By on July 19, 2019

Shopping cart full of cash money bills, Image: urfingus/Bigstock

When I was in high school, many moons ago, I had to recreate an historical debate in front of the class as part of a project for my American History class. I was assigned to take a “pro” position on the Three-Fifths Compromise (I don’t imagine that these sorts of things happen much in high school today). My opponent in the debate was a young lady who was, shall we say, a little different. She didn’t have many friends, she was socially awkward, and I’m not entirely sure that I’d ever actually heard her speak before.

We picked numbers out of a hat to see which one of us would go first, and she won. Right from the beginning, it was evident that things weren’t going to go well. She starting mumbling, inaudibly repeating the same thing over and over. Our teacher, a kind, and gentle man, asked her to speak just a little bit louder.

“Three fourths of a person, that’s all they were. Three fourths of a person!” And then she broke into hysterics and ran out of the room. The teacher sprinted out the door after her, returning after a few moments.

“Now, everybody,” he began, “Mary (not her real name) is our friend. When she comes back in the room, I ask each of you to treat her as our friend.” Let’s be honest. She wasn’t our friend. But in that moment, thanks to a kind word from our teacher, we did our best to treat her as one.

Here at Ask Bark, we get a lot of emails. As the curator of said emails, I do my best to answer all of them personally, even if I can’t dedicate precious ones and zeroes to them in this space. Some of them just aren’t interesting enough for me to dedicate an entire column to answering — it’s often as simple as “Don’t go to that dealer if they’re pulling that garbage on you,” or, “No, it’s never a good idea to spend all of your money on a used German car that’s out of warranty.” Stuff like that.

But every so often, I get an email that both excites and terrifies me, because I know that there is sufficient content within for a good column, but will also likely expose the writer of the correspondence to the combined vitriol of TTAC’s Best & Brightest. Today is such a day. So, everybody, Tom is our friend. After you’ve read his email, I ask each of you to treat him as our friend.

Here we go.

Mark,

I buy a new car about every 3 years. I typically drive about 35,000 miles a year so in the course of three years I spend the equivalent amount of seat time as the average 12,000-mile-per-year driver does in 8 years. While I take good care of my cars, do all the routine maintenance myself, and understand that modern, well-cared-for cars can easily log a bunch more miles, by the time I hit 100,000 miles I’m tired of the car and itching to trade. The rub is that I’m usually upside down so I end up adding cost to the new car note which starts this cycle over. 

I know I’m creating this problem for myself, but I like new cars and I take comfort in the knowledge that a new car will likely remain trouble-free for the duration of my ownership. I also understand that new cars have warranties so if something goes drastically wrong, the manufacturer has my back — at least up to the mileage limit. 

I’ve thought about options: A low-mileage off-lease car cuts depreciation expense, but how well the car was maintained or driven is unknown — and then I’m still left with a high-mileage car in just 2 years.  A cheaper, small car is more affordable but comfort is important to me. Leasing a car isn’t an option because of the miles driven. There is no effective public transportation where I live so I can’t ride the bus. 

Is there a better way or time to trade and buy that will at least minimize the negative financial impact and still enable me to indulge my “New Car Jones”?

Thanks,

Tom

Tom, I thank you for your letter. Now, as your friend, I’m going to give you the best possible advice I can, even if the mathematics behind your question are giving me a bit of a twitch in my left eye.

The good news is that you’re aware that you’re creating a problem for yourself — that’s part of any good twelve-step program. I am almost afraid to ask how many times you’ve created said problem, and how much negative equity you have in your current car. That is the sort of thing that can make breaking the cycle difficult — like taking out a payday loan. It’s difficult to get out of a loan with that much negative equity without rolling it into another sizable asset — like a new car, for example.

The bad news is that you’re engaging in quite a bit of poor-decision rationalization. You mention liking having a warranty — well, with your annual mileage, you’re not going to have a warranty on most of the cars sold in the USA after 12-18 months. You say that you understand that well-maintained cars will last quite a bit longer than 100k miles, but then you say you tire of the cars and just want something new.

You mention that you don’t know how a used car has been driven or maintained, but surely you’re aware of things like Autocheck and CarFax (flawed as they may be). You say that a cheaper, small car isn’t an option because you like comfort, but you have to know that there are small cars that are quite comfortable to drive, not to mention the money you’d save on fuel.

Leasing is the best way to go

But the greatest fallacy that you’ve accepted is that leasing isn’t an option. Tom, my friend, mi amigo, leasing is perhaps the best option. While they are never advertised, or even widely spoken about, high-mileage leases are fairly common and are specifically designed for people just like you — people who drive a high number of miles and quickly tire of cars.

No, you won’t be able to do a 30,000 mile per year lease on a BMW 3 Series for $299 a month, but when you pay for the miles in advance, you pay significantly less than you would if you had to do it as an overage penalty at the end of a normal lease. You even have the opportunity to negotiate your lease terms, so you might end up paying as little as six to eight cents extra per mile, which will be a lot less than the depreciation of your car in real world dollars after three years. And if you really want the reassurance of a warranty over the course of the lease, then just buy an extended warranty.

And after three years and 100,000 miles, you can simply walk away. No negative equity. No headaches. Nada.

The difficult part of all this is going to be biting the bullet the first time you break the cycle. You can either drive your current car into the ground for another 100k or so and wipe out all of your negative equity, or you can…shudder…roll negative equity into a lease. I strongly recommend against doing this. Doesn’t mean you can’t. But I really wouldn’t. 

So there you have it, Tom. Go investigate high mileage leases, and then decide if you really want to break this habit, or if you want to keep justifying your expensive behavior. Tough love from your friend, Bark.

Go easy on him, guys.


Do you need your own dose of tough love? Send your questions to Bark at [email protected] or slide into his Instagram DMs at @barkmfors and we promise he’ll be gentle.

 

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85 Comments on “Ask Bark: Breaking The Cycle Of Negative Equity...”


  • avatar
    Best_Ever

    Geez. What a great story that was.

  • avatar
    87 Morgan

    Tom, you are the reason GAP (Guaranteed Asset Protection) insurance was developed, I hope you buy this product every time the finance manager offers it to you. Option 1, If you have GAP on your loan, find the time to be a storm chaser, figure out the closest ‘hail alley’ and have your car parked in the ‘zone’ and pray for a total loss valuation by your insurance company and voila, your negative equity is gone. You can now start fresh.

    If you have a reasonable budget to work with…

    I respectfully submit that perhaps owning more than 1 car is your answer, since you are a high mileage driver. Do a 15k per year lease, 3 year deal on an all-weather type vehicle. Next, and this is the trick, find the correct pre-owned car that has miles to give; I present to you the idea of the used C6 Corvette. Find some garage queen vette that some New Balanced shod Jort wearing boomer (most likely white guy…not that it matters at all) has kept tucked in his garage except for cars and coffee and the occasional drive. If the average car is supposed to get 10k per year, find a vette’ that has had 4k per year and is 9 years old..36k mile car or less. This car will have an approximate value of 5-7k less than your purchase price with an additional 40k miles on the odo. This is the love story, you get a vette and 40k miles for 10K or less (tires…). Rinse and repeat. If you are over 40, insurance on a vette’ is not bad at all, stupid cheap actually, good gas mileage for your long commute and fun.

    • 0 avatar
      FreedMike

      Yet another nice thing about a lease that Bark doesn’t mention: gap insurance is built into the finance contract.

      Car gets totaled, and you walk away from the lease. Game Over.

    • 0 avatar
      TheDutchGun

      So the solution is a bad accident or defrauding an insurance company. Sad state of affairs.

      • 0 avatar
        SirRaoulDuke

        Let’s say he becomes a certified storm spotter for the National Weather Service. And he really has to punch that hail core to see if there is a tornado on the other side. Now he is saving lives getting a warning issued. Moral dilemma solved. Car is still trashed. Everyone wins.

    • 0 avatar
      MoparRocker74

      BINGO!!! This is the correct answer. If you have the means, and you have a genuine love of cars and driving, it makes total sense to invest your ‘real money’ into a car or truck you truly enjoy. The daily commute is drudgery, it completely sucks. There’s just no way around that. The daily grind is rough on machinery, so why not invest as little as possible but as much as necessary for a reliable and non torturous appliance to get through a routine that’s mundane at best. A Cammarollaccord bought for cash is a perfect tool for the job. It’ll get miles, dings, wear and tear but that’s the intended purpose of bland appliances: they get chewed up and thrown away. Maintain it of course, because by keeping a transportation device in service without incident, that frees up cash for more fun cars and activities. Just like a washing machine, you don’t shop for one because you’re ‘tired’ of your old one. It’s kept going as long as viable because it’s not a purchase to get excited about. Save the excitement for the sweet ride in the garage, reserved for date nights, roadtrips, a random Friday where you’re going to happy hour, etc.

      • 0 avatar
        phxmotor

        The daily commute is a grind? It really sucks? Dude ya gotta learn to enjoy the little things. A commute is a grind? Only if you make it so. For many people… it’s the best part of the day. The calmest part of the day. The most serene… and most blissful part of the day. I guess it’s all in how you deal with the world. Read some Dale Carnegie already. You just might like it.

    • 0 avatar
      Jean-Pierre Sarti

      morally reprehensible advice.

      i hear goldman sachs is hiring…

      • 0 avatar
        Lockstops

        Yeah, I’m sure he’s not driving a Lambo dude…

      • 0 avatar
        87 Morgan

        Explain how it is morally reprehensible. No fraud, car gets totaled by weather. Happens every day.

        Though was kidding on the insurance piece, but you should be carrying gap at those kinds of negative equity to absolve yourself of financial liability should an unfortunate even occur.

        • 0 avatar
          Jean-Pierre Sarti

          where i live in houston it is not too hard to find a street that will flood when we get a lot of rain. i have personally seen people park in one such street near me before hurricane harvey. is this not similar to what you suggested?

          i don’t don’t where your moral compass points but parking in a place you know will flood to claim insurance might not be legally wrong but is morally reprehensible in my humble opinion.

          • 0 avatar
            Johnny Ro

            J-P S, yes yes yes.

            Shady insurance claim, let’s call it $5k gained if you get away with it.

            Clean conscience, priceless.

    • 0 avatar
      JoeBrick

      @87Morgan3Wheeler- When your post started out, I thought you were going to recommend keeping full coverage on his car and ‘accidentally’ setting it on fire somehow or something of questionable morals…

    • 0 avatar
      S197GT

      don’t buy GAP from the finance guy.

      your regular car insurance company should have it for much less.

  • avatar
    volvo

    I second Morgan’s suggestion. For the driving profile you describe I wouldn’t look for a vette but

    In my town there is a one owner 100K mile very clean all records 2003 LS430 sedan for sale at $6K. No guarantees but you probably could get another 100K out of something like that without other than routine maintenance. Agree with Bark about avoiding a Euro badge with similar age and mileage.

    • 0 avatar
      87 Morgan

      That is a fantastic suggestion, the LS 430 is a great place to spend ones time.

      • 0 avatar
        volvo

        And if you run the numbers 5 year TOC for a car like this is about 50% of a new $35K car at 15K miles/year. An that includes setting aside unexpected 4K reserve for engine or transmission. Don’t know how 30K miles a year would pencil out but it is an easy calculation to do. Just don’t leave out lost opportunity cost for the money you have tied up in the car.

  • avatar
    formula m

    You are using up vehicles and want the benefits of them being new but do not wanting to pay for the amount of driving you do.

    • 0 avatar
      PandaBear

      Well said. So he either 1) need to use up a cheaper vehicle, being older nice car or a cheaper new car, or 2) pay up (or ask his employer to pay more or offer a company car), or 3) don’t use up the vehicle much (switch job).

      • 0 avatar
        Flipper35

        Could also do a 36 month loan so the car is paid off by the time he wants to trade.

        • 0 avatar
          krhodes1

          That is the secret – a combination of down-payment and finance term such that the car isn’t underwater.

          Of course, that means he probably can’t afford what he actually wants to drive.

          Personally, as I have said on here many times, I won’t finance a car for longer than the term of the full B2B warranty. And I don’t do extended warranties. Plus a downpayment sufficient that I can dump the thing at Carmax and walk away at any time.

  • avatar
    Dawnrazor

    Defer your gratification, understand that sometimes we simply “can’t have it all” in life, bite the bullet, and keep your current car until it is paid off!

    Otherwise you are probably going to remain buried in negative equity and debt, with all the stress that entails. Sure, there are ways you can continue to replace your vehicles regularly as desired, but all of them will add to your costs and will probably ultimately raid your wallet to the same extent that negative equity does.

    Not intending to be patronizing here (I was in the same situation at one time), but perhaps you could pursue a new interest/hobby (that won’t get you into further debt!) which would give you some of the satisfaction you are craving. No, it won’t directly scratch the car itch, but it might divert your attention sufficiently that you can learn to be content with your current vehicle for the time-being while you get your financial house in order.

    • 0 avatar
      FormerFF

      Yeah, you have to start somewhere and where you start is with the car you have. Keep it and drive it until it becomes uneconomic to keep on the road.

      I don’t share Bark’s enthusiasm for leasing, I can never find deals that make leasing less expensive than owning. If you want to minimize your total cost of ownership, buy a five year old mainstream car and drive it until it needs something expensive. It that’s too much, buy something new and mainstream, and keep it for five years, at which time you can sell it on Craigslist for $2500, and go get another one.

      If you want to keep doing what you’re doing, go way up on your payments so that your car is paid off in three years, at least that way you won’t be going negative equity.

      Driving a lot of miles is expensive. Driving a lot of miles in a newish car is more expensive. Driving a lot of miles in a newish nice car is yet more expensive. There’s no way to game the system to get someone else to pay for the cars you’re using up.

    • 0 avatar
      ravenuer

      Pretty much what I was going to post, although I would say “You sound like a brat. Time to grow up”.

  • avatar
    thegamper

    Coming up with the cash to break the cycle can be the most difficult thing in this situation. Tempting to roll it into your next purchase rather than come up with $10K today. But, based on the narrative above, you just aren’t accepting the reality of your situation. I too would rather have a car payment than pay anything for breakdowns or maintenance. I think you will find that high mileage leases on most vehicles is fairly expensive, but there are always those special cases. If it were me, I would ride this one out and pay it off as difficult as it may be. I would really consider looking at heavily depreciated low mileage CPO vehicles that come with generous warranties. Cadillac CTS for instance can be had with 30K miles at 50% of MSRP (as an example). I believe GM and Volvo both have good programs, Hyundai/Kia warranties transfer to new owner as well I believe. Commit to 3 year notes with payments in your budget, rinse and repeat whenever your zero it out. You will have equity instead of a liability at the end of each vehicle.

  • avatar
    Arthur Dailey

    For nearly 30 years, my Old Man did exactly what Bark is recommending. A one year, high mileage lease on a Cadillac or Lincoln. Drove it as much as he wanted/liked and then swapped it for a new one.

    Of course in his situation much of the cost was covered as a ‘business expense’.

    Occasionally if it was an exceptionally nice vehicle or had less miles than normal, a member of the family would purchase the car when the lease ended.

  • avatar
    Hummer

    This seems like such a simple cycle to break, buy cars that hold there value well, welp problem solved. Even a 4Runner can be financed for 5 years and still have the owner come out on top with a small down payment.

    This is just a problem I’ve never understood, we still have cars available today new for less than $15k, put 2-3k down with a 4 year note (if your really hurting and we’re in some magical mystery world where used won’t work) and problem solved. Of course if your buying a 15k car to begin with and require a note of 4 years after 3k down your credit probably isn’t stellar to begin with which leads to interest rates.

    Live within your means.

  • avatar
    dividebytube

    Before my dad retired, part of his job was driving 40k+ miles a year. He was also buying a new one every 2-3 years since the mileage was racking up. Of course this was in the 70s and 80s, when cars weren’t quite as good as they used to be.

    He eventually settled on buying used Nissan Stanza’s and would take them to 200K miles before my brother or I inherited them. He drove three of them over the course of a decade.

    So get yourself something reliable – Camaccord – and just pile up the miles on them and save your money. Co-worker of mine commutes to work 75miles each way and has a 1996 Toyota Camry with over 300k miles on it. Yes it has needed some work but it has never left him stranded because he looks after his cars.

  • avatar
    FormerFF

    One more thing: the term “negative equity” is a euphemism. You’re going into debt.

  • avatar
    Lockstops

    Why do you drive so much? If it’s for work and you end up losing so much money on your car then maybe that job isn’t worth it or you’re not compensated enough? Stop driving so much, or get compensated for it.
    (If it’s not work, instead some kind of iron-butt driving is a huge hobby of yours then get a new hobby.)

    Also, CPO’s do have warranties AFAIK. With so many miles that you’re piling on why do you care if the car has a couple dozen K’s on to odometer since it won’t be a ‘new’ car for more than a month or two with you anyway? Buy CPO and have it serviced at the dealership to keep warranty current and resale value up (or is that not a thing in the USA?). Same thing for the car you buy: if it’s a CPO surely it does in fact have a full service history?

    • 0 avatar
      Scoutdude

      Yeah many CPO warranties run past the original warranty even if they aren’t as comprehensive as the new car warranty.

      The service history is a crap shoot, some may have it some may not.

  • avatar
    Lockstops

    I hear that you can actually _make_ money by buying a $100K Tesla.

  • avatar
    DenverMike

    This one’s extremely simple. Make more money. Or spend less. Or make more money and spend less. Why do seemingly intelligent people do this? Do they figure it’s just a matter before they outlive a rich parent, uncle or grandparent? I can’t believe they’re otherwise that stupid.

    • 0 avatar
      banker43

      Yup, the “outlive” strategy is more common than you might think. As a branch banker, I’ve seen many otherwise intelligent children of the well-off screw around for most of their life waiting for mom or dad to die. No focus on a career, spending every penny they make at some low stress bottom rung job, and occasionally begging for a handout from the old folks. As you can imagine, this often does not work out, as sometimes mom lives deep into her 90s needing expensive health care, or the will is not written the way they thought. Whatever happens, it is a pretty sad way to live. See it all the time!

      • 0 avatar
        DenverMike

        It makes no sense otherwise. Having no fallback, I had to sink or swim, delay gratification, and never carry a debt load in the first place. Eventually I was buying new cars/trucks and real estate in cash, with not a huge income.

        It can snowball the other way.

  • avatar
    Tony Moody

    Couple thoughts:

    1) spend time on the leasehackr forums and ask for help on the kind of high mileage lease described in the post, especially the part about negotiating the mileage purchased up front as that’s not a super common thing

    2) you didn’t mention the price point you like to shop, but if it’s high enough, you can probably find a dealer who can discount the new car purchase *and* eat the negative equity on your trade in. It may not make logical sense, but some dealers are able to treat the transactions as sufficiently distinct that they can do more when doing both than they could on the purchase alone. As in 1 + 1 = 3. e.g. they might be able to discount a sale $3000 and eat $2000 in negative equity on a trade (i.e. credit you $2000 more than it’s really worth), but could *not* discount the sale by $5000 in isolation, nor could they cut you a check for your trade including the $2000 bump in isolation.

    3) live more closely to your means, or at the very least wait 3.5 – 4 years rather than 3 between trades.

  • avatar
    Scoutdude

    There is only one way to get out of debt, legally and without filing bankruptcy and that is to pay it off.

    With no knowledge of where the person is in the cycle it is hard to make great recommendations, but it comes down to some pain, one way or another.

    One option is to ride on until the negative equity is gone.

    Another is to just bite the bullet and throw cash at it. Either as a lump sum down payment at the next car that covers the negative equity or bit by bit so it is gone before the next car is purchased if the next anticipated replacement is not in the near future.

    Or you can do a combination, ride on, throwing some extra money at it until at least you don’t have anything to roll, but preferably until you have some equity.

    Now that you’ve got back above water how do you stay there?

    One way is to choose a shorter loan, if you are going to use up a car in 3 years then you should do a 3 year load, or at worst a 4 year loan.

    If you can negotiate the extra miles up front at the right price a 2 or 3 year lease is another option.

    Either way you’ll be paying more, but if you keep on rolling you’ll eventually hit a wall where you have more negative equity than the lender will roll into an auto loan.

    That will be one big chunk of pain, compared to the lesser pain of getting on track to eliminate that negative equity now.

  • avatar
    Lie2me

    Tom, you’re doing great, keep up the good work and very soon you’ll have no money AND no car, so no more problem. Maybe your mom will let you use her PT Cruiser in an emergency, but you’ll have to take her and her lady friends shopping once a week

    Life is good

  • avatar
    ToddAtlasF1

    I had a customer a couple of years ago with a two year old, 125K mile Honda Accord. The brakes were beyond shot. She didn’t have the money to replace the missing pads and badly grooved rotors. At the time I wondered what she was doing that required driving more than fifty thousand miles a year yet was so bereft of value that she didn’t earn enough money to maintain her car. IIRC, my employer was paying me 55 cents a mile whenever I had to drive my own car for work at the time.

    • 0 avatar
      SoCalMikester

      had a gf that thought driving 50 miles a day to work in newport beach was worth the DOLLAR AN HOUR extra that a similar local preschool job would pay. 50 miles in rush hour traffic for EIGHT dollars in a leased tacoma. fkn idiot, but she was chubby!

    • 0 avatar
      MBella

      Usually when people put on that kind of mileage, it is because of a huge amount of freeway driving. There you shouldn’t be using the brakes so they really shouldn’t wear out that much. That’s an interesting story.

  • avatar
    SCE to AUX

    Get a different job that puts less miles on your car. Pay off your debt, and enjoy normal living. Spending 3-5 hours a day in the car is no way to live.

    You’d break even financially, even if you took a pay cut. And your blood pressure would improve.

    Alternately: Sell your house, get a nice ride, and live in it.

  • avatar
    Secret Hi5

    Many words wasted. It boils down to:
    Don’t spend money that you don’t have. “Tom’s” so-called requirements are frivolous, created to rationalize going into debt.

    edit: (^What Denvermike said )

  • avatar
    ToolGuy

    “I take comfort in the knowledge that a new car will likely remain trouble-free for the duration of my ownership.”

    Rules change over time – sometimes we don’t realize they have changed. For example, Michelin tires used to be worth a premium. In 2019, that seems to no longer be the case.

    A new car purchased in 2019 might be demonstrably *less* trouble-free than a used car with a proven track record, depending on:
    – The degree of innovation in the powertrain (reference numerous TTAC articles)
    – Whether the ‘automaker’ name begins with an “F” or a “G” (see Matthew Guy’s sales roundup table if this is unclear)

    Agreed that you should be shopping for something with a relatively long wheelbase.

  • avatar
    Eric

    How’s your credit? One way is you can take-over leases from people that are sick of their car but way under their mileage limit. That’s one way to get a lot of miles in cheaply.

    Get smart on the financing math before you go in. See if you can negotiate a lower rate. Don’t negotiate on monthly payments. The magic trick they are pulling is extending out your principal to get your your target monthly payment. If you drive 8 years worth of driving in 3 years, you should be making 8 years of monthly payments in 3 years.

    However, getting out of that grind is hard. You have negative equity, you need to finance that, plus your new car and you’re never really paying off the car depreciation plus adding a ton of finance fees.

    Another tip, if you are driving a ton of miles, consider a manual transmission. They last longer and the cars that do have them cost less. On the small car side, you can buy an “ace of base” chevrolet sonic for $12k with a top notch infotainment system. On the small SUV side, i bought my new Jeep Compass for 17.5k (my suggestion for an Ace of Base entry). Cutting down that purchase price on your next car will help you improve your finances faster.

  • avatar
    Robotdawn

    Shorten your note. It’s the only way out. You may have to do it in increments, 5 years this time, 4 years next. 4 should at least keep you positive, 3 would be best, that way you actually upgrade each car trade.

    I’m the same way in some respects. I always buy new as most of the time I’ve traded in one of the inspirations of my trade is “something is going wrong and I’m not paying for it”.

  • avatar
    JoeBrick

    Tom, old friend, what you need is a new girlfriend. Start going around the local car dealerships and talk to the salesmen/women. Find out if the car dealer has a daughter. The rest is up to you, buddy !

    • 0 avatar
      Lie2me

      Yeah, that’s it, date the sales manager’s daughter to get a good deal

      • 0 avatar
        JoeBrick

        Date the OWNER’S daughter to drive free loaners…

        • 0 avatar
          ToolGuy

          Ideal is to marry the owner (since that particular individual is in possession of a license to print money).

          Another option is to marry the owner’s spouse (after checking for an existing prenup).

          You guys have got to aim higher – I recommend “The Big Leap” as reading material to help address your ‘upper limit problem.’

  • avatar
    PandaBear

    Tom’s best option is to buy a nice used car and drive it forever, something that he won’t get bored of, like a Lexus LS, that is also very reliable. Bring it in to detail once a year, put aside money to repair. Warranty is overrated and so is maintenance history when compare to how much depreciation you are taking on.

    If he absolutely have to get a different car every 100k, he need to go downmarket with a commodity that doesn’t drop much in value, used. Like a Hertz retired Camry LE with 30k miles already, and drive it till 100k and sell it for 1/3 of the price.

    He can also take over others’ low mile lease with not many months left, that should be a discount to take over, but that takes a lot of effort looking for a new lease take over every several months.

  • avatar
    Garrett

    Lease 3 cheap cars, and rotate between them.

    Repeat.

  • avatar
    dwford

    Make your next vehicle a pickup truck. Not only will you find huge incentives on most of them, but they hold their value very well.

  • avatar
    jalop1991

    1) Buy a brand new Honda. (Or Acura–this works just as well for them too.)

    2) call up Curry Honda (or Curry Acura) and buy, for cheap, the transferrable HondaCare 8 year/120K mile product.

    3) Drive your 100K miles.

    4) sell the still very new, only 100K mile Honda WITH REMAINING WARRANTY for incredible money

    5) rinse, repeat

    This is not hard. Hits all the buttons, satisfies all the requirements.

    • 0 avatar
      JoeBrick

      RIGHT NOW, in my area, Honda is offering a ZERO DOWN, 36,000 mile 3 year lease on new Civics for $219/ month. I got one of these last year, but it was $249 at the time that I went for it. And I LOVE the car. I have had it since October. I called up to find out what it would cost me to get out of the lease and just buy the car. They told me I could buy the car for $17,300 and I would not have to pay anything else. Talk about a DEAL ! An almost-new (10,000 miles) Honda, for $17K. And I PERSONALLY KNOW THE PREVIOUS OWNER- ME. He always did the maintenance on time, and drove the car like it was his baby.

      • 0 avatar
        jalop1991

        um….math is math.

        Back of the envelope, you paid $2190 to day. Now add the $17300 to buy it out. (You DO know that your contract spells all this out, right? It was never “hidden”.) . Your total $$$ out of pocket for that car: $19,500.

        That’s what a new Civic costs right now.

        If you can’t figure out how to buy a new Civic for $19,500 right now, you’re not fogging a mirror.

  • avatar
    ex007

    Interest:

    Those that understand it, earn it. Those that don’t, pay it.

    • 0 avatar
      Scoutdude

      Paying interest is not necessarily a bad thing. It just needs to be used right. Using it to acquire appreciating assets like real estate can improve your financial situation over the long haul. That is how I accumulated the majority of my wealth. Of course I wasn’t the one actually paying the interest on most of those, it was the tenants, and it was deductible.

      On the other hand paying interest for something you don’t even own any more, which is what you do when you roll negative equity into the next car’s loan, is usually not a good idea.

      However sometimes paying interest on something like a car is a good idea. If you have money making say 6% and the car loan is 4% it doesn’t make sense to pull out that money to avoid paying interest on the car.

      • 0 avatar
        DenverMike

        Right. But getting a car loan “to build credit” is stupid. Myth busted.

        The best way is to maintain a couple credit cards, the older the accounts the better. Of course pay them off at or before the end of the month, or as soon possible, never exceed 20% of the credit limit, and occasionally ask to extend their “limit” and review/lower your interest rate.

        I did top out to an 850 FICO without ever financing a car or real estate, just with efficient use of credit cards.

        Besides making payments on time, it makes you look extremely responsible and live well within your means, when you’re given $50,000 (for example) in total “lines” of credit, but never use more the $10K (of it) at any given time, then pay it all back.

    • 0 avatar
      ToolGuy

      ex007,

      Excellent point! And we could add:

      New Car Depreciation Curve:
      Those who understand it, get to choose their slope.

  • avatar
    volvo

    +1+

  • avatar
    OldWingGuy

    Wow. just wow. …by the time I have 100,000 miles I’m tired of it and itching to trade… so take on more debt. Whatever floats your boat.
    Just think what your grandparents, who lived thru the depression would think – about going into an endless spiral of debt because you’re bored with your vehicle. If the banks or car companies are dumb enough to lend you money, go hard. Doesn’t affect me. Oh wait….

  • avatar
    volvo

    +100+

    Wow. You and I Get it.

  • avatar
    Jeff S

    I don’t give advice anymore especially since people tend to do whatever they want to do. The trouble with giving advice is it is free and most people value something they pay for more than what is given to them for free. For me I would be more tired of mounting debt than I would be of the car itself. Either having a new car every couple of years is more important or getting out of debt–you can’t have both.

    • 0 avatar
      James Charles

      Jeff,
      I agree. Giving free advice, especially for simple problem solving is not good. As you stated, you give the advice and they continue on.

      This guy is looking for an easy way out with no changes in his actions. So disregard him. He’s been living his way for a while and if he hasn’t adjusted his lifestyle, he’ll take no one’s advice.

  • avatar
    7402

    I suggest reading Mr Money Mustache’s clown car blog post at https://www.mrmoneymustache.com/2013/04/22/curing-your-clown-like-car-habit/

    Yes, take it with a grain of salt–you probably don’t want the writer’s exact lifestyle any more than I do. However, you need to understand the basic concept. Then read more of the stuff on that extremely useful (even if somewhat extreme) web site. Understand the arithmetic behind compounding. Post your precise situation in the Ask a Mustachian forum as a case study (read the guidelines for case studies first). You will get plenty of useful advice there that addresses your larger life approach issues in addition to the specific car-related issue of this TTAC article.

    Tom, you have a money problem, not a car problem. Your query belongs on a financially-oriented web site rather than a car-oriented site.

    • 0 avatar
      Johnny Ro

      Mr. Money Moustache, yes. A self employed blogger millionaire who has endless time to work out and to help friends with startups and hang with his kid. He started with a nest egg then quit corporate and went cheap in a cheap nice town. Very nice.

      His blog is about, going cheap and focus on good things in life.

      The Tom guy is not asking anything bad, and the high mileage lease looks like a nice answer if Tom continues his career this way.

      MMM quotes- “Surrounded by serfs with trucks” and “you need a 3/4 ton turbo pickup because you might buy a cottage and then a boat and then need to haul the boat to the lake”

      • 0 avatar
        -Nate

        Wow .

        The Consumer not very elite .

        Apparently the media has managed to make living within your means a bad thing .

        From a German Car Mechanic / Owner / Enthusiast / Foamer :

        Don’t buy one new -or- used unless you’re :

        A. rich

        -or-

        B. willing to just drive the damn thing into the ground and walk away when it breaks .

        To see how others deal with transportation needs, read up on mozambikes ~ for $115 U.S. Dollars they get a nice sturdy bike with good tires and no more waiting for the damn jitney bus =8-) .

        -Nate

        • 0 avatar
          krhodes1

          C. Buy them wisely (simplest is best and what isn’t there won’t break), and wrench on them yourself.

          I did finally have an issue with my infamous ’11 328! wagon over the winter – first one in six years. Sitting in the garage in Maine, the windshield cracked – not a clue how or why. Had the BMW dealer replace it and do a couple of outstanding recalls when I got back to Maine for the summer a month ago. Cost me nothing, yeah $0 glass deductible!

    • 0 avatar
      krhodes1

      Interesting blog – thanks for posting it! That guy and I seem to agree on a bunch of things but disagree on many others. I do not have to work at all at talking myself out of a Tesla. :-)

      Ultimately, I can afford to splurge on cars because I am a major cheapskate in most other aspects of my life, and I have arranged my life to not have to drive very much. Cars aren’t much bother when you only put a couple thousand miles a year on each of them.

  • avatar
    SaulTigh

    I don’t think anyone can help you, because you’re clearly given to making impractical choices, and like many others I wonder why you HAVE to drive that much. Anyway, you do mention you do some of your maintenance, so here is my suggestion:

    Buy a lightly used Camry or Accord on the shortest note you can afford the payment. When that note is payed off, seek out and purchase another Camry or Accord of the same model year (and preferably trim level). Buy the shop manual for this car. When that note is payed off, by yet another one of the same model year, preferably with cash at this point. By then you should be pretty efficient at wrenching on this particular model and know all the quirks. With three cars, you can buy supplies and common parts in bulk, and spread your mileage out. I doubt very much you’d do this, as it will probably be like wearing a hair shirt to someone used to a new car every 3 years.

    Incidentally, this is not completely my idea. I worked with a guy in the late 90’s who had a 100 mile round trip commute daily, for an $8.50 cent an hour job. This was worth it in that where he lived it was hard to come by an $8.50 an hour job. His stallion of choice? 1st generation Ford Festiva. He did all his own wrenching and maintenance, and bought up every one he could find dirt cheap. Always had at least two runners, and a rotation of 2-3 more in his own U-pull-it back yard. Never, ever missed a shift.

    • 0 avatar
      redgolf

      SaulTigh – who wants to wrench after driving/working that many miles? “Honey, no time to eat dinner with you and the kids, gotta wrench on the Toyota so I can save a few hundred bucks!” swallow,rinse, repeat! keep er runnin!

      • 0 avatar
        SaulTigh

        You tech the kids to wrench, as exemplified in the GREATEST MOVIE EVERY MADE: Six Pack!

        • 0 avatar
          ToolGuy

          SaulTigh,

          I watched your movie – you left out a key piece of information:
          a) Teach the kids to wrench
          b) Die with your spouse in a vehicle crash

          Not sure I want to sign up for that deal.

          (Also, a young Diane Lane did a pretty poor job of cleaning the windshield mid-race – so there were some gaps in the training provided – lol.)

  • avatar
    tankinbeans

    Would it be an idea to get used to the “new to me jones”?

    Buy a Corolla or previous generation Civic for your primary drudgery. Have a slightly interesting car is the wings that doesn’t cost an arm and a leg to purchase and maintain. I believe 5-10 year old Mustangs aren’t terribly expensive. Then you get tired of the second interesting car and go find some else that’s new to you. Might help assuage the boredom.

    I completely get it though. I tend to be serial automotive monogamist and tire quickly. The difference is that I’m young, have recognized that it’s an issue holding me back, and have taken the first step to breaking the cycle. I am paying off my lease and am likely buying it out. When I start to get an itch for a new car, I find one that I like, but which I know will fall way outside of my comfort zone in terms of payment and take it for a test drive. When the sales person comes back with the numbers, I balk and walk. Keeps me humble and recognizing that I’ve made the right choice.

  • avatar
    millerluke

    I’m in a similar boat – I drive about 45,000km each year for work. Basically, I buy a new car, set the payments for 4 years, and then when the car is paid off, my wife gets it to drive the kids around. I use my wife’s former vehicle as trade, and buy a new car, starting the circuit again. Of course, I have the vehicle totally paid for when it has less than 200,000km.

    Right now, my wife drives a 2012 Elantra (240,000km) and I have a 2019 Camry (17,000km.) The Camry will be paid off in 3 years or so, about the time the Elantra is ready to ‘move along.’ Sidenote: The 19 Camry sucks for reliability. The tranny crapped out at 220km, the touchscreen freezes up randomly, the new transmission sometimes gets stuck in a gear and won’t downshift, the brakes wear incredibly quick (just had them replaced under warranty – and I do almost all highway driving, so not much braking at all). But, it’s comfortable and spacious, and incredibly fuel efficient (about 6.3l/100km, or 37-38mpg) and remarkably powerful 4-cyl engine.

    Perhaps, Tom, you should keep your vehicle until it’s paid off, then trade it in. Maybe budget slightly higher payments, but get in done in maybe 4 years, instead of the three years you’re doing currently.

  • avatar
    bodayguy

    I’m going to agree with some of the other posters – you sound like 2 cars would be better. But we don’t know your budget. With that much mileage per year, I’d have a Civic that you can drive the wheels off (cheap but good MPG, maybe even a lease) and then have a fun car for occasional use, maybe a used Miata or Mustang or whatever floats your boat.

    Don’t put all that $$ into a higher-priced car that you rack up the miles on.

  • avatar
    mburm201

    I have to disagree with Bark’s recommendation. If Tom was living within his means and had no debt and a fully-funded retirement, it wouldn’t be an issue. Since he can’t even afford to get out from underwater after a few years of car ownership, this clearly isn’t the case. It sounds like his personal preference for new vehicles is dooming him to throw away large amounts of his income. Most new cars today are capable of 200k reliable miles. Many are capable of 300k or more. Tom could buy a reliable vehicle with 100k to 150k miles for 70% – 80% off of its list price. He could then proceed to drive it for 3 – 4 years. Not only would the depreciation be far less, so would the cost of insurance, registration, and license tabs. I commute about 75 miles a day. I’m currently driving a 2007 Lincoln MKZ with 220k miles on it. It was at 140k when I got it. I hope to get an least a couple more years out of it. I have some maintenance items to take care of, but no more than a few hundred dollars a year. With the miles I accumulate, the depreciation on a new car would be horrific, so I plan to get a similar 7 – 10 year old car when this one wears out.

  • avatar
    -Nate

    As usual there’s an amazing amount of good help and information here, only good if those who read it (quite apart from Tom, the O.P.’s situation) as many here desire to have decent _enjoyable_ transportation at reasonable cost .

    Many ways to do this regardless of income level .

    -Nate

  • avatar
    dahammer

    I don’t agree with the notion of buying more than one car, you can only drive one at a time anyway. Unfortunately, the OP wants someone to wave a magic wand and make the accumulated negative equity and high auto loan disappear. Sorry Sunshine, life don’t work that way.

    You need to balance your wants with your needs. You want a new car, but need transportation. Deep down you knew the right answer before you wrote to Barth, you just needed to hear it from someone else.

    Time to cut the crap and play the game, buy a used car with low miles and pay it off. Then keep driving it. No reason you couldn’t get 200k miles from a Camry or Accord. You are in this situation because you used your dinner money for breakfast.


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