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You see this all the time. People bragging that they never finance and instead pay cash. So my question to them is what is your secret? Where do you find $25,000 sitting around to pluck down on a car?
I don't buy $25,000 cars, I just sacrifice and save as best as I can and bank most of my pay and at some point I have enough to buy a decent used car when I need it.
Excellent question. And the answer is the perfect reason as to why you can't get ahead by leasing a car... You build no equity doing so.
Being smart when buying cars goes a long way too. We bought a Mitsubishi Eclipse Spyder awhile back for my sister in law to drive while she was staying with us for 6 months. It wasn't a huge cash expense, but we found a car that was listed for several thousand below market value. Went and looked at it, it was in great shape, the owner just didn't know what they could get for it, I guess. Sold that car 6 months after we bought it for $2k more than we paid ($1500 after taxes.) Mathematically, we made 20% on that deal and the only thing we did to the car was one oil change.
Avoid buying new. The depreciation hit from the first 4 years or so almost always assures that you will lose money. By contrast, I've never had a single car that I didn't make money off of or didn't break even. I buy them about 4 years old and I find cars that are what I want and are a good value. I keep them for at least 4 years unless I've bought something just to turn around and sell for profit.
Eventually, you build up equity in your vehicles and you can afford to trade up. Avoid financing whenever possible, that's just counting against you. A good way to do this is to charge it if you can... Open a new credit card that has 0% financing for a year or more, and charge the car. If you really want to maximize your money, use a card that pays you points or cash back. We bought our MDX on a credit card... Got 2.2% cash back toward travel expenses and 0% APR for another year or so. It all adds up.
You see this all the time. People bragging that they never finance and instead pay cash. So my question to them is what is your secret? Where do you find $25,000 sitting around to pluck down on a car?
I don't just find it. I saved it. A long time ago I simply kept my vehicle instead of trading it in and starting with a payment. So I simply just kept making myself monthly payments. I started a car account. That payment went in there every month. You would be surprised how fast it adds up. It just takes discipline to not raid it. And if I was short a month or two or three due to some unforeseen circumstances then I never scrambled to make the payment. When I had 1-2k over my what I am willing to pay I went and bought another car. I bought the other car cash and then sold my old car. You never trade in. You're leaving hundreds if not thousands on the table. That money I got from the sale went back in the car fund account. Then I just kept making payments. Oh and that extra 1-2k is for maintenance/repairs. Over the years our investments and careful spending started to allow us more buying power I could add to that fund faster. Now I've been doing it this way a long time. About 17 years. I have bought cars on payment before but I despise making payments. I keep my vehicles a long time unless they are unreliable then I dump them. But I'm fairly frugal. I just don't need a new car every few years. My wife is in the same mindset. Neither of us like borrowing or owing money
Buy a car that just came off lease. Let someone else take the depreciation hit.
I do the same thing when I bought my boat or quads or dirt bikes etc. I started a account and simply put money aside. When I found the boat I wanted I laid a stack of cash on the table. It was exactly what I was willing to pay for the boat. It was a lot less than asking price. Cash always talks.
I don't just find it. I saved it. A long time ago I simply kept my vehicle instead of trading it in and starting with a payment. So I simply just kept making myself monthly payments. I started a car account. That payment went in there every month. You would be surprised how fast it adds up. It just takes discipline to not raid it. And if I was short a month or two or three due to some unforeseen circumstances then I never scrambled to make the payment. When I had 1-2k over my what I am willing to pay I went and bought another car. I bought the other car cash and then sold my old car. You never trade in. You're leaving hundreds if not thousands on the table. That money I got from the sale went back in the car fund account. Then I just kept making payments. Oh and that extra 1-2k is for maintenance/repairs. Over the years our investments and careful spending started to allow us more buying power I could add to that fund faster. Now I've been doing it this way a long time. About 17 years. I have bought cars on payment before but I despise making payments. I keep my vehicles a long time unless they are unreliable then I dump them. But I'm fairly frugal. I just don't need a new car every few years. My wife is in the same mindset. Neither of us like borrowing or owing money
Buy a car that just came off lease. Let someone else take the depreciation hit.
I do the same thing when I bought my boat or quads or dirt bikes etc. I started a account and simply put money aside. When I found the boat I wanted I laid a stack of cash on the table. It was exactly what I was willing to pay for the boat. It was a lot less than asking price. Cash always talks.
^ This. Thank you. Didn't even read the rest (I'm sure it was good. It's late, sorry.)
A. I buy used cars. Many years ago I had a car hit head-on by a driver who fell asleep at the wheel. I had not yet made the first payment on that showroom-shiny purchase which was never really the same again. That was my last new car and I'll never get another one, so I don't really need $25,000.
B. As soon as my first used car was paid for, I started directing the $200/mo. car payment to a savings account at the credit union where I had paid off the loan. I took very good care of my paid-for car. When it gave up the ghost I bought my next used car with the cash I had saved at the credit union. And I keep putting that $250/mo. in the "car" account. Eventually the bank account grows bigger, and your cars can get nicer, because you're not paying interest on a loan.
You see this all the time. People bragging that they never finance and instead pay cash. So my question to them is what is your secret? Where do you find $25,000 sitting around to pluck down on a car?
To many $25K is no big deal to others its a major amount of cash,not much of a secret involved you either got it or you dont.
For those that dont have it its not in your best financial interest to think $25K cars, If you got $5K in your bank you should be looking at used cars in the $5K range.
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