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Car buying - what kind of deposit?
- Thread starter Joss
- Start date
- Joined
- Oct 2, 2006
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- 840
I have to disagree with this. i have a 1989 F350 crew cab with 360000 miles on it. I put in a new tranny at 180000 and a new engine at 300000 and it is still going strong. Body is a little rough now but the drive train is rock solid.
As far as financing, if your looking to build your credit by all means do it. You are in a possition to decide how much you want your payment to be and then finance an amount equal to that payment and pay cash for the rest. Four wheel drive is nice, it can help out in snow. If you know how to drive well offroad you can go almost the same places with a 2 wheel drive as a 4 wheel drive. If you don't it just means you will get stuck further in. I have an 89 pickup without 4 wheel drive and a 2002 Excursion with 4 wheel drive. They both work well off road for what I use them for. If we are getting alot of snow I take the excursion for the better traction. Hope this helps.
- Joined
- Sep 30, 2002
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- 1,382
Joss, as you have probably surmised by now when you are purchasing any item that depreciates its always better to stem your loss by paying cash. Now that being said...the zero % finance option if available is good. Use someone Else's money for your purchase and pay no fee for the exercise. Now invest your savings at a nominal rate and you have just turned the whole car buying activity on its ear.
Also if financing is unavoidable or maybe more beneficial to you personally as you previously stated then don't overlook leasing. That is unless you plan on keeping this vehicle into a very old age.
Hope this helps
Good luck
Also if financing is unavoidable or maybe more beneficial to you personally as you previously stated then don't overlook leasing. That is unless you plan on keeping this vehicle into a very old age.
Hope this helps
Good luck
- Joined
- Feb 11, 2001
- Messages
- 1,151
4wd does not improve safety...this is true on snow/rain/ice as well as dry conditions...its biggest feature is to keep you from spinning your wheels
however some AWD systems...ie those with electronic stability control...do improve safety...especially with big heavy vehicles like suvs
Joss, in addition to all the good advice here I'd recommend checking out a book called "Don't Get Taken Every Time" by Sutton. There's some great chapters on financing, as well as negotiating the purchase.
One suggestion from his book: if you're buying new, the down payment must be at least equal to that first hit of depreciation, which can be north of 30% on some models, IIRC. Otherwise, as Chuck and others have noted, you end up owning more on the car than it's worth--"under water".
Sutton also has some good formulas for figuring out a) how much money does "x" payment a month give you, and b) for figuring out how much that payment costs you in interest. Good stuff, and if you've got the dough but want to build up good credit, why not take a one or two year term loan, pay down as much as you need to, and pay the loan off in one or two years versus 4--you'll save a ton of interest and hopefully get the benefit of being a good payer. If you get an idea of what the car might be worth at the end of its usable (to you) life, that may also help you figure our how much to put down. Edmunds, both the little book and the website, is a great resource for this kind of data.
A possible alternate strategy, also mentioned above: buy a slightly used but still factory warranted car. That way the depreciation hit has already been absorbed, but you still have some factory level coverage. Balance it against the cost of an extended warranty(that worked for me--a Toyota Platinum extended warranty more than paid for itself, but that may not be true of all makers), which you may need to buy any way if you want to keep the car beyond the normal warranty.
Also, look out for terms on Zero per cent financing; it's not available to everyone(credit reasons), and if you have to pay list price in order to get it, measure it against the possible savings from a discount off list and the added cost of interest payments.
One suggestion from his book: if you're buying new, the down payment must be at least equal to that first hit of depreciation, which can be north of 30% on some models, IIRC. Otherwise, as Chuck and others have noted, you end up owning more on the car than it's worth--"under water".
Sutton also has some good formulas for figuring out a) how much money does "x" payment a month give you, and b) for figuring out how much that payment costs you in interest. Good stuff, and if you've got the dough but want to build up good credit, why not take a one or two year term loan, pay down as much as you need to, and pay the loan off in one or two years versus 4--you'll save a ton of interest and hopefully get the benefit of being a good payer. If you get an idea of what the car might be worth at the end of its usable (to you) life, that may also help you figure our how much to put down. Edmunds, both the little book and the website, is a great resource for this kind of data.
A possible alternate strategy, also mentioned above: buy a slightly used but still factory warranted car. That way the depreciation hit has already been absorbed, but you still have some factory level coverage. Balance it against the cost of an extended warranty(that worked for me--a Toyota Platinum extended warranty more than paid for itself, but that may not be true of all makers), which you may need to buy any way if you want to keep the car beyond the normal warranty.
Also, look out for terms on Zero per cent financing; it's not available to everyone(credit reasons), and if you have to pay list price in order to get it, measure it against the possible savings from a discount off list and the added cost of interest payments.
I was looking at similar vehicles myself a few months ago. I decided for the added cost, maintenance, and fuel cost to forget about getting a SUV. I now have a 2003 Venture van, which if you read reports is not supposed to be good, but I have 15,000kms on mine now and haven't had problems. With a minivan you get just as much if not more room then a SUV, good traction because they are FWD, especially in the snow (mine's awesome in the snow), a comfortable carlike ride and best of all you get high mpg, I get 30mpg with my van on the highway, you can't touch that with a SUV, and it has more then enough passing power. Not telling you what to do, just offering an idea to you for consideration. 
I would put down as much money as you can. If you are trying to build credit you can just get the loan for the shortest term possible (1-2 years), when you pay off debts that looks good on credit ratings as well.
I would put down as much money as you can. If you are trying to build credit you can just get the loan for the shortest term possible (1-2 years), when you pay off debts that looks good on credit ratings as well.
- Joined
- Dec 16, 2000
- Messages
- 2,044
Two things, neither of them related to your original question: 1) I just rented a Highlander on a trip, drove it for a week and loved it. 2) The first thing to tell the Toyota dealer before even negotiating is to stick the limited production fee (if it has one). That fee is nothing but pure profit for the dealer tacked onto the sticker price.
Gollnick
Musical Director
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- Mar 22, 1999
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- 29,258
Unfortunately, all to often, and especially in the hands of an inexperienced and unskilled driver, four-wheel-drive is just a way to get stuck in a worse spot.
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- Jan 4, 1999
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- 3,000
No, to have less debt. Zero debt is best. Less debt is next best.
- Joined
- Nov 20, 2001
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- 7,353
I disagree with that (though I do have 0 debt, apart from a few hundreds in credit card expenses). Debt, like all modern tools, need to be used smartly, but it can be a very powerful and legitimate tool. It certainly is better to have no debt rather than more than you can manage... 
For the majority of the population, this statement is good advice.
For the rest of us who can handle financial complexities, good debt is called "leverage". Bad debt is called a "liability" and should be eliminated.
Gollnick
Musical Director
- Joined
- Mar 22, 1999
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- 29,258
The important thing with any debt is to plan it and use it effectively.
I have no problem with the guy who goes to Bladeshow, pays for travel, hotel, meals, bar bills, and maybe buys himself a toy or two, has a great time, and charges the whole thousand bucks of it to his credit card and pays it off over the course of the coming three months. Yeah, it costs him $50 in interest. But if fifty bucks is the cost of having that good time and it's worth fifty bucks to him, then very good. But the important thing is that he understands that cost going into it, accepts it, and has planed his finances for it. The other important thing is that he does pay that debt off in a few months. That is a form of good debt, I'd argue. Yes, it would be better if he saved the money up over the preceeding three months a didn't have to pay the fifty bucks in interest, but I'm not going to argue about it. However, if he's still paying interest on that spluge a year later, then it's bad debt. And that's the problem most people get into.
I have no problem with the guy who goes to Bladeshow, pays for travel, hotel, meals, bar bills, and maybe buys himself a toy or two, has a great time, and charges the whole thousand bucks of it to his credit card and pays it off over the course of the coming three months. Yeah, it costs him $50 in interest. But if fifty bucks is the cost of having that good time and it's worth fifty bucks to him, then very good. But the important thing is that he understands that cost going into it, accepts it, and has planed his finances for it. The other important thing is that he does pay that debt off in a few months. That is a form of good debt, I'd argue. Yes, it would be better if he saved the money up over the preceeding three months a didn't have to pay the fifty bucks in interest, but I'm not going to argue about it. However, if he's still paying interest on that spluge a year later, then it's bad debt. And that's the problem most people get into.
- Joined
- Nov 20, 2001
- Messages
- 7,353
All,
Thank you for your help. I finally bought a 2007 RAV4 2 weeks ago. I looked at the CR-V, Pilot, and Highlander, and the RAV4 was simply a better car. I got the top of the line, with the 269HP V6. I really miss the manual transmission, but it seems that it's becoming less and less available.
In my search, I found the Consumer Report articles invaluable.
Thank you for your help. I finally bought a 2007 RAV4 2 weeks ago. I looked at the CR-V, Pilot, and Highlander, and the RAV4 was simply a better car. I got the top of the line, with the 269HP V6. I really miss the manual transmission, but it seems that it's becoming less and less available.
In my search, I found the Consumer Report articles invaluable.