[Poll] Do you have an auto loan?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills

Do you have an automobile loan of any kind?

Poll ended at Thu Mar 26, 2015 11:29 am

Yes
65
25%
No
198
75%
 
Total votes: 263

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SC Hoosier
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[Poll] Do you have an auto loan?

Post by SC Hoosier » Thu Mar 19, 2015 11:29 am

I did a quick search of the site and couldn't find a poll on this. We were wondering in another thread and I'm curious.

Thanks for voting.

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letsgobobby
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Re: Do you have and auto loan?

Post by letsgobobby » Thu Mar 19, 2015 11:34 am

After negotiating our best price on a car, we took the 0% financing for 3 years. Why not? and can't argue with the results of having invested since October 2012.

Still, I'll be looking forward to my last payment of $811.33 in September, 2015.

John3754
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Re: Do you have and auto loan?

Post by John3754 » Thu Mar 19, 2015 11:38 am

I buy used and pay cash.

That said, there were no 0% loans available last time I bought, if someone wanted to give me free money I'd take it.

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Toons
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Re: Do you have and auto loan?

Post by Toons » Thu Mar 19, 2015 11:40 am

No auto loans.Have been in the fortunate position to pay cash for last several vehicles. :happy
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JDCarpenter
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Re: Do you have and auto loan?

Post by JDCarpenter » Thu Mar 19, 2015 11:42 am

Poll is present tense, so "No."

Had one for DW's car from 2019-2012 at less than 1%. Could have done the same for my first new car from 12-15, but went for the rewards points on my credit card instead (and, yeah, paid it off immediately). If we ever buy another new car, we'd consider a loan if the price were right.
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8foot7
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Re: Do you have and auto loan?

Post by 8foot7 » Thu Mar 19, 2015 11:44 am

I made a promise to myself, after selling a car I loved to get out from under the payment during a divorce and driving a beater, that I would never have another car payment again. It was a good promise.

Bungo
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Re: Do you have and auto loan?

Post by Bungo » Thu Mar 19, 2015 11:46 am

Bought my current car for cash in 2004 (new). I might get a loan for the next one, perhaps a few years from now, if interest rates are still low enough.

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Re: Do you have and auto loan?

Post by Meg77 » Thu Mar 19, 2015 11:48 am

My husband financed his car at 2.15% when he bought it last year. Reason being that his student loan has $65K left on it and we'd rather put cash toward that. The rate is in the low 2% range with drbank, but it's floating so we want to pay off that loan asap. Taking low cost fixed financing on the cars will enable us to accelerate that debt repayment.
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livesoft
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Re: Do you have and auto loan?

Post by livesoft » Thu Mar 19, 2015 12:21 pm

Here is the old poll you were looking for:
http://www.bogleheads.org/forum/viewtop ... 1&t=143139

With 275 votes it was rather popular as far as polls on the forum go.
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JimmyD
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Re: Do you have and auto loan?

Post by JimmyD » Thu Mar 19, 2015 12:34 pm

Paid mine off last year and paid off my wife's last month. We're using the savings to help max out a backdoor Roth for each of us, in conjunction with other funds.

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powermega
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Re: Do you have and auto loan?

Post by powermega » Thu Mar 19, 2015 12:48 pm

One of our two cars has a loan on it. I don't see anything wrong with getting a loan for 0-2%. I would rather not disturb my taxable investments and get a low interest loan than have to deal with realizing gains that I don't want to do at the time for the sake of avoiding low interest amounts. A 0% loan is a complete no-brainer to me.
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Trader Joe
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Re: Do you have and auto loan?

Post by Trader Joe » Thu Mar 19, 2015 12:54 pm

No, never. We always pay cash for our automobiles.

Auto loans are a huge mistake. If you cannot pay cash then buy a bicycle and save up.

Twins Fan
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Re: Do you have and auto loan?

Post by Twins Fan » Thu Mar 19, 2015 12:55 pm

Nope... three vehicles and no auto loans for me.

Not that I've never had an auto loan. But, can't stand them, pay them off ASAP, and would love it if I never have another auto loan again.

No numbers running necessary, just a personal preference deal for me.

Gropes & Ray
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Re: Do you have and auto loan?

Post by Gropes & Ray » Thu Mar 19, 2015 1:01 pm

I took a loan the last time I bought a vehicle, but I paid it off in 18 months. Odds are, I will take a loan for my next vehicle purchase, but I don't expect that to be for a few years.

Crow Hunter
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Re: Do you have and auto loan?

Post by Crow Hunter » Thu Mar 19, 2015 1:09 pm

I have only done it on 3 vehicles before.

-1999 Silverado Z71 First new vehicle I ever purchased. I was still living at home at the time right after graduating college. I couldn't stand to pay interest. I paid it off in about 4 months IIRC.

-2001 Corolla My new wife's 198x Cavalier (IIRC) started having serious problems to the point I was working on it all the time. It was my wife's birthday and on a lark, I bought her a new car. :shock: It was rather convoluted. I took a loan out from Toyota, didn't like the interest rate. My parents let me take out a loan from their hometown bank with one of their CD's as collateral and I used that to pay off the Toyota. I paid them off in 6 months.

-2011 Silverado that I bought in 2012. I took out a loan for 3 months at somewhere around $2,500 so that I could get an additional $2,000 off the truck when I bought it. It was a 4WD work truck that was ordered but never purchased and when people buy extended cab 4WD trucks in my area, they want all the extras. Not a basic no frills work truck. The dealership needed it sold more than I needed a new truck so I actually bought it "pre-depreciated" :twisted: .

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Re: Do you have and auto loan?

Post by Rupert » Thu Mar 19, 2015 1:13 pm

powermega wrote:One of our two cars has a loan on it. I don't see anything wrong with getting a loan for 0-2%. I would rather not disturb my taxable investments and get a low interest loan than have to deal with realizing gains that I don't want to do at the time for the sake of avoiding low interest amounts. A 0% loan is a complete no-brainer to me.
+1. It's a no-brainer to me even at .9% or 1.99%, which are pretty common offers these days. And I've never gotten a better deal on a car by offering to pay cash. I've been told several times by salesmen that they can actually offer me a better deal if I finance with the manufacturer's finance company because the dealer gets some sort of incentive from the manufacturer for sending business to the finance company.

Twins Fan
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Re: Do you have and auto loan?

Post by Twins Fan » Thu Mar 19, 2015 1:17 pm

I would have no problem financing or taking the loan to get a better deal on a car. The loan would just be paid off very quickly. :happy

HardSphere
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Re: Do you have and auto loan?

Post by HardSphere » Thu Mar 19, 2015 1:25 pm

I just purchased a car with an auto loan last month. I was planning to wait to pay cash on the particular car I wanted, but the 1996 Oldsmobile I was driving died sooner than expected. Given that I am pretty used to driving cars into the ground, I thought it was a better idea to buy the car I wanted now with the loan rather than downgrade to something I could buy with just cash but be unhappy driving for few years. I put down over 50% of the purchase price as a down payment, and was able to get a much lower interest rate.

Staff at the dealership were unprepared for this, and it was funny. The salesman commented that I was the first customer he had ever encountered that had asked for a shorter loan term (the original choices were 60 and 72 months). The finance manager asked me for a deposit on the car and I asked him if the whole down payment would be OK; he replied with "well, sure but you don't have that much in your checking account now, right? You can come back with the difference on Monday." He was a bit surprised when he saw the amount on the check I handed to him.

jpark1982
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Re: Do you have and auto loan?

Post by jpark1982 » Thu Mar 19, 2015 1:29 pm

Trader Joe wrote:No, never. We always pay cash for our automobiles.

Auto loans are a huge mistake. If you cannot pay cash then buy a bicycle and save up.
Serious? I can understand not wanting to have debt, but saying that if you can't buy a car in cash that you should ride a bike? I would venture to say that the overwhelming percentage of the general public don't have a fully paid off car, whether that means having a car loan or a leasing. Not everyone drives a car into the ground whether or not they can afford to.

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plannerman
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Re: Do you have and auto loan?

Post by plannerman » Thu Mar 19, 2015 1:31 pm

Two years ago the dealer gave me an additional $500 off the purchase price if I financed the car. He claimed he got the money back from the automaker's finance arm. He told me I had to keep the loan for at least three months. I read the contract and there was no such requirement for keeping the loan, so I took the $500 and paid off the note the next week. Who says there are no free lunches?

Bought another car last week. To pay cash, I would need to withdraw from my IRA an amount that would put me perilously close to going over the next MAGI breakpoint for Medicare Part B premiums. So I financed about half the cost @.99% apr to spread the IRA withdrawals over two tax years. I'll pay the remainder of the loan balance off next January.

Financing is just another tool in the toolkit.

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Matt48Ritchie
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Re: Do you have and auto loan?

Post by Matt48Ritchie » Thu Mar 19, 2015 1:34 pm

We've only paid cash so far. But if we found a used car that was at least 2-3 years old and could be financed at less than 2% I would probably do that. Even though we would be able to pay cash for it.

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DaftInvestor
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Re: Do you have and auto loan?

Post by DaftInvestor » Thu Mar 19, 2015 1:35 pm

I wish you had a third option. We me the answer is "Yes - but only because there happened to be a 0% financing promotion when I bought - otherwise it would have been cash".

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mhc
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Re: Do you have and auto loan?

Post by mhc » Thu Mar 19, 2015 1:38 pm

1988 - cash for used car
1992 - loan for new car
1995 - loan for new car
1999 - loan for new car
2003 - cash for new car
2006 - cash for new car
2007 - cash for used car

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DaftInvestor
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Re: Do you have and auto loan?

Post by DaftInvestor » Thu Mar 19, 2015 1:40 pm

Trader Joe wrote:No, never. We always pay cash for our automobiles.

Auto loans are a huge mistake. If you cannot pay cash then buy a bicycle and save up.
Never say never:
- What if you graduate from college - move back to suburbia with the parents to save money - you are flat broke but get your first job which pays great but the job is simply too far away to bike and there is no public transportation that gets you there. I'd take the auto loan for a six-figure salary rather than working at the local McDonalds because my bike gets me there.
-What if the auto loan is 0% interest.
-What if the auto loan is 2% (I can buy a 2.5% CD)

dennis30
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Re: Do you have and auto loan?

Post by dennis30 » Thu Mar 19, 2015 1:45 pm

Yes, rate was cheaper than student loans. Made no sense not to get a loan. I will likely get a loan again in the future when purchasing a car, depending on the financing rate.

leod
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Re: Do you have and auto loan?

Post by leod » Thu Mar 19, 2015 2:36 pm

paid off auto loan in 3 years, I am saving up a little now for future car purchase hopefully i can also pay in cash next time

arizona pokerface
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Re: Do you have and auto loan?

Post by arizona pokerface » Thu Mar 19, 2015 3:01 pm

Trader Joe wrote:No, never. We always pay cash for our automobiles.

Auto loans are a huge mistake. If you cannot pay cash then buy a bicycle and save up.
+1

If the interest rate on a car loan ever mattered to me, I think it would be a sign I should be looking for a WAY cheaper car. I guess it depends on what ones goals are.

Dandy
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Re: Do you have and auto loan?

Post by Dandy » Thu Mar 19, 2015 3:18 pm

After negotiating a "deal" if they offer a exceptional rate like 0.9 percent I might take some as a loan. I usually put some money down take a HELOC "loan" (2.74% tax deductible) for the rest and pay it off in say 6 months. That gives me time to use some capital gain distributions etc and not disturb the investment/saving status.

letsgobobby
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Re: Do you have and auto loan?

Post by letsgobobby » Thu Mar 19, 2015 3:26 pm

arizona pokerface wrote:
Trader Joe wrote:No, never. We always pay cash for our automobiles.

Auto loans are a huge mistake. If you cannot pay cash then buy a bicycle and save up.
+1

If the interest rate on a car loan ever mattered to me, I think it would be a sign I should be looking for a WAY cheaper car. I guess it depends on what ones goals are.
Why do I let blanket statements like these get under my skin?

If I have $100,000 in the bank earning 1%, why should taking a 0% loan mean I should be looking for a WAY cheaper car?

flyingbison
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Re: Do you have and auto loan?

Post by flyingbison » Thu Mar 19, 2015 3:36 pm

From 1985-1991: 5 different beaters that I paid cash for
1991: New car with a 4 year loan, paid off the balance after 3 years
1994: Bought a used pickup as a second vehicle, paid cash
1999: Gave the 1991 to my nephew and bought a new car with cash
2013: Bought a new car with a 4 year, 0% loan on a little more than half the price.

Miguelito
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Re: Do you have and auto loan?

Post by Miguelito » Thu Mar 19, 2015 3:47 pm

My cars, starting in 2000:

1) Cash
2) 20% down, 5 year loan at 6% - paid off in 3 years.
3) 30% down, 4 year loan at 6% - paid off in 2 years (and sold right after).
4) 15% down, 5 year loan at 5% - paid off in 3 years.
5) Cash
6) 5% down, 5 year loan at 4% - paid off in 2 years (and sold right after).
7) Cash (still own)
8) lease
9) Cash (still own)
10) 25% down, 5 year loan at 1.9% (still own and currently paying).
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leonard
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Re: Do you have and auto loan?

Post by leonard » Thu Mar 19, 2015 3:49 pm

Paying, monitoring, and ultimately ensuring the disposition of the loan is a pain. I'd never do it again.

Keep it simple applies to more areas of personal finance than just investments.
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jhfenton
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Re: Do you have and auto loan?

Post by jhfenton » Thu Mar 19, 2015 3:54 pm

Yes. We own a 2008 Ford Fusion outright, but we have a 1.9% loan on a 2012 Honda Odyssey. We bought it when our 1996 Dodge Grand Caravan bit the dust (transmission). We had been paying it on schedule, but I'm going to make paying it off our next priority.

The Wizard
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Re: Do you have and auto loan?

Post by The Wizard » Thu Mar 19, 2015 5:20 pm

A related question here should be, are people taking car loans from DEALERS or doing low cost loans thru a credit union, etc?
A low APR dealer loan is subsidized one way or another, you know.

I may do a partial auto loan later this year for my new truck.
Which is better, a 1.49% loan from my CU or pulling $$ out of a Roth IRA in retirement, gaining a steady 8-10% per year in TREA?
I'll have to ponder it...
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Silence Dogood
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Re: Do you have and auto loan?

Post by Silence Dogood » Thu Mar 19, 2015 5:26 pm

I bought my car used and paid in cash.

Raven2
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Re: [Poll] Do you have and auto loan?

Post by Raven2 » Thu Mar 19, 2015 7:12 pm

Yes, because I was offered a 3 year interest free loan, with $500 cash back, and the option to pay off the loan early without penalty. Under those terms it would have been stupid to pay cash.

tim1999
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Re: [Poll] Do you have and auto loan?

Post by tim1999 » Thu Mar 19, 2015 7:17 pm

Not currently, but I have in the past. I've usually used the dealer's banks as the rates have always been considerably lower than what my own bank and local credit unions, etc. offer.

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Re: Do you have and auto loan?

Post by Khanmots » Thu Mar 19, 2015 7:36 pm

Trader Joe wrote:No, never. We always pay cash for our automobiles.

Auto loans are a huge mistake. If you cannot pay cash then buy a bicycle and save up.
Didn't need a car at uni.

Did need a car once I graduated and had a job.

I got a loan for a car. No mistake made.

I'll also likely get a loan when it's time to replace this car as well. Car loans are at a lower rate than my mortgage; so I'm shoving the money I would be saving for a replacement car at the mortgage instead. Hoping this first car will stay reliable until the mortgage is paid off, but if not... taking out a loan for a year will cost less than I'll have saved on mortgage interest.

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Re: [Poll] Do you have and auto loan?

Post by nisiprius » Thu Mar 19, 2015 7:42 pm

We financed our cars from my first in 1967 to about 1983. Ever since then we've paid cash.

We used the system of getting a three-year loan, and when the loan was paid, arrange for automatic withdrawals of the same amount from our checking account every month, into a savings account. That became the "car replacement fund."
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Re: [Poll] Do you have and auto loan?

Post by bcjb » Thu Mar 19, 2015 7:47 pm

We paid cash and only afterwards realized we could have taken out a 5-year, 0% loan. It just didn't occur to us to look at the financing options, since we could afford the car and didn't want to pay interest. There's not much to regret here, but a 0% loan would have been the smarter financial choice.

bs010101
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Re: Do you have and auto loan?

Post by bs010101 » Thu Mar 19, 2015 7:47 pm

livesoft wrote:Here is the old poll you were looking for:
http://www.bogleheads.org/forum/viewtop ... 1&t=143139

With 275 votes it was rather popular as far as polls on the forum go.
Interesting. Loans seem more popular this time than last.

We paid off our 0.9% interest car loan a couple of years ago, and our other car was bought used with cash. I haven't missed the car payment despite opportunity cost for the year or so left on the loan. I don't plan on getting another one.

madbrain
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Re: [Poll] Do you have and auto loan?

Post by madbrain » Thu Mar 19, 2015 8:10 pm

I voted no.

I do have a lease on a 2012 Leaf EV . I'm happy I leased it didn't purchase it.

It was a $38,000 car on the contract, I leased it for 39 months with $1000 down (to pay mostly for tax/license), my monthly lease has been $249 + tax. And I also got $2500 back from the state of California on day 1.
The price to buy at the end of the contract is about $19k + tax.
But I have heard that others lessees are getting offers from dealers to buy at $12k+ tax instead.
I probably won't take that offer, though, I will be returning mine, as I want one with better range.

fourwaystreet
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Re: [Poll] Do you have an auto loan?

Post by fourwaystreet » Thu Mar 19, 2015 8:51 pm

57 year old and took out my first ever auto loan only because it was 5 years at 0%. 173 bucks a month with 12 payments left

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Re: [Poll] Do you have an auto loan?

Post by MWCA » Thu Mar 19, 2015 9:18 pm

Paid cash two years ago. I want a fun mustang. If ford would give me zero percent I'd take it. Otherwisecash :oops:
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ShiftF5
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Re: [Poll] Do you have an auto loan?

Post by ShiftF5 » Thu Mar 19, 2015 9:29 pm

Paid cash for new car.

Plan to drive it a long time.

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Re: [Poll] Do you have an auto loan?

Post by MindBogler » Thu Mar 19, 2015 10:25 pm

I bought a 1 yr old used car with a 2.09% loan this year. I replaced a 12 year old car that I sold for a decent chunk. I could pay cash but 2.09 is low enough that I don't feel compelled to give up my cash. IMHO, I think you'd have to be crazy to pay cash for a car right now.

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Re: [Poll] Do you have an auto loan?

Post by Dulocracy » Thu Mar 19, 2015 10:42 pm

I do not have one, but I am not opposed to having one. My wife's care is 10 years old, and mine is 5. She gets a car next. Depending on the financing, we may take a loan. We will then drive that car until the wheels fall off. I do not think it is completely un-bogleheadish to have a loan, depending on the circumstances. For example, a 0% loan has obvious advantages. A 0.01% loan does as well. And so on. At some point, having the loan no longer makes sense, but I am not opposed to car loans just because it is a debt.
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Re: [Poll] Do you have an auto loan?

Post by grabiner » Thu Mar 19, 2015 11:22 pm

When I bought a car in 2001, I took out a loan because the interest on the loan was more than the tax I would pay if I sold stock to buy the car, and I intended to pay off the loan well ahead of schedule to reduce the interest.

When I bought my current car in 2006, I had no need for a loan. I needed to come up with a bit of cash for the purchase, so I sold for $5032 some mutual fund shares I had purchased earlier for $5000, paying almost no tax.
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Re: [Poll] Do you have an auto loan?

Post by Alex Frakt » Thu Mar 19, 2015 11:31 pm

I'm in the "Buy new and run it into the ground" camp. Here are my car purchases (price is for everything except sales tax)

- 1991 Peugeot 405 - $10k - paid cash (got it for 40% off invoice when Peugeot abandoned the US market)
- 1997 Subaru Outback Sport - $17k - took a 5 year loan, paid off in 3.5, we needed a reliable car for my wife's first job after passing the bar
- 2003 Acura TL - $28k - paid cash
- 2013 Toyota Sienna SE - $32k - could have paid cash, but took 5 year 0% loan, it's on autopay and I'm not going to pay it off early.

I still can't believe they even rolled the sales tax into the 5-year 0% loan. I literally drove the Sienna away without paying a dime up front or a dime in interest charges or fees ever.

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Re: [Poll] Do you have an auto loan?

Post by basspond » Thu Mar 19, 2015 11:37 pm

I did have on my current vehicle to get incentive but paid it off in a couple of months.

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