Pay down current car and trade in or use cash as down payment?

The difference is the $500 payment is going to a lender. The $500 saved is yours.

 

Because the $500 is going to pay for the current car you drive rather than invested in retirement savings, going to an energency fund, or going to fund a future vehicle.
The debt payment technically reduces your income. Saving... doesn’t.

I’m saving money towards my next vehicle as this one gets older. So once its time to retire Barry White to being a 2nd car/tinker toy I will have the cash available to buy my next primary vehicle.
When a person is done with their 5 year loan... they are no where. They have a grossly depreciated asset and no funds for a vehicle. You basically have to pay off the vehicle and save for the next one simultaneously.
When I paid $28k for my 2013 I had a truck and my full income.
When the next person had their 2013 truck and their full income its 5 years later and whats the truck worth now??
And Tacomas are probably a slight exception because you can easily run them for 15 years and they maintain value better than any other car in the nation.
Most cars have depreciated 90% in 5 years.


Your income is your #1 wealth building tool. Debt payments lower your income available to you.

So many people don’t save the recommended 15% of pretax income per year in retirement but they can sure as hell find $500 a month to finance a car (for a lot thats close to 15%).
The difference between the car payment and not... is retiring a millionaire.

Another answer is risk. You don’t borrow on your car to invest. You don’t borrow on your house to invest.
You need a roof over your head and a car to drive to work to have money to invest.

If you are investing the money you use to buy cars because its that lucrative... you are spending too much of your income on cars.

 

Too much common sense is not in the genes of most male truck owners......

 

Yeah well I’d rather have money in the bank AND no debt.

Why have one when you can have both?

 

I listed it high on purpose because I knew I'd be low balled. I really only wanted 700 but it was the end of the year and I wanted it gone so the first person to offer 600, it was gone.

 

No offense intended, but I don't want to live as frugally as you do. I'd rather be warm in the winter, life's too short to walk around miserable in the cold. I've added onto my home 3 times. If I'd done the work myself, I'd either still be doing it or my house would have been condemned by the town. Also, I don't know what 'recycle all my stuff so I don't have to pay for it' means. I'll live a bit more comfortably and take the car payment, thank you.

 

I don’t freeze. Its called a sweatshirt lol.

I personally take items to the recycle. I don’t do curb pick up. Thats what I mean.

 

There's frugal, then tripping over a dime to save a nickel.

Driving to the waste plant can't be gaining anything in your pocket , if anything, minimal at best. Also, I imagine rodent's love hanging out until you make your trip monthly or how ever often you go.

 

Uhhh saves $30 a month. Drop off is right up the road. And I have no clue what you mean about rodents in your recycle bin. What the heck are you throwing in there?
You should be rinsing out cans and bottles with leftover food/fluids in them.
If you don’t have rodents from your recycle why should I have them in mine? I take my recycle out about every week here recently. Most pick ups are every other week. Your stuff would be sitting longer than mine...

 

I assumed you meant garbage. There is a place that charges $30 a month to recycle? I assumed it was free everywhere.

 

A thread on how much you paid for your truck is useful and relevant since it helps keep dealers from using information assemmetry to screw clients.

A thread like this is pointless. Save as much as possible and spend as little as possible. Avoid debt. Pay interest bearing loans off early to minimize interest expense. Everyone knows these things but most ignore the advice. Fortunately this is a forum for truck enthusiasts not personal finance advice.

These types of threads are as pointless as one asking if I should mainline or snort herion. Half the replies will suggest drugs are bad and the other half will be completely off topic nonsense.

 

Because you can make money on debt. When I bought my Porsche 964 I could have bought it in cash, but with 1% financing that didn't make since given the average annual return on my investment portfolio over the last 10 years. I left my cash in the market and financed the car; here we are 1 year later and my portfolio has appreciated by 30%. Based on the purchase price of the car and the interest rate I'm up over $13,000 in profit by investing the cash rather than buying the car outright. Obviously the market could tank and I could lose all of the increased asset value so I've hedged my bets, but there is certainly a function for debt. As an added bonus the car has appreciated significantly due to Singer and increased demand!

With all of that being said, I applaud your fiscal responsibility and your choice to pay off your house. I'm just adding that everyone has a different situation and debt can be a useful tool when used appropriately.

 

Actually no, and in some areas its not offered at all. My Dad lives in CO and where hes at its not an option. If you want to recycle you’ve got to do it on your own.

 

That's crazy. Sounds like turning back the clock a few decades. We've had free no sort recycling since the early 90s.

 

I still maintain it’s more about how long you drive the thing. You wanna trade up every few years you will lose. I’ve always bought slightly used and drove it at least 7 years or more. I maintain my stuff religiously and am able to fetch the upper range of KBB values when I sell it. Payments with low to no interest rates don’t bother me a bit. What do we figure a good shape Taco would sell for 10 years used ( I don’t even know help me out here insert your own numbers ), nevermind I just looked em up ‘08s holypoo $15-20k for trucks that probably sold for around $35k... so about $15-20k to drive a truck for 10 years that’s not a bad deal. Let’s dive into the numbers a bit more. $15k over 10 years is $125 a month, $20k over 10 years is $167 a month, see where we keep ending up... drive it awhile. Since we’re still here let’s crunch some more numbers. Like say $15k over 6 years ( most loans are 72 months nowadays) that comes out to $208 a month, I’d still argue a bargain. I’m not a fan of debt believe me but it’s more complex than just don’t ever finance anything. These are just quick calculations I’m sure you could as always do better or worse but it’s not unreasonable to expect to sell a Tacoma you buy today for around half of what you paid for it 10 years from now. That’s a solid deal imo regardless of whether you financed or paid cash.

 

Whether you can save 500 each month is a probability.

Whether you have to pay a 500 loan payment or not is a certainty.

If you don’t manage to save the 500 one month, it’s not really a big deal just make up for it another time.

Go ahead and don’t pay your loan payment one month or two and see what happens.

 

I agree 100%

But not everyone who is making car payments is living on the edge of insolvency.

This thread sort of turned into a "car payments are for weak-minded people who can't afford cars" discussion. Which is untrue.

I bought that apartment with my life savings as a down payment instead of buying the truck cash and it's worth $200K more 3 years later.

I will end my participation in this thread by saying Low interest loans are a good choice for people who can afford them! Bon Nuit!