VW and Audi 0% APR - to buy or not?

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bogler52
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VW and Audi 0% APR - to buy or not?

Post by bogler52 »

Hello,

I recently posted about my troubles with my 2013 Acura TL. It needs a new engine ($$$) and I am very weary of what future non-wear-and-tear repairs it may need (you can read about my saga with the TL here: viewtopic.php?f=2&t=314496&start=50).

VW is offering 0% APR with no money down on new and CPO models. 2018-2019 vehicles come with a 6 year / 72,000 mile warranty.

It will cost $13.89 for every $1k financed on a new car, and will cost $16.67 for every $1k financed on a CPO car.

I like the idea of having such a long warranty, and having a brand new car so that I know exactly what happened to it.

I have been saving for a downpayment so I like the idea of not eroding that fund vs. buy a car in cash.

Is this a good deal to finance a car and should I take advantage of it? What rules do you use when purchasing a new car?

Thank you,
bogler52
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midareff
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Re: VW and Audi 0% APR - to buy or not?

Post by midareff »

Make sure the warranty is bumper to bumper, or at a minimum complete drive train. Today's electronics and sensors can be very expensive to repair (bumper to bumper).. Unlike many Bogleheads I do not have a problem with financing cars, provided I can make more after tax interest than the loan costs. Two years ago I took advantage of a 1.49% 36 month offer and left the money in bonds yielding 2.5% tax-exempt.
finite_difference
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Re: VW and Audi 0% APR - to buy or not?

Post by finite_difference »

If you’re upset about car repairs, I would not recommend buying an Audi or VW.

0% APR and a 6 year warranty is a good deal, but total cost of ownership is what matters. You’d want to be able to negotiate a good deal using the car buying approach detailed here:

viewtopic.php?t=124638

But unless you really want a specific Audi/VW and don’t mind the premium in parts cost, i would check-out Lexus (perhaps gently used) and Hyundai/Genesis, and Infiniti.
Last edited by finite_difference on Mon May 18, 2020 9:05 am, edited 1 time in total.
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02nz
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Re: VW and Audi 0% APR - to buy or not?

Post by 02nz »

The longer warranty is only on '18-19 VWs, no longer in effect for '20 and onwards AFAIK. I doubt there are too many '18-'19 models left on dealer lots.

You also didn't mention which models you might be looking at. VW's US lineup is honestly not impressive - spotty reliability, and the Passat in particular is ancient and simply not competitive. Audi is more competitive - there's not really a dud in the lineup - and (according to Consumer Reports) more reliable, but maintenance costs are high.
kjvmartin
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Re: VW and Audi 0% APR - to buy or not?

Post by kjvmartin »

Buy the car you want, not the deal you want.

As much praise as Honda and Toyota receive, I couldn't make one work for me my last round of shopping. There are a lot of options out there.
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Re: VW and Audi 0% APR - to buy or not?

Post by Pomegranate »

bogler52 wrote: Mon May 18, 2020 8:42 am Hello,

I recently posted about my troubles with my 2013 Acura TL. It needs a new engine ($$$) and I am very weary of what future non-wear-and-tear repairs it may need (you can read about my saga with the TL here: viewtopic.php?f=2&t=314496&start=50).

VW is offering 0% APR with no money down on new and CPO models. 2018-2019 vehicles come with a 6 year / 72,000 mile warranty.

It will cost $13.89 for every $1k financed on a new car, and will cost $16.67 for every $1k financed on a CPO car.

I like the idea of having such a long warranty, and having a brand new car so that I know exactly what happened to it.

I have been saving for a downpayment so I like the idea of not eroding that fund vs. buy a car in cash.

Is this a good deal to finance a car and should I take advantage of it? What rules do you use when purchasing a new car?

Thank you,
bogler52
It depends on planned mileage. We had a minor issue that was fixed under warranty during the second year. It's 5 years old now but under 60k miles. Plan to change it after it 100-110k miles. Do not expect it to serve you for 200k miles.
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bogler52
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Re: VW and Audi 0% APR - to buy or not?

Post by bogler52 »

midareff wrote: Mon May 18, 2020 8:47 am Make sure the warranty is bumper to bumper, or at a minimum complete drive train. Today's electronics and sensors can be very expensive to repair (bumper to bumper).. Unlike many Bogleheads I do not have a problem with financing cars, provided I can make more after tax interest than the loan costs. Two years ago I took advantage of a 1.49% 36 month offer and left the money in bonds yielding 2.5% tax-exempt.
It does appear to be bumper-to-bumper. There are some parts not covered, but those are wear items like tires and windshield wipers. There is even coverage if things like breaks wear out within the first year or 12k miles.

That is my thinking - I can more money elsewhere by having a very loan interest (almost 0) loan.
adamthesmythe
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Re: VW and Audi 0% APR - to buy or not?

Post by adamthesmythe »

Even if warranty takes care of issues, you will likely spend more time in the shop with VW/Audi. By the way, VW owner here. I have enjoyed the car but it has not been cheap to maintain.

You seem to be looking for a way to buy upscale vehicles that you can't quite afford.

If you want as trouble-free as possible just buy a new Toyota. I am working on that now. By the way, they also have the 0% deal. (Although I will look at other options to see if I can get the total cost down).

By the way, you're weary of the repairs and wary of the future cost.
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bogler52
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Re: VW and Audi 0% APR - to buy or not?

Post by bogler52 »

finite_difference wrote: Mon May 18, 2020 8:57 am If you’re upset about car repairs, I would not recommend buying an Audi or VW.

0% APR and a 6 year warranty is a good deal, but total cost of ownership is what matters. You’d want to be able to negotiate a good deal using the car buying approach detailed here:

viewtopic.php?t=124638

But unless you really want a specific Audi/VW and don’t mind the premium in parts cost, i would check-out Lexus (perhaps gently used) and Hyundai/Genesis, and Infiniti.
Thanks for sending over this post - very helpful and makes sense. I will look into Lexus, too. My family has owned Hondas / Acuras for years and right now I want to stay away from the brand as much as I've enjoyed them. They have been less than helpful during the issue with my car.
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bogler52
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Re: VW and Audi 0% APR - to buy or not?

Post by bogler52 »

02nz wrote: Mon May 18, 2020 9:01 am The longer warranty is only on '18-19 VWs, no longer in effect for '20 and onwards AFAIK. I doubt there are too many '18-'19 models left on dealer lots.

You also didn't mention which models you might be looking at. VW's US lineup is honestly not impressive - spotty reliability, and the Passat in particular is ancient and simply not competitive. Audi is more competitive - there's not really a dud in the lineup - and (according to Consumer Reports) more reliable, but maintenance costs are high.
Hi 02NZ,

You'd be surprised how many '19s are still on dealer lots right now. I've been looking at Audi's but of course they are more expense to buy.
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Re: VW and Audi 0% APR - to buy or not?

Post by stoptothink »

We have a '17 jetta that we purchased for <$14k OTD. If you have a high volume dealer, VW usually has ridiculous deals on leftover jettas. I checked the site of the dealer we bought from, they have a handful of '19 jettas (so you get the warranty) listed for $13.9k, plus the 0% for 6yrs, and they claim to pay your mortgage for 2 months (not sure how that works).

Having never owned a VW, we figured the deal was so good that if it became a headache after the warranty (we only got 3yrs, not sure how many miles) we could just get rid of it and not feel like we got screwed too bad. We'll be at 4yrs in July, zero issues and we love it.
Last edited by stoptothink on Mon May 18, 2020 10:26 am, edited 1 time in total.
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bogler52
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Re: VW and Audi 0% APR - to buy or not?

Post by bogler52 »

kjvmartin wrote: Mon May 18, 2020 9:08 am Buy the car you want, not the deal you want.

As much praise as Honda and Toyota receive, I couldn't make one work for me my last round of shopping. There are a lot of options out there.
Thank you! Part of my dilemma is that I love cars and driving and want something that is affordable and practical. When I look at something practice and affordable it typically feels like it's going to have no life to it.

I think there are cars that balance this, but usually comes with a cost. I want to be fiscally responsible and enjoy what I drive. I believe these two things are at odds.

A VW Golf R, Audi S4, or even a VW GTI are high on my list, and also high in price.
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bogler52
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Re: VW and Audi 0% APR - to buy or not?

Post by bogler52 »

bogler52 wrote: Mon May 18, 2020 10:19 am
02nz wrote: Mon May 18, 2020 9:01 am The longer warranty is only on '18-19 VWs, no longer in effect for '20 and onwards AFAIK. I doubt there are too many '18-'19 models left on dealer lots.

You also didn't mention which models you might be looking at. VW's US lineup is honestly not impressive - spotty reliability, and the Passat in particular is ancient and simply not competitive. Audi is more competitive - there's not really a dud in the lineup - and (according to Consumer Reports) more reliable, but maintenance costs are high.
Hi 02NZ,

You'd be surprised how many '19s are still on dealer lots right now. I've been looking at Audi's but of course they are more expense to buy.
I realize I didn't say which vehicles I am interested in.

I enjoy driving so something that is enjoyable to drive would be nice.

Golf R is high on the list and high in price.

A GTI is probably plenty of fun, but still somewhat expensive.

The Alltrack can be had fairly inexpensively and I hear they are not bad to drive, and have more space.

Audi's are more expensive, though I would love and S4. An Allroad would be nice, but likely the A4 would be most affordable.
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bogler52
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Re: VW and Audi 0% APR - to buy or not?

Post by bogler52 »

adamthesmythe wrote: Mon May 18, 2020 10:09 am Even if warranty takes care of issues, you will likely spend more time in the shop with VW/Audi. By the way, VW owner here. I have enjoyed the car but it has not been cheap to maintain.

You seem to be looking for a way to buy upscale vehicles that you can't quite afford.

If you want as trouble-free as possible just buy a new Toyota. I am working on that now. By the way, they also have the 0% deal. (Although I will look at other options to see if I can get the total cost down).

By the way, you're weary of the repairs and wary of the future cost.
I do like to drive and would like something on the nicer side. It doesn't have to be high end, but my Acura is a nice place to be, and my mother has a little VW Bug that is very quite on the highway and the turbo engine has nice power.

I'll look into Toyota and who else is offering 0% right now. You are right - I am weary of repairs and wary of future costs. My '07 Honda Accord (5-speed manual) was a little blast to drive and I only had to replace wear items. I thought the Acura would be more of the same and unfortunately it has not.
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bogler52
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Re: VW and Audi 0% APR - to buy or not?

Post by bogler52 »

stoptothink wrote: Mon May 18, 2020 10:25 am We have a '17 jetta that we purchased for <$14k OTD. If you have a high volume dealer, VW usually has ridiculous deals on leftover jettas. I checked the site of the dealer we bought from, they have a handful of '19 jettas (so you get the warranty) listed for $13.9k, plus the 0% for 6yrs, and they claim to pay your mortgage for 2 months (not sure how that works).

Having never owned a VW, we figured the deal was so good that if it became a headache after the warranty (we only got 3yrs, not sure how many miles) we could just get rid of it and not feel like we got screwed too bad. We'll be at 4yrs in July, zero issues and we love it.
Great to know! What dealer did you buy from?
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Re: VW and Audi 0% APR - to buy or not?

Post by 02nz »

Umm, are you really considering both a Jetta that can be had for <$15K and a Golf Type R, which is almost triple that price? This isn't how one does car research. You need to nail down what you're looking for first. And if it's reliability, move on from VW (unless the e-Golf is an option). It seems like the main draw for VW/Audi was 0% financing - in which case there are or will be plenty of other financing offers, given where interest rates are and that car sales have fallen off a cliff.

If I were looking for a car that was nice to drive, nice inside, and likely to be reasonably reliable, I'd probably start with the Mazda3. 0% financing for up to 60 months.
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Re: VW and Audi 0% APR - to buy or not?

Post by 02nz »

bogler52 wrote: Mon May 18, 2020 8:42 am It will cost $13.89 for every $1k financed on a new car, and will cost $16.67 for every $1k financed on a CPO car.
This is the kind of thinking that leads many Americans to buy too much car. (And why you see luxury SUVs lined up at food banks.)
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Re: VW and Audi 0% APR - to buy or not?

Post by stoptothink »

bogler52 wrote: Mon May 18, 2020 10:35 am
stoptothink wrote: Mon May 18, 2020 10:25 am We have a '17 jetta that we purchased for <$14k OTD. If you have a high volume dealer, VW usually has ridiculous deals on leftover jettas. I checked the site of the dealer we bought from, they have a handful of '19 jettas (so you get the warranty) listed for $13.9k, plus the 0% for 6yrs, and they claim to pay your mortgage for 2 months (not sure how that works).

Having never owned a VW, we figured the deal was so good that if it became a headache after the warranty (we only got 3yrs, not sure how many miles) we could just get rid of it and not feel like we got screwed too bad. We'll be at 4yrs in July, zero issues and we love it.
Great to know! What dealer did you buy from?
Strong VW in Salt Lake City. I believe it is the highest volume VW dealer in the mountain west region.

I agree with the other poster; we love our jetta (and it is "fun" enough for us), but cross-shopping a Golf R is pretty hilarious. Figure out what you want first.
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Re: VW and Audi 0% APR - to buy or not?

Post by MMiroir »

bogler52 wrote: Mon May 18, 2020 10:29 amI realize I didn't say which vehicles I am interested in.

I enjoy driving so something that is enjoyable to drive would be nice.

Golf R is high on the list and high in price.

A GTI is probably plenty of fun, but still somewhat expensive.

The Alltrack can be had fairly inexpensively and I hear they are not bad to drive, and have more space.

Audi's are more expensive, though I would love and S4. An Allroad would be nice, but likely the A4 would be most affordable.
We bought a GTI last year thinking it would be a fun to drive car. While it is competent, quick and alot more interesting than a penalty box Toyota, with the DSG it is not overly fun. Like most modern cars, the engine doesn't have much character, the steering doesn't have much feedback and the chassis, while competent, seems pretty dead. The R has more horsepower, but it doesn't change the overall character of the car.

The six year warranty is nice though, and if you follow the model on VWVortex, the GTI seems to be pretty reliable.
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Watty
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Re: VW and Audi 0% APR - to buy or not?

Post by Watty »

bogler52 wrote: Mon May 18, 2020 8:42 am I recently posted about my troubles with my 2013 Acura TL. It needs a new engine ($$$) and I am very weary of what future non-wear-and-tear repairs it may need (you can read about my saga with the TL here: viewtopic.php?f=2&t=314496&start=50).
I don't know what type of car you are looking for but after that experience you might consider a new Hyundai which comes with a ten power-train warranty and a five year bumper to bumper warranty. Some of their models have gotten pretty good reviews.
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Re: VW and Audi 0% APR - to buy or not?

Post by abracadabra11 »

MMiroir wrote: Mon May 18, 2020 10:28 pm We bought a GTI last year thinking it would be a fun to drive car. While it is competent, quick and alot more interesting than a penalty box Toyota, with the DSG it is not overly fun. Like most modern cars, the engine doesn't have much character, the steering doesn't have much feedback and the chassis, while competent, seems pretty dead. The R has more horsepower, but it doesn't change the overall character of the car.

The six year warranty is nice though, and if you follow the model on VWVortex, the GTI seems to be pretty reliable.
Oh come on, the engine has plenty of character - just ask the soundaktor.
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Re: VW and Audi 0% APR - to buy or not?

Post by jabberwockOG »

Sounds to me like you only want high dollar cars you can't afford to own right now. Leasing a car is the most common way for people to drive cars they can't afford. Save your money and pay cash for an older extremely reliable brand/model that you can afford. Later on in life when you have earned and accumulated adequate wealth there will be plenty of time to drive more "exciting " high dollar cars.
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Re: VW and Audi 0% APR - to buy or not?

Post by MMiroir »

abracadabra11 wrote: Mon May 18, 2020 10:33 pmOh come on, the engine has plenty of character - just ask the soundaktor.
:D

Also, if the OP is interested in buying a new VW, there is a $500 rebate for being a member of the SCCA. SCCA membership is $70, so it is a good ROI.
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Re: VW and Audi 0% APR - to buy or not?

Post by grabiner »

bogler52 wrote: Mon May 18, 2020 8:42 am It will cost $13.89 for every $1k financed on a new car, and will cost $16.67 for every $1k financed on a CPO car.
This is the wrong way to think of a loan, unless the number is important for qualifying for the loan (debt-to-income ratio). It costs you very close to $1K for every $1K financed. The loan balance hasn't been removed from your bank account, but every loan payment you make is money that you can't put into your bank account (or other account), so you aren't any better off than if you bought the car with cash. (The low loan rate makes a small difference in cost; if you have $20K in the bank earning 1% after tax used to make payments on the 0% loan, you come out $200 ahead.)

The loan terms may make it worthwhile to take out a loan rather than paying cash for the car (or not; dealers may offer cash back instead of a promotional loan offer), but shouldn't make it much more attractive to buy the car at all.
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bogler52
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Re: VW and Audi 0% APR - to buy or not?

Post by bogler52 »

This is all helpful feedback. Several people have mentioned (and I agree) that I’m interested in cars that I can’t currently afford. Buying something in cash would be the best option financially.

My question is, how do you determine how much you spend on a car?

Thanks,
bogler52
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bogler52
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Re: VW and Audi 0% APR - to buy or not?

Post by bogler52 »

grabiner wrote: Mon May 18, 2020 11:09 pm
bogler52 wrote: Mon May 18, 2020 8:42 am It will cost $13.89 for every $1k financed on a new car, and will cost $16.67 for every $1k financed on a CPO car.
This is the wrong way to think of a loan, unless the number is important for qualifying for the loan (debt-to-income ratio). It costs you very close to $1K for every $1K financed. The loan balance hasn't been removed from your bank account, but every loan payment you make is money that you can't put into your bank account (or other account), so you aren't any better off than if you bought the car with cash. (The low loan rate makes a small difference in cost; if you have $20K in the bank earning 1% after tax used to make payments on the 0% loan, you come out $200 ahead.)

The loan terms may make it worthwhile to take out a loan rather than paying cash for the car (or not; dealers may offer cash back instead of a promotional loan offer), but shouldn't make it much more attractive to buy the car at all.
Hi grabiner,

Thank you for positioning it this way.

I’m curious, when would you choose to take out a loan vs. pay cash? Would it always be because you don’t have the cash, or in a situation where the interest is so low it makes sense to leave the cash where it is?

Thanks,
bogler52
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Re: VW and Audi 0% APR - to buy or not?

Post by onourway »

bogler52 wrote: Tue May 19, 2020 5:59 am This is all helpful feedback. Several people have mentioned (and I agree) that I’m interested in cars that I can’t currently afford. Buying something in cash would be the best option financially.

My question is, how do you determine how much you spend on a car?

Thanks,
bogler52
How much cash do you have to spend without depleting your emergency fund?

There you go.

In your other thread you have apparently decided spending $4-5k to replace the engine in the Acura is not worthwhile - even though the net cost is essentially zero. In other words - with a bad engine, the car is worth maybe $1000. With a replaced engine, it appears to be worth at least $7k. Whether you keep the Acura or not, you should be replacing the engine first.
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Re: VW and Audi 0% APR - to buy or not?

Post by Jags4186 »

bogler52 wrote: Tue May 19, 2020 5:59 am This is all helpful feedback. Several people have mentioned (and I agree) that I’m interested in cars that I can’t currently afford. Buying something in cash would be the best option financially.

My question is, how do you determine how much you spend on a car?

Thanks,
bogler52
10-15% of your income is a good starting point in car price.

If you make $100k/yr look for cars that cost between $10-15k. If you’re someone who frequently changes cars I’d look towards the bottom end and if you keep your cars for a while look towards the higher end.

Of course if you are a two income household with two vehicles making $100k that means two $5000-$7500 cars.
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Re: VW and Audi 0% APR - to buy or not?

Post by reln »

bogler52 wrote: Mon May 18, 2020 8:42 am Hello,

I recently posted about my troubles with my 2013 Acura TL. It needs a new engine ($$$) and I am very weary of what future non-wear-and-tear repairs it may need (you can read about my saga with the TL here: viewtopic.php?f=2&t=314496&start=50).

VW is offering 0% APR with no money down on new and CPO models. 2018-2019 vehicles come with a 6 year / 72,000 mile warranty.

It will cost $13.89 for every $1k financed on a new car, and will cost $16.67 for every $1k financed on a CPO car.

I like the idea of having such a long warranty, and having a brand new car so that I know exactly what happened to it.

I have been saving for a downpayment so I like the idea of not eroding that fund vs. buy a car in cash.

Is this a good deal to finance a car and should I take advantage of it? What rules do you use when purchasing a new car?

Thank you,
bogler52
Has to be VW?
stoptothink
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Re: VW and Audi 0% APR - to buy or not?

Post by stoptothink »

bogler52 wrote: Tue May 19, 2020 5:59 amMy question is, how do you determine how much you spend on a car?
In all honesty, cheapest thing that meets our needs, which for us (family of 4) is generally a new compact sedan at about a month's income. I am a total gearhead, I'll talk cars all day, but I learned quite early that the price isn't worth it to me. I bought a '00 Civic Si at 19, then preceded to have the rims stolen, then the stereo, then have someone bash in the driver's door while I was inside the grocery store, then the entire car stolen; all within a year. One of the best decisions I ever made was buying a home close enough to walk to work and ride my bike almost everywhere else. But I do love taking my brothers' Porsche or E63 for a spin occasionally.
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Re: VW and Audi 0% APR - to buy or not?

Post by Helo80 »

stoptothink wrote: Tue May 19, 2020 8:18 am
bogler52 wrote: Tue May 19, 2020 5:59 amMy question is, how do you determine how much you spend on a car?
In all honesty, cheapest thing that meets our needs, which for us (family of 4) is generally a new compact sedan at about a month's income. I am a total gearhead, I'll talk cars all day, but I learned quite early that the price isn't worth it to me. I bought a '00 Civic Si at 19, then preceded to have the rims stolen, then the stereo, then have someone bash in the driver's door while I was inside the grocery store, then the entire car stolen; all within a year. One of the best decisions I ever made was buying a home close enough to walk to work and ride my bike almost everywhere else. But I do love taking my brothers' Porsche or E63 for a spin occasionally.

You know, if you had bought a Prius, you probably would not have had any of those issues.

I do wonder if your Civic Si is still on the road or gone through the chop shop yet.... I'm guessing gutted by now.
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Re: VW and Audi 0% APR - to buy or not?

Post by stoptothink »

Helo80 wrote: Tue May 19, 2020 8:27 am
stoptothink wrote: Tue May 19, 2020 8:18 am
bogler52 wrote: Tue May 19, 2020 5:59 amMy question is, how do you determine how much you spend on a car?
In all honesty, cheapest thing that meets our needs, which for us (family of 4) is generally a new compact sedan at about a month's income. I am a total gearhead, I'll talk cars all day, but I learned quite early that the price isn't worth it to me. I bought a '00 Civic Si at 19, then preceded to have the rims stolen, then the stereo, then have someone bash in the driver's door while I was inside the grocery store, then the entire car stolen; all within a year. One of the best decisions I ever made was buying a home close enough to walk to work and ride my bike almost everywhere else. But I do love taking my brothers' Porsche or E63 for a spin occasionally.

You know, if you had bought a Prius, you probably would not have had any of those issues.

I do wonder if your Civic Si is still on the road or gone through the chop shop yet.... I'm guessing gutted by now.
It was found a few months later, completely gutted.
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Re: VW and Audi 0% APR - to buy or not?

Post by Helo80 »

stoptothink wrote: Tue May 19, 2020 8:31 am It was found a few months later, completely gutted.
Yup... those late 90's civics are hot items. Easy to steal and run forever making it easy to go get new(er)/working parts when needed.
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Re: VW and Audi 0% APR - to buy or not?

Post by grabiner »

bogler52 wrote: Tue May 19, 2020 6:02 am
grabiner wrote: Mon May 18, 2020 11:09 pm
bogler52 wrote: Mon May 18, 2020 8:42 am It will cost $13.89 for every $1k financed on a new car, and will cost $16.67 for every $1k financed on a CPO car.
This is the wrong way to think of a loan, unless the number is important for qualifying for the loan (debt-to-income ratio). It costs you very close to $1K for every $1K financed. The loan balance hasn't been removed from your bank account, but every loan payment you make is money that you can't put into your bank account (or other account), so you aren't any better off than if you bought the car with cash. (The low loan rate makes a small difference in cost; if you have $20K in the bank earning 1% after tax used to make payments on the 0% loan, you come out $200 ahead.)

The loan terms may make it worthwhile to take out a loan rather than paying cash for the car (or not; dealers may offer cash back instead of a promotional loan offer), but shouldn't make it much more attractive to buy the car at all.
Hi grabiner,

Thank you for positioning it this way.

I’m curious, when would you choose to take out a loan vs. pay cash? Would it always be because you don’t have the cash, or in a situation where the interest is so low it makes sense to leave the cash where it is?
Taking out a loan makes sense if the cost of taking the loan is less than the cost of raising the cash and not having it invested. If you have the cash to buy a car with a 1% loan, but you could instead invest this cash in CDs yielding 1.5% after tax, then you come out ahead with no risk by taking the loan and leaving the cash in CDs. (This ignores secondary costs; if taking the loan requires you to have a $500 collision deductible and you would rather have $2000, that is an additional cost of the loan.)

I have twice taken out loans when I could have paid cash, but there was a cost of raising the cash. In 2001, I bought a car, taking out a loan at 2.99%; I couldn't quite match that in risk-free investments, but in order to pay cash, I would have had to sell stock for a capital gain. Similarly, in 2013, I bought a home, taking out a mortgage at 3.2% APR. I would have had a huge capital gain if I sold enough stock to pay cash for the home, so I sold only enough stock to put 20% down.

And the same logic applies to keeping the loan; declining to make an extra payment on a loan is the same decision as taking out a loan. I paid a lot of points on the 2013 mortgage to get the interest rate down to 2.625%. At that rate, it wasn't worth making extra payments on the loan, because I could earn more on bonds than the after-tax loan rate; I intended to pay the loan on schedule. But in March 2020, bond rates had dropped below the after-tax mortgage rate, and I was able to raise the cash with no tax cost because the stock market had declined, so I paid off the mortgage (with bonds, not stock; I sold stock to make the loan payment, and sold an equal amount of bonds in my employer plan to buy stock).
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Re: VW and Audi 0% APR - to buy or not?

Post by MMiroir »

bogler52 wrote: Mon May 18, 2020 8:42 amWhat rules do you use when purchasing a new car?
We don't have any hard fast financial ratios when buying a car, but we have the following rules in order to keep total ownership costs as low as possible:

1 - Our families car buying strategy has been to buy a new car every five years. For the first five years, it will be the primary driver and get the bulk of the miles. After five, it becomes the secondary driver/back up car. After 10 years, it goes to kids to drive. This maximizes the use of the vehicle.

2 - In addition to meeting your needs, the car has to one you would be happy to own for a long term. Look at 10 year old versions of the car you are interested in, and try to visualize if you would happy to drive whatever car you are looking at 10 years from now. In our case with the GTI, we purchased the car with the intention of handing it off to one of our kids for their post college job three to six years from now. They would likely keep it for three to six years, completing the 10 year hold.

3 - We try to buy new car mostly so we can keep on top of maintenance. If we buy used, it will be one owner, low miles (my last used car purchase was a five year old luxury vehicle with less than 17,000 miles). Stay away from cars with multiple owners as that is a guarantee that few of the owners will have done the preventative maintenance.

4 - A good way to minimize auto costs is to minimize churn. Every time you buy a car, you get to pay the government a sales tax for privilege, as well as spending money/time shopping and bringing the maintenance up to date. If you have to spend a little more up front to make sure that you get a car you like, you are more likely to minimize long term costs.
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bogler52
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Re: VW and Audi 0% APR - to buy or not?

Post by bogler52 »

reln wrote: Tue May 19, 2020 6:40 am
bogler52 wrote: Mon May 18, 2020 8:42 am Hello,

I recently posted about my troubles with my 2013 Acura TL. It needs a new engine ($$$) and I am very weary of what future non-wear-and-tear repairs it may need (you can read about my saga with the TL here: viewtopic.php?f=2&t=314496&start=50).

VW is offering 0% APR with no money down on new and CPO models. 2018-2019 vehicles come with a 6 year / 72,000 mile warranty.

It will cost $13.89 for every $1k financed on a new car, and will cost $16.67 for every $1k financed on a CPO car.

I like the idea of having such a long warranty, and having a brand new car so that I know exactly what happened to it.

I have been saving for a downpayment so I like the idea of not eroding that fund vs. buy a car in cash.

Is this a good deal to finance a car and should I take advantage of it? What rules do you use when purchasing a new car?

Thank you,
bogler52
Has to be VW?
It doesn't have to be VW. I saw their 0% financing first, but thanks to others on this thread I see many car companies are offering this type of financing.
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Re: VW and Audi 0% APR - to buy or not?

Post by bogler52 »

stoptothink wrote: Tue May 19, 2020 8:18 am
bogler52 wrote: Tue May 19, 2020 5:59 amMy question is, how do you determine how much you spend on a car?
In all honesty, cheapest thing that meets our needs, which for us (family of 4) is generally a new compact sedan at about a month's income. I am a total gearhead, I'll talk cars all day, but I learned quite early that the price isn't worth it to me. I bought a '00 Civic Si at 19, then preceded to have the rims stolen, then the stereo, then have someone bash in the driver's door while I was inside the grocery store, then the entire car stolen; all within a year. One of the best decisions I ever made was buying a home close enough to walk to work and ride my bike almost everywhere else. But I do love taking my brothers' Porsche or E63 for a spin occasionally.
I imagine you're working from home now which saves some wear-and-tear on the bike. Kind of like visiting your nephew and nieces, a blast to spend time with the kids (or a Porsche or E63) but nice to not have to deal with them when they take a crap and fall to pieces...

I'm curious if your bother spends his money on toys, or is he a high earner?
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Re: VW and Audi 0% APR - to buy or not?

Post by emoore »

Do you need or want AWD? The Golf R has AWD but is pretty expensive. If you don't need AWD then the GTI would work. Probably 90% of the performance for many thousands cheaper. I still have my GTI and love it. 9 years old with 100k+ miles and still going strong. Had 2 issues; high pressure fuel pump was replaced after a year (replacement has been fine) and a window regulator broke a couple of years ago. Other than that it's been really reliable.
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Re: VW and Audi 0% APR - to buy or not?

Post by grabiner »

MMiroir wrote: Tue May 19, 2020 10:46 am 4 - A good way to minimize auto costs is to minimize churn. Every time you buy a car, you get to pay the government a sales tax for privilege, as well as spending money/time shopping and bringing the maintenance up to date. If you have to spend a little more up front to make sure that you get a car you like, you are more likely to minimize long term costs.
And trading costs as well. You get less for selling a used car than you pay to buy it (unless you sell privately). If a car is sold three times, the total cost for all three owners is more than the cost for a single-owner car.
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Re: VW and Audi 0% APR - to buy or not?

Post by Carguy85 »

Carcomplaints.com A few other websites out there that speak of reliability.... wouldn’t even consider anything euro if reliability and low maintenance cost is important. Just look at how much a Mercedes outside of warranty is worth...(not much) Toyota/Lexus are top of the list in reliability. However, to me the most important aspect of a vehicle to me is whats underneath the shiny paint. I’m a little ocd about having components properly engineered for reliability...others like my brother could care less as long as it’s stylish. An off lease and/or certified pre-owned vehicle with full service records would be a good way to save some money if you want the easier approach of using a dealer. Can also depend on what area of the country you are in as to the ease of finding used vehicles at a fair price in good condition.. Good luck
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Re: VW and Audi 0% APR - to buy or not?

Post by stoptothink »

bogler52 wrote: Tue May 19, 2020 11:42 am
stoptothink wrote: Tue May 19, 2020 8:18 am
bogler52 wrote: Tue May 19, 2020 5:59 amMy question is, how do you determine how much you spend on a car?
In all honesty, cheapest thing that meets our needs, which for us (family of 4) is generally a new compact sedan at about a month's income. I am a total gearhead, I'll talk cars all day, but I learned quite early that the price isn't worth it to me. I bought a '00 Civic Si at 19, then preceded to have the rims stolen, then the stereo, then have someone bash in the driver's door while I was inside the grocery store, then the entire car stolen; all within a year. One of the best decisions I ever made was buying a home close enough to walk to work and ride my bike almost everywhere else. But I do love taking my brothers' Porsche or E63 for a spin occasionally.
I imagine you're working from home now which saves some wear-and-tear on the bike. Kind of like visiting your nephew and nieces, a blast to spend time with the kids (or a Porsche or E63) but nice to not have to deal with them when they take a crap and fall to pieces...

I'm curious if your bother spends his money on toys, or is he a high earner?
I've actually been putting a lot more miles on the bike, and I have a ~7min walking commute (which, as of yesterday, I am going to be making 3x/week). My brother is a high-earner (when he is working (not the case now) - oil & gas contractor), but he generally has more debt sitting in his garage than he has total in assets. Currently has a Porsche Turbo S and E63 wagon sitting in his garage. The AMG has literally sat in the garage for 2yrs collecting dust because he is too underwater on it too sell and the maintenance was killing him. Toys have kept him broke despite income of $200k+/yr for the last decade.
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Re: VW and Audi 0% APR - to buy or not?

Post by tashnewbie »

stoptothink wrote: Tue May 19, 2020 12:47 pm
I've actually been putting a lot more miles on the bike, and I have a ~7min walking commute (which, as of yesterday, I am going to be making 3x/week). My brother is a high-earner (when he is working (not the case now) - oil & gas contractor), but he generally has more debt sitting in his garage than he has total in assets. Currently has a Porsche Turbo S and E63 wagon sitting in his garage. The AMG has literally sat in the garage for 2yrs collecting dust because he is too underwater on it too sell and the maintenance was killing him. Toys have kept him broke despite income of $200k+/yr for the last decade.
Ouch!!
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Re: VW and Audi 0% APR - to buy or not?

Post by Shael_AT »

Oh my, VW is such a beast of a brand.

Bought a MK7.5 2018 GTI SE with one of these amazing 0% APR deals, our local VW dealer has a unlimited, lifetime drivetrain warranty and 84 month B2B warranty - as. long. as. you. dont. modify. or. tune. the. car.

Needless to say... Some things are worth voiding warranty for. :sharebeer But nothing feels as good as a 300hp+, 250tq + front wheel, engine tuned, transmission tuned, exhaust modified, air intake, suspension, wheels and tire modified/optimized tinder box zipping around narrow, probably dangerous, windy roads in Western and Central WA.

Have had this thing for 2 years and somehow, no issues to speak of except the usual maintenance items.

Knock on wood
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Re: VW and Audi 0% APR - to buy or not?

Post by oldcomputerguy »

This topic is now in the Personal Consumer Issues forum (vehicle purchase).
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)
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Re: VW and Audi 0% APR - to buy or not?

Post by bogler52 »

Hi All,

As an update I did end up fixing the TL. I spoke with several dealerships, repair shops, and even auctions. It made the most financial sense to fix the car.

Thank you for all your help and advice.

Best,
bogler52
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Re: VW and Audi 0% APR - to buy or not?

Post by caffeperfavore »

bogler52 wrote: Thu Jun 18, 2020 8:05 am Hi All,

As an update I did end up fixing the TL. I spoke with several dealerships, repair shops, and even auctions. It made the most financial sense to fix the car.

Thank you for all your help and advice.

Best,
bogler52
It usually does. Congratulations on making the fiscally smart move. If your engine issues are sorted out now, you should be good to go for some time. It can be hard to resist new car fever, but the joy of new ownership almost always wears off quickly while the pain of payments keep on coming.
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Re: VW and Audi 0% APR - to buy or not?

Post by azanon »

Shael_AT wrote: Wed May 20, 2020 2:41 pm Oh my, VW is such a beast of a brand.

Bought a MK7.5 2018 GTI SE with one of these amazing 0% APR deals, our local VW dealer has a unlimited, lifetime drivetrain warranty and 84 month B2B warranty - as. long. as. you. dont. modify. or. tune. the. car.

Needless to say... Some things are worth voiding warranty for. :sharebeer But nothing feels as good as a 300hp+, 250tq + front wheel, engine tuned, transmission tuned, exhaust modified, air intake, suspension, wheels and tire modified/optimized tinder box zipping around narrow, probably dangerous, windy roads in Western and Central WA.
It's time for an upgrade IS38 turbo. Unitronic Stage 2+ Mk7.5 GTI makes 381HP/377LB-FT torque. :mrgreen:

I have the MK6 VW GTI with K04 turbo, but vs. IS38, I feel just about a bitter about it as Hitler did in this video: https://www.youtube.com/watch?v=HYVuuN6 ... e=youtu.be
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