No. of Recommendations: 15
I paid off my car loan today. There was no good reason not to.

They were charging me ~ 4% interest, and I had more than enough in my
savings account to pay off the loan.

I don't know why it took me so long. But I'm patting myself on the back anyhow ;o)

Jack
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Congrats!

Fuskie
Who now encourages you to drive that car until the wheels fall off and to start making the same payments into a automotive savings account to cover major service and repairs as well as build up cash to pay down on the next vehicle so you don't have to get another car loan...
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Who now encourages you to drive that car until the wheels fall off and to start making the same payments into a automotive savings account to cover major service and repairs as well as build up cash to pay down on the next vehicle so you don't have to get another car loan...

Awww.....here I was thinking that maybe I deserve a new car ;o)

Isn't it dangerous when the wheels fall off? Hey....in my younger years that was always a possiblity. I remember actually buying USED
tires.....I think they called them retreads. One night I was driving
on a thruway and the side wall blew out on one of them. I don't believe
in angels, etc., but SOMETHING saved me that night. No damage to me or the car, and a friendly tow truck showed up, towed me in to the
gas station (of course I didn't have a spare), and sold me another tire at a decent price.

Maybe God (?) tries to keep young people alive. Anyway, today I depend on my vehicles, and I don't want any mechanical or safety issues.

Besides (devil's advocate in me speaking), is taking out a loan to buy a new car necessarily a BAD thing? When I got this car (in 2009) a 4% loan was very attractive. These days, I think the rates are much lower.
If I got a good price for the trade in, what would be so terrible about
replacing this 4 yr old Civic with a brand new car?

Jack
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My first care was a 1973 Plymouth Duster that my grandfather had bought and never had serviced unless something was broken. One day as I entered a busy intersection, the car seized up. The engine was still ran but the wheels would no longer turn. When I say we got our money's worth out of the car, it was eventually sold for scrap and the buyer cut the chassis in half and to weld to another of the same or similar make and model.

Here's the problem with car loans. And let me preface this by saying all my cars (I have bought 3 now over the last 24 years) were bank or credit union financed (never dealer). When you drive your new car off the lot, it immediately drops in value (depreciation) and isn't worth what you just paid for it. Depending on how long a loan you take out, it could be years before you get to the point where the resale value of the car equals the remaining amount on the loan.

My car loans have been 4 years; the average term length these days runs 5-6 years. Clark Howard recommends 3 year loans. Or better yet, buying a used car (after having it inspected by an independent mechanic) where the major depreciation of the vehicle has been born by the previous owner. I am amazed at people who trade in a car they still owe money on and have to pay off the difference between what they owe and the trade-in value IN ADDITION to taking on a new loan for the next vehicle.

The best way to leverage car ownership is to drive the car as long as possible, at the very least until it's paid off. The longer you drive it, the more value you get out of the money you put into it. It also gives you time to save up cash to put down for your next car when the time comes.

Fuskie
Whose last car loan was 3.99% from his credit union and would definitely recommend getting pre-approved for a car loan by a credit union before going shopping...
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Isn't it dangerous when the wheels fall off?

Many years ago my brother bought his first car: a 12th hand Jaguar. The car had a number of problems with it, but it was his car and he just kept paying the bills for repairs and work.

A few months later my mother bought a new car and sent the old car, a Ford Galaxy, to auction. When my brother arrived home for Thanksgiving with a car that still needed a good deal of work, there was a long discussion, the result of which was that he and my father drove to the auction site, swapped the Galaxy for the Jaguar, and my brother now had a working car that wasn't as cool as the previous one.

The next week my parents got a phone call. The Jaguar couldn't be driven after being sold, so it was being towed, and a wheel fell off.

The trick is to get rid of the car just before the wheels fall off.

Nancy
No, I don't know why it went to auction, but it was probably because the new car was bought through Avis, where my father worked, rather than through a dealer.
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Y'all do understand that "until the wheels fall off" was meant as a figure of speech and not to be taken literally...

Fuskie
Whose suggestion to Seat's brother would have been to have the Jaguar inspected before he forked over the cash...
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Fuskie,

You wrote, The longer you drive it, the more value you get out of the money you put into it...

While I generally agree with the sentiment, I'm not sure I would treat the statement as an absolute. Maintaining a car, especially when you are talking about having multiple major mechanical issues, can cost you a LOT in labor. Unless you are your own mechanic, this can get prohibitively expensive ... and you may never be able recoup all of that cost.

WARNING: TANGENT AHEAD! ;-)

Usually when I've gotten rid of a car in the past, I've already started paying for expensive repairs I know I'll never be able to justify relative to the depreciation cost of a new car. Of course I never see it until I've already paid for a few expensive repairs and can still tell there are other expensive repairs deferred. At that point I throw up my hands and buy another car.

But of course I'd never consider replacing a 4 year old car unless I've put a 250K miles on it or it's been totaled in an accident. That would just seem wasteful to me. Maybe I'd do it if the cost of a car were pocket change, but probably not. My own car is a 2006 Accord. It's been paid off since 2007. Savings rates were falling and I decided I didn't need that much of a cash cushion, so I paid it off in less than a year.

I have to confess I've been tempted to break my own rules though. My new house and job are really close together. My Accord now gets lousy gas mileage (no better than 22mpg) because of the short distances, hilly terrain and traffic signs/lights. My girlfriend's hybrid seems unaffected by any of it. So I might wind up selling / trading in my Accord before my 10 year target in part because of its fuel economy.

- Joel
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Whose suggestion to Seat's brother would have been to have the Jaguar inspected before he forked over the cash...

I never thought to ask. That was decades ago, before yearly inspections were required. I think he bought it from someone at his summer job.

And the next year, one of his friends allowed the Galaxy to roll into a lake, which made for squishy seats coming home that year.

Nancy
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My new house and job are really close together. My Accord now gets lousy gas mileage (no better than 22mpg) because of the short distances, hilly terrain and traffic signs/lights. My girlfriend's hybrid seems unaffected by any of it. So I might wind up selling / trading in my Accord before my 10 year target in part because of its fuel economy.

- Joel


Given the distance, you won't recover the difference in less gas usage.

We have a Prius, and it is a good commute car. At the same time we bought it a relative needed a car. It was going to be necessary for them to finance the car. My advice to buy a used non-hybrid was actually heeded. There was no way it would have been possible to recover the $15K difference in gas. Especially, when after 4 years, the car was totalled.
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That was decades ago, before yearly inspections were required.

As a general rule, any time you buy a previously owned vehicle, you should have it inspected by an independent mechanic as a condition of purchase. Even if buying it from a dealership's used car lot. Used car salespeople are not to be trusted - the law allows them to say anything about the car, whether it is true or not. Only what is written down in the contract is binding. And if they show you the contract on a computer screen (this goes for new cars too), read the printed copy before signing. Just because you see it on the screen doesn't mean it ends up in the signed copy.

Y'all are correct that there comes a point where it costs more to repair the car than it's worth. Similarly, there comes a point where it is no longer worth your while to get collision coverage on an aged vehicle. As long as such a car keeps running (and safely), keep driving it. But if it is no longer viable to keep operating, then by all means, put it down.

Fuskie
Who would suggest a used Prius or other hybrid as a viable replacement car to get the best the best value, though admittedly the Prius retains it's value better than most cars...
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Fuskie, I think he bought it from a co-worker at a summer job. He was in college, and having a car to get back and forth seemed like a reasonable idea. And yes, he learned a lot from buying that car: he learned how expensive repairs can be, that really old cars, even if they're a top of the line car, aren't good bets, and to not trust co-workers when they say the car's in good shape.

Call it a learning experience.

Nancy
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Well, that's what you go to college for, learning experiences.

Fuskie
Whose own had more to do with living with suitemates and smart women but to each their own...
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Windowseat,

You wrote, I never thought to ask. That was decades ago, before yearly inspections were required.

They require yearly inspections?!

Seriously, they don't appear to require any inspections in much of Washington. They do appear to require testing every other year for vehicles of a certain age up here in the Seattle area, though they don't put any type of inspection sticker on a vehicle at all.

Apparently not-new vehicles older than 5 years are supposed to be inspected when they are first licensed in the area. However I got my vehicle licensed out on the peninsula where they don't have any inspection stations at all. They gave me new plates and a new title even though I gave them my King county address. (The agent wasn't sure she could get the system to do it when I told her my address; but the computer didn't complain.)

A month or two after I received my new title in the mail, they sent me a notice saying that I owed them an extra fee because I lived in King county and didn't get my vehicle inspected on transfer. However, the letter basically said I didn't have to pay the fee until the license came up for renewal in 2013. More precisely the letter warned that I couldn't get the license renewed again until I paid the fee. The fee wasn't big - about what I'd pay for an inspection back in Texas. Big deal. I'll pay it when they insist on it.

Beats me when I'll actually have to have the car inspected again though. I assume they'll tell me. I'm guessing it will happen later this year, since I do have to get a new license tag from the DOL every year.

- Joel
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vkg,

You wrote, Given the distance, you won't recover the difference in less gas usage.

Yes, I can do the math. It still burns me that I get such poor mileage. I probably use the car for a bit over 100 miles/week now - way less than I used to. But I'm still burning almost 5 gallons/week or almost $20/week in gas.

If I get >40mpgs, that's a savings of less than $10/week or about $500/year. At that rate, it would still take a long time to justify the added cost of a hybrid.

- Joel
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Who would suggest a used Prius or other hybrid as a viable replacement car to get the best the best value, though admittedly the Prius retains it's value better than most cars...

Hybrid's values rise and drop with gas prices and recalls.

I have mixed feeling about buying a used hybrid. The battery technology is improving. The cost of replacing batteries is decreasing, but probably will remain higher for older models.
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The FuskieMobile™ is an o6 Prius. It's wheels are likely to fall off before the hybrid battery needs replacing. And it's trade-in value stays pretty high, still about $10k+ after 7 years. And boy does only filling up once a month make me happy!

Fuskie
Who stands by his claim, a used Prius will not disappoint if you have to replace your current vehicle...
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If I got a good price for the trade in, what would be so terrible about replacing this 4 yr old Civic with a brand new car?

I have a thirteen year old Civic. At one point, it was the brand new car. But right now it's still just fine. I have two kids. Everyone said that I'd "have to" get a minivan or a larger car, but I didn't and still don't need one.

What's so "terrible" about it? Nothing, per se, if you can afford it, your long term goals are fully funded, and your e-fund is totally up to date. Everyone decides where their money is best spent and if cars are important to you, then that's the place you need to make a plan to upgrade.

But I have found that there are cooler cars and more powerful cars and more fun cars and more luxurious cars, but very, very few more reliable cars than my Civic. Don't get me wrong, I don't love my Civic. In fact, my emotions towards it are now, and always have been, far more resignation and a sense of "settling" for than anything resembling enthusiasm.

But I have managed to take all the money that I would have been using to make a car payment once I paid off my Civic (which was done in under 36 months), and simply socked it away. And in the meantime, my car keeps going, and going... without anything more than regular maintenance and oil changes.

And I have enough money to make sure that if something happens and I NEED that new car, I can simply pay for it and not blink.

GSF
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I have mixed feeling about buying a used hybrid. The battery technology is improving. The cost of replacing batteries is decreasing, but probably will remain higher for older models.

And this is why I will not buy another hybrid. We had a Civic Hybrid that we bought used with 132k miles on it. I put another 70k miles on it, but the hybrid battery needed to be replaced, and the notification on that was the 'check engine' light was on. With that light on, a vehicle automatically fails inspection in MA even though it has nothing to do with safety or any of the things that are checked as part of the inspection.

I would have continued to drive that car even if it was 100% gas-driven, but I couldn't pass inspection, and it was not worthwhile for me to spend $3k on a car with 209k miles that I really only needed to be driving for another year and a half. I could have gotten the inspection requirement waived for one year before having to get it fixed, but that wasn't enough time for me, so we ended up buying another gas-driven Civic, but I wouldn't even consider a hybrid at this point given how many miles I drive, and how long I like to keep a car.

The current Civic will be 2 years old on July 30, and I have 50,600 miles on it at this point. The plan is that I will keep this car for about 8-10 years, as we normally do, and at least 200k miles.

But even at that usage, it really doesn't pay to have the hybrid, particularly as the battery would most likely need to be replaced. From my perspective, though, buying a hybrid is much more of an environmentally-conscious decision than an economic one as I can't get the numbers to work, even for the mileage that I put on a car.
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vkg,

You wrote, Hybrid's values rise and drop with gas prices and recalls.

For myself, I wouldn't care too much about the resale value of the vehicle given the assumption that I would drive it for a very long time. I will probably never consider buying a used hybrid for the same reason I never buy used batteries or used hard drives. The battery is probably one of the most expensive items on a hybrid and at some point you have to replace it.

Also, I have mixed feeling about buying a used hybrid. The battery technology is improving. The cost of replacing batteries is decreasing, but probably will remain higher for older models.

Actually I wonder about the battery technology. I'm a pretty strong believer in (older) NiMH batteries. They don't seem to suffer from recharge degradation as much as other battery technologies, so they tend to last longer, and they have energy densities similar to newer Li-ion batteries. They do have some serious drawbacks - they're relatively heavy and they tend to self-discharge more when hot (part of the reason my girlfriend's hybrid gets better gas mileage here vs. Texas).

Admittedly Li-ion batteries are state of the art. But they're not perfect and they really only offer one serious improvement over NiMH batteries: weight. Li-ion batteries hold a good deal more energy per ounce. But I've seen several Li-ion batteries fail in consumer electronic devices after only a year or so, and I've not been overly impressed with their shelf life or self-discharge rate and when they fail, they can fail catastrophically. So a car with a Li-ion battery is cool, but also a bit worrisome - mainly because we don't have as much experience with Li-ion as other technologies.

As for the car I'd buy? Probably a Civic Hybrid. (Which I believe switched to a Li-ion in 2012.) I figure the difference in purchase price is between $3,500 to $4,000 for the hybrid vs. a comparable Civic EX. (Though the Hybrid and EX don't compare precisely.) Assuming a $4K delta and only $500/yr in fuel savings (and ignoring differences is resale value), I'm looking at 8 years to break-even - not counting the frictional costs of buying/selling a car early. So break-even is at least 8 years for me ... unless I change jobs again and have to drive a lot more. Looking at it that way, it's a tough sell.

Oh well, maybe when my Accord is a little longer in the tooth. Or when gas prices go up another couple dollars/gallon?

- Joel
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I am sorry you had a bad experience with the Accord hybrid. Toyota hasn't had those same problems, and all the things Toyota WAS blamed for turned out not to be electronic control problems at all. The Prius hybrid batteries, not to be confused with the regular battery in the car, last 10 years or more. It is rare that a Prius owner has to replace the hybrid battery during their period of ownership.

The warranty on the hybrid system runs 8 years or 100,000 miles for models before 2010, and in some states, it is 10 years or 150,000 miles. But many Prius have over 200,000 miles off the original battery. If you do replace the battery, there should be a $200 recycling rebate on the new battery.

Fuskie
Who notes the hybrid system doesn't even need any direct maintenance until 100,000 miles...
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Hi GSF,

You mean to tell me that you live in NJ and drive a Civic? Are you crazy ???? ;o)
I couldn't resist - and truthfully, every state I've been in has its share of crazy drivers.

I don't love my Civic. In fact, my emotions towards it are now, and always have been, far more resignation and a sense of "settling" for than anything resembling enthusiasm.

Interesting. We still have our second Accord (2000). Before that, we had a 1987 Accord that was still running fine when I sold it. I'm used to the ride of the bigger car, and the Civic doesn't "do it" for me. Once I rented a Corolla and it seemed to have a smoother ride than the Civic.

I have two kids. Everyone said that I'd "have to" get a minivan or a larger car, but I didn't and still don't need one.

How un-American of you! Of COURSE you need a minivan. ;o) Why if everybody thought like you, how would companies like Exxon (originally Std Oil of NJ) reap in huge annual profits?

Sorry....I've had a rough day.

My Civic is a wonderful workhorse. Got it in Sept 2009, and it has less than 30K miles on it. I'd be shocked if it ever needs more than oil and tire changes. Good gas mileage. That's why I downsized.

I haven't been frequenting this board, and I get the feeling that the sentiment here is definitely in the frugality range. I admire that.

And there's a lot to be said about avoiding being taken advantage of by the banks. These days, with interest rates being where they are, it's so tempting to incur debt. And younger people seem, in general, to have no idea of that thing about how you have to pay it all back.

All of which makes me feel very good about having a ZERO balance in the car loan department. Maybe this weekend I'll celebrate by cleaning up the Civic ;o)

Jack
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great news on the payoff! interestingly enough, i also sent in my last auto payment this past month. great feeling, both having no payment and being able to SAVE that additional money for a rainy day/vehicle repair/replacement fund.

i'm rockin' a 2008 camry 4 cylinder and it gets about 30 mpg. great vehicle that until now has required minimal maintenance. just tires and at 70K it is about ready for new brake pads and if my research is correct, a timing belt as well.

i see these expenses as MUCH better than "rewarding" myself with a new car [payment]. solid vehicle that should last at LEAST another 4 years. *knock knock*

Mike
who hasn't had the best luck with any of his previous vehicles after they were paid off--let's hope this one is different
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i see these expenses as MUCH better than "rewarding" myself with a new car [payment]. solid vehicle that should last at LEAST another 4 years. *knock knock*

I think that if I had a Camry or an Accord, I wouldn't THINK about getting a new car. We still have the 2000 Accord, and I like driving it better than the Civic.

I was trying to be thrifty when I got the Civic. I guess it has saved me a few bucks since 2009.

At any rate, congratulations on paying off the loan. And best of luck with the Camry.

Jack
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Here's an Alaskan version

We spent a week tracking down a reasonable used car near Seattle
, shipped it north from Puget Sound, and drove it occasionally while we drove the old one.

Finally the axle broke (in a parking lot, so no traffic problems). DH called a tow truck for the broken car and me for a ride home.

We kept it in the driveway until the next car roundup, sold parts to some friends, then had it towed to the barge to be taken away!
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yeilBagheera,

You wrote, Finally the axle broke (in a parking lot, so no traffic problems). DH called a tow truck for the broken car and me for a ride home.

I assume that was the old car. What was it?

I've had Hondas most of my driving life. The older ones had problems with the boots that cover the CV joints. ( http://en.wikipedia.org/wiki/Constant-velocity_joint ) You had to catch those quick to avoid having to rebuild a CV joint - which is labor intensive (like half a day) and can be expensive. After I had to have a couple rebuilt, I took to personally inspecting the boots every time I had the oil changed. Much cheaper to just replace a boot.

These days Honda CV boots are supposed to be much more durable; but I still doubt they stand up to an Alaskan winter all that well.

And my mechanic used to tell me that *eventually* a contaminated CV join would seize up and you actually could have the wheel fall off... :-)

- Joel
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The old car broke - it was a Subaru wagon (legacy)
The new -used- one is a Subaru wagon

We need 4 wheel drive up here (snowplows just can't clear the drives, streets, and highways before 7:30 when the snow dumps at 5 am)

and so parking lots were full of white American Eagles in the early '80s, then red Subarus and now green Subarus since the late '90s. The advantage of Eagle and early Subaru was that the 4 wheel drive was on demand.
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Yep, Subarus are really popular here in Colorado because of the way they handle snow. People joke it should be the state car.

Love mine.

Lara Amber
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I would say a 4 year old Civic has plenty of life left. My 6 year old Toyota has been paid off for years. While I don't have an automotive savings account per se, I do have a liquid account I stuff cash in and use as needed / buy longer term securities.
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