nosurprise

iTrader: (1)

I got a loan but paid it off within a year.

Benoit

I buy my cars used. In general low mileage cars that are older than 5 years. Price are dropping ideally on those. Sometimes, I also choose to run minimal insurances on them. Worked until now.

Johnhav430

Cash, but I bought a 2006 in 2016. If it were brand new, I'd likely finance for 36 mos. as long as the interest were 2% or less (if not I'd wait or buy a less expensive vehicle if I really needed it [that hasn't happened since 1998]). I always have to leave a back door in case I were to lose my job. It's not likely, but stranger things have happened.

EZZ

Finance because a 2% loan is free money. My returns are much much much higher in my investment portfolio.

peteharvey

It is possible that Lexus tend to be purchased in cash, while the Germans are leased due to their long term reliability.

pvsmith

I bought my Lexus on credit cards. The dealer allowed me to put $5,000 per card on it. I racked up the points and paid off all the cards within a couple of weeks (I didn't want to risk getting a past-due charge.)

RX469

iTrader: (1)

Hi Pete, am I thinking/reading this incorrectly? Do you mean the German's short-term reliability?

Johnhav430

You read him correctly.

He's taking a shot at folks like me, who bought a BMW (it's made in Regensburg) brand new with 62% down and paid off in 35 mos. This doesn't make sense to him because it's a German car and not Japanese. The car is now 12 years old and nothing except the ABS broke. With German cars, that's a DIY, ~$4xx. With Japanese, it's over $4k at the dealer (2004 Maximas and 2008 LS460s are two examples where you can find failures on the forums)

To me, it doesn't matter what country a vehicle was produced in, the financing should be the same. What I would say is that nobody should knowingly buy an unreliable car, that's silly.

sm1ke

iTrader: (5)

I think it's more to do with cost to own outside of warranty. Some German cars will have the odd gremlins even if maintained properly, but I'm sure the majority are ok (although not as bulletproof as a Toyota or Lexus). But if you have to perform a service outside of warranty, generally the German dealers charge more, and it's harder to find an independent shop that works on German brands.

EDIT: This is the general consensus. There may be exceptions to this "rule", but they are very few and incredibly far between.

Johnhav430

What you say is true. At the same time I don't mix investments with disposable income, unless it were a play account. Someone here (I would say 'Captain Obvious') said you should have invested in amazon stock, not had savings, you would have gotten x% return. That isn't how I look at it, and explained why eventually.

I guess your way is saying a new BMW 330i costs $59k and I could finance it 100% instead of putting anything down. I'll put the downpayment of $40k into the market instead, and pay 2% on the loan (I think higher today). Did you really put 40k into the market? And if you did, what if the market has a downturn?

edit p.s. let me actually prove you to be right. I took $29,999.99 out of savings in Dec. 2006, and plunked it down on the 335i. Actually, it was play money from my brokerage account, and I wanted to spend it before it took a downturn, so technically it went from brokerage to savings, and was withdrawn from savings. If I didn't buy a car it would have stayed there.

In reality, I should have financed the 335i 100% because from 2006 to 2019, the stock market went up maybe 1.7x. I wanted a payment under $400 so I had to have a downpay--$400 is based on my job. My salary is more than triple today, but I still only feel comfortable with maybe $500/mo., that's it. So when I see $840/mo. for the 330i lease, there's no way it could happen for me.

That ~ $30,000 that I put down would be worth maybe 51,000 today, so yes, it would have been better to finance 100% and leave it in the market. It's just that the two things are different. Like for me, selling facebook at 41, how dumb was that? Buying CSX in 2009 during the recession, how smart was that? Point being these decisions have nothing to do with a car purchase...but you are not wrong, you are correct.

geko29

I don't know where this "consensus" comes from. Yes, German dealers charge a lot for labor. But so do dealers for other luxury imports, such as Lexus or Jaguar. As for the independents, I have yet to see one that refused to work on German cars. On top of that, there are 8 shops I'm aware of within a reasonable distance of my home that actually specialize in BMWs. I've personally had work done at two of them. There's a great VW/Audi shop less than a mile from my office. These places are not difficult to find, at all.

geko29

My story is somewhat similar to yours, but the short answer is yes, that money would be invested.

Our monthly budget is set up such that we save plenty, live well and can cover all of our expenses, but have no additional cash flow available for a car payment. So when the time came to replace my wife's car last year, we essentially had two options:

1) Finance, and reduce contributions to our taxable brokerage account by the amount of the required payment
2) Withdraw from the brokerage account, pay cash for the car, and continue contributing at our existing pace

Up through about 18 months ago, I had been planning on #1. As the market kept hitting high after high, I started shifting to #2, and that is eventually what we did. My thought at that time was that it was less likely that the short-term return on those funds would exceed the interest on the loan. So far that's worked out exceptionally well, as the markets fell a decent amount in the tail end of last year. It has recovered now, but in the meantime, those full-amount contributions were made at lower valuations and have provided nice returns, and those contributions would have been smaller if we financed. So it's kind of a double-whammy. I won't know for another few years whether I actually came out ahead, but the early signs are quite good. I'm comfortable with the decision regardless of how it turns out.

sm1ke

iTrader: (5)

It's just the general perception of the masses. You may be right in that all of these luxury dealers charge a lot for labour, but according to the general perception, you would spend less time at the dealership (and less money, as a result) if you owned a Lexus brand. So shop labour can be priced the same, but because Lexus has their reputation of reliability, people assume that they would spend less time at the shop, which makes them more comfortable paying cash for it and owning it out of warranty versus a German brand that has a reputation with electrical gremlins. I'm not saying that you're wrong, I'm just saying that this is what the average person believes to be true.

That's great that you live in an area with so many independent shops who specialize in your car's brand. It must be nice for you to have a shop so close to your office for when you need work done (if at all). I don't live where you do, so my experience is quite different. Here, there are way more shops that can/do work on Lexus/Infiniti/Acura. So even if it happened to be easy for me to find a shop to do the work on a BMW, it would still be easier to find a shop willing to work on a Lexus in comparison.

At the end of the day, it's all guesswork, so if I'm wrong, I'm wrong.

Johnhav430

I like that. I feel I reserve the right to be wrong, and learn from you, or anyone else, if I am. I cannot know all there is to know, and ain't too proud to admit it. How did I manage to make 10X my investment buying CSX in 2009? I am not a genius. I heard Warren Buffet was loading up, things were so battered at the time, what's to lose? Ditto with buying Chase and Citi during Brexit. I thought these are real cos. with solid books, bad economic news doesn't change that. And my tolerance for risk is not much today, which is why I sold facebook at 41 (bad move). How risky was amazon in 1998 (I think based on my coworkers that I remember telling), a little, but seemed like a good thing to do.

Now that I've had a LS430 for 2.5 years, I can tell you that so many like for like OE Lexus parts, are way more expensive than BMW. Ditto for services (varies). I attribute it to the business models. It makes German cars very affordable when DIY, very. Are we all like that guy legit street cars working on AMGs and have our own lift in our garage? Probably not, most of us have day jobs outside of autos. Can we do $4200 dealer jobs for $4xx at home? Sure we can.

At the end of the day, like you say, we try to do the best we can with what we know and can find out. Financing a car for 84+ mos? Generally bad, at the prevailing rates. At 0% then bring it on, as long as it's not a car that we really cannot afford at a nominal rate and term. If I can't afford a 992 at 36 mos., then I probably cannot afford it at 96 mos. 0%. Making the payment, and affording, are two different things imho....

mewtoo

When I bought new, I took an auto loan from the dealer then pay it off in the first month.