. They are known for being pieces of crap, especially the transmissions.
The other thing is, after 3 years a honda accord is still worth close to 12 grand, therefore your still paying the same money if you were to trade it in, and you would be gaining equity on a car. The other thing is a honda accord from my experience if taken care of can be a nice car for at least 180k miles. Then the sad thing is it is still worth around $3-4k then.

Unless you have a transmission, a motor or something really major going out every single year you would still be saving money over car payments.



Oh, well. I'm one of those people who buy older cars for around a thousand in decent condition, or needing a repair that is mostly labor, then do it myself. I drove my last car for 2 years, I spent a grand total of $600 in 2 years including oil changes. The transmission did go out, but I just junked the car and got $150 back on that. The car looked nice, good interior, just needed a timing belt when I got it.
Went to a used car lot, found a decent car for $1500 yesterday, buy them before the car place repairs them, they will sell them for 100-200 over what they traded them in for. If it lasts 2 years I'm essentially paying $60 a month, and I save money not having to pay full coverage insurance. If it gets totaled I replace it with another reliable used car. Basically I'm paying 240 a month less in car payments, and 100 a month less in insurance, no to mention there is no interest.

Not directed at Joe or anyone in particular, just a soap box moment:
I'm not out to impress people. My cars have always been ok looking, but mechanically sound. It's a mode of transportation, not a compensatory mechanism for inadequacies with a boring life or inability to get women(if single or in midlife crisis) or to impress a neighbor who doesn't give a crap anyway, and if they do it is a sad sad thing. If you can afford to pay cash for a car that you like great, go for it, but if want to buy something that will keep you in debt well beyond when the car is worth anything, think twice about it.

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Old 02-03-2008, 05:57 PM   #28
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"We will pay off your OLD car!!" Yeah, we will roll it into your NEW loan and send you out of the lot upside down on the loan already! Heh... gotta love the American way... funny how fiscal mismanagement is driving our economy into the pooper, yet everyone can justify thier debt... becuase if they couldnt, they wouldnt have it would they? Phenominal shift in society.

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Old 02-03-2008, 06:57 PM   #29
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It doesn't end with cars. My idiot sister bought an overpriced house with no money down and went upside down on the same day. Not only that but the market started a slow downward turn and now she's got to be upside down by at least 50k. Sad.

I don't think I know a single person (in real life that is) that isn't carrying a car loan (if not two) and 10k+ in credit card debt. People who have owned their home for 10 years likely have already rolled a huge debt into their home refinance a couple years back and have already built it back up. All it takes is a minor turn towards a recession and we have the highest level of bankruptcy and foreclosure since the depression. WTF.

Why? A bunch of spoiled brats who think they deserve everything they want. There are so many brand new cars I'd love to put in the garage. I've got my eye on an 08 GT500 and the new Challenger. I could buy both in cash but I don't really think I need the cars. I think knowing I can do buy them is almost as cool as actually owning them (ok, that's a lie I tell myself).

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Old 02-03-2008, 07:09 PM   #30
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I like you Bobby... I do. You are correct... I love it when I have banks or CC companies try to sell me on thier credit cards because they have such a low APR... I am like, why do I even care what your APR is? I dont know what my current one is! Why? Because I pay off the card monthly, like you are supposed to. We use Discover because of the cash back rewards and charge almost EVERYTHING. Credit cards are great, many of them offer great rewards, and I travel 4 days a week so they are super convenient... BUT you have to be a big boy or girl and pay off what you just purchased.

It is amazing to me all of the ppl that I meet who ask me how my wife and I can plan to retire early on what I make alone... well we dont have all of the crap that they have and we dont drive new cars like they do and we dont buy anything that we cannot pay for. A great quote from a wise man "If you want to live like no one else, you have to live like no one else!" You cannot build wealth if you are trying to keep up the APPEARANCE of wealth... aha...

I fly with flight attendants that make 1/5th what I do, and thier cars alone cost 3x what mine does. I listen to them bit#$ all week long about thier dire predicament... no kidding?! But of course they deserve the car, the house, the $1500 laptop etc... because ppl in debt can justify it in thier own way. If they couldnt justify it, they wouldnt be in debt, it is the justifying that gets them in trouble. It isnt a $30k debt on a car, it is only $600 a month! HA No, it is your soul...

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