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I just bought a 2005 Volvo V70 2.5T with 70k miles and I'm not sure that really made sense.
The price was $8700 and with 11.5% interest over 4 years the total price is about $11k. Fine, but there's no warranty. So I added a Wells Fargo engine and powertrain 3yr/36k warranty for $2600 which comes out to $65/month (yes generally a bad idea but I can cancel it whenever I want).
So I've spent almost $14k for a 10 year old car with 70 miles. My payment is $290/month. In 5 years I'll probably have put another 70k on it and it will be worth $3000 maybe.
Wouldn't it have made more sense to buy a new VW Golf Sportwagen for $23k? I'd have a more reliable vehicle with a full warranty. If I got 3% interest over 5 years I'd be paying $436/month. The car would probably be worth $15k.
If you look at it as cost per year, I'm paying $11k to own a vehicle for 5 years, while if I bought new I'd be paying $8k. That's not even factoring the benefits of reliability, and the gas mileage (30mpg vs 17mpg).
Conventional wisdom says that buying new cars is a bad idea, and I think conventional wisdom is dumb (and so am I)
I wouldn't buy a used Volvo. They are not very reliable and the parts are very expensive.
But a used 3 year old Camry or Accord makes sense. At that age and mileage ~40K they still have a lot of life and can be bought for a reasonable discount to a new car. But I also pay cash. No reason to pay 11% interest.
Why would you spend $14K on a 10 year old used car that has 70K on it?
I just bought a 2006 Lacrosse with 114K on it for $4200. Sun roof, leather, blah, blah......cash. You could of bought three of these and took short trip to Las Vegas with the change.
Last edited by thecoalman; 08-01-2020 at 05:30 PM..
But I also pay cash. No reason to pay 11% interest.
You have to deal with the private sellers and find one listed for a while. That car I bought is listed on a lot for about $5500 and KBB has it at about $5300.
He had it listed on CL for $5200, I showed a little interest and then backed off. He dropped the CL asking price to $4700 and I sent an email offering him $4200 in $100 bills. Sold!
- it's in very good condition
- is known reliable one
- you pay full price cash
- price is right.
The way OP did it? Not so good. But that is the American way. Have no cash saved, charge everything.
Btw, 11% on car loan? What kind of hoodlums did you buy that car from? 2 - 3% - that I do understand. Then paid off in 3 months.
why do you feel like you need an extended warranty?
Usually people buy used cars with the full understanding that they're fixing stuff out of pocket and you should have had the car checked before you bought it to avoid surprises.
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