Top 10 Reasons NOT to buy a 2010 Prius (from a huge Prius fan)

oh ya, i paid cash for mine... did have $660 early withdrawal penalty because i used part of CD that was earmarked for my EV next year, but considering the discount, i am ahead

 

It would be hard for me to spend $25k to $30k cash for something that car be stolen or destroyed and also loses value everyday it is used. I would rather finance a car and spend $30k on a new kitchen or swimming pool.

 

???
It seems like you are saying you have $30K available for a purchase, but that you would buy more ($60K) and finance half of it.

The conventional wisdom is that you take out loans only to purchase capital items -- items with inherent value that do or may increase in value or are able to produce positive cash flow.

A car will never fit into that definition! Not only will it always lose value, you have to continue to pay to use it (and fix it!).

Oh, well. I guess it really comes down to how much you want to spend on anything you purchase. I'd prefer to spend the price of purchase, not the price plus interest charges. At least on my home loan I can deduct the interest I pay from my taxes! And the down payment I made -- which has been my initial equity -- has grown by multiples since then!

 

I have no idea what you are saying. Did you read my post correctly ?

People take out loans for many reasons. Not for things that may increase in value or make positive cash flow. What about student loans, home improvements or repairs, or to cover medical expenses.

 

That's what GAP insurance is for. Also if you car is stolen or totaled the insurance company will screw you and you lose money if you paid cash. If you total you car a week after you get it, do you think you will get a check for full purchase price plus taxes and tags ? If you do you have the best insurance company in the world. I never keep a car for more than 3-4 years so I stick to financing or leases.

 

That's a great point. I like my 2009 so much, I try to drive it every chance that I get, when I'm not away on business. So around town, some of my trips are only about 5 miles one-way.

Also, I'd like to see Toyota adopt a newer battery technology in the next few years. Since I live in a hilly area, I end up losing a lot of regenerative coasting and braking from going down hills that would be useful to recover. So a traction battery that could not only be used in a PHEV, but could also provide more reserve power from regeneration, would mean more EV driving time for me, with a considerable improvement in FE.

Hence, I will be keeping the '09 for a few years and waiting for the next big breakthrough. In the meantime, I'm saving those pennies for the "G4".

And, I'm also grateful for being able to have the backup camera, 3 door SKS, glitch free NAV system, "no complaints" about my "package 5", six-spoke (vs. 5 spoke) standard rims, "less cluttered" console, "secret" storage compartment, shifter on the dash, after-market matching body side molding, full color MFD vs. monochrome MID, etc, etc, etc. :rockon:


And does anyone honestly think that the new solar roof really looks good?? :behindsofa:

 

I like it! Really! Wish it had been an option on the '09.

 

I haven't seen it in person so I can't say, but on my current '95 Integra, when I go to work in the morning, opening the moon roof is the first order of business. It may feel good to have the wind blowing through your wavy tresses if you are so blessed, but on my bald head, it's sinfully delicious!

 

Students loans are for educations that should increase future income. Home improvements should increase resale value. Medical expenses should extend lifespan. All of these represent increased value.

Gap insurance ... yet another hole into which money disappears. I don't see how getting screwed out of $100 every month is better than getting screwed out of a $5000 lump sum once every third decade.

The real waste of money is changing cars every few years. I used to finance a portion of mine, but the last payment to anyone other than my car replacement fund was over a decade ago. It can now replace two cars.

 

I'll try to state it a bit more directly. I would have earlier, but it may have come across as a bit too prescriptive.

I'm suggesting that you and I (and the rest of us except for Bill Gates) have limited resources. This means we need to make choices on how we spend money. You said that you would spend $30,000 not on a car but on a home improvement, and that you would finance the car purchase. I'm assuming this is because you don't have $60,000 in available cash -- otherwise, why finance a purchase where the Net Present Cost of that event is more than the cash value? Even if you flip this around and finance the home improvement and use cash for the car, you are over-extending yourself (unless the latter produces a home of greater value than the cost of getting there).

I understand that you would prefer to change cars on a regular basis, so you don't want to purchase. In your opinion, a short-term lease makes more sense overall (from a broader perspective, that is). It could be that it works better than making purchases with 60-month term loans, but I can't see that it makes much sense. If you were to save money for a few years, then you could put more money in on a purchase (or go all cash), and then your finance costs for each purchase would dwindle, leaving you more available cash each month.

I think it makes sense to buy what you can afford. If you don't have the money, then don't buy it. This leads in well to your next point:

You are quite correct. This doesn't mean all people (or even most) are making sensible decisions. Student loans? Usually this provides leverage toward a better financial stake in life, if not a more rounded cultural experience. Home improvement or repairs? Increases or maintains the value of an asset that not only provides you shelter but also, over the long haul, actually increases in value. Medical expenses? You shouldn't have to take out loans for this unless you've hit a major medical episode where your insurance coverage was limited. It only makes economic sense to provide your own safety -- keep cash on hand or at ready reserve. You should be able to have several months of normal expenses in hand so that you can withstand the ups and downs of life's little emergencies.

OK. I've introduced many "shoulds" in my response. This obviously represents my view of personal financial management. I suggest it because I believe it is prudent. I'd really like others to follow it so that I don't have to be part of the group funding the bailout solutions to address problems created by those who don't plan or limit their spending. I mean no offense in these statements. I intend to offer what I see is a reasonable way to approach such large expenses.

 

Gap insurance that costs $100 a month ? If you finance a Lamborghini, then yes maybe. My credit union offers it for free. Most car companies offer it for a few dollars a month. VW offers gap insurance for a passat for $9-$12 a month which comes out to under $144 a year.

If paying for a car in full makes you feel good then do it. If you own the car for 30 years like you said then you have made a wise choice. I like new cars every few years and don't really car if I lose some money doing it that way. For those who lease, I am sure will disagree with you.

 

I was lumping all the varied costs of financing into a rough single figure. Every line item needs to be a profit center for somebody.

 

While I now see why my post may have confused you. I should have said that if I had to chose from making a full cash payment $30k car purchase or $30k home improvement, I would chose the full payment for home improvement. I would never finance any home improvement. If I don't have it, I don't spend it. As for car purchases, I feel more comfortable financing. To me a car purchase is going to lose it's value slowly and I would rather have more cash in hand for other things. The home improvement will add instant equity to your home and will increase your homes value.
I am sure the many finance wizards on this forum will disagree and call me stupid but I really don't care. I have been blessed with good fortune dealing with real estate investments in the past so I favor home investments over car purchase. To me all type of car purchases are a money pits.

 

My head spins reading your post -- though I can only agree when you say:

• If I don't have it, I don't spend it.
• The home improvement will add instant equity to your home and will increase your homes value.
• To me all type of car purchases are a money pits. AND:
• I am sure the many finance wizards on this forum will disagree and call me stupid but I really don't care.

My view of it is that you make all of the right arguments in favor of not financing car purchases and leveraging real estate improvements. Still, the most critical parts of your argument are these: you like to do it that way, you can afford to spend the money, and you don't really care if I think there's a better way.

OK. (Also -- I'm NO finance wizard!!) :focus:

 

As the great Ron Burgundy once said.... " Agree to Disagree"
We could go back and forth for years about this topic. Lets call it a draw or I get my wife on here and your head will really spin.

As far as finance wizards go, let's leave it to the pros. I think one of them just asked how many mpg's does the new Prius get.

 

I'm good! :tea:

So long as the "pros" aren't elected representatives, that's OK by me. If two or three of them know enough of the Prius to even ask the question, then things are headed in the right direction!

 

lets take an example... ah hell with that!! lets not...lets use real life.

ok, i had the option to finance and was approved for what they said would have been top tier rates of like 5.05% on a 60 month term with $4000 down. ok, well my AVERAGE interest payment for the first year would be over $100 a month. that is $1200 (actual total interest i think was around $3300).

ok i also had the option to pull $25 K out of a CD i had, pay $660 penalty. so if you look at difference between interest lost ($1200 more or less) and the penalty, we say it run me around $1800-2000 right?

but remember i would have paid more than that in interest...well, i also got a discount of $XXXX for (thought i would slip didnt ya!!) the Priority Purchase Prog. and a sale tax waiver in WA State for purchases before Aug 1 which is another $2600....

so i ended up doing the CD cash thing...and as far as a car the depreciates every day...betcha i could sell it today for more than what i paid for it

as far as the logic if "instant equity" paid instantly verses "depreciating equity" paid over time with interest... flip that 180º and then your logic would be a lot like mine, but then again, it would be more like what most financiers do

 

That solar roof sounds more like an expensive toy to me, if I understand what it does correctly. I guess it's supposed to keep the car cool when nobody is in it? Like those reflectors you put on your windows to keep the sun out?

Now if its purpose was to recharge the batteries--that would be significant.