Category Archives: Autos

How Much We Saved on a 5 Year, 0% Interest Auto Loan

5 years ago, we bought a brand new Toyota Camry after our 2005 Corolla was totaled. The price of the car was $22,600, but with a 5 year, 0% interest rate, I estimated that we’d earn $4,777 by investing that money in the stock market, which brought the total price of the car down to $17,823.

Now that we’re 5 years later and I just made the final payment, I get to look back and see how accurate my estimate was!

Calculating How Much We Saved By Investing

The first payment was on January 27th, 2014, and the final payment was on December 27th, 2018. During that time, the S&P 500 (where I invested that $22,600) gained an average of 7.06% per year, so my estimate was nearly perfect, which is a happy coincidence.

According to the investment and regular withdrawal calculator (which assumes we invested the $22,600, then withdrew $376 each month to cover the payment), we’ve actually earned $4,825 compared to paying for the car in cash.

What I’m really excited about now is the $376 we won’t be paying to Toyota each month!

And we now have a fully paid off 2014 Toyota Camry and a fully paid off 2015 Hyundai Tucson, each with less than 40,000 miles on them, so we should be able to keep these cars for another several years!

We do have a few scrapes and scratches that we’ve acquired over the years that we’ll get fixed, that will likely cost around the same as one month’s payment. After that, the savings will get invested each month and continue to grow.

Taking the 0% Interest Was Worth It For Us, But It’s Not For Everyone

Since we were prepared to pay for the car in cash, we really were in the position to make this decision.

If you are thinking about buying a new car and are faced with a similar decision, but you AREN’T paying in cash, you can’t simply say to yourself that you’re saving money with 0% interest since that money isn’t being invested in your case! Yes, it’s cheaper than a 3% auto loan, but you’d still be paying the full cost of the car!

Our decision paid off, and hopefully we’ll have the car for another 5+ years, which gives us plenty of time for us to save up for the next time we’ll need to make a car buying decision.

Reasons To NOT Buy That New Car You’ve Been Eyeballing

Maybe you recently got a bonus at work. Maybe your current vehicle broke down. Maybe you’ve got a savings account that is burning a hole in your pocket. Whatever the reason, you’re thinking about purchasing that fancy new car that you’ve seen slicking around town and is at the dealership with a red for sale sign on it’s windshield. Well, we’re here to tell that no matter how nice of a vehicle it may be, purchasing an expensive, brand new vehicle is not a good financial decision. We know, you want the car. But we want what’s best for your net worth. You should too!

It Is Not An Investment

Investments are assets that should have a decent chance of positive returns. Automobiles, on the other hand, will almost definitely not earn you money. Not only will you lose value on the car itself, you’ll have to spend a small fortune on insurance, gas, and maintenance. There are few transactions throughout the last 100 years where an individual sold a car for more than they paid for it (think classics, collector automobiles).

At Its Basis, A Car Is Merely A Tool

Vehicles are one of many methods of transportation. They are designed, sold, and driven with the purpose of moving people from one place to another. Sure, they’re a bit more intricate than hammers and screw drivers, but they only truly have one purpose. And you shouldn’t overspend if you don’t have to.

You Can Find A Comparable Used Car For Much Cheaper

And you’ll probably be just as happy with it. There are even some theories that people keep used cars for the same period of time that they would’ve kept a new one. You might buy a new car and keep it for five years or you might buy a 2 year old car and keep it till it’s 7 years old. You get the same utility, though- 5 years of use. Think about it, if we assume you buy a vehicle every 5 years, do you want the cheaper or the more expensive version? Well, do you want the new model or the used model? It’s basically the same question.

You May Not Even Need It

As we mentioned above, there are many methods of transportation. Think about your personal situation. Do you need a car or do you want a car? Many of us now live in urban cities where our jobs, food, entertainment, and shopping are all within a walkable range. The market is also shifting towards remote employees, making the need to get around much less demanding than it has been in the past. Even if you do have a commute, city busses, subways, ridesharing, and other public transportation could possibly save you thousands of dollars compared to that new car.

Lastly, And Perhaps More Importantly, You Can Put Your Money To Better Use

There are countless investments that could set your finances us for success that in the long run will bring you more satisfaction than a new vehicle. Put more into your 401(k). Put it towards a down payment for a house. Earn interest though peer to peer lending. Invest it in a crowdsourcing platform. Even moving the money to a low yield, albeit super safe, savings account will probably be better for your net worth than spending your money on a new vehicle.

How to Save Money on Car Repairs

How to Save Money on Car RepairsEveryone has car problems now and then, or maybe they just need to schedule maintenance on their vehicles. But we can all agree that care repairs are not cheap. In fact, they can be painful when unexpected. However, the following guidelines may help to save money the next time you need an oil change or tune-up.

Swap Services

If you are cash-strapped with little to spend on car services, and you know a great independent car mechanic who loves home-baked apple pie, offer to make a couple in exchange for rotating your tires. Some people swap services like housecleaning, pet grooming, and lawn care for car maintenance or repair so neither person has to pay cash.

Do it Yourself

Some vehicle services are not difficult to learn. The local college or vocational school may offer a basic auto maintenance class you can take to care for your car’s routine maintenance. You can also browse the numerous online how-to videos that show and tell you how to do things like replace a headlight, flush the steering wheel fluid, and check your brakes if you are mechanically inclined.

Clip Coupons

Many leading car shops and auto dealers offer regular coupons by mail or on their websites. Coupons may offer a complimentary first oil change to try their service as an introductory offer. A coupon of five oil changes may be sold for the price of three when you buy them together. Check regular community mailings and the local online or print newspaper for coupons or discounts.

Drive a Bargain

If you need a service performed and you can’t find a coupon for the car shop that you want to do the work, ask if a discount is available. Chances are they will give you a discount of ten to fifteen percent overall or on service, if not the products. Many auto shops are competitive and will give a discount if requested. You can also ask about low-interest or zero-interest financing on pricier services, as well as having only the most necessary work done at present, delaying secondary work until you have more money. Everything is negotiable, so don’t hesitate to ask.

Shop Around

It’s easy to get attached to a favorite oil change shop or auto repair business because it’s familiar or convenient. But to save money, it’s a good idea to shop around and compare pricing, which you can do online or by phone. You can also compare websites and check the local Better Business Bureau to see if shops you are considering have a low or poor rating. Ask friends or coworkers who drive well-maintained vehicles where they have work done, and then contact the business to see if a referral discount is available.

Needing a brake job or a radiator flush is not something to look forward to. But it can be managed financially with creative thinking and planning. Start setting aside a monthly amount toward car repairs and maintenance if you are not already doing so. Even twenty-five dollars per month will come in handy the next time you need a repair or service for your vehicle.