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Umm, real estate goes up in value. Cars go down. The key to making money is avoiding debt and using your income to invest in things that go up in value.
There's nothing necessary about car debt. In fact, its not even desirable.
And Americans money problems are hardly based on lack of debt, lol. Thats an insane statement.
But if you're going to buy the car anyway, take the long, cheap loan rather than pay cash, and let your money work for you during that time.
I did that a few years ago with a new car. Toyota was offering 60 months at 0%. Would have been a fool not to take it even though I had been planning to pay cash.
The issue isn't a loan or paying cash it's how much you put into the purchase.
Who cares if the value goes down, you have to pay it anyway, I'd much rather pay 1.75% with zero down and invest the remainder over paying cash. Financing is smart; overpaying for things is not.
That being said if you happen to drive a lot and keep cars for 15 years a new Toyota makes a compelling argument over buying a used one unless you buy a really worn out one and do the work yourself.
Financially the best thing you can do is move closer to work as it's costing you roughly $0.50/mile in total costs (deprecation, mx, gas, TAXES insurance etc) to run a new car. On just a 30 mile commute you're talking $15/day in car expenses, that is $3700/yr in out of pocket costs, that is $5300 in pretax income. Two income family? Multiply by two over $10k/yr in pre-tax commuting costs!
Insane how it adds up!
Compare to my costs, 2000 miles a year on a fully depreciated car, average $360/yr in mx costs since ownership, $100/yr in taxes, $240/yr in insurance and $200 in gas.
On a side note I note that about 1:5 people in my neighborhood do not renew their vehicle registrations, and there are some nicer cars. If you can afford to buy BMW, Audi, Lexus etc but you can't afford to register it? So messed up and we all pay for it.
I test drove a Leaf and BMW i3, these electric cars are the future I tell you, wow they are nice to drive!!
Why? If you can get a loan for <2-3%, that is like stealing money. You want to get a loan for as long as possible. Americans have it all wrong, they are so worried about debt. The key to making money in this life is actually to use debt/leverage as much as possible, ie, get as much $ loaned to you by others as you can so you can invest and make more. That is the whole key to real estate investing. Now obviously a car is not good debt, like that of a real estate mortgage, but it is a necessary debt nonetheless.
You forgot the one thing about cars. They lose value! Cars are not an investment unless it's a very rare circumstance.
You will never convince people who want a new car not to buy a new car.
I know people who buy and trade in every two or three years.
I like to trade when the new wears off my Tahoe...every 3 or 4 years. Some people like to throw their money away on food, drinks, guns, travel or drugs. I like throwing mine away on a new Chevy.
I have always negotiated my own vehicle prices. I tried costco but they didnt get anywhere near the final price I negotiated.
Settle on a car but remain a little flexible. You essentially want dealerships to compete for your business and will have to pit them against each other and be willing to go back and forth. If you don't like doing that face to face try emailing them - eventually you will reach a price that is their minimum operating price
Using a car buying service is literally paying an additional party for the convenience. Nothing wrong with it, but you aren't saving any money.
Maybe I could have done just as good at a dealer on price, but at least I didn't have to waste a half a day putting up with a bunch of BS at a dealership.
Maybe I could have done just as good at a dealer on price, but at least I didn't have to waste a half a day putting up with a bunch of BS at a dealership.
You would do better on price most certainly. But the battle is half the fun!
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