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Thanks for the informative response but really? Makes sense to have no debt but I don't think everyone has that amount of cash saved up on top of savings. My current car has 200k miles and my commute is 60 miles round.
I think it only makes sense to buy something newer and have it financed? I don't think it would make sense to save up $18k in 3 years (assuming I save about $500/month)
Agreed. I'd rather make small payments for 5 years and have the newer car now. I'd also rather keep liquid assets liquid and not tie up cash savings into a depreciating asset. If the difference in total cost between a financed car and a car you bought outright (which is typically the interest cost) is going to kill you, then you're DIW to start with.
I see NO financial difference in saving up $400 a month for 5 years to buy a decent car, or making $400 a month payments on the same car. But I do see that you can have and get use out of the car now rather than 5 years from now.
I'm doing just fine with my life. I've bought cars with cash, financed cars, and leased them. It all depends on my use needs for the car. None of it has hurt me financially. In fact, I'd like to punch Dave Ramsey in the balls.
Being someone who just started my career, I wouldn't pay 15k for a used car.
Makes sense. But I paid $16k for my Mustang GT convertible, and have no problem with spending that kind of money. At the time, you couldn't find one cheaper. Considering it was half the cost that it sold for new, that's a good deal. It's all relative. A used Aston DB9 will run close to $100k and still be a "good deal."
If you're just looking for basic transportation and don't really care about cars, then yeah, there's no reason to buy a newer used car. But if you want a specific car, then you're often going to pay to play.
Thanks for the informative response but really? Makes sense to have no debt but I don't think everyone has that amount of cash saved up on top of savings. My current car has 200k miles and my commute is 60 miles round.
The idea is to accept the fact that your current vehicle will eventually need to be replaced and to start planning for your next purchase the minute you sign on the line for this one. So instead of saving $500/month for 3 years or not saving anything and paying $350/month for 5 years to finance, you would include a fixed amount in your budget for vehicle replacement and let the amount you have saved when you're ready to replace the vehicle dictate what you buy.
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I think it only makes sense to buy something newer and have it financed? I don't think it would make sense to save up $18k in 3 years (assuming I save about $500/month)
Does it really make more sense to pay $350 a month for five years to finance the same car? Especially considering the fact that you'll be paying for repairs out of pocket by the time it's paid off
It's your money and you should do with it what you want, but I can see only two circumstances where financing a car can be rationalized: When you have the finances to pay cash for the vehicle but it's earning more in interest than the note would cost; or if you are in desperate need of a vehicle and have no money, in which case you should buy cheapest thing that will serve your needs and pay it off as quickly as possible.
Last edited by duster1979; 12-14-2012 at 12:55 PM..
Keep in mind that "private party" sales can frequently be anything but ...
with so many people operating casual used car operations.
Just because a car is listed on Craig'sList or in a local advertising medium by someone other than a storefront car dealership doesn't mean it hasn't been purchased or held for resale.
As well, all the stories about how granny only drove it gently to church on Sunday's doesn't mean that her grandkids didn't beat the heck out of it the rest of the time. Or that granny's church was 700 miles away via two-lane highways ...
You must evaluate any used car purchase only on the car that is offered to you, as it sits, and remember ... that the person selling it is trying to split the same difference in dealer valuation that you are by buying the car privately.
It is essential for any used car purchase to have the vehicle inspected by a knowledgeable tech, independent of the seller. IF you don't know how to do this, then find an expert in the cars that you are considering and pay them for their services.
Remember, what you are purchasing is the remaining service life of the vehicle. Consider what your real transportation requirements are and buy accordingly.
I've never paid more than $1200 for any used car I have bought. "Course I'm buying what I'm comfortable with (which is mechanically simple cars from the 70's). Not everybody's cup of tea. But it has served me well. Hell, I even have working AC in 5 of the 15 I have. Plus I was picky about what I bought. Took me 21 years to build the collection. But only bought 2 from a dealer (obviously the two most expensive ones!).
My best buys have been from referrals... I hear of a car for sale from a neighbor or someone else I know.
No reason not to buy private as long as you have vetted the car and in my State... it is the law for the Seller to provide a current SMOG if applicable... so many private party sales run into trouble on this...
A seller sells as-is and the car won't pass smog and the buy has a car they can't operate on the road.
When you buy from a Dealer...
The vehicle MUST have a current SMOG
The Dealer is bonded and licensed.
The Dealer, in my State, must do minimum safety inspection/repairs... such as brakes.
The Dealer will take a check.
The Dealer may have special financing.
The Dealer is not going to rob you, at least with a gun
The reason I add the last one is because there have been several private party craigslist sales where either the seller or buyer were robbed or worse...
Dealer- You can go in and know the paperwork is there, and if its not you have someone to go after. However its harder to haggle and prices will be higher.
Private- Cheaper prices, more room to haggle but you have to pay for taxes, transfer plates, etc on your own. May also be missing/not be entirely honest with paperwork and may disappear after sale.
You really cant go wrong with a low mileage used Acura. It's just a Honda with a few extra bells and whistles. I'm sure there are some lemons out there but in general I think you'll be ok. Get that pre-purchase inspection done just to be sure.
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