Go Back   986 Forum - for Porsche Boxster & Cayman Owners > Porsche Boxster & Cayman Forums > Boxster General Discussions

Reply
 
LinkBack Thread Tools Display Modes
Old 01-19-2005, 03:03 PM   #21
Registered User
 
Join Date: Jul 2004
Location: Houston, Texas
Posts: 7,240
IMO, buying a brand new car on credit as a lease is a huge waste of money. I stopped doing it years ago. Never pay interest to anyone for something that depreciates! This isn't a difficult thing to figure out, but all too often the "gimmies" take over and the buying becomes emotional and completely unrational.

Now buying a two to three year old car with a factory extended warranty on it where some other person has paid most of the initial depreciation on the car is the smart way to go. I did that with my LS400 (a 95 bought in 99 from a dealer as a certified pre-owned) and it's paid off in spades. Car was 60% of sale price in 95, and I had nearly $9,000 worth of free maintenance and repairs done to the car over the next 36 months. I got them to replace all sorts of stuff and they never blinked an eye at my requests because the warranty backers were so good. The car is in top shape now and only 10 years old.

I'd only borrow on a used car if the interest rates were terribly low, say 2% APR and I could prove to myself that my investments were outpacing that 2% loss for the next X years of payments.

And personally, I don't borrow money on used car purchases either. If I can't afford to pay cash for it, I do not buy it. When I can afford to pay cash for it, I am very, very cautious because the day after I take possession, the bank account is dry and that makes me feel really lousy. I worked hard for that cash and it looked great in my account!

I think my bottom line is that buying or leasing a new car is a very expensive proposition, but I highly recommend it to all you young people because it creates so many 3 year old creampuffs I will then buy from you for a fraction of their "like new" value.


Last edited by RandallNeighbour; 01-19-2005 at 03:06 PM.
RandallNeighbour is offline   Reply With Quote
Old 01-19-2005, 05:30 PM   #22
Registered User
 
Join Date: Jan 2005
Location: Richmond, VA
Posts: 251
Send a message via AIM to YellowJacket
Porsche986: You talk about the "feeling" of knowing you have debt and how you don't like that. You should take some finance classes. The way the world works, the way huge corporations are successful, etc, etc, is that they borrow money at a certain rate, and use it to return a higher rate. This money that is borrowed is debt. Good debt is good. Bad debt is bad. Good debt means that you are making more off of your debt than you are paying for it. For example, if I finance my new car at 4% and invest the money I would have used to buy it, and get a 6% return, my net return is 2%. If you are capable of making money above and beyond the cost of financing the car (which currently, is not hard to do), then you are financially better off to finance it. It's called opportunity cost.

I agree that it "feels better" to pay cash for a car and not have a payment, but I make my decisions based on spreadsheets, not feelings, that is my only point.
YellowJacket is offline   Reply With Quote
Old 01-19-2005, 05:46 PM   #23
porsche986
Guest
 
Posts: n/a
I see your point, all i am saying is i am the same as randell, i only buy a car with money i have or i dont buy. Any figures you have no matter how good means the car is never yours untill debt is cleared no matter how good the apr is. At the moment it happens the av APR in the UK is 15%.

We are talking about buying a car with cash or finace. No investing... ect..
I see what you mean about investing yes... but again i speak from a UK point and the idea of any kind of lease, finance, loans is in my view a bad idea.
I dont claim to be an expert in investing but i do know basic facts to run a good company and thats own your items, stay clear of debt and loans. It is never a good idea of finace as if there were no finace we would all be getting superb prices for our boxster on trade.

tooooooo many people buy then cant afford payments, resulting in huge boxster stands at garages which in return means reduced price.
  Reply With Quote
Old 01-19-2005, 09:57 PM   #24
Registered User
 
bamaboxster's Avatar
 
Join Date: May 2004
Location: Birmingham, AL (Crestwood)
Posts: 83
Send a message via AIM to bamaboxster
2 things I want to chime back in on.

First, will all due respect and condolences to the Tom Williams family for their loss of Tom Williams (founder of the Tom Williams Automobile "Gallery") to a bout with cancer. He was 78.

I drove by the Tom Williams dealerships tonight on the way home from college to check one thing out. What I was looking for was the falg pole at the end of the row connecting all of the dealers in this "subdivision". The flag, which is right against highway 459 for everyone to see, was not at half staff. I don't know what the protocol is on lowering flags for specific reasons, but I feel at least someone in one of the 7 dealerships Tom Williams put on the ground, would have thought of it.

Unfortunately, I feel this oversight is metaphoric for the way the upper management (Sonic Corporation) is so disconnected from their dealers, and how the dealers are disconnected from their customers.

Someone should have the respect to lower the flag to half staff at this auto dealer megaplex bearing Tom's name.



Second,

As for buying a new car cash, from my experience, what car you buy may make a difference.

For example; I bought my 2003 Infiniti G35 6 speed Sedan about halfway through the model year. The car stickered at $34,000 loaded, I paid $31,000 cash for it.

I drove the car 13 months, put 27,000 miles on it, traded it for the Boxster.

With the serious amount of miles I put on it in a year and it being a manual transmission on a 4 door sedan, I got $27,300 actual cash for it. I took less than a $4000 hit. This is not too unusual for 6MT owners, but unusual for the typical car market.

With that said, the G35 has held on to its resale value quite well and is one of the reasons I went back to another G35.

Another new one; In 1995, I bought the first 96 M-Edition Miata (Merlot color) which stickered for $24,000 and change. I bought it for $23,200 Sold the car 2 years later in pristine condition with 20K miles on it just under $18,000.

On the other hand, to defend the used car purchase (the one I should have kept); I bought a 1998 VW Jetta GLS TDI 5 speed, the Turbo Direct Injection diesel, with 115k miles on it for $5,000 even 4 years ago. This car was as clean as a new car, no wear showing on it any where. it was still getting 52MPG on the highway with 140K miles on it. Zero issues with this car. Only if everyone took care of thier cars like me and the previous owner of this Jetta. I put 24k miles on it, sold it a year and a half later to another TDI enthusiast for the same $5000 I initially paid for it. Jetta III TDIs and Golf TDIs and like cars in similar or less condition are still getting around the same 5 grand. With that kind of gas mileage, the savings covered the insurance and tag.

I did almost as well on my 1990 Audi 200 Turbo Quattro 5 Speed and my 1986 Commemorative Edition Audi Coupe GT. A little more maintenance cost in involved when you drive an old Audi.

These were cars that are sought after models and have a loyal or cult-like following. The rarer and more special the car, the better it will hang on to its resale, but only within the circle of like enthusiasts.

Look at the market on the Toyota Prius, the hybrid. It is extremely difficult to get this car anywhere in the country and the demand for them is high. People are still getting near what they paid for the first generation Prius, if they happen to give them up, and that is rare.

In comparison, yes my babied 04 Boxster will be a real bargain for someone looking for a used one with warranty still left on it for $34,000 as mentioned in the post above. Its will be a great deal for someone. I am the one that took the $12,000 hit in 5 months on the Boxster. This was the only new car I bought that had such a dramatic initial depreciation rate. I'm quite sure my future 997 will also.

I don't believe in strapping yourself down to a new car if you can barely make the payments and not saving money for a rainy day, just to have driveway jewelry.

I agree, its smarter to buy a car a few years old which is well taken care of in cash if possible. I never finance the full amount of the purchase price, nor do I max out the term for 5 years if I finance. I have the funds to pay for a new car in full and I have. I'm 35, my house is almost paid for (<3 years to go), I live within my means, I'm saving and investing money, but enjoying life at the same time.

Cars are my life long passion and its the only thing I spend money on. They're not investments, unless its a special vintage, but a careful purchase can be kinder to the wallet.

Dave

Last edited by bamaboxster; 01-19-2005 at 11:51 PM.
bamaboxster is offline   Reply With Quote
Old 01-20-2005, 08:52 AM   #25
Registered User
 
Join Date: Jul 2004
Location: Houston, Texas
Posts: 7,240
Yellowjacket, spreadsheets do indeed changed one's attitude and feelings about financed purchases, but I must say that paying cash for any depreciating item is what any CPA or CFP would tell you or me if asked.

Add one more thing into the mix of this conversation: Buying cars on credit and paying interest assumes three important things that simply cannot be assumed in my mind at my ripe old age of 42:

1. One's annual income level will remain the same and/or increase over time.

We can work hard to keep our jobs and make more money, but alas, excellent employees lose their jobs every day! Finding another can often take months or longer. If his or her car is paid for, it's one less thing they'll have to be concerned about losing should their savings run dry.

2. One's health, and the health of his or her family will remain excellent during the duration of the loan period.

We can eat lots of fruits and veggies, lay off the red meat, jog three miles each morning and still contract cancer and see our life savings wiped out due to the crappy insurance we are all forced to endure in the USA. Few employers have excellent health coverage any more and the overage payments for a catastrophic illness in one's family can easily exceed $50k. Being out of car debt would go a long way toward making those medical payments.

3. One's current investments will not tank and be worth far more in the years to come.

The financial climate has changed. Modest gains can be had if invested wisely, but truth be told, the old addage of not counting ones' chickens until they're hatched is still true.

By no means am I trying to be arguementative, but losing sleep, developing ulcers, arguing with one's spouse over spent-money issues because the spreadsheets and possible interest gained did not pan out, and assumes one will follow through and invest what has been borrowed to fulfill the scenario you've laid out.

The interest charged on the loan, however, is guaranteed to be charged to the payee.
RandallNeighbour is offline   Reply With Quote
Old 01-20-2005, 09:48 AM   #26
Registered User
 
Brucelee's Avatar
 
Join Date: Jun 2004
Location: Des Moines, IA
Posts: 8,083
Financially, one can take both sides to the debt/leverage argument and feel right. To me, if one HAS the cash, the emotion may take over.

To wit, I have no debt at all and it feels wonderful. I could borrow a ton of money and use it to leverage any number of things. Or, use it to invest in other things.

I don't do that.

To me, it feels better than what the spreadsheet might tell me.

At this stage of my life, that is more important to me that being "right."
Brucelee is offline   Reply With Quote
Old 01-20-2005, 10:41 AM   #27
Registered User
 
Join Date: Jan 2005
Location: Richmond, VA
Posts: 251
Send a message via AIM to YellowJacket
I can certainly understand what some of you are saying regarding the decision to finance using debt or using cash out of pocket. It probably also depends partly on what stage of life you are in. Right now, I'm young and have room to make a little bit more risky financial decisions than someone who is twice my age. Furthermore, if I make a mistake, I don't have a family of four to worry about supporting. So it makes more sense for me to use my money for other purposes than paying cash for my car. That being said, I can definitely see where it makes more sense for some of you to have the piece of mind that comes with something "guaranteed" (i.e. it is guaranteed that if you pay off your car, nothing will happen to cause you to lose more money on the car than issues related to repairs, depreciation, etc.).

Sorry if I came off a bit too sure of my ways earlier!
YellowJacket is offline   Reply With Quote
Old 01-20-2005, 11:40 AM   #28
Registered User
 
Join Date: Jul 2004
Location: Houston, Texas
Posts: 7,240
Yellowjacket, I love the banter, and I don't get riled up about it at all! Keep it coming. That's how I seem to learn from others... lots of communication of all kinds.

Just save a lot of money and stay out of debt in your youth! That way, you can relax as you age and not worry about money... and you can enjoy the miracle of compounded interest, which gets really miraculous in those last years!
RandallNeighbour is offline   Reply With Quote
Old 01-20-2005, 04:15 PM   #29
Registered User
 
bamaboxster's Avatar
 
Join Date: May 2004
Location: Birmingham, AL (Crestwood)
Posts: 83
Send a message via AIM to bamaboxster
Randallneighbor,

Well spoken

Dave
bamaboxster is offline   Reply With Quote
Old 01-20-2005, 04:30 PM   #30
Registered User
 
Perfectlap's Avatar
 
Join Date: Nov 2004
Location: New Jersey
Posts: 8,696
NOT living with debt certainly lowers your stress level. But when you realize that $30,000 cash diversely invested in real estate, stocks, bonds will be exponentionally greater thirty years from now you have to know that the elusive "debt free good feeling" is a luxury in itself! You are leaving allot of retirement money on the table by putting the cash in another man's pocket and driving home with a smile. One very expensive smile really.
The number one thing financial advisors preach is the benefits of time. every year that you tie up cash in non-appreciating investments, is that much more cash you have to kick in to get the same return in thirty years. They also preach that even if you are in your 40's you should never think its too late to invest, people are living longer and the world is getting more expensive.

My father used to always say "a guy who makes $100,000 goes out and spends half his income on a car isn't very wealthy" He has never paid more than $5,000 for a car, EVER... even though he was more than able to buy a really nice car.
__________________
GT3 Recaro Seats - Boxster Red
GT3 Aero / Carrera 18" 5 spoke / Potenza RE-11
Fabspeed Headers & Noise Maker
BORN: March 2000 - FINLAND
IMS#1 REPLACED: April 2010 - NEW JERSEY -- LNE DUAL ROW
Perfectlap is offline   Reply With Quote
Old 01-20-2005, 04:33 PM   #31
Registered User
 
Perfectlap's Avatar
 
Join Date: Nov 2004
Location: New Jersey
Posts: 8,696
"That way, you can relax as you age and not worry about money... !"

I don't think I have ever in my life met a guy over 30 who didn't worry about money. Well there was that one single guy who ate allot of canned tuna fish.
__________________
GT3 Recaro Seats - Boxster Red
GT3 Aero / Carrera 18" 5 spoke / Potenza RE-11
Fabspeed Headers & Noise Maker
BORN: March 2000 - FINLAND
IMS#1 REPLACED: April 2010 - NEW JERSEY -- LNE DUAL ROW
Perfectlap is offline   Reply With Quote
Old 01-20-2005, 04:50 PM   #32
porsche986
Guest
 
Posts: n/a
lol i am 25 and i wanna live a little and not bother about investing.... if the bible and prophecy is correct then aint the world going to end in march 2006? lol who knows... i would much rather spend and enjoy today or die tomorrow rich.
  Reply With Quote
Old 01-21-2005, 10:57 AM   #33
Registered User
 
Join Date: Jul 2004
Location: Houston, Texas
Posts: 7,240
Perfectlap, any investment that has a potential yeild to outpace an interest charge on a car loan will also have a risk factor and the "savvy" investor could lose much of that cash!

By the way, I paid $35k cash for one of my cars, and I am the first person over 30 you now know that does not worry about money. I don't make a lot, and neither does my wife, but we have no debt and that's why we don't worry about money. And just to set the record straight, I absolutely hate tuna fish! Our debt-free lifestyle allows us to eat and fine restaurants, fly to Australia and dive the Great Barrier Reef, yada yada yada. I'm not bragging, just trying to tell you that not paying all that interest really piles up the savings account for the one who saves versus spends, even when you have a modest annual income. I do spend though... I'm on this forum as a Porsche owner

Every single one of my friends who finance their cars, and finance new ones too frequently and make rotten choices in cars too never have an extra dime to save and invest ask me how on earth they can become financially secure like my wife and me.

...they hate my answer, which you can easily guess! Get out of debt and stay that way forever.

If you are one of those very rare people in this world who is an excellent saver of money AND a prudent and wise investor, you go right ahead and beat the interest on a car loan with investments versus paying cash. I admire you more than you will ever know.

I must admit publically and humbly on this forum that I am not this kind of person and do not know of any, although they must be out there somewhere! As I stated before, most every person I know lives beyond their means and one sizeable hiccup in their finances (blown engine, AC unit dies at the house, a root canal and crown, etc) and they're screaming "bankrupcy, foreclosure or reposession!" Do they find a way out? Sure! Just take out a loan or charge it on a credit card. The hole just got deeper.

Sounds like your situation is different from your posts... could you pay off your loans with your investments if necessary today? Hope so.

I feel like I'm wearing out my welcome on this topic and seriously hijacked this thread so I won't prattle on any longer. I'm just really sad for my friends because they have credit-spent themselves into a life of slavery to banks and will have little to nothing in retirement, and some have already found themselves in bankruptcy court

Last edited by RandallNeighbour; 01-21-2005 at 10:59 AM.
RandallNeighbour is offline   Reply With Quote
Old 01-24-2005, 06:48 PM   #34
Registered User
 
Join Date: Jan 2005
Location: Tuscaloosa, AL.
Posts: 8
Send a message via AIM to Christeon
It's a Dealer problem in my opinion.

I live just south of you in Tuscaloosa AL. I never once considered taking my car to Tom Williams ever, I go to Jack Ingram Motors for anything that requires dealer involvement. My experiences with Tom Williams started with my BMW afterwhich I vowed never to torture my car with them again. The guys in Montgomery seem to be very professional and what you'd expect from a Porsche dealer. Tom williams owns to many dealerships and treats the german cars as if they were just another car "off" their lot. Please don't judge anything about Porsche from your experience with them.
Christeon is offline   Reply With Quote
Old 01-30-2005, 04:31 AM   #35
Registered User
 
bamaboxster's Avatar
 
Join Date: May 2004
Location: Birmingham, AL (Crestwood)
Posts: 83
Send a message via AIM to bamaboxster
Christeon,

I'm happy to hear about Jack Ingram Porsche. I did make a visit down to Montgomery last Friday to check them out.

I spoke to Sonya Wilson, an extremely professional saleswoman whom has been with this dealer for 18 years.

I was able to drive the new 997S that day.

A week later, I received a thank you letter for visiting from Sonya, and another one from the General Manager. I never got a thank you-anything from Tom Williams Porsche even after I bought my new Boxster.

Jack Ingram in Montgomery, AL and Jim Ellis in Atlanta are very professional dealerships. Its just unfortunate that J. Ingram Porsche is 90 miles south and J.Ellis is 160 miles east which is somewhat far for me to have the vehicle serviced from time to time.

Maybe in another 2 years I will consider buying another Porsche, but for now its time to save, payoff the house and make good investments.

Dave

I'm happy to see that there are Porsche dealerships that give a flip, just wish they were closer.

bamaboxster is offline   Reply With Quote
Reply


Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Trackbacks are On
Pingbacks are On
Refbacks are On




All times are GMT -8. The time now is 05:40 AM.


Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2020, vBulletin Solutions, Inc.
Content Relevant URLs by vBSEO 3.6.0
Copyright 2018 Pelican Parts, LLC - Posts may be archived for display on the Pelican Parts Website -    DMCA Registered Agent Contact Page