vader1

I am just sort of curious. First off, I know people here will have widely varying incomes, and someone will chime in "I only pay cash!" etc etc. But I see the average car payment for the US is $503 right now for 68 months (source Experian).

I am fairly conservative with my money and put several times my car payment level into retirement accounts every month to max out my tax advantage. I also refuse to go with any term over 60 months.

So right now when I pulled the trigger on the used 981 I had to finance 36k or so. I am getting towards 50 in a "DINK" situation so financially, I am comfortable. But the payment is about $640 a month for 60 months, which is more than the average by about 25% even though the term is shorter. I have no trouble affording the payment, it is taken out of my check and I don't notice it but............It freaks me out. It seems to bother me on a regular basis for no particular reason. My second car is paid for.

I have spent the last 20 years with car payments ranging in the $250-$400 range, now I have this one that I can make without issue, but it freaks me out just because it is over 50% higher than the largest car payment I have ever had. It shouldn't but it does.

I am not sure if this is just because I can remember when a can of soda at the machine was $.25 or maybe I am just neurotic with money, and probably always have been.

So am I the only one just freaked out by the size of payments and what are you comfortable with? I see what a new truck can cost and see all these tradesmen who probably don't have it as easy as I do and wonder how they sleep at night when they buy a new truck. It would drive me nuts.

JonBoy

I haven't bought a new car since 2008. I buy used and I pay cash. I hate payments. Yes, new cars come with "0% financing" and I recognize the value of "free lending" but the principle of owing someone for a depreciating asset is just tough for me.

When I hear of people buying a daily-driver pickup for $50K, I cringe. I cringe at the payments. I cringe at the depreciation hit. I cringe at how they'll take it into the dealer in three years and do it all over again.

Short answer: I don't like payments and I generally won't put a car on a loan. It's a canker in our society that we finance everything and own nothing. I'm about to move to British Columbia and probably double my mortgage (!) - that's a BRUTAL thought for me and, in all probability, I'll wind up with a lesser home just to reduce my mortgage. We were hoping to pay our house off in 10 years and, at those purchase prices in BC, we'll be lucky to do it in 15 or 20 years...

rob-2

Depends if you're paying interest on that money. If you are I like shorter. If I get 0% I stretch it out for as long as possible. I got 0% for 72 months, yeah I took it. Would have done 100 months.

I think the key is that you have the cash on hand to terminate the deal. Be that buy out the loan or sell the car. I'd rather not have a car payment but putting 50k cash into a car when it drops in value doesn't make sense if someone will give me the money for free.

This all becomes different when you're paying 2-3% for the money. Can you invest and get higher returns?

There is an auto bubble, so people are loaded up on car debt.

mosesbotbol

It depends for me on what additional costs will I have to spend on the car. Is it an all service included warranty? Am I leasing or buying? A used car that may cost a lot to, let's say like an Aston or Lotus; they payment would need to be cheaper (to include expected service) than a new car where any issue is under warranty. For me, I want my total out of pocket for either scenario I want to be under 1K a month. I don't like financing over 60 months; I want to keep at 48. That last year is a bear. I don't like keeping cars over 4 years; too many cars I'd like to own at some point in my life.

QUIKAG

I only pay cash.

FrostyWinters

Congrats on the 981!

We refuse to pay over $350/month on car payments. We lease, btw. Currently our Mazda 3 is at $320/mo on a 3-years lease.

white98ls

Me too, like crazy. My parents for two decades bought a new Accord every 4-5 years, trading them in at ~60k miles (a quarter-way through the car's useful life) for probably a third of what they paid and buying a new one which is exactly the same, just one generation newer. Absolutely killed me.

I have enjoyed taking advantage of some good rates, but I still hate that monthly amount eating into my budget. So I like to pay off early and in some cases, avoid it. I've only owned a few cars in my life, but here is what I've done:

2000: '98 Integra - my parents paid for most of it, but I chipped in about $3k cash. Sold in 2013.

2009: '01 M5 - financed $19,400 at 3.99% for 60 months ($357 payment), but paid off after 18 months. Sold in 2015 for $5,300 more than I paid. In retrospect, I probably should have put that $ in the stock market but oh well.

2013: '02 S2000 - financed $13,000 at 1.74%(!) for 60 months ($226 payment). Would have loved to keep this loan really because of that rate, but I decided to sell when I got my M3 because I didn't want two cars again. Sold in 2016 for $900 more than I paid.

2016: '11 M3 - paid cash using the proceeds from the M5 + S2000 since I owned both at once. Could have financed, but I had the $ from selling the other two cars and I didn't want to start 5 years of payments again. And frankly, I'd feel like kind of a bum after selling two cars, making money on both of them, and then financing the replacement when I didn't need to.


All in all, over 17 years and 135k miles, I've lost a total of less than $10k to depreciation, including my current M3 which has been depreciating, but probably not too badly (I plan on keeping it a loooooong time). People lose that in like 2 years of owning a new Fiat 500. I'll keep doing what I'm doing and let these suckers finance, eat depreciation (each of the first 4 owners of my M5 paid about $1/mile in depreciation), and rinse/repeat. The only way I'd go the "buy new and finance" route is at a <2.5% rate, keeping it 8-10+ years, and it has some new tech that I feel is important to not wait for (electric/hybrid, safety, autonomous driving ability, etc.).

I have a good friend who at a young age (26-27) bought/financed a brand new M3 at ~$75k. Although he loved the car, he said it was the worst decision he's made. He's the one who bought my M5.

vader1

I have, for the last few cars, been able to secure less than 2% on my loans. I think the current one is 1.5% through my credit union. So I don't mind borrowing because I think I can do better with my money in the market. I also never go beyond 60 months but I also pay ahead of time. I took out a 5 year on the 328 and paid it off in 3 years, I have a five year on the Cayman and hope to pay it off in three years.

It still drives me crazy just I guess due to the size of the payment based on what I got used to as normal over the last couple decades.

I am completely nuts though when it comes to budgeting. I have a spreadsheet every year that show my monthly income, estimated utilities, pocket money, random periodic payments like car insurance or license tabs. I know every month what I have left for walking around discretionary income. My spreadsheet shows that I will have my shower retiled this month, then get carpet for the home theater next month, followed by new tires in March. I have another one that has retirement accounts, estimated rates of return, estimated annual contributions with presumed salary increases built in, all conservative estimates. Followed by pension payout starting at what they would be at age 55, 56, 57, 58, when SS kicks in, my other supplemental savings.

I have always been this way but it helps you live better on your money if you keep track of it down to the nickel. Some kids called me Alex P Keaton in High School. But I obsess about personal budgets. Almost to the point of OCD.

white98ls

x2. I remember when I was 22, I bought a nice huge couch and they had 0% financing. Could have obviously paid cash, but why do that if you're responsible and can make the $113/mo payments for a year? BTW, if you don't make the payments, does collections come and seize your couch? :P What if it's stained?

Once in HS my friend got a ridiculous speeding ticket (like 32 in a 30 - he's brown), and he got it reduced to $5 in mediation. They asked him if he needed to make payments, and just to piss them off he said yes. So I think he made like 12 payments of $0.42 LOL

vader1

I am sort of the same. I think I bought a new daily every three years for the last 20 and had two long term toys I had for ten years each. I get that cars are flushing money down the toilet but it is what I enjoy the most so you have to enjoy yourself to some extent or life is no fun.