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Re: Finance cars or pay cash?
Old 02-26-2005, 06:29 AM   #21
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Re: Finance cars or pay cash?

I had a friend whos car ownership theory was "all cars are throw-aways." .
Lets retire, I had a friend who had this down to an art form. We used to work on the road, away from home for months at a time, but drove home weekends. He would buy a junk car and run it into the ground. Not even looking at oil let alone changing it. On the rare occasion they puked he would sign the title leave it on the seat take his things out and leave it were it sat. Then bum a ride till he could find another junker. He claimed to make out like a bandit, since we were paid milage....Shredder

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Re: Finance cars or pay cash?
Old 02-26-2005, 06:49 AM   #22
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Re: Finance cars or pay cash?

Wow Shredder! That's takin' it to a whole higher

When I was on an expense allowance, I traveled
first class, drove Cadillacs and lived (temporary
housing) in the toniest part of town. All made sense back then. If only the ER bug had bit me 5 years earlier.
I sure could use that money now. OTOH, I was running a company and couldn't very well show up in a 1952

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Re: Finance cars or pay cash?
Old 02-26-2005, 02:08 PM   #23
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Re: Finance cars or pay cash?

I had a friend whos car ownership theory was "all cars are throw-aways." His philosophy was to buy the hunk of junk for about $1500 and drive it until it dies.
You must know my brother-in-law, that's his philosophy. He probably did save a lot of money, but then again, there was that one car that croaked on the New York Throughway .... I'm told he had a heck of a time getting home.
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Re: Finance cars or pay cash?
Old 02-26-2005, 06:59 PM   #24
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Re: Finance cars or pay cash?

I've spent over 15 years working in automotive retailing, and ... pros in the business agree ... cheapest way to live is to buy them slightly used, keep them maintained, and ... drive them into the ground.

'Course, if everyone did that, none of us could have made a living in automotive retailing ...

There is the rare exception. *We try to buy Toyotas. *Like Southwest Airlines, they're cheap, and they get you there without fail. *But ... when shopping for a slightly used Camry, we found the used models were almost as expensive as new, and very tough to find on the privately owned market. *So, we bought new. *In that case (1 year ago), financed with a 4% credit union loan. *Paid off the loan anyway, but new was the way to go in this case.

Another cute trick, if you don't drive much ... buy a classic. *Buy the right, older car, and you may not make much money on the investment, but it will probably at least break even. *But don't pile on the miles, and baby that car.

Last piece of advice ... watch those old luxury cars. *For grins, call the Lexus dealer some time and tell them your power windows, seats, or some other hi-tech component has gone out, and ... the car is out of warranty. *The Lexus is one great car, but like all premium luxury models ... when they break, and it is out of warranty, those are some very big numbers.

By the way ... yes, car dealers do make a lot of money on the "back end" ... the F&I portion of the car deal. Old rule of thumb was to make $1K on the front (gross profit on the sale of the new or used car), and $1K on the back [finance reserve (dif between your interest rate and were we borrow money), and profit on extended service contracts, etch, gap insurance, etc.]. To be fair to the dealers, it is still a competitive business ... good domestic dealers only make 3 to 4% EBITDA.

Good luck ... fun subject.
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Re: Finance cars or pay cash?
Old 02-27-2005, 11:40 AM   #25
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Re: Finance cars or pay cash?

Trying to get this thread back on the road... Debt is a nasty four letter word in ER. If you can afford a new car and you want a new car - get one. I bought a new truck in 2003 at 0% for 5 years. I'm agressively paying it down. Should be done in 12-18 months.

IMO no debt is better than debt. Even interest free debt.


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