If you own a car, do you have a car payment?

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities

If you own a car, do you have a car payment?

Poll ended at Mon Jul 21, 2014 6:27 am

Yes, I have a monthly car payment.
42
15%
No, I own my car outright.
233
85%
 
Total votes: 275

TRC
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If you own a car, do you have a car payment?

Post by TRC » Fri Jul 18, 2014 6:27 am

Seems like everyone I know is tied to a car payment. When they finally get it paid off, they go buy another and reset their debt cycle. Curious what percentage of bogleheads have car payments.

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Re: If you own a car, do you have a car payment?

Post by BTDT » Fri Jul 18, 2014 6:30 am

I chose to pay the zero interest loan monthly and set the full payoff balance aside in an interest bearing account :oops:
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investingdad
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Re: If you own a car, do you have a car payment?

Post by investingdad » Fri Jul 18, 2014 6:35 am

I'm financing my 2013 Maxima at 0%. Got it for 26.9K, well below sticker, because it was the base model and a left over.

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Re: If you own a car, do you have a car payment?

Post by Gropes & Ray » Fri Jul 18, 2014 6:37 am

I took a loan because the rate was 1.49% interest, and I needed to keep some cash for other potential expenses. But I paid it off in 18 months, and I wouldn't have bought a new car at all except that my wife got a good job that required travel, and I wanted her to be safe. Bought her a Subaru Impreza for the AWD, comfort and the gas mileage. I'm still rocking a fashionable 2004 station wagon that I inherited from my grandfather.

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jmndu99
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Re: If you own a car, do you have a car payment?

Post by jmndu99 » Fri Jul 18, 2014 6:42 am

I have owned my '06 Dodge Stratus for 4 years now. I bought it used (1 year old). Aggressively paid the loan off. Suzie Orman tells us to keep our car for 10-15 years. Yes, the car is 8 years old. 7 more years will go by quick.

The money that I would be paying every month is automatically going into the stock market.

BTW: Your title of your post is contradictory, in that, if you OWN a car, you cannot have a PAYMENT. Just sayin'

sscritic
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Re: If you own a car, do you have a car payment?

Post by sscritic » Fri Jul 18, 2014 6:43 am

I got a loan because they offered an extra $500 off if I took it. My first payment was for $29k. It will be paid off in four payments, so ask again in two months.

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BrandonBogle
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Re: If you own a car, do you have a car payment?

Post by BrandonBogle » Fri Jul 18, 2014 6:53 am

I put No because I went with the intent of your post even though I technically do have a car loan. I bought the car, negotiating solely on price, the then they offered me 0% financing instead of my $1.5k rebate in 2006. At the time, I had access to CDs paying 8% the first year, 7.x % the second year, and 6.x% the third year (see Ken's blog around SECU of MD for details from 2006-2008). So, I got way more in risk-free interest than the $1,050 benefit of buying cash.

When that car loan was paid off 4 years later, I still had roughly $21k in 6.8% student loans. I took PenFed's 0.99% auto loan to pay off these 6.8% loans and aggressively paid down my 4.5% student loans over the next year. So kow I just that 0.99% loan, but it really represents my student loans than money for buying the car.

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Re: If you own a car, do you have a car payment?

Post by leonidas » Fri Jul 18, 2014 6:56 am

I have a 2007 Sonata whichwas paid off in 2011. I just bought my wife a 2012 Honda pilot for 29000 earlier this year and have those payments for another 4.5 years. But for 3 years it was nice to be free of them.

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Re: If you own a car, do you have a car payment?

Post by carolinaman » Fri Jul 18, 2014 7:00 am

I answered no but did use my HELOC to pay for it. 6 months later I have paid it down to about $3k (from original $24k). I have either paid cash or used HELOC to buy all my cars in last 30 years except for an interest free loan for a Sonata. When I used HELOC, I aggressively pay loan off, usually in less than 2 years.

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Toons
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Re: If you own a car, do you have a car payment?

Post by Toons » Fri Jul 18, 2014 7:15 am

Own vehicles :happy
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tim1999
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Re: If you own a car, do you have a car payment?

Post by tim1999 » Fri Jul 18, 2014 7:19 am

I have a lease payment on one and I own a couple of older cars outright. Due to the incentives and the fact that I tend to keep my newest car for only 3-4 years, it made more sense to lease this time. Last time it made more sense to buy. Paid cash for that one.

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Re: If you own a car, do you have a car payment?

Post by hulburt1 » Fri Jul 18, 2014 7:34 am

I have paid cash for all my cars. all new. Run until can't run any more. Have 4 all over 140,000 they just keep going. Years old (7,10,20 and a 72 bug).

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Re: If you own a car, do you have a car payment?

Post by Longtimelurker » Fri Jul 18, 2014 7:35 am

I took a loan for my car 2013 VW Tiquan when the dealer offered $1000 off of the price to finance it. I had to maintaing "a balance" for 6 months. So I took the loan, paid it down to the point that 6-months of payments would pay of the car, and finished that up last year. I think I paid ~$25 in interest to get $1000 off the car. Of course, had I financed the whole thing for the whole term I would have paid like $2500 in interest. Guess they didnt expect a boglehead when they launched that promotion.
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Re: If you own a car, do you have a car payment?

Post by Jack FFR1846 » Fri Jul 18, 2014 7:35 am

5 cars, no payments
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Re: If you own a car, do you have a car payment?

Post by S&L1940 » Fri Jul 18, 2014 7:36 am

investingdad wrote:I'm financing my 2013 Maxima at 0%. Got it for 26.9K, well below sticker, because it was the base model and a left over.
wow, the other Maxima owner on this site.
Have owned or leased one or two Maxima's since 1985 and our current 2008 bought outright with all bells & whistles @ $32.0 OTD is the last of the line. Diminished quality and service (from three different dealers) these last few years has brought us to the end of the line. We are now a one car - low mileage - family and in a couple of years will be looking at a Subaru or Honda.
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Re: If you own a car, do you have a car payment?

Post by bloom2708 » Fri Jul 18, 2014 7:38 am

No car payments here since 2005. My wife was always a "we'll always have a car payment" person. I convinced her otherwise. She was also a "we'll always have a mortgage" person. I convinced her otherwise.

Now I'm working on "we'll work until 67 and then collect Social Security". This one seems harder than the others. Not for me, but for my wife.
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livesoft
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Re: If you own a car, do you have a car payment?

Post by livesoft » Fri Jul 18, 2014 7:58 am

It might be interesting to have more poll options to find out whether folks with a car payment are really "tied" to it. From the responses, it seems that idea of getting a loan does not have the connotation that it used to and indeed it may be a financial plus.

Maybe even ask if you can fit all your cars into your garage, too?
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Re: If you own a car, do you have a car payment?

Post by cheese_breath » Fri Jul 18, 2014 8:02 am

Own two vehicles outright. Last time I had a car payment was 1989, and I paid it off in four months. Before that my last car payment was 1973.
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Andyrunner
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Re: If you own a car, do you have a car payment?

Post by Andyrunner » Fri Jul 18, 2014 8:03 am

Financed my last car at 0.9% interest over five years. I figured I could make more in the market but decided I hate additional loans and paid it off in 14 months.

Next car will most likely be cash.

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Kenkat
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Re: If you own a car, do you have a car payment?

Post by Kenkat » Fri Jul 18, 2014 8:05 am

I have the title but I used a HELOC to finance it so I answered yes. I can pay it down (or not) on my own schedule and it uses the approximately 80% equity in my home at a very low cost.

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TheGreyingDuke
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Re: If you own a car, do you have a car payment?

Post by TheGreyingDuke » Fri Jul 18, 2014 8:17 am

I have owned around 55 cars since 1965, none of them were purchased with borrowed $$. :happy

First purchase, in 1965, was a 1960 Renault Dauphine, 3 speed, 32 horsepower, and would hit 65 mph with a good tail wind, $200. Most recent purchase, in 2012, was a 2009 Jetta Sportswagen (2.0 Turbo), $15k, which goes like stink.

Almost all were used with the exception of a couple of Civics when I was a new father and worried about dependability.
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Re: If you own a car, do you have a car payment?

Post by JoeJohnson » Fri Jul 18, 2014 8:20 am

0% for 60 months = car payment

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midareff
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Re: If you own a car, do you have a car payment?

Post by midareff » Fri Jul 18, 2014 8:23 am

PenFed had 1.49% 5 year financing available when I bought 22 months ago. The decision was pay cash or leave it in the market..... the rear view mirror says I made the right call so far. Actually, it was more a no brainer than anything else. Going backwards from there, 6 years of no payments, 10 years of payments, 10 years of no payments.

I'm situational on vehicles. If someone wants to give me money so be it. If not, write the check.

EDIT: Wonder if I can remember them all.... 1967 MG1100, 1967 Austin Cooper 1275 S, 1970 Opel Kadet Rallye, 197? Toyota Corolla 2D, 197? Toyota Corolla 4D, 197? AMC Gremlin followed by company cars for several years, then a 1984? Datsun Sentra, 1987? Toyota MR2, 1998 Porsche Boxster, 2000 Porsche Boxster S, 2003 Jeep Liberty, 2013 Benz C350.

A dozen so far.....
Last edited by midareff on Fri Jul 18, 2014 9:58 am, edited 1 time in total.

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Re: If you own a car, do you have a car payment?

Post by KlangFool » Fri Jul 18, 2014 8:32 am

Hi,

I bought my 2014 Nissan Altima on a loan. I could buy the car with cash. Why?? I get additional $500 cash back and the 3 years 7.5K loan is at 2.69%. Effectively, I get paid ($500 - $326) = $174 to take the loan. The loan is less than 0%.

KlangFool

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Re: If you own a car, do you have a car payment?

Post by LateStarter1975 » Fri Jul 18, 2014 8:32 am

Paid off our two vehicles last October and vowed never to have car payments in my life. Established a savings account (Car Fund) to save our monthly car payments and it will be used for future car purchases with cash. CASH is king in my life right now
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Re: If you own a car, do you have a car payment?

Post by nodenuff2 » Fri Jul 18, 2014 8:37 am

My wife just bought a vehicle we were prepared to write a check for it but after making the deal we were offered the 0% financing .With reluctance I agreed to it but not the 60 months much shorter time wise .
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Re: If you own a car, do you have a car payment?

Post by nisiprius » Fri Jul 18, 2014 9:07 am

I really recommend this maneuver: "when the loan ends, just go on making the payments, only make them to yourself."

The first few were financed. They were 36-month loans, and even then we kept our cars for at least 5 or 6 years. These days you'd probably need a longer loan but on the other hand cars are much better and more durable and you can keep them longer. After the third one, I set up a dedicated savings account at the credit union that I called the "car replacement account." As soon as the car loan payments ended, I set up automatic transfers of the same monthly amount from our checking account to the "car replacement account." Because it was the same amount we were already paying, it was almost painless.

By the time we needed to replace the car, there was almost enough in the "car replacement account" and by scraping a bit I was able to pay cash for it.

After negotiating the price, the salesperson started to talk about financing, and I remember the look of disappointed surprise on his face when I pulled out a checkbook and said "Oh, that's OK, I don't need financing, I'll just write the check now."

Even if you don't save the full amount to buy the next car, you can save enough so that next time you only need to finance a portion of the price, and then a smaller portion the next time.

It sounds like a silly trick but it worked beautifully for me. I am sure the behavioral economists know all about this, but the only way I've ever been able to do serious savings is to make it automatic, e.g. via payroll deduction. Saving by just making a fresh decision every month to put something away never has worked for me.

I could say we never financed another car but that's not quite true. Of the six, seven, eight we've bought, one was financed for a special reason--my wife had just gotten her first job and wanted to build a credit record in her own name, so she financed it with only her name on the loan. Two were bought used from acquaintances. All the rest were bought new, for cash.
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Re: If you own a car, do you have a car payment?

Post by investingdad » Fri Jul 18, 2014 9:13 am

KlangFool wrote:Hi,

I bought my 2014 Nissan Altima on a loan. I could buy the car with cash. Why?? I get additional $500 cash back and the 3 years 7.5K loan is at 2.69%. Effectively, I get paid ($500 - $326) = $174 to take the loan. The loan is less than 0%.

KlangFool
I almost went with the Altima but I had read about some problems with the transmission in the 2013 models. How has the 2014 been for you? I ended up with a 2013 Maxima per my post above. First time "stepping" up a little bit and I've enjoyed it so far.

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Re: If you own a car, do you have a car payment?

Post by Grt2bOutdoors » Fri Jul 18, 2014 9:18 am

No. My first car (still own 18 years later) I put 50% down and took a loan from my father. I paid him back as soon as I could (less than 2 years) - I don't like to owe anyone.
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Re: If you own a car, do you have a car payment?

Post by Grt2bOutdoors » Fri Jul 18, 2014 9:19 am

jmndu99 wrote:I have owned my '06 Dodge Stratus for 4 years now. I bought it used (1 year old). Aggressively paid the loan off. Suzie Orman tells us to keep our car for 10-15 years. Yes, the car is 8 years old. 7 more years will go by quick.

The money that I would be paying every month is automatically going into the stock market.

BTW: Your title of your post is contradictory, in that, if you OWN a car, you cannot have a PAYMENT. Just sayin'
Why stop at 15 years? Maintain it, change the oil, give it a wash and wax every now and then, it will go much longer than 15 years. Save your money and invest it.
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Re: If you own a car, do you have a car payment?

Post by pennstater2005 » Fri Jul 18, 2014 9:23 am

I do the same thing as Nisi, making payments into a dedicated savings account after car is paid off. Takes some discipline.
“If you think nobody cares if you're alive, try missing a couple of car payments.” – Earl Wilson

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Re: If you own a car, do you have a car payment?

Post by KlangFool » Fri Jul 18, 2014 9:27 am

investingdad wrote:
KlangFool wrote:Hi,

I bought my 2014 Nissan Altima on a loan. I could buy the car with cash. Why?? I get additional $500 cash back and the 3 years 7.5K loan is at 2.69%. Effectively, I get paid ($500 - $326) = $174 to take the loan. The loan is less than 0%.

KlangFool
I almost went with the Altima but I had read about some problems with the transmission in the 2013 models. How has the 2014 been for you? I ended up with a 2013 Maxima per my post above. First time "stepping" up a little bit and I've enjoyed it so far.
investingdad,

No transmission problem with my 2014 Altima. Need to bring in my Altima to adjust the passenger side airbag sensor.

KlangFool

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Ged
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Re: If you own a car, do you have a car payment?

Post by Ged » Fri Jul 18, 2014 9:32 am

When I was just starting out back in the 1980's I partly financed one of my cars. Paid it off over a year. I hated making payments. All of the other cars I've owned during my life were cash purchases.

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Re: If you own a car, do you have a car payment?

Post by livesoft » Fri Jul 18, 2014 9:36 am

TheGreyingDuke wrote:I have owned around 55 cars since 1965, none of them were purchased with borrowed $$. :happy .
I was never a used car dealer like you. I've owned one-tenth the number of cars if you count half the car my spouse had when we got married. And I still own and pay insurance on 3 of them. :) I am even old enough that I may have already bought my last car.
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Re: If you own a car, do you have a car payment?

Post by Professor Emeritus » Fri Jul 18, 2014 9:39 am

TheGreyingDuke wrote:I have owned around 55 cars since 1965, none of them were purchased with borrowed $$. :happy

First purchase, in 1965, was a 1960 Renault Dauphine, 3 speed, 32 horsepower, and would hit 65 mph with a good tail wind, $200. Most recent purchase, in 2012, was a 2009 Jetta Sportswagen (2.0 Turbo), $15k, which goes like stink.

Almost all were used with the exception of a couple of Civics when I was a new father and worried about dependability.
I just counted , it's 18 since 1970. All cash. 14 used, 4 new, all minivans when we had small kids and friends to haul.

First car was a 1960 Corvair production serial number was 564. $175 It had a gas catalytic heater, a tube radio, a non functioning parking brake and I had to put in my own seatbelts. It was bright red and I called it Eric (the red)

Current ride is a 2009 Pontiac Vibe GT. also Red bought it used. It does have a parking brake.

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Re: If you own a car, do you have a car payment?

Post by Batousai » Fri Jul 18, 2014 9:50 am

I'll add another one to the "I have a loan because the money's cheap" list. We have 2 cars, the newer one has a loan, though there's enough money in the bank to pay it off. I don't because the interest is lower than my marginal real return on the money I'd use to pay it off.

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Re: If you own a car, do you have a car payment?

Post by Imbros » Fri Jul 18, 2014 9:50 am

I just paid peanuts cash for a 2006 Saab 9-3, which happens to be my 3rd and the nicest car I have ever owned. Paid cash for previous ones as well and I have no intention to finance anything other than a house in the future.
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Re: If you own a car, do you have a car payment?

Post by traumadoc77 » Fri Jul 18, 2014 9:54 am

We paid off our cars this year, we are saving up money to buy the next car with cash.

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Re: If you own a car, do you have a car payment?

Post by MathWizard » Fri Jul 18, 2014 10:00 am

Out of 14 cars, all used, and only two financed. Those were while I was in Grad School *,
when cash flow was an issue.

Other than that, I've only borrowed for houses, grad school, and engagement/wedding rings
(again while I was in grad school). All have turned out well (30th anniv. two years ago).

I don't expect to ever sign loan papers again.

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Re: If you own a car, do you have a car payment?

Post by Twins Fan » Fri Jul 18, 2014 10:27 am

I have 3 vehicles and no car payments... a daily driver, a pick up, and a hot rod.

I have financed vehicles before, but always like to pay them off ASAP. It's totally a mental thing, I just can't stand car payments.

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Re: If you own a car, do you have a car payment?

Post by denovo » Fri Jul 18, 2014 10:29 am

jvclark02 wrote:I chose to pay the zero interest loan monthly and set the full payoff balance aside in an interest bearing account :oops:
What is this interest you speak of, stranger?
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Re: If you own a car, do you have a car payment?

Post by denovo » Fri Jul 18, 2014 10:32 am

Grt2bOutdoors wrote:
jmndu99 wrote:I have owned my '06 Dodge Stratus for 4 years now. I bought it used (1 year old). Aggressively paid the loan off. Suzie Orman tells us to keep our car for 10-15 years. Yes, the car is 8 years old. 7 more years will go by quick.

The money that I would be paying every month is automatically going into the stock market.

BTW: Your title of your post is contradictory, in that, if you OWN a car, you cannot have a PAYMENT. Just sayin'
Why stop at 15 years? Maintain it, change the oil, give it a wash and wax every now and then, it will go much longer than 15 years. Save your money and invest it.
Really , it depends on what care you have. If my Passat makes it even to 12-13 years, I'd be surprised. It's currently at 9. It's not that reliable of a car, and I do all the maintenance items regularly, but it has terrible ratings on Consumer Reports (for good reason).
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Re: If you own a car, do you have a car payment?

Post by 22twain » Fri Jul 18, 2014 10:33 am

I've never taken out a loan to buy a car, and I'm pretty sure my wife never has, either. My first car was a hand-me-down from my parents near the end of graduate school; before that I didn't need a car. My wife had a couple of different cheap used cars before we got married. By the time we needed to replace our cars a few years after we got married, we had enough money to buy two new cars for cash: a Toyota Corolla type car that we used for out-of-town trips, and an even smaller car for local trips (no more than about 15 miles round trip). That was 24 years ago. Since then we've replaced the first car twice (most recently last year), and the second car just once (also last year), each time with similar new cars for cash. No "upgrading" except for the normal escalation of standard features which is very noticeable after ten years.

I think after adjusting for inflation, each of the replacements actually cost less than its predecessor!
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Re: If you own a car, do you have a car payment?

Post by Crimsontide » Fri Jul 18, 2014 10:34 am

Used to be one of those folks that thought I would always have a car payment, then I woke up... Haven't had a car payment in 10 years.

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Re: If you own a car, do you have a car payment?

Post by TomatoTomahto » Fri Jul 18, 2014 10:35 am

Paid cash for 3 cars; the fourth one offered (after price was finalized) an interest lower than inflation, so we "financed" that one. We had intended to pay in cash, but it seemed like free money. We have the payment auto-deducted (pun :oops: ) from our account, so no chance for late fees.

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Re: If you own a car, do you have a car payment?

Post by Rayandron » Fri Jul 18, 2014 10:47 am

I owe about 4-5k on a 0.9% interest car note for my Honda Fit. I could pay it off today but it would leave my e-fund a little lower than I'd like and the rate is low so I'm just letting it ride on auto-payment/autopilot for the time being.

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Re: If you own a car, do you have a car payment?

Post by livesoft » Fri Jul 18, 2014 11:15 am

Does anyone with a 0% auto-loan, make the monthly payment with a 2% cash-back credit card? :twisted:
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Re: If you own a car, do you have a car payment?

Post by nhdblfan » Fri Jul 18, 2014 11:16 am

Last three I did he same thing, Lexus RX ,Lexus GX and Mercedes CLK 550 Cab, put half down in cash, took out a loan for other half (.9 % was the highest).I then put the money I would have used for other half( full payment) in MLP's ( ETP,ECA,HCLP) and some in PFF,the interest distributions,dividends far exceeded the .9 % I was paying and the value went up more then enough on most to pay for the down payment cash I laid out !

Loving those MLP's outperformed the S&P 12 out of the last 13 years AND the distributions are tax deferred !

The trick of course is to learn how to "use" credit to your advantage,not let them take advantage of you.

Bungo
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Joined: Wed Sep 28, 2011 11:28 am

Re: If you own a car, do you have a car payment?

Post by Bungo » Fri Jul 18, 2014 11:22 am

I bought my current car in 2004 for cash. Will consider financing the next one if I can get a 0% loan.

Longtimelurker
Posts: 471
Joined: Fri Dec 13, 2013 8:23 am

Re: If you own a car, do you have a car payment?

Post by Longtimelurker » Fri Jul 18, 2014 12:03 pm

livesoft wrote:Does anyone with a 0% auto-loan, make the monthly payment with a 2% cash-back credit card? :twisted:
And then pay off the CC balance from a 0.85% savings account, which held the full cost of the car from the initiation of the loan?
Stay the course. If you can't resist greed, and fear is proven to be 2x as strong, you are doomed as an investor.

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