Buy, Finance or Lease - the Car Conundrum

[Polish_Silver]

keeping the car forever

give them meticulous maintenance, and run them until there is nothing left of them. There is no reason why you can't get 250k+ miles out of a modern vehicle. Absolute cheapest per mile way to own a car. . . ?

My experience with toyotas and honda is that they can last that long. My friend kept a Toyota pick up for 230k miles--- one way to the moon.

None of my toyotas or hondas has ever "worn out" all were perfectly good vehicles when I sold them, under wifely pressure to increase social status with a newer car.

In Pennsylvania the company I worked for had a lot of mechanical engineers. One of them swore the Hyundai sedan was the best car he ever had, in terms of transportation per dollar.

[santafe2]

Re: Buy, Finance or Lease - the Car Conundrum

not for me - I pay what I can afford in cash. But it's been awhile. Americanos seem to own Lease Central. That's what all the dealerships were pushing. A relative bought a Honda Civic. Three grand down - that was their prescribed limit on a lease down payment - and $187 a month, with a three year buyout of $13,600. At that point maybe they would have another $3K to throw in, financing (8.9% at the dealership today) the balance over 3-5 years. Crank those numbers up against a cash sale of $18,600. Yowza.

This in an EJ classic. Only buy a car you can afford which is a car you can pay for in cash. I'd link that post but it's late. If you haven't read it, it's a good life lesson.

[GRG55]

Re: New car sucker timing

This is exactly what my neighbors did on a lease. The payments were exactly the same for a new one! How could we go wrong.

Wrong, wrong, wrong . . . .

Decades pass and through bubble and bust, feast and famine, FIRE and flood, human behavior stays exactly the same...

[GRG55]

Re: Buy, Finance or Lease - the Car Conundrum

This in an EJ classic. Only buy a car you can afford which is a car you can pay for in cash. I'd link that post but it's late. If you haven't read it, it's a good life lesson.

santafe2 is correct. It's a pre-financial crisis classic titled: "How Much of Your Car Should You Finance? Zero percent"

EJ started the thread in November of 2006 and the last post was by don in September of 2010. Not bad in this world of 15 second sound bites and short attention spans

Here's the link:

http://www.itulip.com/forums/showthr...e-Zero-percent

[GRG55]

Re: New car sucker timing

i'll bite: sedan with slightly flashier color scheme and bigger engine?

As corny as this is going to sound, and "right" or "wrong" here's what this starving student did:

1. Acknowledge the husband but be attentive to the wife (apparently 98% of family car buying decisions are made by the wife - I think the remaining 2% is a measurement error);
2. Use all my product knowledge to explain the benefits of owning the practical dirt-coloured sedan;
3. Clue 1: Wife's body language doesn't seem particularly receptive whenever describing any of the "economical and practical" benefits (remember this is less than two years after the Arab oil embargo and memories of gasoline line ups, the economy is in a recession and she's looking at a box with cloth seats and blackwall tires);
4. Get wife to tell me more about her family by asking if the back seat will be sufficiently roomy for the kids (carefully phrased to avoid any potential for a double entendre);
5. Clue 2: Wife opens up, forgets about the car and goes on and on to me about her kids, her home, her neighbourhood, etc;
6. Convince wife to persuade husband to sit down with us so we can all have a good chat;
7. Inject a series of questions into the conversation that she has to answer with "Yes"
   • I'll bet you live in a really nice neighbourhood? "Yes"
   • I'm sure you have a home your family is proud of? "Yes"
   • Your kids look up to their Dad, don't they? "Yes"
   • Your husband is a really hard worker, isn't he? "Yes"
   • Your husband deserves a nice car, doesn't he? "Yes"

Less than 2 hours later the paperwork was done, the silver hardtop had a fresh wash, a full tank of gas and was headed down the road...and I banked one of my largest commissions for the summer.

I am not really a "people person"; as a "gearhead" I much prefer messing with machinery over messin' with people, but that one summer taught me more about human behaviour and human psychology than anything else I have ever done...

[jpatter666]

Re: keeping the car forever

My experience with toyotas and honda is that they can last that long. My friend kept a Toyota pick up for 230k miles--- one way to the moon.

None of my toyotas or hondas has ever "worn out" all were perfectly good vehicles when I sold them, under wifely pressure to increase social status with a newer car.

In Pennsylvania the company I worked for had a lot of mechanical engineers. One of them swore the Hyundai sedan was the best car he ever had, in terms of transportation per dollar.

We recently bought a (newish) Hyundai sedan -- previous year model. I got an unusually good deal and at the end the salesman admitted that Hyundai corporate had told them to mark the car as sold to help the numbers and they *had* to get rid of it.

To make an odd story even odder, we were prepared to pay cash, but got an outlandish offer. Three years at 0.0. 0.0!

And $1000 off to take the deal. Was a bizarre offer from corporate finance, but we took it since all the risk on their end and we got another grand to boot.

So the wife is happy (sometimes you just need to forget thinking strictly financial and remember happy wife, happy life....) and yeah, we'll drive this sucker into the ground. It *is* a very nice car though.

[don]

Re: keeping the car forever

we'll drive this sucker into the ground.

We always do. On the Hyundai the difference in a pre-owned with 30k or less miles was about $5 grand. Not enough of a savings to forgo the extra mileage, the 10 year drive train warranty, 5 year general warranty, etc. I'm driving my 2nd Lexus sedan, both bought pre-owned. There the savings was more substantial, with a good ride that should last 200,000 miles.

[flintlock]

Re: Buy, Finance or Lease - the Car Conundrum

Lots of modern cars will make it to 200k miles and beyond with little or no repairs. Its not just Toyota and Honda anymore. In fact, I'd say there isn't a 5-10% difference in most cars today in terms of long term reliability. Of course there are exceptions! Now how much is costs and how you are treated when it does break is still an issue. My last Toyota was a 1999 Land Cruiser with only 66k miles on it that was nothing but problems, leaving my wife stranded several times. On every occasion, at different dealers and independent mechanics, we would get bogus diagnostics or other ridiculous treatment. One dealer managed to lose our key, requiring a new COMPUTER to be installed because Toyota designed the stupid thing to require the original key to reprogram another! This was fixed in later models. Others would just start replacing parts without any real diagnosis. Finally I had to diagnose it myself. Bad ground on underside of engine. (Bad idea to put alternator on bottom of off road vehicle) Most likely Toyota is no worse than any other, but sometimes I think their supposed "superiority" makes it a sellers market, and they treat their customers worse because of it. Worst dealer experiences I've ever had. Ironically, the only lemon vehicle I've ever owned. My parents have two Lexus vehicles and love them and the dealers service. But they have spent a pretty penny on those cars also, even though they both have under 100k miles. They are good reliable vehicles, just expensive when they do break.

Contrast that with my Dodge Ram. Only one slight problem in 115k miles. Slight noise from alternator bearing. Changed it out myself for $100( dealer part) in about 20 minutes. The alternator for the LC was $350 and a nightmare to replace in comparison. I do all the work on my truck myself because I enjoy it, its easy to work on, and I know it is done correctly that way. Some vehicles make better sense to hold on to. Some are ticking time bombs when the finally do break.

The cheapest vehicles to own are the mass market ones. Pickups, mid-sized family cars, etc. That is a better indication in most cases of cost of ownership than any particular brand. Economies of scale means not only cheaper to purchase, but cheaper parts and better availability of good mechanics to work on them down the road. I also bought a Hyundai, because if you leave brand status out of the picture, it simply made the most sense. Cars in general are really good today.

[c1ue]

Re: Buy, Finance or Lease - the Car Conundrum

[jpatter666]

Re: Buy, Finance or Lease - the Car Conundrum

Most likely Toyota is no worse than any other, but sometimes I think their supposed "superiority" makes it a sellers market, and they treat their customers worse because of it.....Ironically, the only lemon vehicle I've ever owned.

A Toyota RAV4 was the car we got rid of. Belonged to my wife before we met and was apparently a lemon-year for RAV4s. Car constantly had issues -- the worst episode being a bad transmission that the dealership wanted thousands to fix. I did some research and found that Toyota had actually put out a recall for the transmission for that year and would fix it for free.

Found the official notice and went back to the dealer. Got a sneering (what do *you* know) reaction which quickly changed.

[jk]

Re: Buy, Finance or Lease - the Car Conundrum

A Toyota RAV4 was the car we got rid of. Belonged to my wife before we met and was apparently a lemon-year for RAV4s. Car constantly had issues -- the worst episode being a bad transmission that the dealership wanted thousands to fix. I did some research and found that Toyota had actually put out a recall for the transmission for that year and would fix it for free.

Found the official notice and went back to the dealer. Got a sneering (what do *you* know) reaction which quickly changed.

if you use it for repairs or warranty work, the dealer may matter as much as the vehicle itself. there's lots of info online now about dealerships.

[Polish_Silver]

Cash for cars

Isn't the point of the cash purchase to constrain the cost of the car to what you can afford?

Since the real interest rate is actually negative, you could use dealer financing, plunk the cash into a dividend stock, and liquidated that to pay off the car.

[jpatter666]

Re: Cash for cars

Isn't the point of the cash purchase to constrain the cost of the car to what you can afford?

Since the real interest rate is actually negative, you could use dealer financing, plunk the cash into a dividend stock, and liquidated that to pay off the car.

Stocks do not always appreciate. That's actually going to kill quite a few investors who have been plunging into dividend stocks in a search for yield.

Being willing to pay cash does two things -- first, yes it constrains you on the price of the car, but more importantly it keeps you thinking about the total price. Dealerships don't want to talk total price -- they want to talk payments.

[GRG55]

Re: Cash for cars

Isn't the point of the cash purchase to constrain the cost of the car to what you can afford?

Since the real interest rate is actually negative, you could use dealer financing, plunk the cash into a dividend stock, and liquidated that to pay off the car.

Dividend stocks, which have been bid into the stratosphere in this world of ZIRP, are going to get creamed the same time the bond market turns...

[lakedaemonian]

Re: Buy, Finance or Lease - the Car Conundrum

See recently divorced and turning 50 . . .

Harley-Davidson and Corvette OWN that space.