Sometimes I wonder how I ended up so differently from the rest of my family.
Every member of my family except me drives a car/truck that is less than 2 years old and probably has less than 30,000 miles on it. Until last month, all three of their cars were Hondas. My mom drives a Honda Oddyssey, my dad drives a Honda CRV and until a month ago, my brother drove a Honda Accord. All 3 cards were bought from the same dealership, and all within a year of each other. A month ago my brother traded in his Accord and bought a Toyota 4Runner. My father is now talking about replacing his 'old' CRV (which probably only has 30,000 miles or so on it). My family seems to be under the impression that once a car's warranty runs out (usually at 36,000 miles), that the car is 'old' and it's time to trade it in for a new one before it gets so old that they won't get much money for it. In the time I've owned one car, my brother has had four cars: 2 pickup trucks, a Honda Accord, and now a Toyota 4Runner.
I drive a 1999 Chevrolet Camaro Z28. It has 111,000 miles on it and has been through 5 accidents (only one was my fault!), but it's still chugging along. It isn't the prettiest car in the world, or in pefect running condition either for that matter, but all things considered, it runs quite well. When I bought this car back in 1999, I financed it for 3 years at 0% interest. I think Chevrolet was desparate to get rid of the Camaros, since they haven't sold well in years. Their loss was my gain. After 3 years of $580/month payments, the car was mine, free and clear. This is a good thing. At the same time, when I bought it, I also paid about $1000 for a 'bumper to bumper' extended warranty for 100,000 miles. I definately got my money's worth out of that warranty. I'm sure that the $1000 I spent for that warranty was a good investment. I would have spent far more than that on repairs to my car, had I not bought this warranty.
For over two and a half years now, I have not had to pay one cent in car payments, and for most of those last 2 1/2 years of financial freedom, my family has been hassling me to buy a new car. I have refused. They think I'm in denial and that my car is going to keel over dead any second now. I will always have a car payment, they say, so I might as well get used to it. I disagree. The way I see it, those last 2 1/2 years of no car payments has already saved me $17,400 in car payments! That's an additional $17,400 in my pocket instead of someone elses. That's almost the cost of an entire car right there!
Americans these days always seem to want the newest, shiniest things. I'm just as guilty of that in many aspects. I'm always buying the latest gadgets for my home (DVD players, iPods, etc.) but these are all small items that are relatively cheap. I'll spend a couple hundres dollars on a new gadget or an upgrade to the latest greatest PC, no problem, but I have a big problem with spending $30,000 just so I can drive a new car and impress all my friends. I don't care about impressing anyone with my car. It runs well, everything for the most part works fine (A/C, stereo, engine etc.). There is something to be said for owning free and clear a car that has 300 horsepower, and has enough acceleration that you are across the intersection before anyone else has even started moving!
I look at all the cars available these days and for any decent car, you are going to be spending $25,000 - $30,000 for a new car, no matter what you get. I've had my eye on the Acura TL for some time now. I want one bad, but I haven't gotten one yet because I don't like the concept of a monthly payment of over $600 for a car! The way I see it, every month that I don't buy a car, I'm saving at least $600. Yes, I may have to spend $500-1000 every 6 months or so on repairs to the Camaro, but it still ends up being a lot cheaper than buying a new car.
I know that at some point the Camaro will die and I'll have to find another car. This day gets closer and closer every day. I have been postponing this day as long as I can because, first of all, despite the fact that my car is old, I still like it. The acceleration is great, the stereo sounds good, the A/C works. I really have nothing to complain about. When this day does come, my plan is to try to buy a decent, late model used car. That way I can cut down on the monthly payment and reduce the inevitable depreciation hit you get whenever you drive a new car off the lot. I also plan to buy another 100,000 mile warranty and drive this new car, until it hits 100,000 miles, probably watching each member of my family cycle through several more cars in the process.
There is no way you are ever going to make money buying a car. It's a losing proposition. The idea is to minimize how much you lose.