My father, who died in 2000 at the age of 89, had a philosophy about buying vehicle. His first car was bought on payment spread out over a three-year period of time. When the last payment was made, he continued to make payments to the bank that was put into a vehicle purchase account.
He kept that first vehicle for ten years before buying another one. Because of what he had saved, he had more than enough money to pay CASH for his second car, avoiding paying interest on borrowed money.
When I purchased my first vehicle, I followed his example and when my last payment was made to the bank, I too continued making payments for as long as it took to save enough money to pay cash for my next vehicle. I did not adhere to the ten-year rule.
The other modification that I made to his vehicle purchase philosophy was that I purchased year old vehicles that had been leased by a company with the lowest mileage I could possibly find. I was willing to drive 3-4 hours if necessary to find the car for which I was searching.
A year-old vehicle that had been leased was like buying a brand-new vehicle for substantially less money.
When I retired, I went to my father's ten-year rule because I realized I was no longer driving near the number of miles that I had been while working. I was willing to drive an hour to work that enabled me to look for work farther away from home.
Another variation to my father's vehicle purchase plan that was implemented after I retired was that in addition to continuing to make payment to the bank, I used the interest off of our investments in CDs and this enabled me to purchase a vehicle with more luxury and durability.
