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An automobile isn't always a liability. If you drive a classic car that appreciates, it most certainly is an asset. As far as an automobile being used to get from one place to another, it doesn't have to be a liability, that's the choice of the owner.
All I was trying to point out is that paying cash for a car, especially one priced $30k or more isn't going to save much with interest rates so low.
Totally agree with the interest thing. I think you have to be smart about financing - sometimes it really is to your advantage to hold on to your cash.
As for assets...ok, you're talking about a fraction of a percent of all cars out there, most of which require a lot of maintenance to remain worth more or the same as when they were 'new.'
For the rest of us (who love classic cars but don't have time for their unreliability issues, lack of safety features, and overall generally poor performance/handling relative to newer cars), we can't go into buying a car with the notion that our feelings are going to be hurt that it's not worth the same amount of money as when we took it home the first day.
An automobile isn't always a liability. If you drive a classic car that appreciates, it most certainly is an asset. As far as an automobile being used to get from one place to another, it doesn't have to be a liability, that's the choice of the owner.
All I was trying to point out is that paying cash for a car, especially one priced $30k or more isn't going to save much with interest rates so low.
"drive" being the key word. Keeping something like a 1989 911 in the garage to drive 2-3K miles a year will avoid a lot of depreciation. Using that same car to deliver pizzas 6 days a week while keeping it parked on the street at night isn't going to have much benefit. Even when a car is no longer depreciating due to age, it can still depreciate from use.
I am not sure what depreciation really has to do with this equation, unless you would rather be covered by gap insurance in a loan, than assume the risk of eating the depreciation in the event of an accident.
Otherwise, a car's principle cost over 5 years is going to remain constant, whether it is purchased or financed.
Personally, I don't understand the obsession with depreciation, it's probably because I tend to keep cars for a while.
Also, unless you are thinking about selling, what does the value really matter?
Get a low mileage 2-3 year old car instead...they really are out there and some other poor sucker already took the first few thousand of depreciation.. It amazes me that car salespeople's jobs are to get you to spend a staggering fortune for something that is dropping in value like an up turned hourglass as you sit there looking at it in the showroom. I spend way too much money on new cars in my life and I finally wised up...And the best part?? No one really cares or even remembers that you bought it "new"..Your real friends don't need an explanation,... and your enemies won't believe you anyway...Save your cash!
What is a simple rule of thumb to use when buying a new car, is it like 20% of your monthly income or what? For example, if someone brought in 5.8k a month, and 20% of that is a little bit over 1k. Thanks in advance.
Not sure about the financial stuff, but in general my basic rules of thumb are:
It must not be a convertible
It must not have an automatic transmission
It must not have a wimpy engine
It must have only two doors
It must have 4 round tail lights
Personally, I don't understand the obsession with depreciation, it's probably because I tend to keep cars for a while.
Also, unless you are thinking about selling, what does the value really matter?
Depreciation matters if your car is wrecked or flooded or a tree falls on it or it's stolen. Insurance will pay you the current market value.
Depreciation matters if, in 5 years, you decide to get another vehicle even though you thought you would keep this one longer.
Depreciation matters if you are in a financial situation where your total net worth is evaluated and you need it to be as high as possible. The less your car is worth, the less your net worth is.
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