How do you pay for your car?

[DexterPunk]

Perhaps an odd question, but I'm just interested how you guys normally go about it. I've never had a bank or finance loan for a car. Last time I purchased a car my parents wouldn't let me. They would much rather give me the money and pay them back than paying the interest on a loan. A smart way to do it I guess. My 2004 Impreza RS is about to be 'payed off' and is starting to get up there in Km's. I reckon I'll hold on to it for another 12 months or so, and trade it in when it hits 200,000. I often look at carsales for a bit of fun, but I'm now thinking about what I'll look at next. At the moment I'm thinking about perhaps a 2011 or 2012 WRX. Or perhaps even the far girlier Fiesta ST? I guess that's another topic. It's a lot more than I would have spent on a car previously. I know that it's a horrible investment, and for something that pretty much just hauls your arse from A to B, there's smarter ways to spend money. But I also love driving cars (as we all do here I guess) and I'd love something a bit nicer next time around. So just wondering if most here take out loans when buying, borrow against the home loan, or save the cash and pay up front?

[Exar Kun]

Every car except the Clio has been on finance of some sort. The Clio cost me less than $5k so was able to do that on cash. Our new Skoda is being salary sacrificed (thank you very much Mr Abbott) which is a total rort but we'll take it whilst it's there.

I've never had a problem with going on finance (and my wife and I have owned 9 cars between us in the last 6 years!). I always pay it off well before it's due and I accept that cars are something you lose money on. I totally accept the rational people have for only buying cars with cash, however, but I'm totally rubbish at saving.

edit: Fiesta ST = awesome and a performance bargain.

[petey]

Out of 8 cars I've owned, two have been financed. One was the old falcon xt 2004 ba mkII, then I upgraded to my current xr8 2005 bf. Still got 3 and half years to go paying it off, thinking about selling/paying off the loan to get rid of the debt.

It really doesn't hurt me too much, but I know the money I am paying including interest is going to be a hell of a lot more than what the car is/was worth.

[Jiminee]

The (2010) SS Commodore I bought earlier this year was half and half on cash/trade in and car loan. I made sure I can pay out the loan early without penalty which I hope to do. The finance offered through the car dealer though could not be paid out early without a huge fee so keep that in mind.
Curiously though, it was way harder and much more work to get my smallish car loan this year than it was to get my 100% home loan in 2007! Copped a ton of attitude from the credit union to when I went in and made my initial inquiry, then they had a look over my records and I explained I only wanted the loan for half the value of the car and they changed pretty their tune in a big hurry - that was quite the learning experience. I did go in and ask about it on a Saturday morning though and I do look like a colossal bogan on the weekends rather than an Engineer so that may have had something to do with it.

[DexterPunk]

I popped into the bank earlier just to have a chat and do some homework. They swiped my card and said, "oh you're already pre approved for $25k when you're ready." They said something about being a good customer, I asked about my income and they said it had nothing to do with that, it's just based on a long term customer relationship or something. Their loans were fairly high though, the cheapest being around 9.5% (commonwealth bank). I think If I took out a loan it would be similar to what you did Jiminee. Trade in, with half the cash ready anyway... and I'd want to pay it off nice and early. I'm moving early next year, and my pay should go up a bit as well, so I will re-evaluate my finances then.

[pixelboy]

It's about making profits from a high yielding car loan not customer relationships!

Having said that my car is on a salary sacrificed novated lease that is just a fancy way to buy a car on finance.

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[Speed]

Cash!!

I know that people will do whatever they like & I don’t care, it does not affect me. ……BUT....borrowing money for cars is the absolute worst way to spend money for anyone who wants to get ahead financially.

A few years ago I read exactly 63 books on creating wealth & understanding how money works.
I know that figure because I still own the books and I just counted them.
For nearly eight years Emjay and I used to work 45 minutes from home six days a week, and from home the other day. We used to take turns driving & reading on the way to and from our workplace.

Wasting money on cars was a common point that most of those books instilled into me. Another little known fact, (back then at least), was that 90% of millionaires surveyed according to one of those books, never bought a brand new car and in fact, the majority of them owned cars that we more than 10 years old. The majority of people that owned all the flashy cars were high income earners who owed more than what their assets were worth.

Don’t get me wrong, I love nice cars as much as the next person but I believe that delayed gratification is one of the keys to a long, happy & stress free life.

[Big Kev]

I save up and buy it outright.
When I buy a car I then start stashing cash in to a savings account for the next 5-10 years so when I need to change it, the money is there waiting. I don't like being in debt.

[wabbit]

Yeah cash here too. My first car was on pure loan and I think that's what made me grow up and understand like Speed said... worst way to spend coin.

My second car and last (so far) was paid in cash. Since have an even better understanding of how much cars just waste coin like no tomorrow, I now share a car with my girlie ('06 Rolla), and even then we've dropped the usage way down, and only use it on the weekends if needed (plus random needed case aside). Far out! a standard car that doesn't do any kms... yep that suits me just fine... oh the savings, lovely lovely savings.

I'm completely with ya Dex, I love driving too... maybe its because I don't have anything better to drive but I do enjoy "working with" the Rolla or finding out what its actually capable of which is surprising, I guess I've always loved tin tops the more average the better and getting a real feel for what I'm driving (yeah, okay I can't seem to word what I'm thinking tonight).

*I'm fully aware my use case can't be for everyone heh.

[dvestate]

The last 4-5 cars I have bought have all been cash with no loans. Had a few loans for my first few cars but paid them off quick.

I figure if I can't afford it out of my account I don't need it.

Although this flows to everything, I have a credit card with a pretty low limit set as purely my Internet purchases and that is it.

The only loan I have is my house

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[Bauer]

I asked about my income and they said it had nothing to do with that, it's just based on a long term customer relationship or something..

Clearly CBA dont follow any responsible lending code around not lending without a full understanding of the customers ability to repay the debt.

(yes i have read that part out loud a lot over the years)

[Quincy]

cash.


as others have stated, getting a loan for a car, is like heating a bbq by burning $100 bills!

But if you want to drive a sweet car, than you must sacrifice a few $$$.

[Hz-Lab]

We get a new car every 2 years, we are slowly upgrading too. We generally finance have the changeover cost which normally keeps finance well bellow the 10k mark, which is easily manageable. For Example when we bought the Pajero this time around we only borrowed 6k, We got a decent trade on the Outlander and had a few k that we had been saving. Both my missus and myself both get paid Bonus's annually, those are normally allocated straight away to paying off any loans we have. So generally our loans are paid off within the Year.

Although this year I blew it on my '51, but meh... we need toys, the Paj was way too serious for me.

My aim in life now is never to be any more than 10k in debt, including all cards, personal loans and car loans, but excluding the home loans. Makes for really manageable repayments and in the case that you happen to have a bit of extra cash laying around some time, you can really put a dent in it quickly. I also think about the purchases a bit more too, instead of getting all excited and borrowing 25k to buy a green snotball and then spending thousands more on it and selling for 9500 lol...

[Crowella]

First car was cash, second car by finance, future cars will be cash. If it wasn't for the worst of timing with my old car, I could have saved a little bit more to really reduce the loan down by about $5k or so and it'd be even less of a fuss. Personally I'm not too worried about the debt, I've been paying it off easily and hopefully should be paid off by the end of next year with the savings on the side.

Like Dex, I get the same thing when I walk into CBA. I just assume they want to push out high-interest loans. I don't even own a credit card so the car finance is really my only "debt".

[wobblysauce]

All Cash.. for myself, Debt free life.

Like the old joke 'who is the richest person here.. it is the bum on the corner with the coins in the Cup', most people are over there heads in debt.

But if you have a home loan use that with the mortgage and add some more on to that, then getting a car loan with higher fees.

[DexterPunk]

No debt here either. I do like knowing that any money I have is basically in the positive. I think property is a different story though.

[Santaria]

Salary sacrifice for me. Working for a non government organisation definitely has its perks. Doesn't cost much a week to have a new car.

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[matticooper]

The 1st car was a loan from the parents, which I paid back in full within a month, then the 2nd, 3rd, and 4th were paid in cash outright. When I moved in with the now wife, we had a personal loan for #5, we used the mortgage (because we were well ahead of the repayments) to fund #6 and we've used leasing to get #7 (current) and #8. Although, #7, there was residual at the end, so we've covered that off with a staff loan (perks of wife working at the bank).

With my ol' man, I think the worst was having a loan from the parents (especially whilst living with them).

[Vilante]

I had a few crap boxes which I paid for to begin my car career. My first real car was bought for me (big mistake) by my parents. My second car was a loan from the bank I had trouble paying back (see first car). The 3rd/4th/5th cars have been company cars which is definitely the best situation