Vehicle prices

I only buy cars cash. If you can't save up for it and buy it with perhaps a trade in of your old car it ain't worth it.

Interest is the devil when you pay it. Much better to earn it. Yes this means I drive comically cheaper cars than some of my colleagues but then my financial position also seems to be that much better on average.
 
Cius said:
Interest is the devil when you pay it. Much better to earn it. Yes this means I drive comically cheaper cars than some of my colleagues but then my financial position also seems to be that much better on average.
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Well that's what it comes down to, doesn't it?

Can your ego handle the fact that your peers and people in your social circle have a better car than you do? Seems like most people can't, and would rather eat 2-minute noodles every day than take a blow to their ego. Weird.

I get the fact that there's nothing wrong with forking out on something you enjoy. But at the very least, if you can't afford it without a balloon, then you can't afford it...
 
Mike Hoxbig said:
I get the fact that there's nothing wrong with forking out on something you enjoy. But at the very least, if you can't afford it without a balloon, then you can't afford it...
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Yep, the best book on personal finances hands down for me is still the millionaire next door. In that book the author quickly figured out net worth is meaningless unless you also look at income and age. In the end he came up with a formula based on a large data set where you could have average wealth for your age and income, could have half what your should, or could have double.

He called each group:
UAW: Under accumulator of wealth
AAW: Average accumulator of wealth
PAW: Prodigious accumulator of wealth

Buying cash tends to be PAW's, buying on credit but with no balloon is AAW, and buying on balloon is generally UAW's. Cars and how you buy them due to how expensive they can be tend to be the primary predictors of your wealth come retirement.
 
Cius said:
I only buy cars cash. If you can't save up for it and buy it with perhaps a trade in of your old car it ain't worth it.

Interest is the devil when you pay it. Much better to earn it. Yes this means I drive comically cheaper cars than some of my colleagues but then my financial position also seems to be that much better on average.
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This is a sound concept when you have a vehicle at your disposal to start with, but especially when a first time buyer or in some predicament of loss the minor cost of interest (if done right, not buying stupid and on balloon etc) with the ability to have a car in the here and now and for the new 5 years is worth much more than the interest saved through having no car and putting money away to buy one.

Especially when a car is a money generator for you then interest is really just a cost and not the devil.

As per your example above the lack of a car could easily put you in the under accumulator of wealth if you don't look at the bigger picture and simply try your damndest to avoid what could be a minor cost in reality.

So it should preferably be avoided, but also shouldn't be a hard black & white rule.
 
SauRoNZA said:
This is a sound concept when you have a vehicle at your disposal to start with, but especially when a first time buyer or in some predicament of loss the minor cost of interest (if done right, not buying stupid and on balloon etc) with the ability to have a car in the here and now and for the new 5 years is worth much more than the interest saved through having no car and putting money away to buy one.

Especially when a car is a money generator for you then interest is really just a cost and not the devil.

As per your example above the lack of a car could easily put you in the under accumulator of wealth if you don't look at the bigger picture and simply try your damndest to avoid what could be a minor cost in reality.

So it should preferably be avoided, but also shouldn't be a hard black & white rule.
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100% Agree, my rule would be debt only for a first modest car if possible, thereafter try your best to buy cash. I was lucky in that my future wife was working while I studied and saved really well so after we got married she could actually pay for my first car, a second hand Balade I bought from my dad for R15K. So I was lucky to not have to go into debt on any car, but it still works if you buy something reliable and cheap as your first car on credit and then pay it off as fast as you can.
 
ihsaan said:
Car prices in South Africa are ridiculous.. In neighboring countries you can buy a jap import for half the price they go for in South Africa and in great condition.

Capitec has a neat infograph of what car you can afford based on your salary..

https://www.capitecbank.co.za/bankbetterlivebetter/articles/which-car-matches-your-salary
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I stopped reading at...

"A good rule of thumb is that the price of the car should be no more than 30% of your annual gross salary, and your monthly car costs no more than 10%."

No it's not a "good rule of thumb" it's a bloody legal mandate.

A good rule of thumb would be to say all your car expensive including finance, maintenance and insurance should be no more than 10% of your NET salary.

That's a rule that is actually good and useful.

Their "infographic" also actually gives no info or graphics...just takes you to the sales pitch where they can tell you it's okay and you can afford to put 30% of your salary into a car.
 
So it looks like guaranteed buy back is a good deal. Keep the car for 3 years and trade up or down or around
 
WaxLyrical said:
Given the long term cost of repairs and maintenance, the idea is to never own a car. Keep trading in and refinancing everytime the motorplan is about to expire.
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Lol! You think a 5 year old car will cost the same to maintain over the next 5 years as purchasing a new car will cost???
 
SauRoNZA said:
I stopped reading at...

"A good rule of thumb is that the price of the car should be no more than 30% of your annual gross salary, and your monthly car costs no more than 10%."

No it's not a "good rule of thumb" it's a bloody legal mandate.

A good rule of thumb would be to say all your car expensive including finance, maintenance and insurance should be no more than 10% of your NET salary.

That's a rule that is actually good and useful.

Their "infographic" also actually gives no info or graphics...just takes you to the sales pitch where they can tell you it's okay and you can afford to put 30% of your salary into a car.
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Pretty much. 20/5/10 rule.

20% deposit / pay it off over 5 years or less / monthly payments including insurance shouldn't exceed more than 10% of your take home pay.

Then again, you only live once. What people spend their money on shouldn't be anyone's business, as long as they can cope.

I don't believe in turning every cent around and then hoping when I'm 65 I'll be able to afford a nice car. I can walk my dog tomorrow and get hit by a bus. By all means, invest in your retirement, save for rainy days, but don't live like a penny pincher. Live and let live..
 
3lOH55A said:
Pretty much. 20/5/10 rule.

20% deposit / pay it off over 5 years or less / monthly payments including insurance shouldn't exceed more than 10% of your take home pay.

Then again, you only live once. What people spend their money on shouldn't be anyone's business, as long as they can cope.

I don't believe in turning every cent around and then hoping when I'm 65 I'll be able to afford a nice car. I can walk my dog tomorrow and get hit by a bus. By all means, invest in your retirement, save for rainy days, but don't live like a penny pincher. Live and let live..
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I realised re-reading it now that they actually refer to the purchase price of the car being 1/3rd of your annual salary and your instalments and total costs being 10% which is actually a good logic.

I thought it was the typical bank legal limit of 30% per month.

So I reverse most of my statement they actually aren’t fleecing anyone.
 
WaxLyrical said:
Absolutely.

Terms and conditions will of course apply.
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Maybe is some super or luxury car.

Say a car costs R220 000 (i20). That's about R5100 per month.

After 5 years it's paid off. Even having to buy and install a new engine in year 8, won't cost more than R50 000. The once a year service will cost maybe R10 000 to R15 000 in total over the later 5 years, and the tyres maybe R2500 every few years, probably only once in those 5 later years.

Of course if you drive 50 000km or more a year, that changes things a bit, but then that not nearly the average person.
 
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WaxLyrical said:
Absolutely.

Terms and conditions will of course apply.
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OK let's see
In the 5 years since my wife's car was paid off, I've done:
A warranty at R300 per month = R18000 over the 5 years
1x turbocharger, R4900, I paid because a dealership would have charged R20k and the warranty covers 10k
CV joints a couple of grand - which the warranty paid for
umm
One gearbox mount R700
One lower control arm mount R800
umm
Brake pads and disks R2k
Oh yeah, anti shudder valve, and EGR valve, R1500 together
Can't think of anything else...


Are we at three months' instalment on a Golf 7 TDI DSG yet? Cos that would be the equivalent replacement.
 
Sinbad said:
OK let's see
In the 5 years since my wife's car was paid off, I've done:
A warranty at R300 per month = R18000 over the 5 years
1x turbocharger, R4900, I paid because a dealership would have charged R20k and the warranty covers 10k
CV joints a couple of grand - which the warranty paid for
umm
One gearbox mount R700
One lower control arm mount R800
umm
Brake pads and disks R2k
Oh yeah, anti shudder valve, and EGR valve, R1500 together
Can't think of anything else...


Are we at three months' instalment on a Golf 7 TDI DSG yet? Cos that would be the equivalent replacement.
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Could definitely work if vehicle is under R200k and you pay it off in 3 years.
You have the benefit of never having to worry about repairs plus enjoy the creature comforts of a fairly new car.
 
WaxLyrical said:
Could definitely work if vehicle is under R200k and you pay it off in 3 years.
You have the benefit of never having to worry about repairs plus enjoy the creature comforts of a fairly new car.
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200k lol. A 200k car has no creature comforts. We enjoy the creature comforts of the older car - full dual zone climate control, dsg, auto lights/wipers, leather seats, etc.
And even a 200k car, is gonna cost you a new turbo per month on the present car. Or more.
 
Sinbad said:
200k lol. A 200k car has no creature comforts. We enjoy the creature comforts of the older car - full dual zone climate control, dsg, auto lights/wipers, leather seats, etc.
And even a 200k car, is gonna cost you a new turbo per month on the present car. Or more.
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Arguably the best new R200k car atm is this:

IMG_5283.JPG

It's the 63kw N/A 1.4. R8k allows room for some options that very reasonably priced.

Super simple & mechanically basic. Tried & test design since 2009 (original design) & an engine from 198x
 
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