Time to Buy a New Vehicle

[Idnar7]

Going in to our fourth year of retirement we are due for a new vehicle for dependable travel. Wife won't hear of a used vehicle - this could be our last car! For those who have recently purchased a new vehicle did you pay cash, finance, or pay part/finance part? Is getting financing hard? What do you need to bring with - pension stubs/ss statements? We did a 50k remodel last year and trying to refinance or get a HELOC was such a hassle that we just ended up withdrawing from IRA. Looking at about a 40k vehicle so would require another 55k withdrawal this year. Have about three years left on a mortgage. Thanks to a great 2013 our IRA has already earned back the 50k we withdrew last spring.

 

[VaCollector]

Even with the ability to pay cash, PenFed has been there for me with the two new vehicles that I bought well after retiring, the most recent last April…and my ONLY other relationship with them is a credit card. (if you're not a member, it only costs $5 to open an account and join)

With interest rates so low, it was nice to be able to take my time to decide WHEN to pay the 1st one off and with the rise in the market over the last year, my decision to keep it in the market rather than pay off the 2nd one ASAP has been a good one….personal decision for sure, but they are easy to work with!

Good Luck!

 

[ShokWaveRider]

Going in to our fourth year of retirement we are due for a new vehicle for dependable travel. Wife won't hear of a used vehicle - this could be our last car! For those who have recently purchased a new vehicle did you pay cash, finance, or pay part/finance part? Is getting financing hard? What do you need to bring with - pension stubs/ss statements? We did a 50k remodel last year and trying to refinance or get a HELOC was such a hassle that we just ended up withdrawing from IRA. Looking at about a 40k vehicle so would require another 55k withdrawal this year. Have about three years left on a mortgage. Thanks to a great 2013 our IRA has already earned back the 50k we withdrew last spring.

I like a new car every 2 to 3 years, Leasing is also a good deal at current rates. I live in a semi retirement community and a lot of the retired folk here lease as a way to avoid all aspects of owning a car other than driving. Of course we all do not do many miles per year. Personally a 10k lease suits me and that includes 2 trips to Canada and perhaps Key West a year.

 

[Midpack]

We buy new, pay cash and keep cars for 7-10 years. We just don't like debt at all. However, an argument can be made for financing at the historically low interest rates being offered today, so I fully understand those who make that case. Leasing makes no sense unless you trade every 3 years or so, something we've never done.

 

[Walt34]

We just bought a new car last November. I was planning on paying cash but the dealer would not do the deal I wanted unless we financed through the dealership but his next sentence was that there was no prepayment penalty so we financed it there at 1.9%. We made one payment and we'll pay it off when the next one is due.

The only documentation they wanted was our driver's licenses, no pay stubs or anything like that.

There's a thread on car buying services here.

 

[happy2bretired]

I bought a new Honda Accord last year. I financed it since the dealer gave me a better deal that way. I paid the monthly payment once, then paid it off completely. I didn't require any extra proof for the financing. I have purchased from that dealer before tho, so that may have played a part.

 

[Chuckanut]

Normally, I am one who pays cash for a vehicle and drives it a minimum of 10 years. However, the last car I purchased I did finance because the interest rate was 0.9%, which is less than the current inflation rate of about 1.5%. If the inflation rate ever goes below 0.9% and threatens to stay there, I can always pay off the loan.

Before you ask, there was no discount for paying cash instead of financing at this rate. I know, I tried.

 

[ERhoosier]

Depending on the vehicle you intend to buy, some makers are offering 0% (or near 0) financing. Hard to turn down no cost loan. Others are offering rebate vs 0%, and for those you might be better off taking the rebate.
I've also seen some tasty lease deals lately. Some have done well by leasing, then buying car at lease end if they really love it- or turning vehicle back in if they don't.
Deciding on best way to arrange a $40k new ride is a 'problem' most of us would love to have

 

[Animorph]

We normally like to pay cash. However the last two cars came with <1% loans that we kept as long as possible. I didn't bother tracking the last one, which started in 2009, but the other one started in 2002 and with investment gains on the balance we effectively paid about half price for the car. I suspect the last one was similar, given the start date. Not the same market conditions today, so it's your guess.

 

[Chuckanut]

with investment gains on the balance we effectively paid about half price for the car. I suspect the last one was similar, given the start date. Not the same market conditions today, so it's your guess.

Good point. The 2013 market certainly helped, but it's a 5 year loan so we will see how much this helps over the entire life of the loan.

 

[Options]

We buy new, pay cash and keep cars for 7-10 years. We just don't like debt at all. However, an argument can be made for financing at the historically low interest rates being offered today, so I fully understand those who make that case. Leasing makes no sense unless you trade every 3 years or so, something we've never done.

+1
Cash for new cars every 10 years. I haven't had debt of any kind in decades and don't intend to, no matter what the interest rate. Only non-frugal indulgence I have in life is that I buy German luxury cars. The satisfaction they have given me has been priceless.

 

[Ticker]

I bought a new vehicle in August-a very nice Honda Accord with .9% interest

Be sure to test drive the car thoroughly, including the blue tooth.

The Honda has the WORST voice recognition software, and I wish I had paired my phone prior to buying-I would have left the car with the dealer had I done my homework.

 

[Ready]

PenFed has a car buying service for new cars. If you purchase using their service, they will offer you a 0% loan. I have no idea if their prices are lower than the other car buying services out there, but it's worth getting a quote from them once you decide which car to buy.

 

[sheldon cornped]

We also bought a 2013 Honda Accord EX-L in November 2012. We absolutely love it! There was a bug in the bluetooth system but there was a software fix that took only a few minutes to resolve. Before I BMW'd (Buggered My Wallet) or other pricey model, I'd check out the type of model you want and compare it to the comparable Honda. We have kept cars 10 yrs on average. 1st Cadillac was ok. 2nd 1992 Cadillac was a dog with constant electrical problems. 2001 Mazda MPV has been great except for transmission going out at 140k miles. Our son has been driving it for a year now and we hope it will make it to college with him next year.
If safety, dependability, performance and gas mileage are important to you I'd go with Honda.

 

[Dash man]

We typically pay cash for a new car, but for our purchase last year we were offered a deal where the finance company paid the first three payments for us if we financed with them. There was no prepayment penalty. They credited the three months worth of payments to the account within a week, so we just paid off the balance.

 

[Helen]

We just bought a new Subaru Outback yesterday. We went through Costco and I loved letting Costco haggle the price. We could have had 0% financing for 3 years, but I paid cash. Maybe that was dumb to turn down free financing, but I haven't carried any debt in years and didn't want to go back to making even automated payments.

OP, I was wondering how financing would go since I don't have an income. My partner/spouse is still working so I suppose we could have had her finance it.

 

[34rlsa]

We bought a new truck last summer. The dealer knew we would be paying cash; however, when he was looking at all the factory rebates we might qualify for he found an additional $1,000 rebate from Chrysler if we financed a minimum of $10k through Chrysler Financial. The application was done online and approved in just a few days. We were only required to make a single payment before paying off completely. I paid the balance of the loan off with my VISA to earn the mileage then paid the full balance off the VISA at the end of the month.

 

[Helen]

We bought a new truck last summer. The dealer knew we would be paying cash; however, when he was looking at all the factory rebates we might qualify for he found an additional $1,000 rebate from Chrysler if we financed a minimum of $10k through Chrysler Financial. The application was done online and approved in just a few days. We were only required to make a single payment before paying off completely. I paid the balance of the loan off with my VISA to earn the mileage then paid the full balance off the VISA at the end of the month.

Nice, you did well!!! I love hearing stories like this.

 

[robnplunder]

We buy new, pay cash and keep cars for 7-10 years. We just don't like debt at all. However, an argument can be made for financing at the historically low interest rates being offered today, so I fully understand those who make that case. Leasing makes no sense unless you trade every 3 years or so, something we've never done.

+1 but in our case, $750 incentive was on condition that we finance from the car manufacturer. So, reluctantly, we financed some minimum amount, and paid it off when the first bill came.

 

[Walt34]

We also bought a 2013 Honda Accord EX-L in November 2012.

We're liking the 2014 Honda Accord Sport we bought last November. I got that model because it comes with a couple of extras that made the extra worthwhile for us. We haven't fooled with the electronics much since our phones are the old flip phone Tracfones.

It's primarily DW's car so while we're having the lousy weather it's staying in the garage and using the 4WD truck.

 

[Idnar7]

Thanks for all the great replies. Walt34 - thanks for the link to the buying services. I remember that thread but couldn't find it with a quick search. It has been so long since I last bought a car, I still thought three year loans were the standard!! We leased while putting kids through college (generally at about $250/mo)..

 

[Karloff]

I'm going through a similar debate as the OP, albeit in this case the deciding factor would basically be to keep my wife happy and allow her to drive her dream car. You can read all about it on another current thread on this board, here.

Like most of you, I always paid cash for all my vehicles, but depending on your personal situation, some current lease/finance deals DO make sense, specially if they come with a $0 full-maintenance and service plan.

 

[tryan]

the deciding factor would basically be to keep my wife happy and allow her to drive her dream car.

Tried reading your link ... but you lost me at "I'll drive her to the train station every day".

I feel your pain! Just traded my 2002 Excursion and now drive HER 2001 Forester so she could get the car of her dreams (Mazda CX-9). Thankfully, we have never bought NEW so she expected nothing different. Did get 1.9% financing due to our credit scores on a used car.

 

[Birchwood]

We're in the process of downsizing. We are going to give my wife's car to my daughter! and will be left with a 5 yr old Honda V6 coupe(23,000 miles)
and my Ford F150 super crew truck, 3 yrs old with only 10,500 miles. My wife does not drive very much and I will prob. be doing most of the road trip driving in retirement. I anticipate to drive both vehicles until 85,000 miles or 8 years old, whatever comes first. We have to do a lot of road trips to make the limit.

 

[FIREontheMountain]

I bought a new vehicle about a year and a half ago and ended up financing ~40% of the purchase because the loan was offered at 0.9%. I think they pulled my credit and asked me how much I made per year. I do not recall being asked for pay stubs or any sort of documentation. No regrets going with financing even though I had enough cash to cover it at the time.