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S/O- New Cars vs. used-for-cash

Posted by on May. 4, 2012 at 7:41 PM
  • 64 Replies

If you are lucky enough to be one of those people that can buy a brand new car outright with cash, then this isn't for you ;)

The other post (the section 8 one) had a lot of replies glorifying the value of financing a new car to save money, and I vehemently disagree...Below you will see my reasons in the form of my reply to that post. I have made a choice to not do anything on credit, short of financing a house someday if I feel comfortable with it (those historically are a profitable investment). I have no credit cards, and am paying off the very last of a personal loan that I will never get again. My point is, I have been told that "But you will always have a car payment..." or "Everyone has a car payment at some point" I disagree and actually find it to be quite a racket that consumers have fallen for in the car-loan industry. Here's my reply from the other post:

I'm just going to throw this out there for all that keep saying that new cars are cheaper in the long run: Not in my experience. The last time I financed a car was six years ago. I had been financing for four years previous. For the last five years, I have bought any car I have owned with cash, off craigslist or something like that, and have not paid MORE than 2500 for any one vehicle. In the last five years, I have spent less money on vehicles (purchase, maintenance and insurance) then I did in the five years I financed. There are several reasons for this: One, liability insurance is all that is required if you own outright and is WAY cheaper. Two, the value of a new vehicle depreciates SIGNIFICANTLY when you drive it off the lot in comparison to a used car (i.e., even if I paid 1500 cash for a car, if it started acting up in a way I thought was going to be costly to repair, I could usually get close to what I paid for it selling it or parting it out). Three, even a good interest rate is a rip-off (especially when you consider how much value the vehicle looses over the life of the loan). Yup, even when I take into consideration warranties and low interest rates, I threw away more money on financed vehicles than all of my "clunkers" (as some have called them) combined. My dh is usually a good judge of vehicle reliability, so maybe that helped me out. But my opinion, and experience, survivor, is that I agree with you and UNLESS this vehicle was an outright gift and the taxes paid by someone else to register her, this car will cost her more then she should spend on a vehicle and she should have taken the downpayment that she had (which she must have had if she wanted affordable monthly payments) and bought a sensible used car. Also, unless it is a prius, the gas milage on my current 97 contour sedan that I spent 1500 on two years ago is about 30 mpg so I don't spend a significant amount more on gas then a newer sedan, either...


Thoughts? Do you believe that financing a new or used car will be overall cheaper than buying cars outright?

"Women need not always keep their mouths shut and their wombs open." -Emma Goldman
 


http://masqueradingscientist.blogspot.com/




 




 




 




 

by on May. 4, 2012 at 7:41 PM
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Replies (1-10):
CreziaMommyTo2
by Member on May. 4, 2012 at 7:48 PM

for safety reasons i will still buy a new car rather than an old one.


LindaClement
by Linda on May. 4, 2012 at 7:52 PM

Financing is renting money. If you don't borrow any, you don't have to pay rent on it. 

My car (10 years newer than yours) gets 50mpg. So, yes, you would save money (and fuel, and exhaust --as the catalytic systems continue to improve) with a newer car.

Of course, my last car (financed for 5 years) was $17k. We owned it for 21 years. 175,000 miles.

This car (financed for 5 years, $18k) we've already owned 6, and will continue to own at least another 12.

My bil is a big proponent for the cheapness of 'buying used' --except, in the same period, he's paid more than 4 times what we have for vehicles (not including maintenance, 'cause he does his own and we don't know how, and that would never change by buying used.)

LindaClement
by Linda on May. 4, 2012 at 7:52 PM
1 mom liked this

An excellent point: the safety features required in a current-year car exceed those that were in a Volvo (safest car in the world) 15 years ago.

Quoting CreziaMommyTo2:

for safety reasons i will still buy a new car rather than an old one.



stringtheory
by Gold Member on May. 4, 2012 at 7:53 PM

Mmm. I usually include safety under "maintenance...."  I would never drive a car I thought was less safe then anything else on the road. 

Quoting CreziaMommyTo2:

for safety reasons i will still buy a new car rather than an old one.



"Women need not always keep their mouths shut and their wombs open." -Emma Goldman
 


http://masqueradingscientist.blogspot.com/




 




 




 




 

Tanya93
by on May. 4, 2012 at 7:55 PM

I financed both of our cars at .9%.   I'm good with that.

stringtheory
by Gold Member on May. 4, 2012 at 8:05 PM
Granted, I only have ten years of car-owning experience, but I am amazed at you only putting 175,000 miles on in 21 years:). And what do you own that gets 50 mpg? I was under the impression that that was what a hybrid gets? Perhaps if I could afford the financing on a hybrid, my tune would change.

Quoting LindaClement:

Financing is renting money. If you don't borrow any, you don't have to pay rent on it. 

My car (10 years newer than yours) gets 50mpg. So, yes, you would save money (and fuel, and exhaust --as the catalytic systems continue to improve) with a newer car.

Of course, my last car (financed for 5 years) was $17k. We owned it for 21 years. 175,000 miles.

This car (financed for 5 years, $18k) we've already owned 6, and will continue to own at least another 12.

My bil is a big proponent for the cheapness of 'buying used' --except, in the same period, he's paid more than 4 times what we have for vehicles (not including maintenance, 'cause he does his own and we don't know how, and that would never change by buying used.)

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LindaClement
by Linda on May. 4, 2012 at 8:16 PM

My car (Matrix) is advertised at 50mpg.

My old car was from 'way back' when the kids were little and we spent more days walking than driving, although it did make it across the continent twice.

Quoting stringtheory:

Granted, I only have ten years of car-owning experience, but I am amazed at you only putting 175,000 miles on in 21 years:). And what do you own that gets 50 mpg? I was under the impression that that was what a hybrid gets? Perhaps if I could afford the financing on a hybrid, my tune would change.

Quoting LindaClement:

Financing is renting money. If you don't borrow any, you don't have to pay rent on it. 

My car (10 years newer than yours) gets 50mpg. So, yes, you would save money (and fuel, and exhaust --as the catalytic systems continue to improve) with a newer car.

Of course, my last car (financed for 5 years) was $17k. We owned it for 21 years. 175,000 miles.

This car (financed for 5 years, $18k) we've already owned 6, and will continue to own at least another 12.

My bil is a big proponent for the cheapness of 'buying used' --except, in the same period, he's paid more than 4 times what we have for vehicles (not including maintenance, 'cause he does his own and we don't know how, and that would never change by buying used.)


stringtheory
by Gold Member on May. 4, 2012 at 9:09 PM

Ah, I have rented a Matrix before; they do have pretty good gas milage. I guess in my experience, I have not found it feasible to use a chunk of cash on a down payment for a new car over an older one outright... I have spent significantly less on the car I have (two years) using that down payment and occasional repairs then if I was making a $300 monthly payment in that same time. And, if it falls apart tomorrow (knock on wood), it is a common enough make that the parts that are still good will get me over half what I paid for it anyway. I do see how your situation was a better one then most...I base my comparisons on people I work with; they finance a car and sell it shortly after its paid off to upgrade to the newest thing...but because the value drops so much, they don't make any money off of the vehicle and in the end, I am the one who has (in my short car-owner time) saved more money on transportation. I should note that I have an excellent metro system I supplement with :)

Quoting LindaClement:

My car (Matrix) is advertised at 50mpg.

My old car was from 'way back' when the kids were little and we spent more days walking than driving, although it did make it across the continent twice.

Quoting stringtheory:

Granted, I only have ten years of car-owning experience, but I am amazed at you only putting 175,000 miles on in 21 years:). And what do you own that gets 50 mpg? I was under the impression that that was what a hybrid gets? Perhaps if I could afford the financing on a hybrid, my tune would change.

Quoting LindaClement:

Financing is renting money. If you don't borrow any, you don't have to pay rent on it. 

My car (10 years newer than yours) gets 50mpg. So, yes, you would save money (and fuel, and exhaust --as the catalytic systems continue to improve) with a newer car.

Of course, my last car (financed for 5 years) was $17k. We owned it for 21 years. 175,000 miles.

This car (financed for 5 years, $18k) we've already owned 6, and will continue to own at least another 12.

My bil is a big proponent for the cheapness of 'buying used' --except, in the same period, he's paid more than 4 times what we have for vehicles (not including maintenance, 'cause he does his own and we don't know how, and that would never change by buying used.)



"Women need not always keep their mouths shut and their wombs open." -Emma Goldman
 


http://masqueradingscientist.blogspot.com/




 




 




 




 

Nighttiger
by Bronze Member on May. 4, 2012 at 9:58 PM

I think it depends on the car.  Some cars are much better used than others.  For example, I will NOT buy a used Ford, or GM vehicle.  Sorry, they just have a history of falling apart too easily.  With that said, I drive at 99 Honda Civic with 204k miles on it. I bought it in 2006 for $5500 with 111k already on it.  In the last 6 years, while putting almost 100k miles on it, I have maybe had a total of $2k in maintenance cost.  It gets approximately 40 MPG on my drive to work.  It is fully paid off (took a year to pay off I think), and we carry full coverage on it with a $1k deductible (I don't want anyone suing me for hospital bills if anything were to happen).  If I wanted to sell it today, it would sell on CL in this city for approx $2k. However, why would I sell it?? Its an amazing car!  My last car was also a Honda.  It was an 89 Accord that I owned from 1999 to 2006.  I bought it with 150k miles on it and sold it with 220k miles on it.  I will never buy new....at least not as long as used Hondas are around :)  

DH drives a 94 Pathfinder that his mom gave him when we graduated college in 2005.  We have put about 50k miles on it since owning it. Its had maybe $1k of maintenance cost.  We didn't have a loan since it was a gift and I don't know what she paid when she bought it. It has been in 1 accident where the guy rearended DH with a big company van.  The van, a newer van, had its entire front end smashed up.  DH's truck suffered no noticable damage except a small dent in the side door. 

fluffball80
by Member on May. 4, 2012 at 10:52 PM

For us we like to buy new for our daily drivers.  We like to know that its been well taken care of and all the maintenance has been done when its suppose to have to done.  Also once we paid off the loan we still have years to drive it with only paying for maintenance and fuel.  We do have a 71 chevy pickup that was dh's daily driver when he was single and the first couple of years of our marriage until he got a Jetta TDI.  The cost of the fuel savings alone was worth us buying it new and paying for its self.  Now the pickup our project/ weekend vehicle. 


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