Plan B Forum

One of the mysteries of my life has always been the question of how and why people drive very expensive cars.

Although I love the experience of getting new cars and I do so much more often than I need to, I have always been tight with a buck, and I can't for the life of me figure out how or why people buy (or lease) cars that seem totally out of proportion with their resources.

To me, leasing a car is just stupid. You are pissing money away, renting a car that you probably could never in a million years afford to buy. It usually seems to be a matter of the person wanting to be seen as a "BMW" person (or whatever), when all they could truly afford would be a Honda Civic. So they struggle with $500/mo lease payments inorder to drive a car they can't really afford. And the pity of it is, once you lease a car, you are probably locked into leasing for the forseeable future, because you won't have any money available for a down payment when it comes time to turn it in.

So I purchase all my cars. But I can't seem to force myself to go past the $20k mark. If there's a car that I like that is more than that, I start to look for a used one. My current fleet includes a 2006 M-B 240 Sport (which I'm storing for the Winter), bought used for about $16k, a 2005 Honda Element that I drive every day (bought used for $11k), and my wife drives a 2008 Suzuki Grand Vitara (luxury model) which we bought new for about $19k. My 1995 Honda ST1100 (bought several months ago for $3,500) sits in the garage, covered up. All are owned outright, no loans.

As I look around at what the car manufacturers are pushing these days, it seems like there' s something wrong with me. Even modestly equipped new cars seem to have prices in the low 30's, and anything you would actually WANT is in the $40's or $50's. When the car magazines test a new Camaro, for example, even the six cylinder models they test show, "Price As-Tested: $32k." The advertisers show you maybe a fairly nice mid-sized SUV or Minivan, then smile and show you a sticker that is over $35k! The Honda Odyssey can go well into the 40's.

What is a "normal" car payment? Even if you stretch it out over 5 years, these cars have to be five or six hundred a month or more. And that's just for one car. Most households have two or three.

I occasionally read articles about how, for example, Cadillac is targeting their ($40 thousand) CTS at households with incomes of about $100k. Baloney. My household income is more than twice that and I would never even consider spending $40k for a car - one that might be worth $18k in three years if I'm lucky.

How do you look at the economics of these things we must have to live?

What?: A Volvo convertible. How?: the customary manner. Why?: Because life is too short to be a miserly bastard. It has pretty much been proven that you can't take the money with you and if you are working hard you might as well enjoy life a little.

Needs vs. wants.

Simple, really.

What: Nothing. For some reason, everytime I need to go somewhere Gob goes with me and he usualy drives. When I go to work I catch a bus. Partly because I am too tight to pay for parking in the city, and partly because every city needs good public transport and if I don't support public transport and am not included as a statistic in the wash up, then the services I want may not be there.

This household does own a car. But as I am only a very occassional driver of said vehilce, I will let Gob do the what, whys and wherefores of that.

What: Subaru Station Wagon.
How: Bought outright second hand for 10k
Why: Great space for the dogs in the back, room on the roof rack for luggage. Practical cheap and economical. Car's are just tools to us.



What: Suzuki SV 650 Sports.
How: Bought outright second hand.
Why; Fun. Manopause present.

My 2008 Astra is leased.
Why? It's much cheaper that way (salary sacrificed), I never have to consider finances when repairs, service, insurance or rego is due (not to mention fuel...) and when my lease is up I can buy it for a pittance or take another lease on a newer car.

BTW for the members who may have missed it, I've highlighted the parts of the OP I think we were supposed to notice...

dgs49 wrote:One of the mysteries of my life has always been the question of how and why people drive very expensive cars.

Although I love the experience of getting new cars and I do so much more often than I need to, I have always been tight with a buck, and I can't for the life of me figure out how or why people buy (or lease) cars that seem totally out of proportion with their resources.

To me, leasing a car is just stupid. You are pissing money away, renting a car that you probably could never in a million years afford to buy. It usually seems to be a matter of the person wanting to be seen as a "BMW" person (or whatever), when all they could truly afford would be a Honda Civic. So they struggle with $500/mo lease payments inorder to drive a car they can't really afford. And the pity of it is, once you lease a car, you are probably locked into leasing for the forseeable future, because you won't have any money available for a down payment when it comes time to turn it in.

So I purchase all my cars. But I can't seem to force myself to go past the $20k mark. If there's a car that I like that is more than that, I start to look for a used one. My current fleet includes a 2006 M-B 240 Sport (which I'm storing for the Winter), bought used for about $16k, a 2005 Honda Element that I drive every day (bought used for $11k), and my wife drives a 2008 Suzuki Grand Vitara (luxury model) which we bought new for about $19k. My 1995 Honda ST1100 (bought several months ago for $3,500) sits in the garage, covered up. All are owned outright, no loans.

As I look around at what the car manufacturers are pushing these days, it seems like there' s something wrong with me. Even modestly equipped new cars seem to have prices in the low 30's, and anything you would actually WANT is in the $40's or $50's. When the car magazines test a new Camaro, for example, even the six cylinder models they test show, "Price As-Tested: $32k." The advertisers show you maybe a fairly nice mid-sized SUV or Minivan, then smile and show you a sticker that is over $35k! The Honda Odyssey can go well into the 40's.

What is a "normal" car payment? Even if you stretch it out over 5 years, these cars have to be five or six hundred a month or more. And that's just for one car. Most households have two or three.

I occasionally read articles about how, for example, Cadillac is targeting their ($40 thousand) CTS at households with incomes of about $100k. Baloney. My household income is more than twice that and I would never even consider spending $40k for a car - one that might be worth $18k in three years if I'm lucky.

How do you look at the economics of these things we must have to live?

Wow! What a guy...

Sean, I don't know about Oz but over here leasing a car is foolish. One pays a large down payment initially. Then one is responsible for maintenance. There is a mileage limit, usually 12K or so. If one wants additional mileage one must pay. If one goes over the mileage there is a significant charge for it. If there is damage to the car one must pay for it. One is at the mercy of the dealer with respect to what constitutes reasonable wear and tear. If one chooses to buy the car at the end of the term one pays much more than a pittance. I don't even understand why anyone would choose to lease unless they plan to drive very little.

Perhaps in Oz the terms are different and it would make sense.

It's slightly different here @W...

No down payment and I have to do a minimum of 25k kilometres to avoid taxes (last year I did about 40k...). My $400 per month includes rego, insurance, service and repairs, tyres and more than enough fuel. It also comes out pre-tax saving a bit more money.

a min of 25k?

Aside from that it's about the same over here. The lease vs. buy thing really depends on how much you drive and other things. the only thing you tend to pay for over here is wear items (break pads, clutches, tires, etc..) Scheduled maintenance is usually covered by the dealer everything else by the warranty.

The big gamble is how much the car is going to be worth after the lease expires since the "buy" price is pretty much set in stone when signing and if you decide to keep you could be paying much more than the car is worth.

ME I tend to keep my cars as long as possible so buying makes more sense.

Sean also "salary sacrifices", which means the cost of the lease is paid out of his salary BEFORE the income tax is taken out, thus saving him a whack on tax.

http://www.ato.gov.au/print.asp?doc=/content/24632.htm

I don't drive; have a bicycle,,,

Just a quick footnote on domestic U.S. leases.

Many of the high end cars these days (following the lead of BMW, then MB) have started including "free" maintenance for the first 50k miles or so, so this can be a sweetener for a lease. There is really nothing but insurance and rubber (tires, wiper blades) to worry about for the entire length of the lease.

Also, there are always a few manufacturers who are keen to get a certain car on the road, and they are therefore willing to subsidize leases, either with zero-percent interest or unrealistically high residual values, and in such cases, leasing may make more sense than buying, if you like the car. The key is to put the money you would have put down on the car into the bank, so you can either buy the car at the end of the lease, or you will have a down payment for the next car purchase.

Particularly good deals now are available on the Subaru Legacy, Hyundai Sonata (and Kia Optima - the same car), and the new Buick Regal. All pretty nice cars, by the way.

What do I drive :- Hyundai Coupe Siii (I think they call it the Tiburon in the US and Tuscani in Australia)
Why - Wanted another one after trading our beloved Mark II five years ago to "upgrade" to the Hyundai Tucson for dog carrying and caravan towing.
How - Finance through the bank (but my company pays me a monthly "Car Allowance" for my job that covers the repayments and upkeep).

Pro's - Fast enough without being TOO mental
Cons - £60 quid a tank petrol doesn't get me to London and back.

A Toyota Tacoma - no frills...

2006 Scion xB 5-speed manual transmission -- the one that looks a bit like a miniature UPS truck. Good mileage (last time I checked), lots of headroom, great visibility, not so great in a cross wind! I love it. I got one of the last three on the lot in April 2007.

Now I'm wondering FatoGord are you a spammer or not?

Hovers finger over Delete User and Posts button....

1999 Toyota (Reva) Rav4 4door AWD, 126k miles.

I will drive this car until it falls apart. No car payment, just liability insurance, gas and maintenance - which I expect will be minimal for the next few years, as I've already replaced timing belt & water pump and she also has a brand new muffler and fairly new tires.

She has some marred paint and worn seat coverings, as she's taken me & doggy co-pilot across the US 5x now, in addition to regular miles. New custom seat coverings will only cost $400, so I might treat her to those in the coming year. I don't care about the dings in the paint or the slightly rusted wheels. She's a tool, not a status symbol.

I'm not inclined to buy a new car, but if I were, I wouldn't spend more than $25k. Why bother? I can get a brand new Rav4, Prius or Jetta for less than that - and those are all vehicles I'd be perfectly happy to drive.

I believe in buying vehicles gently used and driving them into the ground.

Geez, only 126K on a 1999?! My stepfather just turned 140K on his 2003 Chrysler Concorde.

I sold my Magnum...paid $2000 for its replacement, an immaculate 1995 Caprice Classic 8-passenger wagon, white (no woodgrain!) over medium blue, garage-kept, no rust, and even wearing the original bolt-on wire wheelcovers. It was a legit "Grandma car", and came with 10 years of service records (including every oil change reciept since 2001) and even the original WINDOW STICKER. Only one real issue so far, that being a large oil leak, which I need to chase down this weekend.

I should have added that although my cars are not status symbols, I do get rather attached to them, as I associate them closely with the many memories I've forged in the miles I've put on them. It was hard junking the last one for this one, and it will be hard when the time comes to junk this one, too.