Car payment

[Golf4food]

Two cars, one payment of $309. Plan to pay cash in future, but until then we got 1.9%. In my job I see lots of finance terms and used to see many with payments over $1,000 per month - for 72 or 84 months, not short payoffs. It was insane. More than many mortgages around the country. (mostly Californians getting giant SUVs back in the peak years like 2006, etc)

 

[C.Ann]

I've never had a car payment either - always paid cash for our/my vehicles.. I don't like having payments for anything at all - other than utilities and such.. I personally wouldn't be able to sleep at night with that kind of car payment hanging over my head..

I'm guessing she can afford it though, so all's well that ends well..

 

[helloirishkitty]

$400 sounds awesome!

Ours are $510 for my Enclave and $450 for DF's silverado... thankfully they're short term loans

 

[perdidobay]

1990 was the last year we had car payments...and it was $280 a month.
We pay cash for our cars now. We have sinking funds for large purchases, and we set aside $500 a month for car repair/replacement. We hate to car shop and like to keep the ones we have till they start really falling apart.
The last cars we bought were in 2005 a new mustang and in 2008 a used miata.

 

[Kimberly]

i'm curious - how do people pay cash outright for their cars? I'd have to eat ramen 3x/day, live in a box and work for 10 years to have enough to buy a car...of course I have savings but that isn't car money - that's emergency money.

Instead of making a car payment, open up a savings account with a "deposit" that you would normally save for a new car payment. Add about 400 dollars a month to the savings account, and slowly but surely it will build up to a pretty considerable amount after a few years. It's better than paying for the privelege to finance a car new. Rates typically are higher down here because cars can have a tedency of "disappearing" conveniently after a hurricane (insurance is a big hike as well).

Just a simplified explanation, anyway.

 

[LaurenLC]

I also think your car payment has a lot to do with the type of car you want and how much you can afford. I could never in a million years afford a mercedes so I wouldn't even start to look at one. On the flip side, a car that sells for $17K is going to have a much lower monthly payment with the same terms, down payments, etc as the expensive car. My car payment previously was $236 for a new 2003 saturn ion. It was the middle level model. This time around I bought an overall more expensive car and also went for the highest model, and actually put less money down and had a different interest rate...so my payment is higher.

i'm curious - how do people pay cash outright for their cars? I'd have to eat ramen 3x/day, live in a box and work for 10 years to have enough to buy a car...of course I have savings but that isn't car money - that's emergency money.

First off, we drive our cars till they are no longer worth fixing so we aren't buying a new car every few years. Second, we have a separate savings account that we fund monthly for a new car. We also put birthday, Christmas, and any other checks we may receive from family in this account. My parents purchased my first car for me at 16 and I drove it till I was 24, so I had a lot of time to save up for the next car. My husband drives a 2006 Volvo s-60 and I drive a 2010 Ford Edge; both cars were purchased with cash. I want to avoid car payments like the plague!

 

[MarkBarbieri]

i'm curious - how do people pay cash outright for their cars? I'd have to eat ramen 3x/day, live in a box and work for 10 years to have enough to buy a car...of course I have savings but that isn't car money - that's emergency money.

Yet you can afford to buy a car AND pay interest. It's actually cheaper to do it the other way. With interest rates so low these days, the difference isn't much. Throughout modern times, car loan interest rates have often been around 8% and paying cash means saving thousands of dollars.

A friend's dad gave me one of the best pieces of advice when I was a teenager. He sat down with me and graphed what would happen if I saved $100/month or borrowed $100/month. At first, the difference didn't seem that extreme. Over time, however, the affect of compounding really took over. It was astounding how much more money the saver had than the borrower. It wasn't until my mid 20s that I started applying his lesson, but it has had a profound difference in my life. By spending considerably less than my income, my savings is now working for me and giving me even more money. The end result is that I get to spend a lot more money during my life than someone that pays both for the things they buy and to rent the money they use to buy those things.

 

[DISdreamin']

Holy cow you all have so high car payments!!!! I thought $350 was bad.

As others have said, all things are relative. If we'd been willing to do a 72 month loan, we could have had payments under $350, but we'd rather pay it off sooner. We could have done a 24 month loan, but since there is no prepayment penalty, we'll just pay more each month and enjoy the flexibility of having lower payments if an emergency arises.

Also, all things are relative. Our car payment and insurance will be a small fraction of our monthly income. Obviously, if our income were less we would have either needed to shop for a cheaper car or gone for a longer term for the loan.

 

[golfgal]

I also think your car payment has a lot to do with the type of car you want and how much you can afford. I could never in a million years afford a mercedes so I wouldn't even start to look at one. On the flip side, a car that sells for $17K is going to have a much lower monthly payment with the same terms, down payments, etc as the expensive car. My car payment previously was $236 for a new 2003 saturn ion. It was the middle level model. This time around I bought an overall more expensive car and also went for the highest model, and actually put less money down and had a different interest rate...so my payment is higher.

i'm curious - how do people pay cash outright for their cars? I'd have to eat ramen 3x/day, live in a box and work for 10 years to have enough to buy a car...of course I have savings but that isn't car money - that's emergency money.

Keep in mind too that buying what you want and what you can afford can also mean that you buy the $20,000 car instead of the $70,000 car because you can't see wasting that kind of money on a depreciating asset when a $20,000 car gets you where you want to go just fine. By not maxing out what you can afford you have the money to put aside quite easily to pay cash for a car. Also, there are a lot of people that live well within their means so they don't have to worry about paying bills, etc. Like someone posted earlier, the average cost of a millionaire's car is around $30,000, not because they can't afford a more expensive car but because they are smart enough to know that it is a waste of money.

 

[mrsklamc]

Following Dave Ramsey's steps are how us and many of our friends pay cash for cars. It's not quite as bad as all ramen noodles. Average for participants in his program is 18 months to be debt free minus the mortgage, and 7 years to pay off the mortgage completely. Without all those payments, paying cash for a car becomes a breeze.

 

[BellePrincessBelle]

As others have said, all things are relative. If we'd been willing to do a 72 month loan, we could have had payments under $350, but we'd rather pay it off sooner. We could have done a 24 month loan, but since there is no prepayment penalty, we'll just pay more each month and enjoy the flexibility of having lower payments if an emergency arises.

Also, all things are relative. Our car payment and insurance will be a small fraction of our monthly income. Obviously, if our income were less we would have either needed to shop for a cheaper car or gone for a longer term for the loan.

I've bought $40K+ cars & have never paid over $350. Down payment is key. I also never finace for more than 48 mo.

 

[A_Princess'_Daddy]

When we were younger and (using my words to describe me, only) stupid and vain about our cars, we paid about $900 a month for my cars (BMW) and $700 for DW's (last one was a VW Toureg, perhaps the worst designed car of the past decade). We always financed them over 3 years, and had the cash flow, but investing that much in a rapidly depreciating asset was silly (for us, and in my opinion).

Now, I drive a Subaru Forester for which I paid cash (I traded in my last BMW for it), so no loan payment and it's far more dependable than the BMWs ever were! DW has a Volvo XC90 SUV with a payment of about $500, but that was again financed over three years, with a substantial amount down and a 1.9% rate, so not too bad. She'll then keep it for several years beyond that.

I freely admit that I'm a recovering car snob, and I wish we hadn't wasted so much money on cars when we were younger, but life goes on...

 

[pioneer89]

i'm curious - how do people pay cash outright for their cars? I'd have to eat ramen 3x/day, live in a box and work for 10 years to have enough to buy a car...of course I have savings but that isn't car money - that's emergency money.

For typical families, being able to pay cash means they kept thier old vehicle for a long time. People that like a new car/truck every 2-4 years will have a harder time doing this.

My wife drove her last car until it had 210,000 miles on it. I drove my truck to 190,000 miles. We both had many years of no payments, and we just put that money away.

Funny thing is, when I bought my current truck back in 2002, we had cash, but even after taking all the rebates & such, we could still get a very low APR, so we banked the money and financed. So I did have a payment for 3 years, but I didn't really think of it because I still had enough to pay it off at any time if I wanted to.

 

[NatashaDisneyCM]

I've bought $40K+ cars & have never paid over $350. Down payment is key. I also never finace for more than 48 mo.

I totally agree with this. and I have always done this. BUT unfortunately this time when I bought my truck new a few months ago, I had been leasing, and I did not have cash on hand (full time student lol). I really wanted to pay a big down payment!! but did not have it, So I guess after a year I will need to try to refinance my truck.

 

[DISdreamin']

I've bought $40K+ cars & have never paid over $350. Down payment is key. I also never finace for more than 48 mo.

Yup, downpayment is key! Honestly, the whole idea of a car payment is abhorrent to me, and right now I'm plotting to see if, one year from now, we can be out from under the loan. I think it's do-able, and I'm sure going to be trying!

 

[disney1990]

We never finance for more than 36 months and we have never had a car payment in excess of $250 a month. Yes, down payment is key.

 

[Bethenny]

Yeah, a bigger down payment will get you a lower monthly payment. But sometimes there's more you can do with that big lump sum than putting it into a car upfront. A few years ago, we could have bought a new car outright, but then we wouldn't have had money to finish the basement, which added needed value to our house. Or taken a vacation, which added needed value to our lives.

DH and I have pretty much always had a car payment since we've been married. The lowest one being nearly $400 and that was the cheap car we bought 10 years ago. It works for us and we like having the nice cars. Everyone has different priorities.

 

[Kitty 34]

We pay nothing as the family car has been paid off now for 2 years but we'll probably be making another payment within the year as DH wants a newer vehicle.

 

[MichelleVW]

Yeah, a bigger down payment will get you a lower monthly payment. But sometimes there's more you can do with that big lump sum than putting it into a car upfront. A few years ago, we could have bought a new car outright, but then we wouldn't have had money to finish the basement, which added needed value to our house. Or taken a vacation, which added needed value to our lives.

DH and I have pretty much always had a car payment since we've been married. The lowest one being nearly $400 and that was the cheap car we bought 10 years ago. It works for us and we like having the nice cars. Everyone has different priorities.

Exactly!!

 

[Wonders10]

Yet you can afford to buy a car AND pay interest. It's actually cheaper to do it the other way. With interest rates so low these days, the difference isn't much. Throughout modern times, car loan interest rates have often been around 8% and paying cash means saving thousands of dollars.

LOL I know that in the long run I am paying more than the initial price of the car because of the interest, but I can afford to make my monthly payments. But I didn't have $25K lying around to pay for the car so that I didn't have to have a car payment. Yes I'm young and naive sometimes about things, but I don't think I'm the only person in the world who doesn't have that kind of cash to put into a car all at one time. Plus if I did (and to some extent I do, but not nearly that much), I put it towards my student loans as I feel they are more detrimental to me in the long run than my car payment.