Car payments

[Bruce Nunnally]

I mailed off a check to payoff my 2005 CTS today. I am hoping to be out of the car payment business now -- my plan for the next vehicle is to save up the funds prior to purchase. Even with today's frequent 0% financing offers, the dealer often will give the option of the financing or a reduced price on the car. That means even the 0% financing is not really $0, since if you had been ready to pay cash you would have spent much less. Also, I believe that the best time to purchase a car is at the 1-2 year old point, with 12k-20k miles, and let the original owner soak up the first year depreciation of $12-14K.

I would love to get a new car frequently, say every 18 months, but not enough to spend the cash on that newness. Right now a new 2008 or 09 CTS would cost me over $500/month MORE than my 2005 model, when you consider apples to apples total cost for the next 12 months of ownership and not simply car payment vs car payment.

I am however going to go ahead with the extended warranty on the 05 CTS, since I plan to drive it another 3 years. This gives some time to save for the next car. Previously I had been making payments each month, and saving some funds for the next car each month. Now that the payments are completed, I will send all of the previous car payment and the extra payments to our savings for use against the next Cadillac.

My car plan is to purchase a Cadillac at the 1-2 year point, pay cash, drive it 4 years, and then have saved up the cash for the next one, rinse, repeat.

If you can't afford to pay cash for something, you can't afford it.

[MrEldo97]

This is the best way to buy a car - by far. I paid cash for my Eldorado, I'm financing a modest amount on my Jaguar. I pay extra every month on my Jaguar, I save every month for extra payments and will pay this off as soon as I can. Debt free is REAL FREEDOM!

[Texas Jim]

That is an excellent plan.

No car payments sure is nice.

They even seem to run better when they are not dragging around a payment book.

Your ides of .....

"My car plan is to purchase a Cadillac at the 1-2 year point, pay cash, drive it 4 years, and then have saved up the cash for the next one, rinse, repeat."

Is about the same as what I plan to do. At my age, I don't think I will be buying any more new ones.

Get a CPO.. one or two years old.... drive it till the warranty is almost out. Get another one.

[JimD]

This won't work if you are not comfortable with "high mileage" vehicles. And the definition of "high mileage" has changed remarkably in the last 15+ years. At least as far as engines are concerned.

Oil chemistry, fuel chemistry, engine design and other factors have merged to yield an engine life expectancy in excess of 200,000 miles and beyond.

Every 'machine' on the planet has a maintenance schedule. New machine or otherwise, it's part of the cost of operation.

It's the items outside the maintenance schedule that can cause immediate but temporary gas pains. And that has to be reconciled against the depreciation curve and the amortized monthly cost of financing a large purchase (new, or otherwise).

My daily-driver '98 Seville is approaching 175,000 miles and headed for 250,000 at least; looking for a replacement vehicle is not on my calendar. The depreciation curve has been a horizontal line for several years, the vehicle continues to be reliable (see maintanence schedule), and 'car payments' is not in my vocabulary (or cash flow projection).

My approach is not for everyone. Find a vehicle that answers 80% of your needs and drive it until a horse or bicycle would be a better choice.

[Bruce Nunnally]

Generally to drive a vehicle beyond 100k miles and beyond where one can warranty the vehicle, I think you have to have another vehicle as a backup / alternate. I need a car every day.

I figure I'll have $3K-4K depreciation each year in the 'flat' part of the curve from 2-6 years. So one could arguably spend $6K on a Cadillac and hope for it to last 2 years, then give it away or resell it and make money.

I like to have newer and newer vehicles as I go though, so hopefully I'll pickup a used Cadillac for $24-28K in 2010-2011 as my next vehicle. I am interested to watch the STS-V and XLR depreciation levels. I need a 4 seater right now, but our son leaves for college soon. Then an XLR would be a wonderful extravagance if it were in my budget. Meanwhile if high gas prices drive STS-V depreciation that could be a great used car value.

The wrench in the mix would be if Cadillac comes along with a hybrid or electric model -- I perhaps would be willing to finance that to help sales.

[newbold1]

I mailed off a check to payoff my 2005 CTS today. I am hoping to be out of the car payment business now -- my plan for the next vehicle is to save up the funds prior to purchase. Even with today's frequent 0% financing offers, the dealer often will give the option of the financing or a reduced price on the car. That means even the 0% financing is not really $0, since if you had been ready to pay cash you would have spent much less. Also, I believe that the best time to purchase a car is at the 1-2 year old point, with 12k-20k miles, and let the original owner soak up the first year depreciation of $12-14K.

I would love to get a new car frequently, say every 18 months, but not enough to spend the cash on that newness. Right now a new 2008 or 09 CTS would cost me over $500/month MORE than my 2005 model, when you consider apples to apples total cost for the next 12 months of ownership and not simply car payment vs car payment.

I am however going to go ahead with the extended warranty on the 05 CTS, since I plan to drive it another 3 years. This gives some time to save for the next car. Previously I had been making payments each month, and saving some funds for the next car each month. Now that the payments are completed, I will send all of the previous car payment and the extra payments to our savings for use against the next Cadillac.

My car plan is to purchase a Cadillac at the 1-2 year point, pay cash, drive it 4 years, and then have saved up the cash for the next one, rinse, repeat.

If you can't afford to pay cash for something, you can't afford it.

This seems like a smart plan to me.

When a car has done well for me over years I get attached to it. In the past though when the car got older and started to need a lot of things I always felt like it made more sense to get a new car with a warranty than to spend a lot of money on the older car even though I hated to part with it. However, today I find that car payments are so high that maybe I would be better off keeping the older car and doing the occasional repair to keep it going. 3-4 car payments could instead be saved in order to cover a really costly repair... if / when that time comes. With payments its a guarantee that I am going to have to spend that money rather than a possibility.

[Bruce Nunnally]

Signed for an extended warranty on my 2005 CTS. I purchased the GM protection plan (GMPP) major guard, which is an extended warranty by GM that is similar to the factory bumper to bumper warranty. This adds 36 months and 45k miles to my factory warranty. At that point the car will have just over 90K miles on it. That should cover it until my expected trade range or until it is passed along.

[steve6]

I try to maintain very little investments into cars, this is not always easy to do, I also live in a remote area so I have two cars insured. My first sts, I bought 75% down... paid off the rest in under 4 months. after it was written off for a rear end collision I basically waited and found another Seville for 1/3 rd the price, but 210,000 km's, it has its share of issues, but for $70 a month in insurance and very little maintenance cost its a second vehicle that is reliable to get me to where i'm going in case the gas miser dosn't get me there (with a small battery boost whenever needed :\), it also has a trailer hitch for towing snowmobiles and boats.

But I would not recommend this approach if you don't care to or have the time to do some maintenance yourself... My other car is 18 years old, turning 380,000 km's, this year i've had to change front end components, transmission, water pump 3x, new tires all around and more..... I always seem to be putting a few hours into it every few weeks to maintain it. Now I have a injector pump and hard start problem I have to deal with... it seems to never end, but I don't mind doing the work and have the time... otherwise its not for you. To me, this car (which is a vw jetta diesel) is a throw away car... if something so major goes on it that I feel its not practical to fix, I have no financial ties to the car.... (most people would say the tranmission is enough, but it only cost me $50 for a replacement trans, and about 6 hours of my time to install!)

But I would rather do this than car payments at this point.....

I have seriously been considering a high mileage 03-05 cts now... they are coming down in price big time, and if I can get a few grant for the current sts, it might be a small financial upgrade.... I would not go back into a payment situation for a car I only put 10,000 km's on a year.