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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
Replies (11-20):
glitterteaz
by Ruby Member on May. 4, 2012 at 10:59 PM

I agree I would rather buy one out cash. My car was paid in cash hubbies truck is financed it is a hassel but we didn't have the cash to get one otherwise.

toomanypoodles
by Ruby Member on May. 4, 2012 at 11:42 PM

 IDK....we will always have a car payment because my husband aways wants a new car.  We've never bought a BRAND new car though, but 1 or 2 year old cars.

I like to keep my cars updated too.  We've only not had a car payment once in our 22 years together, and that was only for a few months.  lol

Momniscient
by Ruby Member on May. 4, 2012 at 11:49 PM
1 mom liked this

Depends on your situation. And what your goals are.

LillyJDv3.0
by on May. 5, 2012 at 12:22 AM
I feel better buying new cars. Or at least no more than a year or two old. I've had my share of older used cars and I really hate getting stuck on the side of the road or going out to the driveway to find that it won't start. The newest car we have is financed but our other car was purchased new also and we paid cash for it. We save up as much as we can towards a down payment if we can't save up enough to buy outright and pay it off as quickly as possible. After the newest car is paid off we are hoping that we will be able to save up enough to buy a car to replace the one that is paid off right now. Our cars tend to last awhile though- we buy new or close to new and take very good care of them.

Once this current car is paid off we are hoping we won't have a payment for quite some time. We dont buy luxury vehicles and since we try to pay in cash we can usually get a bit of a discount. Also dh is in the car business himself and so if we buy from the company he works for we save money there too. So buying new tends to work out pretty good for us.
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Veni.Vidi.Vici.
by on May. 5, 2012 at 12:28 AM
2 moms liked this

My SUV is 10 years old. I bought it new. I am hoping to drive it 5 more years.

However, I have purchased clunkers and pre-owned vehicles in the past that worked out very well for me and saved me a lot of money. If you purchase a car with cash there's no monthly payments and insurance is usually less expensive.

Veni.Vidi.Vici.
by on May. 5, 2012 at 12:29 AM
1 mom liked this


Quoting Momniscient:

Depends on your situation. And what your goals are.

I agree.


Sat.Wed
by Bronze Member on May. 5, 2012 at 1:25 AM
Where do you get $300 car payments? and sorry I will pay more for FULL coverage for insurance because of the under/un insured drivers and wildlife here, I took my USED chevy cobalt (2007) in because I recieved a mailer sayong there was a recall and please getit fixed at blah blah dealership, well the DEALERSHIP "bought" back the car and put me in a dodge avenger (2008) I am the only one on the title and loan its a local credit union and my rate is a bitmore than pps rate, my FULL coverage insurance got CHEAPER and I willhave itpaid off by my sons 10th bday (later this year) I have driven used cars all my life, (except the drivered car) first car I was taughtto drive was an 82 AMC Concord
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Della529
by Matlock on May. 5, 2012 at 6:30 AM
1 mom liked this

 I refuse to buy new because of the value loss once it's titled.  I also refuse to deal with dealers - single owner used vehicles with well kept maintenance records are the only vehicles I look at.

jehosoba84
by Jenn on May. 5, 2012 at 9:10 AM

 I could never buy a brand-new car for the reasons already listed. You lose too much value as soon as you drive off with it. I'd MUCH rather buy a car just a few years old. That's plenty new enough for me. That way, the first owner has already eaten most of the depreciation value.

That being said, we've never bought a brand-new car. Our recent purchase was last year in February. We financed a 2006 F-250 Diesel. And we paid only 6500 for it.

Oh, and our payment was only 140/month. It is now paid off though.

Tanya93
by on May. 5, 2012 at 9:16 AM

I'm 41.  I've owned three vehicles in my life.   I received a small truck from my father in college.   I drove that for seven or eight years.  Then I paid cash for a new Chevy Prizm.   Drove that for 8-9 years.   Hit 250K miles on it.   Needed to have the clutch changed once and the AC fixed once.   No other issues than routine stuff.  Then I got pregnant and wanted a bigger car.   So we financed at Ford Fusion at .9%.   No problems with that.   No problems at all with the car and it has over 100K in 4 years of ownership.

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