An open rant to BKers buying non-inexpensive cars

[jacko]

Why are you obsessed what your credit report says? What do you want to accomplish with it?

[IBroke]

Buying new or used is just a personal choice - just like leasing or financing.

What I know for sure though is that I never again want to have a car without a solid warranty. Before I filed, I had to finance a beater from a "buy here - pay here"-lot without warranty - and the repairs added up quickly. After BK, I financed a reliable CPOed vehicle. Yes, it was a $25K loan but at the time I bought it, it was the only car in our household and my mother needed it for her business. And it was never an option for me to have her drive in an unreliable beater just to save $100 or $200 month.

Half a year ago, I leased my first new car in almost a decade. I know that this wasn't the cheapest vehicle available but by leasing it for 24 months, I'm very flexible now.

[TXskyblue]

My opinion is that almost no one should lease.

A car from a reliable brand like Toyota or Honda should last 200,000 miles easily with only minor repairs. Depending on how much you drive, that might be 10 years.

Used cars, if they're from a reliable brand, should be fine for the same period.

[mynameainttracy]

Most of those are the equivalent of a tin can on wheels. Not to mention that if you live in the midwest you are guaranteed to get stuck in the snow in one of those. The Toyota Prius comes to mind, but to each their own.

My 2006 Prius is paid for, drives in the snow like a champ and has never had a single unscheduled maintenance issue. My tin can serves me very well.

[IBroke]

My opinion is that almost no one should lease.

We are switching cars every 2-3 years so leasing is the best solution for us.

[Logan]

I seem to be reading about a lot of folks here who just a year or so out of BK discharge financing cars priced at $30K+.

It would seem to me that we should all be thinking about how NOT to get stuck wit big bills anymore. With cheap new cars going for $13K (sure, not a lot of "soccer mom" space, nor "fahrvergnügen"), but at a lot less of a note! Every one of us coming out of a discharge is de facto broke, and it seems that it would behoove us to try and be a lot more wise in our spending decisions, at least until we have really built up enough cash that Suzy Ormond would allow us to "buy".

I was broke before BK and NOT broke coming out of BK.
PS. Suzy Ormond would tell most of us NOT to declare BK.

[TXskyblue]

I was broke before BK and NOT broke coming out of BK.
PS. Suzy Ormond would tell most of us NOT to declare BK.

I can't afford to pay cash for a 30K car and I'm close to a year post-BK. As a generalization, the last thing someone who just discharged BK should do is take on a large debt on a depreciating asset.

p.s. Suzy lives and dies by the FICO. Since she is partnered with Fair Isaac, it makes sense. She can be entertaining and does offer a reality check for a lot of debtors, but I think her conflict of interest means she should be taken with a grain of salt.

[Logan]

I can't afford to pay cash for a 30K car and I'm close to a year post-BK. As a generalization, the last thing someone who just discharged BK should do is take on a large debt on a depreciating asset.

p.s. Suzy lives and dies by the FICO. Since she is partnered with Fair Isaac, it makes sense. She can be entertaining and does offer a reality check for a lot of debtors, but I think her conflict of interest means she should be taken with a grain of salt.

One year after BK I had plenty of money since I had no debt. I actually went without a car until 2.5 years out of BK then bought a 30 vehicle. I paid it off in a year.

[Logan]

Meant to b say a 30K vehicle.

[sbatman]

I'm the mother of four and lived in Phoenix, AZ (and before that, South Florida-where a breakdown could be dangerous for other reasons) while my kids were young. The biggest car-related nightmare was to get stuck on the Interstate in a remote area with not a lot of driver assistance. WE lived 20 miles to the nearest stop-light for five years. Also, due to health conditions, not having good air-conditioning in 110F+ (pretty common out here) is life threatening. So, I've only bought new cars since 1977. Aside for when I was married to my first husband, when we could afford the two Mercedes and Peugeot, I've always bought a basic, dependable new cars-Toyota Tercel (2), Hondas (5), Nissan (2) and a Mitsubishi(1). I've financed all of them at very good rates (the dealer incentive) or through USAA and managed to get them paid off or traded in before the termination of the loan. Some years I needed a van for all the kids, sometimes a travel or utility vehicle and once a long-commute car.

So, before I filed Ch7, I traded in the pick-up truck I hated and no longer needed for a "cheap" new Honda Element ($23K). I had one years before and loved the utility, especially it's hauling ability after you easily pull out the back seats and utilized the clamshell truck-like tailgate. You can even sleep two in it. This one I financed through Honda at 3% interest (bought right before the credit score plummet), for six years, with the full intention of paying it off before the end of the loan.

So, when I retired, I pulled out all my non-earning, mostly Roth IRAs, 401Ks and 403bs and bought a little house free and clear. So no house payment. Beloved fiance retired then and since he hated the monthly payment on my car (his is a nine-year old, paid of Subaru), he went and paid off the already paid-down balance on my car. So, now, we have no house or car payments.

Now, all the kids are grown, we have the two cars-the daily use on is the Subaru and our traveling car is the Element (four years old with 25K miles). We no longer need to worry about being stranded in the heat with kids and my medical issues in town and have the super, "new", reliable Honda for traveling in the remote, unpaved roads for our cheap camping vacations.

So, there is the time and place for buying and financing a new car that you can afford with a reasonable interest rate. Of course I couldn't buy them with cash I didn't have. I had kids under eighteen and younger for 31 years(!!!)-so that's how long I felt I needed to buy a new car. Relative peace of mind is priceless. Sure, I could have bought good used cars, but I don't trust how someone took care of it and any potential pre-existing conditions. And, in all those years, I never had a break down. The only times the cars had an issue is twice, my fiance managed to puncture the oil pan on gravel/dirt/rocky roads-driver error and not mine.

Just use your judgment wisely, every situation is unique, so blanket advice is just doesn't cover it.

[papie]

Eh, rant away, I guess.

I bought a car for $14k during our Chapter 13 and paid it off in a year and a half. Our second car died one week after discharge, and we purchased another car for around $25k. It too will be paid off in under two years. I have quite a few reasons for buying a larger car. It was a purchase we had planned for a very long time, as we knew our second car was on the brink of death for quite a while. We didn't come out of bankruptcy broke, due to some really good promotions and a trustee who couldn't care less.

I obviously have no issues with people buying more expensive cars, my only advice is to get your financial house in order, always maintain savings goals, and never ever do those crazy long term auto loans. Seven years to pay off an auto loan probably means you'll be making payments on a seven year old beater while simultaneously paying for large repairs.

[iswmle]

I am honestly neither here nor there on buying used or new. I would prefer to buy new, but have always bought used. My mother is a believer in buying a new car and driving it until the wheels fall off. I am extremely fortunate in that my mom decided to get herself a new car, and instead of trading in her meticulously cared for Vitara she passed it down to me. I haven't had a car payment since my BK, and I really enjoy it. That being said, I can see myself getting a car loan in the future, but only if I am capable of paying it off within the year.

I think this rant could be expanded beyond people who filed BK and also targeted to a specific crowd: those who live beyond their means. I was listening to a podcast the other night with the guy who created YNAB and Mr. Money Mustache. Mustache said something funny: that when you buy a car and you purchase it outright, that money that you would be paying to a vehicle can go to you; effectively to your own freedom of not having to work to keep up with your lifestyle.

This reminded me of a friend, who just a couple of months ago was bemoaning his life to me: He is saddled with debt. He just had a baby. At the time he had two car payments totaling over $600. All he wanted was to be free, to leave his crappy home state and move to somewhere exotic. But this is not an option because of his debt. He just can't seem to get ahead. Two weeks ago he and his wife decided they needed to trade in their truck (all 10k miles on it) for something more "family" friendly: they purchased a Honda CRV for $32,000. They traded in the truck (that still had a note on it) for $26,000. I know they had bought that truck new, and I am willing to bet they were upside down on the truck since they put 0 down. So I am assuming that they traded in the truck and rolled what amount was left over including the taxes (this they did for sure) into their new loan.

But he didn't care about the amount of his new loan: he cared about what his payments were going to be. As long as he got his payments with a certain price range he was golden. Never mind they are now even more upside down on a brand new car, that they are in a vicious cycle of living beyond their means. What mattered is that he has a new car with 5 miles on it and heated seats.

If you can afford a new car knock yourself out. It's personal preference! ... but if you are a $30,000/year millionaire struggling with debt or having to declare BK because you're trying to keep up with the white collared exec in the Beemer, then priorities should probably be re-analyzed.

IMO.