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Never buy a car again..


Tindall2006

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5 Replies, one from a CTS-V & Jag owner with a BMW as a beater, another with the Batmobile done up with custom LED Lighting and another who succumb to peer pressure to buy a German Ride. We're all doomed.

 

I'm with Clay. Lots of good stuff to gleam from it. Key is to upon every paycheck, to pay yourself first. I also stand by the fact that you should only live off one income in a dual income family and save/invest the entire allotment of the spouses income.

 

I question the interest rate on the car loan though. I only financed this time because the rate was just a tick over 2%. It didn't make sense to pay cash for it.

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5 Replies, one from a CTS-V & Jag owner with a BMW as a beater, another with the Batmobile done up with custom LED Lighting and another who succumb to peer pressure to buy a German Ride. We're all doomed.

 

I'm with Clay. Lots of good stuff to gleam from it. Key is to upon every paycheck, to pay yourself first. I also stand by the fact that you should only live off one income in a dual income family and save/invest the entire allotment of the spouses income.

 

I question the interest rate on the car loan though. I only financed this time because the rate was just a tick over 2%. It didn't make sense to pay cash for it.

 

Honest question, why?

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Honest question, why?

 

The reason is the money I had earmarked to buy the car and just pay it off is in a series of investments. My investments are doing great year over year. If I took $45k out of the bank to buy a car, I'd lose at minimum the $15,000-$24,000 in earnings it would bring over the next 5 years just leaving it alone and not even adding anything more to it. That's a minimum too. Decent investments are making more than the rate I used, I'm just hitting it low to show you.

 

No thanks. I'd rather pay $2,500 in interest - about $40 per month (if I were to keep it 5yrs) to borrow the money on a depreciating asset and let the principle make the above for me. I actually will make more than the above because I took the money they gave me for the Mazda and put it into an investment vs paying the difference on the car. The reason being is again, my money is making more than the tax savings offered me thus it was better to pay a bit more in taxes today and earn more over time. Thus now my kitty-fund for the car has nearly $60k in it making me money.

 

The key is being able to afford the car payment...check.....and bonus points for being able to write off part of it for business....check. Double bonus points for selling said Audi in 3-5yrs for a decent amount perhaps upgrading vs driving it into the ground.

 

It's the principle Dave R. talks about really. My father showed me this principle back when first got out of college and I put it in motion. I drove a fucking $9k Grand Am for several years to get it started. Hated that fucking car, but to this day it was the best move I made. I didn't really "like" my MS3 either but it helped fulfill a fun-factor need I had and allowed us to put money into another investment we were working on for us.

Edited by TTQ B4U
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This video has me thinking I am a fucking moron...Have I been killing myself keeping my money in savings this whole time?

 

Savings like at a bank? Probably yes, you are a moron... wait, you didn't ask that exact question. :p

 

To me, it depends on what the purpose of that money is, the time table for probably using it and how risk averse you are. But with the interest rates on savings versus inflation every day that money sits there you are losing buying power. So the purpose better be very important, short term or you are very risk averse. I'm not risky with my money but we still have our rainy day and car fund in low risk mutual fund... which are still inherently higher risk than a savings account. It was going to sit for a few years so I'm not going to have it sit in a savings account losing money.

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Blah blah paying interest is stupid and it's better to be earning interest. Didn't need 5 minutes to explain that.

 

^ This

 

5 Replies, one from a CTS-V & Jag owner with a BMW as a beater, another with the Batmobile done up with custom LED Lighting and another who succumb to peer pressure to buy a German Ride. We're all doomed.

 

I drive a 1995 Caprice and a 1984 Suburban. Where's my million dollars? :(

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Can you really get 12% from a mutual fund?

 

Last time I was dealing with them the yield was around 8-10%.

 

EDIT: I just took a look at Nationwide's midcap account and yields in the first 12 months have averaged 6% and 5 years were at 15%. For those in on that fund since ground zero (1999) the yield was 8% as of June 2015.

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Can you really get 12% from a mutual fund?

 

Yeah, that's one of the numbers that made me raise an eyebrow. The short answer is yes, that's a good ballpark number for average annual return, average being the operative word. You can look at the S&P 500 numbers each year, you can easily pick several 5 year periods where you'd either lose money or barely keep up with inflation. 2009-2013 was pretty good, but if you were saving for a car between 2004 and 2008 you'd have been better off rolling up your money and shoving it up your dick.

 

The video also says that you can buy a $6250 car, drive it for a year, and sell it for "basically what you paid for it." It also makes the questionable claim that you can keep driving a $1500 car for a few years, when everyone who's actually driven a $1500 car knows that you're going to have to spend some money to keep that bitch running. Being able to afford a newer car that doesn't nickle and dime you is one of the benefits of having money in the first place. And lastly, as PDQ points out, interest rates vary wildly and credit is dirt cheap for those with good scores right now, so it can often be wiser to take out a low interest loan and let your mutual funds keep earning interest.

 

All that said, there are tons of people who waste gobs of money on cars because they lack self control, and those same people probably can't get 2% interest loans on $45k cars. I'm not a big fan of fooling people with fudged numbers, but if that's what it takes to get idiots to wake up and learn some restraint, then I can't argue with that.

 

/greg, whose 3 cars are probably worth less than $12k combined right now and prefers it that way.

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if you were saving for a car between 2004 and 2008 you'd have been better off rolling up your money and shoving it up your dick.

 

:lol:

 

The video also says that you can buy a $6250 car, drive it for a year, and sell it for "basically what you paid for it."

 

One of our sales reps in Texas buys cheap Honda Accords, drives them for 8-10 months, then sells them for darn near what he paid for them. Every time I see him, he's in a different one. LOL. I don't how he can stand doing it but he swears by it. Never puts tires, brakes, nothing into them. Just changes the oil and rolls them. He likes dickering around with prices and selling things.

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Yeah, I'm sure it's possible, especially if you're the sort of guy who latches onto one make and model and knows everything there is to know about it. If I had more free time I'm sure I could flip Civics all day long, but I don't think that's necessarily good advice for the general public. Plus everyone will tell you about the one time they bought a car at a great deal and sold it later for a profit, and won't tell you about the car before that that lunched its transmission and had to be written off. Confirmation bias at work. I'd plan on the average used car losing about 20% of its value every year, and if you can beat that then just consider it a bonus.
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Honest question, why?

 

Why tie up all your cash when you can use someone else's cash for only 2%? What happens when there is an emergency and you need those cash reserves but they are tied up in the car in your driveway? For only 2%, some would deem it prudent to use someone else's money. Look at it as a form of insurance.

 

Tim, I got you beat... ;) Just got 1.94% :lolguy:

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Tim, I got you beat... ;) Just got 1.94% :lolguy:

 

Aweseome! I did this loan through State Farm. Never knew I could use them. Paid a tad more but they do two things....cover Gap insurance for the life of the loan. They also wave any collision deductible, thus I was able to raise mine from zero to the max amount and that reduced my insurance another $17mo. Pretty cool.

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Aweseome! I did this loan through State Farm. Never knew I could use them. Paid a tad more but they do two things....cover Gap insurance for the life of the loan. They also wave any collision deductible, thus I was able to raise mine from zero to the max amount and that reduced my insurance another $17mo. Pretty cool.

 

ok...you win. :megusta:

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Last year was the first time in my life I bought a decent low mileage car with a loan that wasn't a beater. I hate having a car payment. Yes you can buy a cheap car with cash but you risk an increase in repair costs. This video did not cover anything on upkeep.

 

That aside if you can not get an auto loan for 1-5% interest you shouldn't be getting a loan. Pay yourself like Tim said. That is the smarter move. You don't need a sports car you just want one :)

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DON'T BUY A NEW CAR!!!!!

 

Unless you're me

 

http://www.corvetteblogger.com/images/content/2014/020414_12b.jpg

 

 

http://thegarage.jalopnik.com/no-you-dont-have-to-be-a-millionaire-and-pay-cash-to-b-1724244052

 

Yep, not always a full proof plan to buy used. 1-2 years old cars can still cost more than brand new. I dont think the benefit comes into play until the cars are 4-5 years old, on average. Most 5 year old "daily" type cars are abused and need tires, brakes , ect. So then you have to shop for the right one.

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The video also says that you can buy a $6250 car, drive it for a year, and sell it for "basically what you paid for it." .

 

I will say that this is 100% how I have lived my car life since day one. I have never lost money on a car- and we are talking 30+ cars later. I have only leased once for my wife and it was only because the deal blew every other dealer out of the water, she liked the new car, I was not buying a new car, and it was baby time! They truly gave me a deal no one else was close on (2014 Rav 4, Loaded, 0$ down, $0 first pay, $253 a month for 3 years), and I will never do it again simply because at year 3, I have nothing. Nothing I could have bought for the same $8855 would be worth 0$ at the end of the lease. Nothing! Stupid.

 

If you have any mechanical ability, you should never buy a new car-its a huge hit day one, and a monthly loss due to interest. Even a poor performing mutual fund will make 2-4% a year. Even if your paying a nominal 2% interest rate, you have a net loss of 6%, and that's a worst case scenario!!

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