Didn't someone here say that the younger generation seems to be content having a car payment for the rest of their lives?
I would've paid off my Corolla 8 months ago... but I would've still been in that darn Corolla.
All generations. It's just a fixed part of cash flow and people figure out how much they can afford...like a cel phone bill or internet access. No biggie.
Same applies to people who pay cash for their cars. They've just concentrated their payments into one lump sum instead of spreading them out. In fact what they've really done is prepaid all the car payments for however long they've been saving to buy the car...think about that...say it takes you 5 years to save up enough money to pay cash for a new car. So you lived without for 5 years even though you've been paying for it (into savings). Then you pay cash and feel good about yourself but all you've really done is prepaid for the car. Meanwhile someone else took out a loan for the same car, has passed the financing risk to the bank and gets to enjoy the vehicle in advance of it being paid for.
Except you are not paying an interest charges; this is not insignificant over the term of a car loan, typically five years. Even if the total interest charge is only say, $2000, that is money that can go into a TFSA or RRSP. In addition, you can earn compound interest on the money you put aside for you car, which will in effect reduce the cost of the car by at least a thousand dollars, probably even more.
True financial freedom and not being chained to what you don't want to do is all about spending wisely. People waste as a matter of course in our society. I see it every day, seriously stressed people spending way beyond their means. Heck, it would be a big surprise an outwardly "successful" person fails a credit check when I screen new tenants for my places. Yet these people still get lent money even with crappy 650 or even less credit scores. My point here is saving a few thousand over the life of a new car IS WORTH IT. It didn't cost you to save that money, quite the opposite, and the money to replace it would be taxed, meaning the real value of that $3000 is $4000 PLUS. The real key to freedom is never financing what you can pay cash for and limiting your spending to what you actually need. It's not rocket science and the freedom you get is way worth it and you'll have less stress to boot.
I also think spending cash out of your bank account is fundamentally a way of making any buyer carefully assess her/his transportation needs. We have an era of long term, low interest loans which, in effect, cushion the MSRP of the car. But believe you me, you are going to pay every cent of that car's price with interest no matter what happens or over how long. Actually taking your hard saved cash to buy something is a much different experience than signing up for a monthly payment.
Finally, I have never bought a new car for cash where I didn't get at least another 5% off for having cash on the table.