i actually agree with george!

putting money down does 2 things, helps achieve the perfect payment, and keeps you in a better equity position. if you keep your cars forever money down isn't that important, but if you trade a lot 2-4 years it is important. if you don't put any down i recommend investing a slight amount in gap insurance. your car loses value when you drive off the lot. if you wreck it a month from now and it books out at 15 and you still owe 17 or so the bank eats it. i'm not real big on extended warranties on toyota because i don't think you need them, they are just in case items, but i think gap is a good investment.

rent things that depreciate (cars - which is why open ended leases are nice if you trade every 2-3 years)
buy things that appreciate (real estate)

 

Hehe, the way the Russians do it is they pay CA$H in full. You should have seen the face of the dealer when my cousin whipped out $18,000 in 100 dollar bills. :twisted:
But I don't have that much cash up front, so financing it is. :D

 

Good conversation guys, I'm sure everyone is taking notes.

itimebomb, sounds like you are do all of Scion paperwork for your dealer, or more into the financing. Either way, I would agree with you, if you aren't looking to put anything down, or even just a couple hundred or a thousand, GAP is the way to go. It's only about $5/mo. and saves you a whole lot in an accident.

pvt Joker, good point man.

You think that you have all your life to have fun, which is true, but the thing is, the quicker you get everything you want, the better you enjoy it down the road, and be able to look back and know that you did the right thing by saving young, making the right decisions, and being able to have even more fun when it's all paid for.

 

Here are some rough numbers:

If you buy a new car at 15,000 and fully depreciate it over 10 years it has cost you $1500 per year plus the loss of whatever investment income you could have had on the money.

If you buy a 2-year old car for 10,000 and fully depreciate it over 8 years, it has cost you $1250 per month plus that investment income, which would be 1/3 less than in the first example because the total money is less.

The only time that a new car is more practical than a used car is when the used car prices are extremely high. For example, Honda CRVs hold their value so well buyers are better off to get new ones, since a 1-year-old used CRV is only a thousand or so less than a new one!

If you really want to come out ahead, buy a 60s or 70s collectable like a VW bus. You can drive it, fix it up, and it will be worth more every day you own it. The money you would put into payments on a new car will buy a _lot_ of restoration! I bought my bus in good running condition for $1300, and now, eight years later, turn down offers of $5000 for it.

George

 

my dad explained a few things to me here and there about financing...

i agree on the used car new car thing, when i get outta college, i'm still gonna be driving my tC and saving up for a house.

for those of you who have houses already, don't you have something called an equity line where you're basically pulling money out of your home loan or something like that. and i think the interest rate on the house is much lower, on average, than financing through the dealer. that's why you should take from your equity line and down your car in full so that you're still financing it, but now its through your home loan and your interest rate is much cheaper?

i don't know how accurate any of this information is so don't take what i just said for granted. haha.

 

Well, I went to college without a car. After a year, I got a 4-year old Datsun. I drove that car for several years _after_ I got out of college. You don't have to have a new car for it to serve long after your college experience.

My advice, FWIW, is not to buy a new car for college. The college environment is the worst possible place to take a new car, since most people there will have little respect for your ride. Theft rates, accident rates, and insurance rates are all high around universities. New car lust is a powerful drive, but it will cost you about $10,000 if you take that new car to college.

It's much better to buy a relatively plain Japanese used car that you won't mind getting dinged up. Get something relatively small and easy to park, but big enough to carry four adults. A used Echo would fill the bill very well. It may not be the most stylish ride on campus, but unless you're majoring in "attraction of shallow women" that will be a minor concern compared to reliability and theft-avoidance. Even if you do want to attract the ladies, a tC isn't likely to compete well with the BMOC driving a BMW.

True. If you finance with home equity and then default on the loan, the bank now has a very valuable piece of real estate to compensate them for the debt. A conventional car loan leaves them only the repossessed vehicle which may or may not be worth enough to pay off the loan. Since the bank experiences less risk with the home equity loan, the interest rate is lower. Of course, the buyer's risk is higher, since they stand to lose their home!

Actually you were pretty close. The only place I disagree is on buying a new car for college. Unfortunately, there aren't many 4-year-old used Scions out there!

George

 

yeah i agree with you. i got a 93 accord dx that i can take up. but its time is almost up. it has 175,000+ on it and although its not in too bad of a shape, little random problems come up here and there. for example, a few months ago i was backing out and the distributor broke, last week engine was idling in neutral while i was outside a house waiting for someone to come out one of the coolant hoses cracked and the car heated up fast (obviously due to lack of coolant).

i've already tried convincing them about simply getting an old car but they say they can sleep easier knowing my car isn't going to break down on the way to school or something, since they're in san jose and goto UC Davis. i, of course, wouldn't mind an old civic or integ but the keep insisting that they're more likely to break down, which i can't really argue with cause you don't know how rough the previous owner(s) have driven it.

my only options now would be a civic or a tc and since my parents aren't hesitant when it comes to safety, the civic would be an EX or something of the sort (they want ABS for sure), so for about the same price, i'd go for the tc.