REVscene - Vancouver Automotive Forum

!LittleDragon · 10-09-2013, 01:53 PM

Personally, if I had cash to buy it outright, I'd still take the 0% but that's just me.... There's several scenarios where you will be on top if you take the 0%

Let's use the X5 example above... You could buy it with cash, save $5k but be $50,000 out of pocket. You could finance it for 5 years, cost you $5k more and it'll cost you $916 a month out of pocket... Most people choose one of those two scenarios.

You can dump the $50k into something like PHK and NCZ that at today's prices are yielding 12% annually and pay out monthly. This should pay you more or less $500 a month, brings your $916 a month out of pocket down to $416. You still have your $50k invested in assets that can easily be converted back into cash and you dropped your monthly payments by $500

Another thing you can do and this is more inline with what I'm doing is invest the money and pay the $916 with your pay check. Sure it'll cost you $5k more over 5 years but $50k at 12% yield compounded monthly will make that $5k back in a year. After that, it's all profit. Similar benefits as the previous scenario but because you're not withdrawing, your money grows more and more every month.

The last two scenarios only work if you have money to buy the car outright. If you have enough for the down payment and have to borrow the rest or you have nothing to put down at all, maybe you should reconsider your purchase.

freakshow · 10-09-2013, 02:02 PM

Two great points on my post:

@lowside, my post was directed to 'car guys (or gals)', that don't mind spending a few moments to ask around or google a problem. If you want to spend as little thought as possible on your car, then yes, buying a newer car in warranty might be better. You're just literally paying for that privilege.

@LittleDragon, there are some scenarios where 0% is better because you'll be able to invest and grow that money to more than the interest that you would be paying. But for the vast majority of people, that would not be the case.

The_AK · 10-09-2013, 02:03 PM

Quote:

Originally Posted by westopher

Had cash saved up while I had my old car. Had a comfortable job, owned a condo with very low mortgage payments, and came across a very good deal. I was 25. 2 months later, I quit my job, found someone to rent my condo, and moved 1200kms away, and wondered why the fuck I spent a bunch of money on a new car to have it sit in a parking spot in Vancouver LOL. Now I sold it for less than half the price, and used the money to buy a car that was 10 years older and 10x more fun. Unless you have a family, or a job that depends on commutes, or a ton of money to blow, fuck new cars. 15k depreciation on my gti in 3 years makes me want to blow my fucking brains out when I think of how stupid it is. 4-5 year old cars and a tool kit are ideal for people who are interested in new cars and aren't rich.

amen to that brother

noclue · 10-09-2013, 03:25 PM

Quote:

Originally Posted by !LittleDragon

Personally, if I had cash to buy it outright, I'd still take the 0% but that's just me.... There's several scenarios where you will be on top if you take the 0%

Let's use the X5 example above... You could buy it with cash, save $5k but be $50,000 out of pocket. You could finance it for 5 years, cost you $5k more and it'll cost you $916 a month out of pocket... Most people choose one of those two scenarios.

You can dump the $50k into something like PHK and NCZ that at today's prices are yielding 12% annually and pay out monthly. This should pay you more or less $500 a month, brings your $916 a month out of pocket down to $416. You still have your $50k invested in assets that can easily be converted back into cash and you dropped your monthly payments by $500

Another thing you can do and this is more inline with what I'm doing is invest the money and pay the $916 with your pay check. Sure it'll cost you $5k more over 5 years but $50k at 12% yield compounded monthly will make that $5k back in a year. After that, it's all profit. Similar benefits as the previous scenario but because you're not withdrawing, your money grows more and more every month.

The last two scenarios only work if you have money to buy the car outright. If you have enough for the down payment and have to borrow the rest or you have nothing to put down at all, maybe you should reconsider your purchase.

The problem with that method is that one bad day on the market will erase all your dividend gains and more. That is of course, if you decide to sell your shares but most people freak out and sell. And also the chance of the stock collapsing. Do your due diligence, especially stocks with 7%+ greater yield.

As for cars, personally IMO you are better off leasing German cars than purchasing one.

Mr.Jay · 10-09-2013, 03:32 PM

Quote:

Originally Posted by nabs

What life decisions did you factor into your purchase, I'm talking about for new or next to new cars over the 30k mark. (Your first major vehicle purchase)

I mean were you done school already? Yes

Just got a full time job after finishing school? Never without a job while going to school then full time afterwards

Worked for a few years and saved up down payment, or the whole amount? Gave myself the goal that if I really wanted the car I would save up the whole amount in 4 years time.

Paid off student loans/other loans? No debt

Did you have any anxiety surrounding buying a new vehicle? Yes, thought it was going to be all rainbows and sunshine then I got fucked by Openroad a couple times over. This reason alone I would never buy a new car.

I'm just curious because it seems that a lot of people these days have money to put towards a new vehicle. I would like to get a new car but I am just wondering when I will be in the right financial/personal place to put towards a new car, just wondering how/what/when you guys decided you were ready.

Was it a smart decision? No, I could of bought a townhouse or something and slowly gain something of value however the enjoyment I have gotten from my car makes it more bearable.

I would not of bought my car if I did not make my goal.

Great68 · 10-09-2013, 04:10 PM

Quote:

Originally Posted by nabs

What life decisions did you factor into your purchase, I'm talking about for new or next to new cars over the 30k mark. (Your first major vehicle purchase)

I mean were you done school already? Yes

Just got a full time job after finishing school? Yes

Worked for a few years and saved up down payment, or the whole amount? Paid 1/2 down, the rest over 2.5 years

Paid off student loans/other loans? Debt Free

Did you have any anxiety surrounding buying a new vehicle? Not really

Would I buy new again? Probably not, but depends on the kind of car (IE I'd never buy a turbo'd hatch used, who knows how hard the previous owner(s) were on the car?) and what kind of deal I can get off the lot. I don't have any regrets at all.

!LittleDragon · 10-09-2013, 04:15 PM

Quote:

Originally Posted by noclue

The problem with that method is that one bad day on the market will erase all your dividend gains and more. That is of course, if you decide to sell your shares but most people freak out and sell. And also the chance of the stock collapsing. Do your due diligence, especially stocks with 7%+ greater yield.

As for cars, personally IMO you are better off leasing German cars than purchasing one.

Yeah, it can be unnerving to see your $50k investment go down to $40k in a week but I'd expect people that take the investment route to be disciplined enough not to sell and actually buy more. Besides, dividend investing is different. I'm not in it for the capital gains but for the monthly income it produces. The funds I buy paid a consistent dividend throughout the 2008 recession and didn't flinch. Gives me a lot of confidence in those funds. Of course at the time, the prices were down so the yield was closer to 18%... kinda wish I got into that earlier... lol... but this is a discussion for the investment thread so I'm gonna stop... lol

kluk · 10-09-2013, 04:20 PM

Worked as a teller through uni, saved enough and bought myself a G35. After I bought it/graduated I got a promotion and kept the G till now. Financially it's not harming me at all right at this point. Saved enough now and looking for a home/moving out.
Keep in mind that parents paid for schooling

dinosaur · 10-09-2013, 04:55 PM

Quote:

Originally Posted by nabs

I'm just curious because it seems that a lot of people these days have money to put towards a new vehicle. I would like to get a new car but I am just wondering when I will be in the right financial/personal place to put towards a new car, just wondering how/what/when you guys decided you were ready.

nabs.JPG

radioman · 10-09-2013, 04:58 PM

nabs · 10-09-2013, 05:14 PM

guys thanks for the honest answers, I know money and finances are a touchy subject for a lot of people and I appreciate the responses. Keep them coming...

and yes dino, I know i've owned many cars in the past and still own a few but I was just curious as to what other people are thinking on the subject. People who know me personally know the position I am in currently and I don't have to explain it openly. =)

knight604 · 10-09-2013, 05:24 PM

The company needed a new van since the current one was dying so we looked at the sprinter and it isnt bad considering we fill up 2x less on the sprinter that equals to 200 less on the monthly payments and now its like we are only paying 200 a month for it.

And on the note of buying a new car there is warranty so dont have to worry about maintenance for a few years and by that is over , the sprinter will be paid for.

dark0821 · 10-09-2013, 06:36 PM

I just bought a new car in the last 3 month, my situation was:
I have no debt, no loans, already moved out with my fiancee and my daughter. Iam working full time, my fiancee is on maternity leave, but was working full time before, plan is to return to full time while her parents will take care of the daughter so no "day care" cost --- fuck yea! =.=

The thing is I agree with everyone how you take a huge hit when buying new. But we needed a newer car, we both felt that a S13 240SX was not the right vehicle for my daughter to be sitting in. It is ok for me to hoon around in, but I am glad that my daughter is sitting inside a car that has electric nannies and up to date safety features.

My situation is me and my fiancee was saving up for a downpayment for a town house. We could have bought used, but that will pretty much dry-up our savings. (as we needed something newer/current) In the end we bought a new car that has 0% APR for 84 month. The monthly payment are about $240 taxed in, and OMG so fuel efficient. All in all, 240SX is on storage insurance, the ELantra is costing us just about $200 more than the 240 per month, blame the bad gas milage of the 240 LOL. And with my income, that is bearable I guess. Still saving a good chunk of money every month towards the downpayment xD.

I dont know, I cant really argue buying a new car was a smart decision, but my daughter was born and I felt like I was cornered some what. But the good thing about buying new I guess is...

You do get exactly what you want, color, options etc etc
You get your warranty (since it is a DD, the only mods going on are springs and wheels and the LED/light bulb etc etc, nth effecting the warranty and so that is a plus)

And you just feel good that you know exactly what cond your car is in, you had it since day 1 so you take care of it!

Hopefully my post was helpful, good luck on your new purchase!

thumper · 10-09-2013, 10:30 PM

Quote:

Originally Posted by freakshow

0% financing is a scam.. just do some basic math on the cash incentive on the same car, and you'll see exactly how much you *are* paying in financing per month.

I'm in the never-buy-new camp. I would actually never even buy a 2 year old car. I think 3 years is the newest I would go because of depreciation hits, and even that's a stretch.

Of course, if you're ballin' out of control, theres absolutely nothing wrong with buying new. Unfortunately, I'm not in that situation.

In answer to your question, everyone will feel 'ready' at a different point in their financial life. Instead of phrasing the question as "When are you ready to buy a new car?", I would ask "When are you ready to lose massive amounts of money every year?"

I could make over $100K, and still not feel ready for that..

i was pretty much in your camp, but this time around the car was a year end leftover that was heavily discounted so i couldn't pass it up on it.

...that and my last car blew up on me and at that moment in time i was tired of buying used/old/both and dealing with the breakdowns and paying for the repairs. it's nice to have a full warranty for once.

ilvtofu · 10-09-2013, 11:29 PM

I don't think there is a definite answer, everyone's values are different, everyone's career/investment situation is different. It's safe to say it doesn't really make financial sense to buy new especially when there are lightly used alternatives for significantly less but if that's what floats your boat don't let anyone stop you. Obviously not talking about spending every last dime of your paycheck to finance a corvette etc.

I'm most likely going to finance (60month) on a focus ST in December or January. Will be trading in my current daily and putting a couple grand down. Would be looking at around $4500 a year. I could also get a Mazdaspeed 3 that's 2 or 3 years old for about 10k less, but the car just isn't as appealing to me and spending an extra 10k spread out over the 5 or 6 years (at least) that I plan on keeping this car for is worth it for me.

It helps to not always look at things through the eyes of an accountant.

One of my favourite quotes
"Nowadays people know the price of everything and the value of nothing."

GLOW · 10-10-2013, 09:19 AM

most i think i spent on a car to date is $17k, but i'll answer based on 'what if'
I would:
-finish school with secure full time job (off probation)
-student loans & other debt under control (i can make the payments)
-only anxiety would be scared of someone hitting my car in the first week

looking back i probably could have had more fun getting a nicer car, but then i wouldn't have had enough for 20% down on my house. i got through life with older cars so far so i don't regret or feel like i'm 'missing out'.

nice thread. lots of interesting info on 0% financing

white rocket · 10-10-2013, 10:08 AM

Buying new will ensure that the warranty will start the day you buy it. To some this means a lot and it can have a dollar figure attached to it. If you plan on keeping the car for a LONG time then this may make sense. Buying pre-owned will save you a ton on depreciation. The new to used hit is usually in the 30% range and can be more in some cases(a la Escalade). But now the warranty is partially expired due to time and kms. That's the real battle(or scale if you will) when it comes to new vs. used IMO.

From a financing standpoint, it really depends on what you have available to you. 0% deals can be good but the vehicle is usually marked up substantially to cover the "free money" they are offering. Whereas a pre-owned vehicle will cost 5% or more. Even at 0% your monthly payment won't keep up with the depreciation within the first 3 years at least so if you plan on dumping before then you may have negative equity.

Personally I'd buy property first and leverage that for a home equity loan at ~3%. At least the property will continue to go up in value(relative to a vehicle anyway)

dared3vil0 · 10-10-2013, 12:01 PM

Just a side note, some manufacturers offer a "maintenance" package with the purchase of the vehicle, it costs between $1400 and $2000 and covers ALL maintenance for 3 years... That mean all oil changes, all brake jobs (One brake job basically pays for it...) and all other expensive crap...

heleu · 10-10-2013, 01:04 PM

I've been working for over 10 years and I would never buy new. Unless you are buying an old european luxo-barge, or modding your car, your biggest cost is depreciation.

I have friends that argue that if they keep a car for 10 years, the depreciation per year is minimal, but they're ignoring the time value of money.

I also think some of the comparisons in this thread aren't really apples to apples. I see buying new economy cars compared to keeping old JDM sports cars. Of course you would spend more on maintenance on the sports car; a more fair comparison would be an old economy car vs a newer one. I doubt you would spend nearly as much on maintenance and tires.

Hehe · 10-10-2013, 02:37 PM

Except my first car (powered by dad/mom) I have always bought used... until I met my wife (her job has car-loan assistance program due to the nature of their work... they drive around a lot), then it's just lease and lease.

I have grown so used to leasing that I can't see myself buying a car anymore.

From experience, I like new cars as they never need any work. I used to spend a good money/time to work on cars (pretty much all the regular maintenance). But as I grow older, the idea of getting my hands dirty in the garage became less and less appealing. I still do it from time to time... but definitely not as much I used to.

A trick I always used is leasing my cars in Oct. Usually they have better rates on financing and dealer are always willing to negotiate on price. This is especially good for models recently updated. The next year model won't offer anything new, and you get a very good deal.

I had an E93, and I was able to negotiate it in Oct with 10k discount with 2.9% lease rate. My buddy bought the same car half year earlier, only 1k discount and 4.9% rate. In my opinion, that's the depreciation hit right there.

xpl0sive · 10-10-2013, 04:03 PM

I really don't see a point of buying new. Most cars warranties are long enough now that you can buy a 2 yr old car, keep it for two years and still sell it with some warranty left on it. I would much rather let someone else take the initial 20+% hit on depreciation. Plus I get bored very easily, so I change cars once a year usually. I've had over 20 vehicles and not one of them was new. I usually buy a car for a good deal or bring it up from the states, drive it for a year or so, and then sell it for about the same amount as I paid for it.
The Canadian new car prices are just ridicuous to me. For example I was looking at the new ML350's and fully loaded they are almost $80k here. I can go down to California and pick one up for around $50k and it will have under 10k miles on it. Still has the same warranty. That goes for most other cars as well. New cars are a waste of money to me.

BEEB · 10-11-2013, 10:20 AM

If you put either one of these words - Depreciation/Cost/Price, into your decision, you won't buy new.

GS8 · 10-12-2013, 12:21 AM

I'll never buy new.

Buying something a few years old will still have a warranty, lots of life in it and save you thousands because, as everyone said, depreciation hits as soon as you drive it off the lot. If you plan to resell, I would avoid cars with the worst depreciation.

FRStan · 10-12-2013, 11:30 PM

Bought my FRS brand new when I just finished school. Wasn't the smartest choice IMO since it's tough for me to buy my own place now with the payments, and I lose quite a bit selling the car. If I had to do it all over, I'd buy a cheaper car outright and just pay for gas and insurance monthly and call it a day.
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cdizzle_996 · 10-13-2013, 08:25 AM

I have 0 debt, a decet chunk in savings, and already own a condo.

I've been asking myself a lot of these questions as well. I make 80ish a year but still struggle with pulling the trigger on a new/used car. I still drive a 99 Integra with 360k. I've been contemplating on a 07-08 TL-S or IS350 for the last 6 months. Both cars have already depreciated a ton, they're now 20k give or take, but I feel like they're going to continue to drop in value and I hate thinking about the loss in value. Until I think it's absolutely necessary, I'll probably just keep on rollin in my beater.
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