Anyone else not save for cars?

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Kywildcat
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Anyone else not save for cars?

Post by Kywildcat » Mon Sep 10, 2018 10:22 am

I have a 10 year old Hyundai Elantra with 150k miles that is still going strong and in good condition for its age. However, I realize that I will probably need to buy a new car in the next few years. I often see people talk about saving for new cars so that no loan is required; however, I'm not sure this makes the most sense given the combination of two factors.

1) I don't know for sure when I will buy a new car. It could be next week if it requires an expensive repair or it could be 4 years from now. This seems like a long time to have a decent chunk of money sitting in a savings account to avoid a car loan.

2) Car loans are cheap.

As further background, I contribute about $1k to a taxable account each month (after maxing out 401k, Roth, HSA) that gets invested into Total Stock Market. My thought was that I could get a car loan and then re-direct my taxable savings to the car loan for 1-2 years. This would allow me to be fully invested at all times and have no tax consequences of selling appreciated shares. If it makes any difference, I am relatively young (32) so my time horizon is decently long from an investing perspective. Just curious if others have similar thoughts or if I'm missing anything.

Jack FFR1846
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Re: Anyone else not save for cars?

Post by Jack FFR1846 » Mon Sep 10, 2018 10:28 am

Money is fungible.

I have never saved specifically for a car. If I want to buy a car, I buy a car. The payment could come from my current liquid savings, from US Savings bonds sales, or from selling taxable account shares.

As mentioned, car loans are cheap, so if you don't have the savings, take out a loan.

<shrug> No big deal.
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RickBoglehead
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Re: Anyone else not save for cars?

Post by RickBoglehead » Mon Sep 10, 2018 10:31 am

You are not missing anything. If someone is on top of their finances, like most on this board, there should be no reason to save for a car.

Low interest loan, borrowing from emergency fund and then building it back up, etc.

LiterallyIronic
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Re: Anyone else not save for cars?

Post by LiterallyIronic » Mon Sep 10, 2018 10:33 am

I don't, because I buy clunkers. I just take the cash from my emergency fund to buy a car and then build the emergency fund back up.

At only 150,000 miles, you should be able to get at least 50,000 more out of it, I would hope.

Mjar
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Re: Anyone else not save for cars?

Post by Mjar » Mon Sep 10, 2018 10:39 am

Kywildcat wrote:
Mon Sep 10, 2018 10:22 am
I have a 10 year old Hyundai Elantra with 150k miles that is still going strong and in good condition for its age. However, I realize that I will probably need to buy a new car in the next few years. I often see people talk about saving for new cars so that no loan is required; however, I'm not sure this makes the most sense given the combination of two factors.

1) I don't know for sure when I will buy a new car. It could be next week if it requires an expensive repair or it could be 4 years from now. This seems like a long time to have a decent chunk of money sitting in a savings account to avoid a car loan.

2) Car loans are cheap.

As further background, I contribute about $1k to a taxable account each month (after maxing out 401k, Roth, HSA) that gets invested into Total Stock Market. My thought was that I could get a car loan and then re-direct my taxable savings to the car loan for 1-2 years. This would allow me to be fully invested at all times and have no tax consequences of selling appreciated shares. If it makes any difference, I am relatively young (32) so my time horizon is decently long from an investing perspective. Just curious if others have similar thoughts or if I'm missing anything.
I am in a similar situation with my 06 Camry, saving for a car only because I don't want to touch current savings and liquid investments, but like others have said if i have to I will without batting an eye and just buy the car because I am in a financial stable position. People around me have been telling me i need a new car and my response is simple "I am not a car guy and this is running fine" My only motivation for a new car right now is I am tired of the blah interior of my car, else I don't car it gets me from A to B. If you can afford the car loan and get better returns from the market with that cash instead, I would do that.

new2bogle
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Re: Anyone else not save for cars?

Post by new2bogle » Mon Sep 10, 2018 10:50 am

I don't. All excess money goes into one pot, and comes out as needed. I don't pay cash for cars as I find 2% (often lower) finance rates that you can get for cars to be "free" money. My last new car I bought had a loan of ~$22k after trade-in and maxing out how much the dealership would take on credit card (2% cash back card). That $22k (left in taxable since 2015) has made more in investments than the total of ~$1,000 I will have spent on interest paying the loan back.
Last edited by new2bogle on Mon Sep 10, 2018 10:50 am, edited 1 time in total.

ResearchMed
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Re: Anyone else not save for cars?

Post by ResearchMed » Mon Sep 10, 2018 10:50 am

Jack FFR1846 wrote:
Mon Sep 10, 2018 10:28 am
Money is fungible.

I have never saved specifically for a car. If I want to buy a car, I buy a car. The payment could come from my current liquid savings, from US Savings bonds sales, or from selling taxable account shares.

As mentioned, car loans are cheap, so if you don't have the savings, take out a loan.

<shrug> No big deal.
This ^^

When we decided to buy another car (it had been too long with only one, and wasn't quite working, given we could afford the two we had before a crazed teen totaled DH's car), we were planning to pay cash, from our semi-emergency/semi-short-term savings.

But we checked about loan rates, and it was almost zero, so we just went that route. The simple MM funds were paying more then, and definitely more now. That also then leaves us with the cash in case of some other urgent need, etc., so we still wouldn't have to dip into longer-term savings.

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wolf359
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Re: Anyone else not save for cars?

Post by wolf359 » Mon Sep 10, 2018 10:59 am

Jack FFR1846 wrote:
Mon Sep 10, 2018 10:28 am
Money is fungible.

I have never saved specifically for a car. If I want to buy a car, I buy a car. The payment could come from my current liquid savings, from US Savings bonds sales, or from selling taxable account shares.

As mentioned, car loans are cheap, so if you don't have the savings, take out a loan.

<shrug> No big deal.
I follow this strategy, except that I DID save specifically for a car. After I paid off my first car loan, I continued paying it to myself, until I had enough for a car. That became the core of my emergency fund, then the core of my taxable investments. I no longer have a fund designated as "car fund," because I am stretching my cars as long as possible.

When the market is up, I fund cars by selling shares. When the market is down, I fund cars by selling bonds. Since I'm also investing regularly, the capital gains aren't really that high, because I usually sell the most recently acquired shares (they didn't have time to appreciate much.) This also doesn't happen that frequently, since I don't buy cars that often (maybe once a decade.)

I go in with the intention of paying cash. Usually you either get the big discount or the super low interest rate on the loan. The last time we bought, they wouldn't give us the big discount unless we ALSO took the super low interest rate loan. That wouldn't have happened if we had sought the loan first.

mmmodem
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Re: Anyone else not save for cars?

Post by mmmodem » Mon Sep 10, 2018 11:00 am

I used to save extra in my emergency fund to purchase a car. It was important then because I had a lot less money. For my current car, I went ahead with the low interest loan. It was either that or liquidate my investments. I could easily afford the payments for the car and like you said, the loan is cheap. I could go either way and since it didn't matter either way I chose the easier option. I also understand that some people think it's simpler to pay cash.

armeliusc
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Re: Anyone else not save for cars?

Post by armeliusc » Mon Sep 10, 2018 11:18 am

I don't, because I just do not have anything left after trying to max HSA, 401K, and saving what's left to increase EF to our goal.

I honestly don't know how it seems that (almost) everyone here can afford to max out 401K, IRAs, HSA, have 2 years EF, taxable, separate savings for cars, vacation, paying extra for mortgage, and never take a loan for anything. It just seems that everyone here have very large income.

My daily driver is 200K miles, 14 yrs old Honda Civic. Our 'family car' is another 5 yrs old Honda Civic with 65K miles. When one of these die, we'll just have to take another car loan. Not something I'd want to, but it's just the reality.

LesBleus**
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Re: Anyone else not save for cars?

Post by LesBleus** » Mon Sep 10, 2018 11:24 am

I was driving a 2004 Rav4 with 180k miles and decided to sell it after the serpentine belt broke along with other stuff that costed me $800 to fix. Bought a 2016 Honda Accord EX-L for about 22k out the door 2.1% auto loan. Did not put a down payment and paying $390 a month.
I'm ok with that and plan to make small extra payments. I just didn't see the justification to drop a few thousands to lower my payments by a few bucks.

Whatyear?
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Re: Anyone else not save for cars?

Post by Whatyear? » Mon Sep 10, 2018 11:34 am

Like others who replied, I used to save for cars when it was I bigger chunk of my disposable income/savings. But as I get closer to retirement, my plan is that I'll assume a car payment in my annual budget, then decide how to pay for it (cash or financing) depending upon what else is going on in the year the need for a new car arises. I think of other big ticket items (vacations, home improvements) the same way - trade them off against each other when the time comes. So everything is much more fungible.

Broken Man 1999
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Re: Anyone else not save for cars?

Post by Broken Man 1999 » Mon Sep 10, 2018 11:34 am

We have paid cash for the last two vehicles. Prior to that we would finance for the longest term; I would soon grow weary of making payments, and we would just pay it off.

Today's auto loans (available with good credit) scream "take me" in my opinion. Obviously you shouldn't buy anything that you wouldn't normally buy just because of the near 0% loans available.

At the end of the day, as Jack FFR1846 noted, money is fungible. We haven't subscribed to the different "pots" as some do.

Virtually every dollar we spend comes from a tax-deferred account, along with the tax haircut.

Nice thing for many retirees, no more commutes, so a vehicle can really last a really long time, if the owners desire. Though, I'm sure many retirees consume more miles if they travel extensively.

I'm thinking maybe one more vehicle might do it for us. We should have 8-10 years left on the present one.

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whodidntante
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Re: Anyone else not save for cars?

Post by whodidntante » Mon Sep 10, 2018 11:35 am

I took a low interest car loan that I did not need to take in order to acquire the car. I also kept my low interest mortgage. Both decisions worked out wonderfully. It doesn't bother me if others pay cash or if others think I should have.

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queso
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Re: Anyone else not save for cars?

Post by queso » Mon Sep 10, 2018 12:06 pm

Same boat as you. 13 year old car that I'd love to keep running for another 10 years, but who knows what will happen. I am handy and fix minor things myself, but have a low tolerance threshold if vehicles become unreliable or leave me stranded. If the day comes when it lets me down one too many times I'll buy another one with either a low interest loan or with cash from my emergency fund and then build it back up. I don't want a big pot of money sitting around earning 1-2% when it may be closer to 10 years before I pull the trigger on a new one.

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Earl Lemongrab
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Re: Anyone else not save for cars?

Post by Earl Lemongrab » Mon Sep 10, 2018 12:38 pm

I don't buy vehicles very often. I have only bought three in my life. I had an old truck that I inherited from the family business that died in 1981. At that time I bought my first one, a 1980 Blazer. When it died about ten years later, I got a 1987 Bronco. That developed a fatal problem in 1999, when I purchased the current 1995 Bronco.

Eventually I'll need a new one. I have plenty of resources to do that. No separate fund.

My biggest concern is what to buy now. In the old days I'd look for a low-mileage, relatively new, Bronco or Blazer. Problem is, they haven't made those in a long time. I'm not that thrilled with the so-called replacements for them.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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queso
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Re: Anyone else not save for cars?

Post by queso » Mon Sep 10, 2018 12:43 pm

Pardon the hijack, but here you go Earl :)

https://www.roadandtrack.com/new-cars/f ... r-details/

jlawrence01
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Re: Anyone else not save for cars?

Post by jlawrence01 » Mon Sep 10, 2018 12:49 pm

I do not save money that s specifically dedicated to purchasing a new car or taking a vacation or making home repairs. We place them in the budget in the time period that we expect the expenditure to take place and forget about it.

My friend always takes the other approach. In 1992, he bought a new Toyota Camry with a $300 payment. Thirty-six months later, the car was paid off. Every month after that, he placed $300 in a growth mutual fund. By 2008, he had approximately $43K in the account and ended up buying a new car for $15k.

My plan is to replace my current vehicle in 2021 and I have a good idea as to what it is going to cost.

Texanbybirth
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Re: Anyone else not save for cars?

Post by Texanbybirth » Mon Sep 10, 2018 12:55 pm

We save a car "payment" every month BECAUSE I have no idea when our car is going to go out, and I don't want to pay interest on a car loan no matter how small. When we bought our last car in 09/2017, the interest rate was higher than our savings account was paying. We paid cash anyway so it didn't matter, but I don't know where others are finding car loans for cheaper than savings accounts are paying. (We have excellent credit.)

I put the car "payment" in the Moderate Growth LifeStrategy Fund at Vanguard (VSMGX). I did feel like it was a waste sitting in a savings account, and both of our cars are brand new (still under warranty) so unless we get into a situation where either is totaled we wont' need the cash for 10+ years. We're in a low tax bracket, so any cap gains will be taxed at 0% anyway.

To each their own! :beer
armeliusc wrote:
Mon Sep 10, 2018 11:18 am
I honestly don't know how it seems that (almost) everyone here can afford to max out 401K, IRAs, HSA, have 2 years EF, taxable, separate savings for cars, vacation, paying extra for mortgage, and never take a loan for anything. It just seems that everyone here have very large income.
We don't max my 401k or IRAs, and the only reason we max HSA is because we spend that money each year on prescriptions for some of us in the family. Our EF is nowhere near 2 (or 1) years, and a vacation for us is driving to Florida to stay with family - okay that's a great perk. My logic is we're always going to need two cars (2 kids under 4 and another on the way with a SAHM), so we might as well save for it while we can! I've also always liked the logic that has a little bit of savings in pre-tax, post-tax, and taxable.

mariezzz
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Re: Anyone else not save for cars?

Post by mariezzz » Mon Sep 10, 2018 12:59 pm

armeliusc wrote:
Mon Sep 10, 2018 11:18 am
I don't, because I just do not have anything left after trying to max HSA, 401K, and saving what's left to increase EF to our goal.

I honestly don't know how it seems that (almost) everyone here can afford to max out 401K, IRAs, HSA, have 2 years EF, taxable, separate savings for cars, vacation, paying extra for mortgage, and never take a loan for anything. It just seems that everyone here have very large income.

My daily driver is 200K miles, 14 yrs old Honda Civic. Our 'family car' is another 5 yrs old Honda Civic with 65K miles. When one of these die, we'll just have to take another car loan. Not something I'd want to, but it's just the reality.
Hang on to those Honda Civics - they'll last a long time, although since 2000 or so, the Honda CVT has had expensive issues, to count yourself lucky if yours do not. You might do some research on this, and chat with your mechanic, if you have a regular one who you trust.

A lot of people here have high incomes, and some are quite active. But many of us don't have huge incomes. See below for alternatives to car loans.

Car loans might be 'cheap' in terms of interest, but they will obligate you to carry collision & comprehensive insurance, which is not cheap.

I've driven an old beater (19 years old now) for the last 11 years. I don't carry collision/comprehensive - which keeps insurance costs lower. What I save on collision/comprehensive goes into my retirement funds (but I am fine with taking it back out when I need a replacement care.
Am now at the point where I need a replacement, so am setting aside funds for that - all my money beyond my basic needs goes into retirement accounts, so have put those contributions on hold for a couple of months. If it died and I needed to replace it relatively quickly (I've organized my life so I could go without a car for a month or so easily - just would spend a little more time on mass transit), I would have used money from my Roth IRA which I consider to be my emergency fund (and would have returned as much as possible within 60 days to keep that balance up). Will buy another older car to keep insurance costs low - have a good mechanic who is keeping an eye out for something. Could easily wait 4-5 months until something comes along.

Although newer cars have some safety features older cars don't have, your best safety feature is how you drive and whether you replace your tires when needed. Any car 2000-ish or later has adequate safety features.

targetconfusion
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Re: Anyone else not save for cars?

Post by targetconfusion » Mon Sep 10, 2018 1:13 pm

+1 in the "not saving" camp.

It has always felt strange to me that the (unscientifically) default BH car guidance is not to finance. To be fair, there are at least two good reasons for not financing:

1. Not knowing how much car to buy - if financing will make you buy more car than you otherwise would.
2. Decluttering - you want one less loan to track and/or no title encumbrance.

To #1, as others have noted, the overbuying is probably a small problem for the average BH. Those most militantly paying cash are probably often those who least need to do so. But if you know it helps you, fine. Decluttering is a fair motive but, with autopay, loan hassle approaches zero. Or, at least no more than maintaining a Ramseyesque separately tracked car fund.

As has been noted, money is fungible and so "car savings" feel like nothing more than a behavioral self-game.

runner3081
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Re: Anyone else not save for cars?

Post by runner3081 » Mon Sep 10, 2018 1:29 pm

LiterallyIronic wrote:
Mon Sep 10, 2018 10:33 am
I don't, because I buy clunkers. I just take the cash from my emergency fund to buy a car and then build the emergency fund back up.

At only 150,000 miles, you should be able to get at least 50,000 more out of it, I would hope.
Same here!

MrBeaver
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Re: Anyone else not save for cars?

Post by MrBeaver » Mon Sep 10, 2018 1:48 pm

Sure, money is fungible. But I have an easier time controlling spending if I have a budget where I plan how much I can spend on different items now and in the future.

We save for car needs, but the actual money goes in the rest of my 'medium-term-savings' account. I just maintain a record of how much is earmarked with my budget analysis (similar to envelope-style budgeting).

However, we also combine future car repairs with future car purchases into this category.

jalbert
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Re: Anyone else not save for cars?

Post by jalbert » Mon Sep 10, 2018 1:53 pm

armeliusc wrote:
Mon Sep 10, 2018 11:18 am
I don't, because I just do not have anything left after trying to max HSA, 401K, and saving what's left to increase EF to our goal.

I honestly don't know how it seems that (almost) everyone here can afford to max out 401K, IRAs, HSA, have 2 years EF, taxable, separate savings for cars, vacation, paying extra for mortgage, and never take a loan for anything. It just seems that everyone here have very large income.
The term maxing out an account like a 401K can mean to the legal limit or it can mean to the limit of your budget.
Risk is not a guarantor of return.

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GoldStar
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Re: Anyone else not save for cars?

Post by GoldStar » Mon Sep 10, 2018 2:02 pm

We don't save for cars specifically. If we don't take a loan we borrow from our Emergency Fund (I'm with you and others - the loans are so low its hard not to take the loan even if you have the cash. Especially with the 0% loans they are oftentimes handing out). Sometimes if I know we might be buying a new car in a few months I will start trying to put extra buffer in the Emergency Fund.

Catfish Plumber
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Re: Anyone else not save for cars?

Post by Catfish Plumber » Mon Sep 10, 2018 2:08 pm

Is there a trick to getting “near zero” auto loan interest rates?

I checked current rates on bankrate.com and am seeing 4-5%.

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steelerfan
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Re: Anyone else not save for cars?

Post by steelerfan » Mon Sep 10, 2018 2:21 pm

I save for cars.

I used to buy new with loans, but decided I don't want to borrow anymore. Last two cars I bought I paid cash. It works for DW and I.
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wriley4409
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Re: Anyone else not save for cars?

Post by wriley4409 » Mon Sep 10, 2018 2:27 pm

+1 on the current interest rates being 4%-5%. Auto loan rates have been rising along with the fed raising rates over the last year or so. Certain manufacturers still offer incentive financing however. I also save for new vehicles.

randomguy
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Re: Anyone else not save for cars?

Post by randomguy » Mon Sep 10, 2018 2:33 pm

armeliusc wrote:
Mon Sep 10, 2018 11:18 am
I don't, because I just do not have anything left after trying to max HSA, 401K, and saving what's left to increase EF to our goal.

I honestly don't know how it seems that (almost) everyone here can afford to max out 401K, IRAs, HSA, have 2 years EF, taxable, separate savings for cars, vacation, paying extra for mortgage, and never take a loan for anything. It just seems that everyone here have very large income.
It is selection bias. When you watch an NBA game are you surprised at how many players are over 6'2 despite being only like 2% of the population? The same thing happens on most activity specific boards. Go to a weightlifting forum and everyone seems strong. Go to a running one and most people seem fast. And on a travel board people have traveled to a crazy number of countries. Through in you only hear from a fraction of the people (i.e the people saving 15% aren't going around bragging. The 40% are) and you get our the results you see.

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Elsebet
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Re: Anyone else not save for cars?

Post by Elsebet » Mon Sep 10, 2018 2:44 pm

I buy a brand new car with a loan, pay the loan off aggressively, then keep the car as long as possible.

Right now I have a 2016 Tacoma that should be paid off in Dec 2018 and I hope to keep it 18 more years.
My husband drives my old 2006 Honda Civic Si which we hope to keep at least 3-8 more years.

H-Town
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Re: Anyone else not save for cars?

Post by H-Town » Mon Sep 10, 2018 2:47 pm

Catfish Plumber wrote:
Mon Sep 10, 2018 2:08 pm
Is there a trick to getting “near zero” auto loan interest rates?

I checked current rates on bankrate.com and am seeing 4-5%.
You most likely need to buy new and buy from car manufacturers that have reduced interest rate as a promotion.

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Re: Anyone else not save for cars?

Post by triceratop » Mon Sep 10, 2018 3:20 pm

Catfish Plumber wrote:
Mon Sep 10, 2018 2:08 pm
Is there a trick to getting “near zero” auto loan interest rates?

I checked current rates on bankrate.com and am seeing 4-5%.
My local credit union has rates on 3-5 year loans below the corresponding treasury yield. If I were in the market for a new car that would be “sub zero” from my perspective.

As mentioned, though, it may be even better if you buy from the manufacturer.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

NextMil
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Re: Anyone else not save for cars?

Post by NextMil » Mon Sep 10, 2018 3:33 pm

Just bought a new to me car today, and the sales rep looked confused when I asked for wire instructions. I saved up for it, and dumped my high mileage vehicle before it was completely worthless. I hate payments, and my savings for it doubles as my car maintainence account. I never worry about repairs or buying new to me vehicles. It’s comforting, but I don’t fault people who finance, just not for me.

NextMil
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Re: Anyone else not save for cars?

Post by NextMil » Mon Sep 10, 2018 3:37 pm

armeliusc wrote:
Mon Sep 10, 2018 11:18 am
I don't, because I just do not have anything left after trying to max HSA, 401K, and saving what's left to increase EF to our goal.

I honestly don't know how it seems that (almost) everyone here can afford to max out 401K, IRAs, HSA, have 2 years EF, taxable, separate savings for cars, vacation, paying extra for mortgage, and never take a loan for anything. It just seems that everyone here have very large income.

My daily driver is 200K miles, 14 yrs old Honda Civic. Our 'family car' is another 5 yrs old Honda Civic with 65K miles. When one of these die, we'll just have to take another car loan. Not something I'd want to, but it's just the reality.
Once your EF is done you may be in a different spot. I was in rough shape until after EF. People are also in different spots career wise. You will get there.

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sunny_socal
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Re: Anyone else not save for cars?

Post by sunny_socal » Mon Sep 10, 2018 3:43 pm

I guess I sometimes save, other times I don't:
- First car: parents bought for me ($3k)
- Second car: paid cash myself ($3k)
- Third car: Financed (new)
- Fourth: Financed (bank loan, plus cash from sale of 3rd car)
- Fifth: Financed (new)
- Sixth: paid cash ($15k)
- 7th: Financed (bank loan)
- 8th: Financed (new - still paying for it...)

My income has fallen due to job change, so likely I won't finance again in the future. Cars are all new enough that I can drive them for another 10 years. Kids get our old cars.

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Earl Lemongrab
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Re: Anyone else not save for cars?

Post by Earl Lemongrab » Mon Sep 10, 2018 3:43 pm

queso wrote:
Mon Sep 10, 2018 12:43 pm
Pardon the hijack, but here you go Earl :)

https://www.roadandtrack.com/new-cars/f ... r-details/
I have read about the new Bronco, but the devil is in the details. It's based on a much smaller model and is going to be whopping expense when it gets here. I'm not a player now, maybe in 2025 or so.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

azanon
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Re: Anyone else not save for cars?

Post by azanon » Mon Sep 10, 2018 3:50 pm

I save for cars, due to the following rationale (two examples):
1. My current car is worth ~ 15K. If a reputable bank offered to give me a "car equity loan" at 1.5% for 5 years on the 15K, i wouldn't hand them my title and take the deal, and then presumably invest the money (effectively on margin?!?). I'd just keep the car title and say no thanks. So if that's true, how is having 15K in cash that I could use to buy a car i needed, but then not using it for that, any different?

2. Another version of really the same thing I just said: Having really any loan and taxable investments at the same time, is essentially investing on margin. Being a boglehead, I don't agree with investing using borrowed money.

mw1739
Posts: 511
Joined: Mon Mar 21, 2011 5:44 pm

Re: Anyone else not save for cars?

Post by mw1739 » Mon Sep 10, 2018 3:56 pm

We save for general expenses (home repair, car, kids college etc.) and withdraw the money when needed. With that said, I dislike financing depreciating assets, so I've informally set a benchmark of 50% down and 50% financed.

My wife's Chevy SUV (bought 2 weeks ago) is financed at 3% - the manufacturer was only offering 0% on slow selling car models.

maddogio
Posts: 66
Joined: Fri Jan 20, 2017 11:38 am

Re: Anyone else not save for cars?

Post by maddogio » Mon Sep 10, 2018 3:58 pm

NextMil wrote:
Mon Sep 10, 2018 3:33 pm
Just bought a new to me car today, and the sales rep looked confused when I asked for wire instructions. I saved up for it, and dumped my high mileage vehicle before it was completely worthless. I hate payments, and my savings for it doubles as my car maintainence account. I never worry about repairs or buying new to me vehicles. It’s comforting, but I don’t fault people who finance, just not for me.
I just did this Saturday. They seemed kind of annoyed that I planned to bring in a cashier's check. Even more annoyed that I refused their financing offer, even though I'll finance about 40% of the vehicle's cost through a personal lightstream loan. They were stunned I didn't want to bring home the truck that day, which would have required financing through them. It seemed like they thought they had some leverage they didn't really have.

If you want to sell me a car, you'll do it this way. If not, I'll go elsewhere.

azanon
Posts: 1959
Joined: Mon Nov 07, 2011 10:34 am
Location: Little Rock, AR

Re: Anyone else not save for cars?

Post by azanon » Mon Sep 10, 2018 4:02 pm

maddogio wrote:
Mon Sep 10, 2018 3:58 pm
NextMil wrote:
Mon Sep 10, 2018 3:33 pm
Just bought a new to me car today, and the sales rep looked confused when I asked for wire instructions. I saved up for it, and dumped my high mileage vehicle before it was completely worthless. I hate payments, and my savings for it doubles as my car maintainence account. I never worry about repairs or buying new to me vehicles. It’s comforting, but I don’t fault people who finance, just not for me.
I just did this Saturday. They seemed kind of annoyed that I planned to bring in a cashier's check. Even more annoyed that I refused their financing offer, even though I'll finance about 40% of the vehicle's cost through a personal lightstream loan. They were stunned I didn't want to bring home the truck that day, which would have required financing through them. It seemed like they thought they had some leverage they didn't really have.

If you want to sell me a car, you'll do it this way. If not, I'll go elsewhere.
The last time I bought one (~ 6 years ago), I actually just wrote a regular personal check for 31K at their desk. I noticed they just took it and eventually handed me the keys. I eventually was tempted to ask, "Aren't you going to call the bank and make sure it's good?". The salesman just said he knows where i live if there's a problem. I think maybe I looked (or acted) like I was good for the 31K?

Oh, and to your point, they were annoyed I was paying cash presumably for the same reason. I of course declined the extended warranty, and pretty much everything, but a set of floor mats :mrgreen: .
Last edited by azanon on Mon Sep 10, 2018 4:05 pm, edited 1 time in total.

3funder
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Re: Anyone else not save for cars?

Post by 3funder » Mon Sep 10, 2018 4:05 pm

My wife and I have a general cash-like savings fund. Call it an extended emergency fund. If we need a car, we buy a car and build it back up in the years following. We also have a modest amount in taxable equities.

Texanbybirth
Posts: 980
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Re: Anyone else not save for cars?

Post by Texanbybirth » Mon Sep 10, 2018 4:09 pm

maddogio wrote:
Mon Sep 10, 2018 3:58 pm
NextMil wrote:
Mon Sep 10, 2018 3:33 pm
Just bought a new to me car today, and the sales rep looked confused when I asked for wire instructions. I saved up for it, and dumped my high mileage vehicle before it was completely worthless. I hate payments, and my savings for it doubles as my car maintainence account. I never worry about repairs or buying new to me vehicles. It’s comforting, but I don’t fault people who finance, just not for me.
I just did this Saturday. They seemed kind of annoyed that I planned to bring in a cashier's check. Even more annoyed that I refused their financing offer, even though I'll finance about 40% of the vehicle's cost through a personal lightstream loan. They were stunned I didn't want to bring home the truck that day, which would have required financing through them. It seemed like they thought they had some leverage they didn't really have.

If you want to sell me a car, you'll do it this way. If not, I'll go elsewhere.
The best is putting a large part on your credit card to get the points, then paying off the CC at bill time. Give them a personal check for rest, of course. :beer

maddogio
Posts: 66
Joined: Fri Jan 20, 2017 11:38 am

Re: Anyone else not save for cars?

Post by maddogio » Mon Sep 10, 2018 4:16 pm

azanon wrote:
Mon Sep 10, 2018 4:02 pm
maddogio wrote:
Mon Sep 10, 2018 3:58 pm
NextMil wrote:
Mon Sep 10, 2018 3:33 pm
Just bought a new to me car today, and the sales rep looked confused when I asked for wire instructions. I saved up for it, and dumped my high mileage vehicle before it was completely worthless. I hate payments, and my savings for it doubles as my car maintainence account. I never worry about repairs or buying new to me vehicles. It’s comforting, but I don’t fault people who finance, just not for me.
I just did this Saturday. They seemed kind of annoyed that I planned to bring in a cashier's check. Even more annoyed that I refused their financing offer, even though I'll finance about 40% of the vehicle's cost through a personal lightstream loan. They were stunned I didn't want to bring home the truck that day, which would have required financing through them. It seemed like they thought they had some leverage they didn't really have.

If you want to sell me a car, you'll do it this way. If not, I'll go elsewhere.
The last time I bought one (~ 6 years ago), I actually just wrote a regular personal check for 31K at their desk. I noticed they just took it and eventually handed me the keys. I eventually was tempted to ask, "Aren't you going to call the bank and make sure it's good?". The salesman just said he knows where i live if there's a problem. I think maybe I looked (or acted) like I was good for the 31K?

Oh, and to your point, they were annoyed I was paying cash presumably for the same reason. I of course declined the extended warranty, and pretty much everything, but a set of floor mats :mrgreen: .
I had a similar situation. They would have accepted a personal check, but I needed to do an electronic transfer to make it work - I'd thought about buying for a little while, but found a vehicle/deal I liked before I got all my ducks in a row. I can get a cashier's check sent overnight and provide the funds more quickly than waiting on the ACH transfer.

maddogio
Posts: 66
Joined: Fri Jan 20, 2017 11:38 am

Re: Anyone else not save for cars?

Post by maddogio » Mon Sep 10, 2018 4:17 pm

Texanbybirth wrote:
Mon Sep 10, 2018 4:09 pm
maddogio wrote:
Mon Sep 10, 2018 3:58 pm
NextMil wrote:
Mon Sep 10, 2018 3:33 pm
Just bought a new to me car today, and the sales rep looked confused when I asked for wire instructions. I saved up for it, and dumped my high mileage vehicle before it was completely worthless. I hate payments, and my savings for it doubles as my car maintainence account. I never worry about repairs or buying new to me vehicles. It’s comforting, but I don’t fault people who finance, just not for me.
I just did this Saturday. They seemed kind of annoyed that I planned to bring in a cashier's check. Even more annoyed that I refused their financing offer, even though I'll finance about 40% of the vehicle's cost through a personal lightstream loan. They were stunned I didn't want to bring home the truck that day, which would have required financing through them. It seemed like they thought they had some leverage they didn't really have.

If you want to sell me a car, you'll do it this way. If not, I'll go elsewhere.
The best is putting a large part on your credit card to get the points, then paying off the CC at bill time. Give them a personal check for rest, of course. :beer
Putting $5000 (the max they'll allow) on my Fidelity Visa.

;)

azanon
Posts: 1959
Joined: Mon Nov 07, 2011 10:34 am
Location: Little Rock, AR

Re: Anyone else not save for cars?

Post by azanon » Mon Sep 10, 2018 4:20 pm

maddogio wrote:
Mon Sep 10, 2018 4:17 pm
Texanbybirth wrote:
Mon Sep 10, 2018 4:09 pm
maddogio wrote:
Mon Sep 10, 2018 3:58 pm
NextMil wrote:
Mon Sep 10, 2018 3:33 pm
Just bought a new to me car today, and the sales rep looked confused when I asked for wire instructions. I saved up for it, and dumped my high mileage vehicle before it was completely worthless. I hate payments, and my savings for it doubles as my car maintainence account. I never worry about repairs or buying new to me vehicles. It’s comforting, but I don’t fault people who finance, just not for me.
I just did this Saturday. They seemed kind of annoyed that I planned to bring in a cashier's check. Even more annoyed that I refused their financing offer, even though I'll finance about 40% of the vehicle's cost through a personal lightstream loan. They were stunned I didn't want to bring home the truck that day, which would have required financing through them. It seemed like they thought they had some leverage they didn't really have.

If you want to sell me a car, you'll do it this way. If not, I'll go elsewhere.
The best is putting a large part on your credit card to get the points, then paying off the CC at bill time. Give them a personal check for rest, of course. :beer
Putting $5000 (the max they'll allow) on my Fidelity Visa.

;)
Hmm - I wonder if I could put 30K on my 2.5% Cash back USAA credit card next time? I might have to look into that. :mrgreen:

jehovasfitness
Posts: 553
Joined: Mon Jan 22, 2018 2:26 pm

Re: Anyone else not save for cars?

Post by jehovasfitness » Mon Sep 10, 2018 4:20 pm

Catfish Plumber wrote:
Mon Sep 10, 2018 2:08 pm
Is there a trick to getting “near zero” auto loan interest rates?

I checked current rates on bankrate.com and am seeing 4-5%.
Right. We have excellent credit and jeep dealer offered 5% , so we used Lightstream at 4% for a 5 yr loan

MrBeaver
Posts: 238
Joined: Tue Nov 14, 2017 4:45 pm

Re: Anyone else not save for cars?

Post by MrBeaver » Mon Sep 10, 2018 4:22 pm

NextMil wrote:
Mon Sep 10, 2018 3:33 pm
I hate payments, and my savings for it doubles as my car maintainence account. I never worry about repairs or buying new to me vehicles.
Exactly what I do. Though I'll take a below safe investment return loan if I'm offered it.

mervinj7
Posts: 683
Joined: Thu Mar 27, 2014 3:10 pm

Re: Anyone else not save for cars?

Post by mervinj7 » Mon Sep 10, 2018 4:25 pm

triceratop wrote:
Mon Sep 10, 2018 3:20 pm
My local credit union has rates on 3-5 year loans below the corresponding treasury yield. If I were in the market for a new car that would be “sub zero” from my perspective.

As mentioned, though, it may be even better if you buy from the manufacturer.
+1 Local credit union offers 2.69% for a 5 year auto loan. The current 5 year Treasury Yield is 2.78%. When we bought our 2018 Nissan Leaf, the manufacturer offered 0% for 5 years plus an extra $500 credit for taking their "financing" option.

https://www.sffirecu.org/about-us/rates ... #position1
https://www.treasury.gov/resource-cente ... data=yield

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Cycle
Posts: 762
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Location: USA

Re: Anyone else not save for cars?

Post by Cycle » Mon Sep 10, 2018 5:31 pm

Like many here, I just keep enough in the checking (2%) account to buy a handful of cars should we need them. Our 2011 crv is worth about $6500.

As with everyone else, we plan on paying to get rid of it in 5 years when everyone switches to the autonomous ride sharing fleets.

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Kenkat
Posts: 4361
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Re: Anyone else not save for cars?

Post by Kenkat » Mon Sep 10, 2018 5:47 pm

azanon wrote:
Mon Sep 10, 2018 4:02 pm
maddogio wrote:
Mon Sep 10, 2018 3:58 pm
NextMil wrote:
Mon Sep 10, 2018 3:33 pm
Just bought a new to me car today, and the sales rep looked confused when I asked for wire instructions. I saved up for it, and dumped my high mileage vehicle before it was completely worthless. I hate payments, and my savings for it doubles as my car maintainence account. I never worry about repairs or buying new to me vehicles. It’s comforting, but I don’t fault people who finance, just not for me.
I just did this Saturday. They seemed kind of annoyed that I planned to bring in a cashier's check. Even more annoyed that I refused their financing offer, even though I'll finance about 40% of the vehicle's cost through a personal lightstream loan. They were stunned I didn't want to bring home the truck that day, which would have required financing through them. It seemed like they thought they had some leverage they didn't really have.

If you want to sell me a car, you'll do it this way. If not, I'll go elsewhere.
The last time I bought one (~ 6 years ago), I actually just wrote a regular personal check for 31K at their desk. I noticed they just took it and eventually handed me the keys. I eventually was tempted to ask, "Aren't you going to call the bank and make sure it's good?". The salesman just said he knows where i live if there's a problem. I think maybe I looked (or acted) like I was good for the 31K?

Oh, and to your point, they were annoyed I was paying cash presumably for the same reason. I of course declined the extended warranty, and pretty much everything, but a set of floor mats :mrgreen: .
Not only do they know where you live, they also know some guys with a tow truck that will happily pick it up if you miss too many payments or when that check bounces!

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