How Much of Your Car Should You Finance? Zero percent.

[EJ]

Re: How Much of Your Car Should You Finance? Zero percent.

Words of wisdom and so against every message the media and financial organizations throw at people today, especially the unschooled and unwise.

My first car was a $300 1967 VW Bug, then 13 years old. I had to rebuild the heater boxes and use screen door springs to keep the foot pedals off the floor, but it took me a hard several thousand miles, and living on a remote Vermont mountain top through a long hard winter. Then I sold it for $300.

The 12 years after that were mostly a nightmare of expensive leases (what was I thinking?) low down payments and lifetime terms, and even a repossession. (Repo man’s compassion quotient=0).

I’ve paid cash for every car I’ve bought since 1995. South Florida is full of highly leveraged, overpriced “dream” houses that usually have the “Dade County Duo” out front- a new (leased) Hummer3 and a new (leased) S class Mercedes. I enjoy asking “What are your payments?” while riding past on my bike. An amazing number will proudly throw out numbers over $1,000 and more a month and I just cringe for them.

Ok, my shitbox story is...

I didn't go to college right out of high school. I worked for a year, bought a new Honda Civic and drove it for the first year I was in college, then had to sell it to pay tuition. Lived without a car for a semester but hated being without a car at UMass, Amherst, as I was living-off campus. Using classified ads (no craigslist in those days), found a 1970-something Datsun 510 sedan with no rust on the body (a rarity for Datsuns) and a seized engine in one town, bought it for $250. Found the same model year as a station wagon with a rusted out body and new engine, bought it for $450. Drove the crap station wagon up to Amherst, following my brother who towed the sedan with his car. Rented an A-frame and put the new engine from the station wagon into the sedan, had a tow truck tow the other to the dump, got $40–the cost of renting the A-frame.

Total cost: $700. Car lasted through college until I lent it to a friend after I left college while in CA. Someone drove into him (not his fault).

[Pervilis Spurius]

Re: How Much of Your Car Should You Finance? Zero percent.

EJ,

Aaron Krowne recently had a similar topic on his blog.

I made remarks over there that buying a low dollar (~$3000-4000) used car every 5 years or so gets you a car with greater quality and better creature comforts with each purchase. I was fortunate that the car game was a racket I understood before I made my first purchase. I have had great success with this method. You might be surprised but the cars aren't beaters or "shitboxes" either, although you may have a different opinion .

The key of course is to find a single owner vehicle with a maintenance history.
With the internet, the man-hours invested searching is almost nil anymore, but you might have to wait about a month if you're particular.

For many of you this may be moot, if you have a high profile job.

[EJ]

Re: How Much of Your Car Should You Finance? Zero percent.

EJ,

Aaron Krowne recently had a similar topic on his blog.

I made remarks over there that buying a low dollar (~$3000-4000) used car every 5 years or so gets you a car with greater quality and better creature comforts with each purchase. I was fortunate that the car game was a racket I understood before I made my first purchase. I have had great success with this method. You might be surprised but the cars aren't beaters or "shitboxes" either, although you may have a different opinion .

The key of course is to find a single owner vehicle with a maintenance history.
With the internet, the man-hours invested searching is almost nil anymore, but you might have to wait about a month if you're particular.

For many of you this may be moot, if you have a high profile job.

Indeed, a VP Sales can't get away with driving a beater. For anyone with a job where a show car is justified because it's expected (e.g., a meaningful portion of income depends on appearances), a used luxury car is still the right way to go. For example, a three year old BMW M3 just off lease with 30k miles on it (that is, just broken in) can be had for $35,000 vs $49,000 new. Consistently avoiding the 30% haircut you get for buying new, even with cash, for the first 2 to 3 years of ownership... over time, this really adds up.

If you make enough money, you can drive whatever you want. One of the other things you can buy with financial independence is the right to eccentricity, and owning a car that's less expensive than the car everyone knows you can afford is one of them. Warren Buffett drives a Lincoln Town Car with a license plate that reads: "THRIFTY". The car's cost is a rounding error on the return he earns on his wealth daily.

I'm thinking of adopting the eccentric's car look... a Toyota Corolla or Honda Civic, because I'm concerned about pollution and fossil fuel consumption. Fifty percent of the pollution generated by a car is created in producing a car, so if I'm worried about pollution, I don't buy a new Pruis (rhymes with "Pious"), but buy a used Toyota Corolla or Honda Civic, and drive it slowly. That and an old truck, and replace the FX with the two–the Corolla for getting around, the truck for hauling stuff.

What do you think?

[jk]

Re: How Much of Your Car Should You Finance? Zero percent.

a different approach

the first car i ever purchased was in 1970 - a new bmw! cost=$3000 cash for a bmw 1600 - the first model they imported. the 2002 didn't exist yet. $3000 looks cheap, but i could have bought 2 vw bugs for that money. anyway i drove the car for 13 years and sold it after it had broken down a couple of times, and i realized that the lost day's earnings were more than the much depreciated value of the car. in general i've kept every car until it had to be junked or was worth only low 3figures.

i view the cars as a consumption item with some entertainment value along with providing transportation. i'm not interested in prestige, but i care about performance. my current vehicle is a 2005 subaru legacy gt wagon - 4 wheel drive for my beyond-ordinance-steep driveway in new england winters, wagon for cargo duty when necessary as well as for a deliberate lack-of-flash, turbo for fun - the magazines say it goes 0-50 in 5.3sec. the fun is part of my purchase calculation. the mileage isn't great, but it's not bad - about 21mpg driven with a heavy foot.

i have seen too many people who've become ill or disabled for me to postpone gratification completely.

so the piece i'd add to this "advice" thread is that when considering cost v savings, realize that you have to calculate the future value of those savings subject to assumed nominal investment returns but discounted by both inflation and the probability of you not being in a condition to enjoy that future value. there's no day like today.

[Jim Nickerson]

Re: How Much of Your Car Should You Finance? Zero percent.

As someone who made a fair amount of money treating torn-up faces on people involved in auto accidents, and having been in a significant accident in a Mercedes 300CD, from which I limped away on a sprained ankle with a bleeding forehead, and having avoided an incredible crash through either sheer luck or because of the safety tracking features of an all-time 4-wheel drive vehicle, my overriding concern in buying a vehicle is its safety features.

When one ventures out on the freeways in the Dallas-Fort Worth area, if inclined to drive the posted speed limit, it is amazing how almost everyone passes by going faster--often much faster. Highways are to my estimate filled with fools. The reason my concerns above all others is the safety features of a vehicle is not due entirely to the experience of working on torn-up faces, but more from the experience of waiting on general surgeons to explore traumatized bellies, neurosurgeons to crack open skulls to evacuate hematomas, or for orthodpedic surgeons to have teams operating on fractured legs and arms at the same time; occasionally all these things before I could get to the facial injuries. The facial fractures were often the least of the patients' problems. The strong impression all this has made upon me does not come close to taking into account those killed in motor vehicular accidents. I never lost sleep from getting up to treat those in the middle of the night who died or had to see them through some period of recovery. Automobiles, interstates, and Americans (throw in fools, drugs and booze) are a highly dangerous combination.

People fret and feel remorse over those lives lost and bodies mangled in the current wars, but those tolls are relatively miniscule compared to the annual carnage that occurs on our highways, and I apolgize for not giving you the most recent numbers, but whenever I have looked them up, they overwhelm me. What is more overwhelming is the tacit acceptance by this country as a whole of those lives lost and injuries sustained.

If I had to commute on interstates daily or be on them frequently for whatever reasons, I would personally borrow money to buy the safest car I could come reasonably close to being able to pay off.

We certainly cannot choose whether or not some fool is going to run over us or run us off the road, but we can choose to buy the safest vehicle we can afford if one must subject oneself to the risks of driving.

On the highways, I can tell you shit happens, serious shit happens. Death certainly is the easiest and least expensive way out of some of the things that can happen. No one wants to die, and I can tell you that no one I ever treated was happy with what all was necessary to try to restore them--excepting all of them were definitely happy not to be dead. Real happiness is succeeding in remaining alive and uninjured when it comes to motor vehicles despite what that might cost in the short run.

[EJ]

Re: How Much of Your Car Should You Finance? Zero percent.

As someone who made a fair amount of money treating torn-up faces on people involved in auto accidents, and having been in a significant accident in a Mercedes 300CD, from which I limped away on a sprained ankle with a bleeding forehead, and having avoided an incredible crash through either sheer luck or because of the safety tracking features of an all-time 4-wheel drive vehicle, my overriding concern in buying a vehicle is its safety features.

On the highways, I can tell you shit happens, serious shit happens. Death certainly is the easiest and least expensive way out of some of the things that can happen. No one wants to die, and I can tell you that no one I ever treated was happy with what all was necessary to try to restore them--excepting all of them were definitely happy not to be dead. Real happiness is succeeding in remaining alive and uninjured when it comes to motor vehicles despite what that might cost in the short run.

Adding a bit of levity to the discussion, eh? ;)

That's my one misgiving about buying the little Corolla vs continuing to drive my little Japanese tank–with the 20 in. wheels (Jeff loves those)–wrapped in air bags. New cars of the same model are certainly safer than old ones, and bigger safer than smaller, except for top-heavy SUVs and trucks, of course. So let's qualify the advice to say the cheapest safe car you can tolerate.

[spunky]

Re: How Much of Your Car Should You Finance? Zero percent.

EJ:
Do you mow grass ??? Your average lawnmower puts out 8x the emissions of a modern car. I will never buy a new car again , because it is a ripoff. I will always have a truck, but it isnt my primary mode of transport.


Could someone please explain to me america's sick obsession with lawns and mowing grass ???

[Jim Nickerson]

Re: How Much of Your Car Should You Finance? Zero percent.

Could someone please explain to me america's sick obsession with lawns and mowing grass ???

Pride, ever more rare among some Americans.

[WDCRob]

Re: How Much of Your Car Should You Finance? Zero percent.

Fun thread and a great article. Which I've forwarded to my better half, who doesn't understand my passion to continue in an increasingly quirky 1998 VW Golf when I 'can afford a new car.'

She's right, but thriftiness aside I live in a high density area, enjoy my bike, work steps away from the Metro and put less than 500 miles/month on the car these days.

I'm not sure I'll ever make enough money to go full-on threadbare eccentric, but we all have dreams I guess.

[Jeff]

Re: How Much of Your Car Should You Finance? Zero percent.

Okay, I've been worth well into 8 figures in recent memory, but my everyday car is a 2000 Chevy Suburban 2500 4wd beast. I use a manual lawnmower, have solar power and use extensive alternative energy technology, but I've also been put thru the windshield of a taxicab on I-55, put a tiny econobox into a telephone pole at high speed, and been hit by a cop in pursuit.

Until gas hits $600 a gallon or my net worth falls bellow 4 figures, I'm going with self preservation.

Did I mention it's paid for?

[Finster]

Re: How Much of Your Car Should You Finance? Zero percent.

As someone who made a fair amount of money treating torn-up faces on people involved in auto accidents, and having been in a significant accident in a Mercedes 300CD, from which I limped away on a sprained ankle with a bleeding forehead, and having avoided an incredible crash through either sheer luck or because of the safety tracking features of an all-time 4-wheel drive vehicle, my overriding concern in buying a vehicle is its safety features.

When one ventures out on the freeways in the Dallas-Fort Worth area, if inclined to drive the posted speed limit, it is amazing how almost everyone passes by going faster--often much faster. Highways are to my estimate filled with fools. The reason my concerns above all others is the safety features of a vehicle is not due entirely to the experience of working on torn-up faces, but more from the experience of waiting on general surgeons to explore traumatized bellies, neurosurgeons to crack open skulls to evacuate hematomas, or for orthodpedic surgeons to have teams operating on fractured legs and arms at the same time; occasionally all these things before I could get to the facial injuries. The facial fractures were often the least of the patients' problems. The strong impression all this has made upon me does not come close to taking into account those killed in motor vehicular accidents. I never lost sleep from getting up to treat those in the middle of the night who died or had to see them through some period of recovery. Automobiles, interstates, and Americans (throw in fools, drugs and booze) are a highly dangerous combination.

People fret and feel remorse over those lives lost and bodies mangled in the current wars, but those tolls are relatively miniscule compared to the annual carnage that occurs on our highways, and I apolgize for not giving you the most recent numbers, but whenever I have looked them up, they overwhelm me. What is more overwhelming is the tacit acceptance by this country as a whole of those lives lost and injuries sustained.

If I had to commute on interstates daily or be on them frequently for whatever reasons, I would personally borrow money to buy the safest car I could come reasonably close to being able to pay off.

We certainly cannot choose whether or not some fool is going to run over us or run us off the road, but we can choose to buy the safest vehicle we can afford if one must subject oneself to the risks of driving.

On the highways, I can tell you shit happens, serious shit happens. Death certainly is the easiest and least expensive way out of some of the things that can happen. No one wants to die, and I can tell you that no one I ever treated was happy with what all was necessary to try to restore them--excepting all of them were definitely happy not to be dead. Real happiness is succeeding in remaining alive and uninjured when it comes to motor vehicles despite what that might cost in the short run.

Perhaps it is time for the US government and the states to sue the automakers. Hit then up for a few hundred billion, you know, to help cover the costs of treating the injured. Whether the tort business picks up a hundred billions bucks in the process, or whether it can be spun to make demagoguing politicos look good of course is beside the point. As part of the settlement, to drive home the altruistic nature of the effort, ban all television advertisements from the airwaves. After all, they just target children and corrupt them, making them believe driving an automobile is "cool". All cartoon characters will be banned from print advertising as well. Come to think of it, ban Ronald MacDonald. He just brainwashes innocent kids into thinking saturated fat and cholesterol are cool. Meanwhile, ban the Internet. After all, people might encounter porn there. Or worse yet, ideas that might make them think the government may not be acting in their best interests, or cause them to think twice about buying stocks. Or a McMansion ... or generally to spend money they don't have ...

[Jim Nickerson]

Re: How Much of Your Car Should You Finance? Zero percent.

Perhaps it is time for the US government and the states to sue the automakers. Hit then up for a few hundred billion, you know, to help cover the costs of treating the injured. Whether the tort business picks up a hundred billions bucks in the process, or whether it can be spun to make demagoguing politicos look good of course is beside the point. As part of the settlement, to drive home the altruistic nature of the effort, ban all television advertisements from the airwaves. After all, they just target children and corrupt them, making them believe driving an automobile is "cool". All cartoon characters will be banned from print advertising as well. Come to think of it, ban Ronald MacDonald. He just brainwashes innocent kids into thinking saturated fat and cholesterol are cool. Meanwhile, ban the Internet. After all, people might encounter porn there. Or worse yet, ideas that might make them think the government may not be acting in their best interests, or cause them to think twice about buying stocks. Or a McMansion ... or generally to spend money they don't have ...

Finster, what is your point?

[jk]

Re: How Much of Your Car Should You Finance? Zero percent.

Could someone please explain to me america's sick obsession with lawns and mowing grass ???

thorstein veblen's theory of the leisure class dealt with this particular issue explicitly in 1899. the lawn originated as a piece of fertile land deliberately withheld from producing a useful crop, and thus a sign of wealth.

[Spartacus]

Re: How Much of Your Car Should You Finance? Zero percent.

So what do you think of aftermarket 5 point harnesses vs the regular seat belts?

As someone who made a fair amount of money treating torn-up faces on people involved in auto accidents, .

[DemonD]

Re: How Much of Your Car Should You Finance? Zero percent.

Someone once told me that Sacramento processes 300 accident claims a day.

You know what I find interesting though. I hear about how so many people live through horrible accidents in big, sturdy cars or SUV's. How about you have a small car with great handling so you never get in an accident to begin with? I was recently told a story of a person who smashed up her 1989 mercedes 4 door sedan, and she was told by the inspector that had she been in a less sturdy car, everyone would have been killed. When i asked her what happened, she had told me they were driving on Mulholland Dr. and had lost control of the car.

Duh.

Bigger cars = harder to control

Have yet to hear of an "overturned honda civic" but i've seen more than one ford exploder lying on the side of the road wheels up.