Your financed primary car: Keep it once paid, or Upgrade regularly?

[Neuk_]

Same with us.

We saw some nice family car options but I'm slapping a tow bar onto the Ballade for our camping trips and instead of a new car, we are buying a flat in a seaside town we often visit for the same price as demo/low km entry-level SUV.

After I sold the Golf R, which was my first new car and first car I never paid off, I bought the Touareg which is the perfect family car for us so it will stay for quite a while and I will pay it off. I want to get our '66 VW Bus back on the road in a reasonable state next and then save for a 964 or 993 Series Porsche 911 but will pay cash for it as I never finance project or weekend cars. Holiday homes or flats aren't on the radar with my parents living in Ballito and the future inlaws owning houses at Pecanwood and in Sodwana so paying off our house is a better option.

 

[shinji]

Sold my first 2 cars before paying them off (both with less than 6 months left on financing), which was for the lack of a better word - stupid. Did upgrade to better cars each time though.

Current car was bought brand new in 2012 (got tired of secondhand issues, long story). Have about R800 left to pay on the balloon payment, then it's all mine.
Going to keep this one, spend some cash to add a flash infotainment touchscreen doohicky and maybe some better speakers. No need to upgrade, since I hate commuting (but do love to drive) and am stuck in the bloody Free State.

Might consider getting a real flash car when the business in Durban starts moving though.

 

[Sinbad]

Keep it. Put the monthly payment into some kind of investment. Then you have a rainy day fund, or a really good deposit when you do eventually need to trade it in or upgrade.

 

[Jet-Fighter7700]

Keep it. Put the monthly payment into some kind of investment. Then you have a rainy day fund, or a really good deposit when you do eventually need to trade it in or upgrade.

best piece of advice here, best car to drive is one that is paid off, and if its a well made Asian vehicle, can go forever with a small bit of regular maintenance.
there is a good reason Honda's and Toyota's are so stolen/hijacked.

 

[Cius]

A few years back I did an exercise where I calculated how much one would spend re-financing cars every 3 and 5 years vs paying off the first one, and then buying a new car cash every 10 years out of savings.

The difference was staggering. Over a lifetime it amounted to millions of rands difference. While interest costs are high when you continually pay the bank (worse so if you do balloon payments, which I left out of my calculations) the bigger hidden killer of wealth is simply depreciation. The bigger and nicer the car the more it is and the biggest depreciation year is year 1. So if you get a new car every 3 years you pay a crap ton in depreciation costs. 5 years is better. 10 years it really averages out and you lose less. I should actually re-do my calcs with buying demo models cash as then you miss out even that first year massive loss.

Either way I have never been in debt for a car. Always paid cash what I could afford and upgraded slowly when I had saved enough. Currently own a Balade (wife drives) that is perhaps 8 years old and a Honda Amaze CVT that is 1 year old. Plan on driving both till they are 10 to 15 years old and then replacing them cash. The CVT was a big upgrade from a tazz i drove for about 15 years. That tazz while an uncomfortable ride is why I am debt free today and a home owner. Was dirt cheap to run and allowed me to reach my other financial goals. I never plan on owning any of the luxury car brands (BMW, Merc, etc). You just lose too much on them. Not that I have issue with others getting them, I am just not a gear head. Cars are for getting from A to B for me in decent comfort.

I have friends where their car is a much more important part of their life and what they are passionate about and I can get why they buy bigger engines, faster, or more comfortable cars. My only advice to people like that is understand the full cost of ownership and don't sacrifice something like retirement savings for cars.

I see too many people reaching retirement age with little to nothing saved, still being in debt, and being unable to work anymore. Its like watching a slow motion train wreck unfold. Yet many of those people who never saved for retirement drove cars much nicer than I ever will and replaced them often. Its just poor decision making.

 

[die_koos]

My wifes' car is used for family trips, so I buy new/almost new and keep it 10 years. I try to pay cash out of savings or settle early if cash not possible. So we always have 1 dependable car. For my own car I buy what I want, but always only if I have the cash on hand and never new. Now with the shift to not work from home I don't see the need to upgrade my car at all... currently driving a 8 year old DC bakkie and it does less than 10 000 kilos a year, so servicing, tyres etc, costs are minimal. Fuel consumption is a bit high but not problematic since I'm not commuting... might have to rethink my strategy if I need to go back to an office again....

 

[Other Pineapple Smurf]

Keep it. Put the monthly payment into some kind of investment. Then you have a rainy day fund, or a really good deposit when you do eventually need to trade it in or upgrade.

In our case, it is becoming a Covid fund as last year not only wiped out our rainy day fund, but all our savings including one to replace our second car. Just won't finance again.

 

[Other Pineapple Smurf]

It's a Honda, keep it, look after it and it will go on forever.
Besides, if you no longer have to shell out 20% of your salary to finance the vehicle, it stands to reason you should have funds available to fix at least most of the things, if not all, that are wrong with it.

I originally double my payments this year to get the feel of how a replacement car would impact my budget and I never noticed the money in my budget.

I then got serious and pumped it 20% extra of my salary to pull forward the settlement date (no residual).

Major dealership service, new tyres and windscreen excess will all be covered in one month on that amount (payment + 20%) and then my car is good.

Yes, I service at the dealership but when you plan to own the car for its life, you cherry-pick what they do and not what the service book requires. The generic cabin filter is 10% of OEM price for example so I do it myself, but I pay for the expertise to look after the engine.

 

[supersunbird]

Bought my Figo Sept 2013 on 72 months, paid off by 2017. On 170 000km now and still going well. Sept it will be a 9 year old vehicle.

 

[Barbarian Conan]

Not really till it gets stolen. Probably after about 8-10 years of driving it. Although working from home and living close to the office made upgrading my car a stupid proposition.

 

[Priapus]

Not owing the bank money on our cars makes me happier.

Both mine and my wife's cars are fully paid for. MK5 GTi and a Seat Leon Cupra. I don't plan on "upgrading" until we need to ie; when kids come along or one of the cars gets stolen / written off.

Not paying a bank each month for cars is the best thing!

 

[Other Pineapple Smurf]

Thank you for all your replies.

It's just interesting how general feeling towards car ownership has changed over the years. I've participated in similar threads over the past decade on myBB and in the past there was a bigger group staying in the finance loop for various reasons.

Buying new Vs demo Vs ex-fleet is a whole thread on its own.

 

[Mike Hoxbig]

I usually extend my factory warranty until the max which is usually 7 years, and then trade it in.

It's way cheaper (usually less than 10k) than extending the maintenance plan, and covers all the major mechanical components...

 

[CamiKaze]

You only change it once you read the "My Beloved Auris" thread.

 

[chrisc]

I choose to drive a Honda Jazz because it suits me. Easy to drive and park, wonderfully reliable. I could buy a Volvo or BMW tomorrow but what for?

Had a BMW once and the slapdash and disinterested attitude of the dealer put me off. When it was 4 years old they managed to drive it off the edge of a ramp and it was written off. No apology or offer to loan me a car to get home. The following day I got an email with the bill for the work they had done.

 

[Craig_]

I choose to drive a Honda Jazz because it suits me. Easy to drive and park, wonderfully reliable. I could buy a Volvo or BMW tomorrow but what for?

Had a BMW once and the slapdash and disinterested attitude of the dealer put me off. When it was 4 years old they managed to drive it off the edge of a ramp and it was written off. No apology or offer to loan me a car to get home. The following day I got an email with the bill for the work they had done.

I assume you printed that, crumpled it up and shoved it down the dealer principals throat?

 

[cr@zydude]

I now drive about 30km a week. 1 trip a week into the office and a trip to the shopping centre every 2nd week. I'm going to drive my old Tata Indica until the wheels fall off or I end up with a wife and children.

 

[Rocket-Boy]

Watch out then, Chinese products generally fall apart sooner.

At least he has stopped referring to her as "The Chinese"

 

[marco79]

My wife's car is paid off about 3 years ago already. I have about a year left on my car. The intention is to give my car to our eldest once it is paid off and I have to upgrade.

I have to upgrade as I drive quite a bit. Approx. 5000km per month. Current car is already at 270k km.

 

[cguy]

I would upgrade every 3 years or so, except that I don’t drive a whole lot anymore (walk to work or work at home, Uber, etc.), and I have indoor parking, so the car is still in pristine condition.

Currently going on 5 years for my current car, and less than 20k km on the clock.