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Cars - what is your strategy in adult life? Back it up.

  • We have had plenty of threads over the years on leasing vs. buying. I may have even taken part in some of those. I am contemplating this right now, though, and I am curious as to how others in similar life spots think and conduct these transactions. And I am particularly interested in the math that backs up those choices.

    Probably going to be long. For perspective, mid 30's, married, 1 kid, big dog, hope to have more kids. Good jobs.

    I have always felt that the best strategy would be to buy used, maybe 1-2 years old. Pay in cash. Sell in 2 years. Rinse and repeat. However, there are issues with that. First, most bumper to bumper mfr warranties run out at 3 years/36k...not to mention right around 36k seems to be when a lot of "wear and tear" expenses (tires, brakes, etc) seem to hit. In addition, to get something decent and reliable you're shelling out probably 20-25k in cash and then hoping to get, maybe 15k back after 2 years? Plus you're spending out of pocket on tires and other items. Obviously this depends on the vehicle, but it's never fun to pull that kind of money out of savings. If you take out a loan, you're doing worse. APRs on used car loans are worse than new. Either way, you're on the hook to try and sell a used car every 2 years and negotiate yourself a good deal, you're saddled with some potential expenses and it seems the savings would be marginal over what you would be paying for a lease or even a new vehicle purchase.

    Others may say, buy used (or new), pay off, and drive into the ground. I always think 'no thanks' when it comes to that strategy. "Driving into the ground" is not appealing to me. I have owned cars outright going back to my college days, and even today in my adult life when we have a little more money, it's tough to stomach unforeseen $1k - $3k repairs, not to mention the hassle of dealing with the wear and tear shit I mentioned above. Obviously there is a convenience factor that comes into play here, too. Do I want to deal with having my car in the shop to repair the transmission for a week? Also, what is your true cost here? If you buy a used car for $23k (just guessing at a normal-ish cost for a reliable vehicle that can transport a family of 3/4 + a dog - after financing costs) and drive it for 10-12 years, and pay another $8k in expenses/repairs before it dies, is that really that good of a deal? That's still $260/month or so (not counting financing) and you're dealing with a bunch of shit.

    I have really liked leasing. In fact, I pretty much just factor a car payment into my cost of living. If I can keep my car payment in the $250-$350 range, I don't find it too taxing. Plus I get to drive a new vehicle every 2-3 years and never have to worry about a thing. Mileage has never been an issue for me due to proximity to the office. In addition, if you figure a 2 year lease at $300/month, that's $7200 you're paying over the life of your lease. In most cases, if you purchase a new car off the lot for say $30k, it is going to depreciate at least $7200 over two years and you're going to be stuck with the hassle of trying to sell it. The thing with leasing at costs similar to what I outlined above is that you're driving a pretty basic car. Nothing special. Which I guess is fine.

    On my last go round after my most recent lease expired, I decided I wanted a particular vehicle that the mfr was not offering lease deals on. The new car sales APRs were great, the purchase incentives were great, the residuals were great, so I decided I could take the plunge and buy new, offload in 2-3 years before the bumper to bumper was up, and wind up with a very reasonable monthly payment in the $300-$400 range (after getting cash back from the used car sale).

    I am in the process of completing this transaction and it's working out like I expected. The problem is, yeah, I drove a very nice vehicle for 2-3 years, and loved it, and I'm getting cash back, but I don't really want to swallow a $600/month payment anymore. Sure I can afford it, and I know I'm getting it back on the back end but it would be so great to have an extra $2-$300/monthly to put towards future tuition or retirement or a new mortgage for a bigger house or whatever. So I don't think I want to go down this path again, even though it is working out pretty much how I thought it would.

    Now I am looking at new options. Where to go? I have been looking at leasing a new Dodge/Chrysler/Jeep but after sitting down and discussing the pricing, the deals aren't as great as they look in the paper. So I'm supposed to sell my vehicle, which is bigger and still nicer than your new 2012's to save $60/month? (and yeah, I know I'm still getting $7-$10k for my used sale, but still).

    I'm just kind of torn at this point as to where to turn next and thought I would hear some opinions. Would really be curious to hear opinions (and math) of like minded individuals in similar places in life.

    Caveat - and please don't turn this thread into a flame war of this kind. I am not interested in any kind of new or used vehicle that is not a GM, Ford, or Chrysler.

    Knibb High football rules

    WhiteBoyHatcher

  • WhiteBoyHatcher said...

    We have had plenty of threads over the years on leasing vs. buying. I may have even taken part in some of those. I am contemplating this right now, though, and I am curious as to how others in similar life spots think and conduct these transactions. And I am particularly interested in the math that backs up those choices.

    Probably going to be long. For perspective, mid 30's, married, 1 kid, big dog, hope to have more kids. Good jobs.

    I have always felt that the best strategy would be to buy used, maybe 1-2 years old. Pay in cash. Sell in 2 years. Rinse and repeat. However, there are issues with that. First, most bumper to bumper mfr warranties run out at 3 years/36k...not to mention right around 36k seems to be when a lot of "wear and tear" expenses (tires, brakes, etc) seem to hit. In addition, to get something decent and reliable you're shelling out probably 20-25k in cash and then hoping to get, maybe 15k back after 2 years? Plus you're spending out of pocket on tires and other items. Obviously this depends on the vehicle, but it's never fun to pull that kind of money out of savings. If you take out a loan, you're doing worse. APRs on used car loans are worse than new. Either way, you're on the hook to try and sell a used car every 2 years and negotiate yourself a good deal, you're saddled with some potential expenses and it seems the savings would be marginal over what you would be paying for a lease or even a new vehicle purchase.

    Others may say, buy used (or new), pay off, and drive into the ground. I always think 'no thanks' when it comes to that strategy. "Driving into the ground" is not appealing to me. I have owned cars outright going back to my college days, and even today in my adult life when we have a little more money, it's tough to stomach unforeseen $1k - $3k repairs, not to mention the hassle of dealing with the wear and tear shit I mentioned above. Obviously there is a convenience factor that comes into play here, too. Do I want to deal with having my car in the shop to repair the transmission for a week? Also, what is your true cost here? If you buy a used car for $23k (just guessing at a normal-ish cost for a reliable vehicle that can transport a family of 3/4 + a dog - after financing costs) and drive it for 10-12 years, and pay another $8k in expenses/repairs before it dies, is that really that good of a deal? That's still $260/month or so (not counting financing) and you're dealing with a bunch of shit.

    I have really liked leasing. In fact, I pretty much just factor a car payment into my cost of living. If I can keep my car payment in the $250-$350 range, I don't find it too taxing. Plus I get to drive a new vehicle every 2-3 years and never have to worry about a thing. Mileage has never been an issue for me due to proximity to the office. In addition, if you figure a 2 year lease at $300/month, that's $7200 you're paying over the life of your lease. In most cases, if you purchase a new car off the lot for say $30k, it is going to depreciate at least $7200 over two years and you're going to be stuck with the hassle of trying to sell it. The thing with leasing at costs similar to what I outlined above is that you're driving a pretty basic car. Nothing special. Which I guess is fine.

    On my last go round after my most recent lease expired, I decided I wanted a particular vehicle that the mfr was not offering lease deals on. The new car sales APRs were great, the purchase incentives were great, the residuals were great, so I decided I could take the plunge and buy new, offload in 2-3 years before the bumper to bumper was up, and wind up with a very reasonable monthly payment in the $300-$400 range (after getting cash back from the used car sale).

    I am in the process of completing this transaction and it's working out like I expected. The problem is, yeah, I drove a very nice vehicle for 2-3 years, and loved it, and I'm getting cash back, but I don't really want to swallow a $600/month payment anymore. Sure I can afford it, and I know I'm getting it back on the back end but it would be so great to have an extra $2-$300/monthly to put towards future tuition or retirement or a new mortgage for a bigger house or whatever. So I don't think I want to go down this path again, even though it is working out pretty much how I thought it would.

    Now I am looking at new options. Where to go? I have been looking at leasing a new Dodge/Chrysler/Jeep but after sitting down and discussing the pricing, the deals aren't as great as they look in the paper. So I'm supposed to sell my vehicle, which is bigger and still nicer than your new 2012's to save $60/month? (and yeah, I know I'm still getting $7-$10k for my used sale, but still).

    I'm just kind of torn at this point as to where to turn next and thought I would hear some opinions. Would really be curious to hear opinions (and math) of like minded individuals in similar places in life.

    Caveat - and please don't turn this thread into a flame war of this kind. I am not interested in any kind of new or used vehicle that is not a GM, Ford, or Chrysler.

    tl:dr

    Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. - Groucho Marx

    tGreenWay

  • Jesus Christ just buy a fucking car.

    SpartanElement

  • Buy a car that is 1-year old because it depreciates greatly once you roll it off the lot.

    I leased once and would never do it again, but might be wise for those who sell real estate or in sales where you take your clients in your car which should be a recent model.

    I always preferred a Buick because the engine lasts forever--it is about point A to point B, but then you look like you are driving Grandpa's car, maybe a bad look, but Grandpa turns out is a wise old man.

    I have always had trouble with Fords and had constant repairs with them, especially under the hood--rebuilt engine, electrical stuff, radiators, etc.

    PassTheRock

  • I did not read your entire essay. I just wanted to let you know that the rate on a new 2012 vs a used 2011 is marginal at best. We're talking somewhere around 2.99 vs 3.25. When you're looking at a 20k loan, that doesn't translate to very much extra interest at the end of the day.

    TravisotCosmos

  • I'm going to need a few more pages of information before I can comment on the situation

    This post was edited by CORNER BLITZ on 4/15/2012 at 10:41 AM

    signature image

    Behold the walls of Sparta: 10000 men and every one a brick.

    CORNER BLITZ

  • My strategy is simple...buy a new BMW for me every 5 years and a cpo BMW for my s/o every 4 years...I have a 335i right now and will upgrade to a top end 5 series next. I might even buy a 1 series for my nephew when he turns 16 in 3 years.

    tVargMan Prime

  • We own both our cars outright. They are 8+ years old. We will drive them til they die as we watch our insurance premium decrease each year.

    Gomer

  • I bought new. Vehicle was $25,800. After supplier discount and incentives, it was $23,100. Trade pay off took care of taxes. 0% interest for 60 months and the payment is $385/month. When it is paid off, it will have roughly 45,000 miles on it and it will still be worth $13k or so.

    Big Ten Referee

  • Gomer said...

    We own both our cars outright. They are 8+ years old. We will drive them til they die as we watch our insurance premium decrease each year.

    My good friend has a Saturn that he bought new in 1997 for around $12k. He is still driving it 15 years later with 230k miles on it.

    Big Ten Referee

  • Big Ten Referee said...

    I bought new. Vehicle was $25,800. After supplier discount and incentives, it was $23,100. Trade pay off took care of taxes. 0% interest for 60 months and the payment is $385/month. When it is paid off, it will have roughly 45,000 miles on it and it will still be worth $13k or so.

    That sounds nice. Did you lay anything out at delivery? What kind of vehicle?

    Knibb High football rules

    WhiteBoyHatcher

  • WhiteBoyHatcher said...

    That sounds nice. Did you lay anything out at delivery? What kind of vehicle?

    Sign and drive. Mazda CX-7.

    Big Ten Referee

  • Dude, Spartan Rocky territory there.

    We try to buy used. Lease turn-ins at around 36k then pay them off. If you're a smart shopper, you can get a great car for 30% of the original cost, particularly if you're not picky about the brand. Saab (RIP) was a really good buy here in GA. My last 9-5 was $14,900 with 36k. Paid it off a few years back and it is still going strong at 80k. New one would have cost me $40,000+ IIRC. On the other side of the same coin, a 5 year old Honda is almost as expensive as a new one. You have to be smart about the brand to make this work.

    Don't post poop!

    SeeRockCity

  • Your going to lease. Why bother asking?

    EdMartinsLoan

  • I don't have the patience to read through the enitre post - I think you are asking what people do about cars. We used o lease when you could get a 35,000 dollar car for about 350 a month. Those days may e coming back but dried up over the past five years. We switched to buying used outright. Targeted expensive cars with 30-40k miles and 3-5 years old. Started with a 2003 s-class Mercedes with 42,000 miles fo $30,000. Jags are notorious for losing value as well.

    signature image

    It's not what Izzo, Dantonio and Hollis are accomplishing, its the way they are accomplishing it

    Munnburger2

  • I don't have the patience to read through the enitre post - I think you are asking what people do about cars. We used o lease when you could get a 35,000 dollar car for about 350 a month. Those days may e coming back but dried up over the past five years. We switched to buying used outright. Targeted expensive cars with 30-40k miles and 3-5 years old. Started with a 2003 s-class Mercedes with 42,000 miles fo $30,000. Jags are notorious for losing value as well.

    signature image

    It's not what Izzo, Dantonio and Hollis are accomplishing, its the way they are accomplishing it

    Munnburger2

  • I wish I could lease. I drive 65 miles+ everyday.

    And yes, I'm still driving the rusted Ford I was driving 10 years ago.

    signature image signature image signature image

    Formerly Venomous Green Duck. Join Date: Nov. 2004 # of posts: 17,867.

    VenomousGDuck23

  • Buy used. Pay cash. Drive till the wheels fall off. Repeat.

    This country was built by people who worked hard then went home and had just a few too many every night. Then went back to work.

    SBSpartan

  • Munnburger2 said...

    I don't have the patience to read through the enitre post - I think you are asking what people do about cars. We used o lease when you could get a 35,000 dollar car for about 350 a month. Those days may e coming back but dried up over the past five years. We switched to buying used outright. Targeted expensive cars with 30-40k miles and 3-5 years old. Started with a 2003 s-class Mercedes with 42,000 miles fo $30,000. Jags are notorious for losing value as well.

    I don't have the patience to read your post twice!

    I bought a new 08' Hyundai Elantra outright a few years out of college. we bought my wife an 09' Toyota Matrix with 40,000 miles for 11,500 in 2010. We may not drive them till they die per say but so far combined we are probably under $1500 in regular maintenance and one weird repair on the Toyota. Until that number really starts going up we will continue to drive these vehicles. The wife has a long commute so my guess is in about 4 years we will be looking to get her something newer, especially if we were have a kid or 2 in the meantime. Actually my guess is we would be thinking about a second kid at around the same time as long as kid #1 in a year or two goes well. The Toyota will probably have around 150,000 miles at that point. The Elantra just hit 50,000, I am guessing we keep it around about 6 more years or till it dies. In the meantime we may buy a small truck to pull a small boat, so that could change everything around, who knows. When we do buy we will probably look to new or slightly used route again, looking to buy outright if possible or get 0% on new if that is still around. Not a big fan of the lease route.

    This post has been edited 2 times, most recently by Martin Spartan on 4/15/2012 at 8:22 AM

    Martin Spartan

  • Buy a new car every 5 years or so. In a 2 car household it translates to keeping cars about 10 years.

    Wow. Amazing that I was able to keep that to less than 10,000 words.

    Sparty is our mascot, we are Spartans.

    ConQueso

  • Big Ten Referee said...

    I bought new. Vehicle was $25,800. After supplier discount and incentives, it was $23,100. Trade pay off took care of taxes. 0% interest for 60 months and the payment is $385/month. When it is paid off, it will have roughly 45,000 miles on it and it will still be worth $13k or so.

    ditto. I bought new. 1998 Explorer. Think it was $27k. Paid it off in 4 years and I still have it. 85k miles, still worth $3.5k. After 5 years of no payments, I bought a 335i, and it's been paid off since 2010.

    If you can handle it, it's a good idea to keep a paid-off heap in the garage. If things really go south you can sell the newer one and still have transportation.

    FIJI239 81

  • bought a car this winter. bought new, because incentives plus employee discount made new the same price as a 2-year-old used. credit union loan was for 1.9%, so i took the manufacturers money instead of financing terms. plus i get the full warranty. 2nd car is now paid off and still driving. unless there are issues with the new car, i will keep it until paid off before getting another. if it starts being a problem, will trade it in sooner. the key is reliability, i want to have confidence that the wife and daughter won't be stranded on the side of the road. i always drive the old car because i have a work vehicle for my commute, so i don't put many miles on it.

    leasing never works for me, it seems i always go over, even a 20,000 miles a year lease.

    Turf

  • I bought a new truck in 2007. It will be paid off in November and I only have 35k miles on it. I plan to drive it for awhile.

    ColonelAngus

  • I buy used. One to two years old. Drive into ground as Florida you can put 150k on a car with no problem. I hold the cars for about 6 years or more and then basically give them away. I drive a lot so leasing is out of the question. I pay cash and never finance. Holding for 6 years has worked for me. I buy high end luxury cars so I don't get bored with the ride. That's me and not having a car payment in two cars for 5 to 6 years is great. Put more in retirement etc.

    This post was edited by Tanfan on 4/15/2012 at 9:14 AM

    Keeping the sunshiners in check since 2000.

    Tanfan

  • Buy lightly used. Put a shit ton of miles on it. Pay cash if you can, or pay it off as quickly as possible. End up with Tanfan cheddah

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    Dr Leo Spaceman

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