This sucks....I'm miserable..
Instructor
Joined: Apr 2003
Posts: 165
Likes: 7
From: Austin, TX
My rule of thumb (stolen, of course, from those wiser than I) is that if you can't afford to pay for the car in three years, you can't afford the car. Be patient, don't overextend, and you will be much better off in a few years. I always paid cash for my cars. When I was making $60k a year, I drove a car that I bought with $4,000 cash. I still pay cash for my cars, only now it's a 996. Live within your means, and you will be able to live much better soon. Overextend yourself, and you will always be playing catchup.
As someone else suggested, you might consider an older 911. The 3.2 Carreras are great cars, and can be found in good condition for low to mid $20's. Insurance will be much cheaper, too.
As someone else suggested, you might consider an older 911. The 3.2 Carreras are great cars, and can be found in good condition for low to mid $20's. Insurance will be much cheaper, too.
Pro
Joined: Aug 2001
Posts: 697
Likes: 0
From: New York City, Amagansett, N.Y.
Originally Posted by eyeslasher1
What do most people do as far as financing their cars
pay cash, take out a loan or lease their car?
just curious
jeff
Instructor
Joined: Oct 2004
Posts: 238
Likes: 0
From: Hillsborough, NC
Certainly home equity is the way to go if you can. I also agree that you never want to be 'extended' and personally have a rule that I will not finance more than 20k for a car, but I do always (unless the interest rates are a big difference) opt for 5 year loans, and pay them off in 3 years or less. This way if any catastrophic even occurs I am never under water in the car and also I can skip payments for a period of time. Thankfully nothing has ever caused me to do this, but it is like loan insurance.
Hope my little view on car purchasing helps (although a true financial guy would probably think I'm crazy).
Hope my little view on car purchasing helps (although a true financial guy would probably think I'm crazy).
Racer
Joined: Oct 2004
Posts: 388
Likes: 0
From: connecticut
what was the purchase price of the car? If it was a great deal, keep it. If not maybe still keep it if you will reasonably grow into the payments over the next few years. Maximize your pretax savings, and let time work for you on that side. A shorter loan term is less interest paid to the bank overtime. I think if you do not plan on keeping it long term, consider a cheaper scenario (ie lease) I financed a good chunk of my car, but plan on running it into the ground. I may not, but bought it with the intention of doing that. If i strike it rich, well then?
Jeff
Jeff
Thread Starter
Instructor
Joined: May 2005
Posts: 125
Likes: 0
From: Body More, Murderland
Here is what I have decided, check out this craziness..... I am going to take the 42 mo loan @ 6.6% interest, financing $35,000 (the car was $32500, plus tax, tags & tires=$35000, give or take)(BTW: 1999 C2, 6-speed, all options except traction control, sunroof delete, immaculate car w/ 24k miles, extended warranty 'till Nov 2006, I think it is a good deal). The payment is $940/mo. Here is where it gets crazy.....I am putting $5,000 into an account, and depositing my $625/mo car allowance into the account. When the payment of 940 is taken each month, it will take 15 mos before the 5000 is exhausted, at which point I will owe 23000 on the car (the car will likely have about 45k miles on it then). At that point I hope to be in a much better financial situation and will sell the car for AT LEAST what I owe. In essence I am creating a balloon payment situation, with the intention of selling prior to the "kick in" of the high payments. I know people are thinking, why not just finance 30K, payment is still 850/mo, too high for me. This way my car payment is paid in full for the next 15 mo's..... Works in my head, that's all that matters. BTW, I did not want to stick my dad with the car...............
Thanks for everyone's input
Rick
Thanks for everyone's input
Rick
Former Vendor
Joined: Nov 2004
Posts: 1,279
Likes: 0
From: Gilbert, AZ
You only live once...I pay $1000/month for mine used for 4 years financing, but it is a business thing. Thats 0 down full financed. Normal for $40K. Used loans never do more then 5 years usually. You could probably get a new one at a dealership financed for 6 years and pay the same as the used one...but like I said, you only live once.
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Member
Joined: Apr 2002
Posts: 44,102
Likes: 6,920
From: san francisco
get enough cash to buy car, but finance it and invest the money. almost in anything you invest now you should beat the interest rate.
i am sorry to tell you that vp of a large bank is no different than a teller. i work for a very large bank. EVERYONE in my office is a vp. LOL. my secretary is also a vp ;-) so is the security person on my floor!
and a rate >6% for a 42months loan is essentially highway robbery. try more lenders. 72 month with 6% is more acceptable.
i am sorry to tell you that vp of a large bank is no different than a teller. i work for a very large bank. EVERYONE in my office is a vp. LOL. my secretary is also a vp ;-) so is the security person on my floor!
and a rate >6% for a 42months loan is essentially highway robbery. try more lenders. 72 month with 6% is more acceptable.
Pro
Joined: Dec 2004
Posts: 531
Likes: 0
From: Houston, TX
Originally Posted by fast1
Tim: For the long term I agree with your observation. In the short term however, 1-3 years, you never know what the market will bring. Suppose you took a loan in 2000 for $80K to purchase a 996 and took your cash and invested it into almost any mutual fund. Depending upon the fund you could still be hurting five years later. On the other hand if the time frame were 1996 to 2000, you would have made out like a bandit.
Instructor
Joined: May 2004
Posts: 218
Likes: 0
From: SF Bay Area
Probably does not sound like good advice now, but it will before you know it. Take the $950 plus the $600 you are paying in rent (plus what ever you are paying for insurance) and buy as much house/condo as you can possibly afford today. In two years, the price of that condo or house will be much higher than it is now, the interest rates could also be a lot higher. Since your mortgage payment will be tax deductible, you could go much higher than the $1,550 per month on the house payment.
Your income should increase at a decent rate and you will be able to more reasonably afford a similar car in a couple years. Might not be the case for a house if they are appreciating at a good rate. Also focus on keeping away from tickets and you should be able to reduce the insurance costs as well by then.
Lastly, max out your 401k contribution every year while you are young.
The other option would be to keep the car and live for today.
I have always wanted a Porsche and have now owned one for a little over a year. I waited until I was 39 and did not have to worry about financing. There were many times I came close to pulling the trigger. No regrets for waiting though.
Kris
Your income should increase at a decent rate and you will be able to more reasonably afford a similar car in a couple years. Might not be the case for a house if they are appreciating at a good rate. Also focus on keeping away from tickets and you should be able to reduce the insurance costs as well by then.
Lastly, max out your 401k contribution every year while you are young.
The other option would be to keep the car and live for today.
I have always wanted a Porsche and have now owned one for a little over a year. I waited until I was 39 and did not have to worry about financing. There were many times I came close to pulling the trigger. No regrets for waiting though.
Kris
Nordschleife Master
Joined: Sep 2002
Posts: 6,509
Likes: 4
I would never resort to 6 or 7 year financing just to get into a car I could otherwise not afford, esp for a car whose resale value almost everyone got wrong in calculating lease assumptions over the past 5-6 years. To be tied to a car longer than many marriages last is not the wisest of moves IMHO.