Expensive vehicles

snakeskinner

snakeskinner

Twelve Pointer
How do folks afford $40k-$50k for a new truck? Do they make payments on them or do they pay cash or by chance lease them? I could pay off my house for what a new truck costs. If it is financed for 7 years then at the end of those 7 years an owner will have paid over $55k for it and it would be worth much less than half what was paid for it.
 

Muzzleodor

Eight Pointer
Most that drive them probably can't really afford them whether they know it or not. I don't want anything to do with a loan of any kind if I can help it.
 
Mr.Gadget

Mr.Gadget

Old Mossy Horns
For me I busted :donk:donk:donk to pay off the house.
Started with a 30 and after 5 years refi to 15 dropping all fees and paid that off in about 6 years.

Having done that it gave me extra to pay for otyer stuff. Got a new truck years back and paid the high payments about 550 for a 5 year but paid extra for that and got it down to 4. Being I had a trade that was only 3k I had high payments.

Had that truck for 8 years, 4 free and paid for but the end value was in the 16k so when I traded it I got a 32k truck owning 50% off the top and getting a 3 to 4 year loan.

I found that it is best if you want new to have value in your trade to help.

My taco I just traded was paid off a few years yet I traded it in for the 2017 ram.
Got 24k on trade to a 50k sticker Ram.
Got 1.75 % for 3 years and should be able to have it paid off in 2 to 2.5 years with only 300$ in interest.

If I keep this truck for 7 to 9 years should still have 15 to 20k value in it for the next trade.

I was paying a lot in cash over the years to have no or small loans. With the past few being. 0% or 1.75% I did loan on them.

So I would say if you dont have the cash, start someplace saving money or value in used to trade up. It helps only if something is paid off or paid off and save money a year or two same as the payment was. Then go short term loans only.
 
sky hawk

sky hawk

Old Mossy Horns
Contributor
You write a BIG check. I'm guessing most people trade in a vehicle for a down payment and then finance the rest for a long time.

I just bought one last week. A vehicle is not an investment, it's an expense. You gotta have one, and you know it's gonna lose money over time. How much money you lose depends a lot on how much you paid to start with.
 

nckeith

Ten Pointer
snakeskinner said:
How do folks afford $40k-$50k for a new truck? Do they make payments on them or do they pay cash or by chance lease them? I could pay off my house for what a new truck costs. If it is financed for 7 years then at the end of those 7 years an owner will have paid over $55k for it and it would be worth much less than half what was paid for it.
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Well speaking for myself I always buy a new car then drive it 6-7 years and then sell it. I then take the equity from the sold vehicle and combine it with a large down payment and then pay off the next loan in a year or shorter. i just purchased a 2017 superduty in december and paid it off this month. The irony of increasing new vehicle prices is that it keeps the price of older vehicles higher as well. I guess as long as I don't run a vehicle into the ground I am always going to roll "house money" into the new vehicle. I do keep putting money into a car fund monthly. I have a set amount that regardless of payments or not I allocate to vehicle expenses. I figure you are always going to be paying for parts or payments. Might as well budget for it.
I would also suspect the majority of new vehicles are now financed for longer terms and also there are lots of leases again. I would suspect the more leases now, the better pool of used vehicles there will be in 2-3 years.
I am not sure how sustainable MSRP increases can be at the present rate.
The key is to stop worrying how others are doing it and do what works for you and your family.
 

nckeith

Ten Pointer
sky hawk said:
You write a BIG check. I'm guessing most people trade in a vehicle for a down payment and then finance the rest for a long time.

I just bought one last week. A vehicle is not an investment, it's an expense. You gotta have one, and you know it's gonna lose money over time. How much money you lose depends a lot on how much you paid to start with.
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Lets see it
 
sky hawk

sky hawk

Old Mossy Horns
Contributor
nckeith said:
The key is to stop worrying how others are doing it and do what works for you and your family.
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+1. This is key for all family financial decisions. Others may have a pile of money you don't know about, or they may be in debt up to their eyeballs.

Edit: I'll add, I wouldn't make the same decisions today I did 10 years ago, or even 5 years ago. The right choice changes based on a lot of variables.
 
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nckeith

Ten Pointer
snakeskinner said:
It doesn't worry me. Sorry if I offended you. If I had the money I wouldn't buy one $40k vehicle I would buy (4) $10k vehicles.
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no offense at all. I didn't take it that way. I think your question is legitimate. I think about stuff like that all the time. In one regard I always hear that so many americans are only making x dollars per year and how wage have stagnated etc. Then I go to buy a new vehicle and most of the selection of SUV's and trucks are easily over 50k. I was in Utah this weekend and they were selling homes of 1200 sq ft for 1.3 million dollars which is over $1,000.00 per sq ft. and they had a waiting list. Not to mention it seems every restaurant has a line to get in anywhere in Charlotte or Raleigh or anywhere I go for work.
So i think the same things as well.
This is the commercial that always comes to mind

https://www.youtube.com/watch?v=LG-Z-kYSC4s
 
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JONOV

Old Mossy Horns
snakeskinner said:
How do folks afford $40k-$50k for a new truck?
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Many Ways. Affording it is a fluid definition. Some make bad financial decisions. Some make measured decisions and trim accordingly eslewhere.
snakeskinner said:
Do they make payments on them
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Often.
snakeskinner said:
Do they pay cash
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Sometimes.
snakeskinner said:
by chance lease them?
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That too.
snakeskinner said:
I could pay off my house for what a new truck costs. If it is financed for 7 years then at the end of those 7 years an owner will have paid over $55k for it and it would be worth much less than half what was paid for it.
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No one ever said they were a good investment. People pay what they will for their hobbies or lifestyle.

Having sold cars, I will say that for every person that finances that truck and negative equity from the old one for seven years, there is someone else that writes a $60K check. Or makes a high income and has a great credit score and little debt but still finances it. Or asks their parents for money. Or is a soldier with few financial obligations and extra deployment pay burning a hole in his pocket. Or is pushed by a pregnant wife to get rid of a car that she has decided is unsafe for their incoming bundle of joy. Or who buys brand new cars every 10-15 years and drives them into the ground.

Take this example: trading in an older car and financing a new family friendly one for the wife. If the car has been giving her fits or left her stranded at Food Lion with the babies, then dollars and cents wisdom might be overcome by peace at home. The new, reliable car with a warranty is likely to provide years of him never hearing a word about the car...And how can you put a price on that?
 
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Soilman

Soilman

Old Mossy Horns
Contributor
I've often wondered how some folks do it as well, Snakeskinner. It doesn't bother me, but it does make me wonder. I have friends that I know for a fact make much less money than my wife and I, yet they are able to always have nice, much newer vehicles, a nicer house, horses, trailers, ect. than I could ever afford. But, they were given the land for the house and farm, and until her grandparents died, the wife was getting $10,000 a year from them as a gift. I don't know for what they may well have credit card debt out the ying-yang. I also believe they are living their financial life "in the now". In other words, they are not saving appropriately for the future.

A lot of it comes down to individuals situations, lifestyles, and decisions.

I, on the other hand, have never received any "gifts" of that nature, and have to be prepared financially, to move if my job requires it. I refuse to pay much more than 20,000 financed for a vehicle. Aside from vehicles and house, I don't have any debts I can't pay off at the snap of my finger if I needed to. I live within my means, and have a set amount put aside on a regular basis towards retirement. As I've told folks, I don't want to just "survive" in retirement...I want to THRIVE." I don't know about some of these folks with $40K vehicles, but I don't have trouble sleeping at night under MY circumstances.
 
Mr.Gadget

Mr.Gadget

Old Mossy Horns
Along the same lines.....

How can someone take a loan on an ATV for hunting?

I Know a few that are still making payments on a 4 to 5 year old ATV.
Walked in looking for a new ATV this year and they look at me like I'm crazy cause I said I want to pay cash.

One thing I always look at is this, if I have a loan on something I will own enough of it so if there is some life changing event that the wife or family would be able to walk into any place that deals with them or place on the market and sell fast in minutes hrs or day.

things you learn over the years.. Never get upside-down on anything.
Never need to pay insurance that is extra like gap, PMI, or anything.
 

skydog

Guest
I do nothing but scratch my head at what people are paying for trucks. Like others have said, it doesn't bother me one bit what someone decides to do with their money, but with mine, I won't be spending it on a depreciating commodity like a vehicle.

I paid $7K for my truck 4 years ago (2000 GMC) and knock on wood it's been running just as good as new $50K one best I can tell.
 

Boojum

Ten Pointer
snakeskinner said:
It doesn't worry me. Sorry if I offended you. If I had the money I wouldn't buy one $40k vehicle I would buy (4) $10k vehicles.
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Then you are paying insurance, taxes, registration, and buying gas and tires and repairs for four worn-out vehicles. I wouldn't buy a $50k truck, but I have an 80-mile a day round trip to work, and have a place down in SC that I visit at least once a month. I have tried driving the cheap worn-out vehicles, and being broken down all the time and paying a fortune for repairs isn't fun either. I bought my last truck new and ran it 15 years and 300k miles. I got several years with no payment, but when I decided to trade it, it wasn't worth anything and I had to make high payments on the new one. I think I'll trade this one in when it still has some value.
 

double

Twelve Pointer
I sell cars for a living and fill out credit reports everyday. Most people we see are carrying 50-60% debt loads and are one month of missed work away from total ruin.
 

skydog

Guest
double said:
I sell cars for a living and fill out credit reports everyday. Most people we see are carrying 50-60% debt loads and are one month of missed work away from total ruin.
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Exactly...which is what I find so crazy about the prices people are managing to pay for vehicles. Something like 90% of people don't have enough money in the bank to cover 6 months of living expenses (without income) but yet they are buying $50K trucks...
 
Mr.Gadget

Mr.Gadget

Old Mossy Horns
I have friends that never travel so they always have older cars and trucks.
For me I want the warranty, current truck has a lifetime no mile limit on it warranty.

I travel and take long trips. Older higher mile trucks just dont fit the bill.
Just hunting local no long trips I put 2000 miles on my truck towing the ATV trailer last year.
Sure was nice to have the newer truck.
 

double

Twelve Pointer
The bad thing is banks figure your debt off of gross. So 100% of what you make. Taxes are around 30% of your income so you are left with 70%. Their house cars and credit card bills are 50-60% so that leaves 10%of the income to cover food entertainment lights clothes etc. so guess what happens. That credit card debt keeps rising and any chance of a saving is gone. America is in a bad way financially.
 
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Mr.Gadget

Mr.Gadget

Old Mossy Horns
skydog said:
Exactly...which is what I find so crazy about the prices people are managing to pay for vehicles. Something like 90% of people don't have enough money in the bank to cover 6 months of living expenses (without income) but yet they are buying $50K trucks...
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Those same people worry about paying bills and or putting food on the table yet they add 10k worth of tires and wheels lift and lights to an old truck.....

Then put a Yeti in the back.....
 

double

Twelve Pointer
But hey if they didn't make those decisions I wouldn't have a job so spend away folks spend away.
 
Trappertod

Trappertod

Six Pointer
One thing I have been finding out first hand is how difficult it is to overcome poor decisions made earlier in life. My wife and I had this same discussion the other evening concerning a trip to Disney. At this point in life I try to cash flow everything, this keeps me stretched thin a lot, but I am also seeing a reduction in debt because I refuse to borrow any more money. Being in my 40's I wish I had seen the light much sooner. The only thing I can do now is improve my income by getting a higher paying job, which is in the works to help accelerate the process.

I too beat my head wondering how folks do it, especially knowing some that make less money than I do. As one posted earlier many folks are close to ruin with missing a couple of paychecks. For now I just focus on trying to straighten out my mess, I owe the debt, I must pay the debt. I hope my next vehicle purchase can be made with cash on the table.
 
pattersonj11

pattersonj11

Old Mossy Horns
Contributor
I feel like many have never had that much money. When you have the money in the bank, it makes it harder to spend than on credit.

No way i could trade $50k on a truck outside of a commercial usage. Just for traveling...not worth it.
 
Mr.Gadget

Mr.Gadget

Old Mossy Horns
One thing along these lines is how people spend so much on a boat.

Have been looking new and used boats and the number of people that say they are selli g for pay off value yet is it 5 to 7 years old and the same cost of a new one.

The Boat motor and trailer I'm looking is equal to one motor some others have on a boat or sometimes 4 motors.....
Just about any bass boat costs 40 to 80 grand now. A 150 to 250 hp motor can set you back 15 to 25k.

A truck that costs 50 k gets used every day yet some spend north of 50k yet only use it a few times a month....

How many on here that will not spend 30 to 50k on a new truck have Boats, campers, beach house or vacation property like a condo?
 

Homebrewale

Old Mossy Horns
Mr.Gadget said:
How many on here that will not spend 30 to 50k on a new truck have Boats, campers, beach house or vacation property like a condo?
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I don't have a 50k truck. I also don't have a boat, camper, beach house or vacation property. I do have a sizable 401k.
 

skydog

Guest
aya28ga said:
A follow on question might be: how many people have a 401k and an IRA?
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My retirement plan is liquidating my bass boat, jet ski, Silverado HD, and yeti cooler :D
 
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aya28ga

aya28ga

Old Mossy Horns
Contributor
Homebrewale said:
I don't have a 50k truck. I also don't have a boat, camper, beach house or vacation property. I do have a sizable 401k.
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My point exactly. I don't have any of those things either, but I could. I chose to fully fund IRA & 401k funds instead.

My wife and I are driving 15+ year old vehicles, but our house is paid off and we are debt free......
 
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