Join the Meeting Place for Moms!
Talk to other moms, share advice, and have fun!

(minimum 6 characters)

Current Events & Hot Topics Current Events & Hot Topics

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 (31-40):
stormcris
by Christy on May. 5, 2012 at 11:57 AM

Are you thinking in terms of buying the car using the Kelly Blue Book value on the used car or just giving what they say they want? 

Quoting Donna6503:

It like that with most cars; new or used, while it is true a fifth of the value of a car is lost as soon as you drive off, it's really more so with a used car. That $8k used car you just bought is now worth $4k as soon as you drive it off; also, the interest for said car is going to be higher then the new car.

I'm not trying to belittle your point, just showing another side of the debate.

My point in all this; a car shouldn't be viewed as an investment. Your not going to make money from buying used or new; instead, you are trying to figure out a cost you want to deal with in regards to transportation.

Quoting stormcris:

There is never a good reason to buy new because the minute you drive it off the lot it decreases in value somewhere around $4ooo.oo for a car that is priced around $20k. Someone mentioned safety in buying a new car. No that is not actually true because you are basically a beta tester of that car. Considering the many cars that have had recalls recently it is no longer in the best interest of safety to buy new. However, this would be where program cars and one owner certified cars are good ideas as an option. They have already lost the initial drive off depreciation and they have had longer enough for serious problems to be noticed. 

As for me I will stick to buying my used cars and paying cash at this time. I might reconsider but I hate owing.




Fear of serious injury alone cannot justify oppression of free speech and assembly. Men feared witches and burnt women. It is the function of speech to free men from the bondage of irrational fears.
Louis D. Brandeis
ChancesMommy07
by Silver Member on May. 5, 2012 at 12:04 PM

We've always bought our cars new and we probably always will. I like knowing that my warrenty will cover whatever problems should arise and we've never had a car payment over $350 which is more than doable with our budget. The only cars that we buy with cash are my husbands project cars that he fixes up and sells.

Donna6503
by Platinum Member on May. 5, 2012 at 12:53 PM
Since I was 17 I (we) have had only three cars until I hit 40. I had a '74 Audi fox, my hubby had a '81 Chevy piece of junk, and later in our marriage we bought Toyota which was our main car for most of our marriage. I used the Toyota mostly because hubby was basically overseas most of the time because of the Air Force. Still, we drove all those cars over 300k miles.

But, about ten years ago the firm I work for now ... said we (I; because I was the only one) needed to drive a certain kind of luxury type of car. My old Toyota wasn't going to cut it with 'em. So in '03 because the firm did provide matching funds for a down payment; we lay down $10k for a Lexus IS 300 which was nice but way too sporty for a simple mom. Now, the firm is making me get another luxury car again they'll match funds but I so hate to go shopping for another vehicle.

Last year, after hubby retired from the Air Force, as a bit of a gift he wanted a new truck (he always wanted a truck). So with the money we saved to just paid for a new F150 outright. So right now, I'm looking at payments for this new vehicle and I'm really don't want to start with car payments all over again.

:( oh well

I guess I'm shouldn't rumble now
Quoting survivorinohio:


Quoting Donna6503:
.



I will say this, if you're going to buy a new car buy it from a dealership. If you're buying a uses car don't go near a dealership. If you need financing for a use car get your loan from a credit union first; then shop online.

I totally agree.



Posted on CafeMom Mobile
stacymomof2
by Ruby Member on May. 5, 2012 at 2:03 PM

I wonder if it's not so much the value of a new car as the fact that some people need to make payments because they have no money saved or whatever.

That being said, I have always bought used cars outright, and my current one I have been driving for about 5 years.  It gets good mileage, has been reliable, and I've put on a set of tires ($500) a brake job plus some other maintenence ($800).  Add in the usual oil changes and such it has been a very cheap car to own.   

mommy0708toJC
by Member on May. 5, 2012 at 2:10 PM

I don't think that financing a car is cheaper than owning a car out right. I will say this, america runs on credit. Everything is based on credit. Hell job applications are based off a credit report also. I'm glad that you have no credit cards, but your personal loan might be what helps you buy your house in a few years. I'm not all up in your business nor do I want to be. I'm just stating that credit is something that is not over looked but is a very important thing when it comes to just about everything in this country. 

Stephanie329
by Platinum Member on May. 5, 2012 at 2:14 PM
I know a new car payment is not cheaper.

Oo, I get to whip out my Dave Ramsey stuff?

http://www.daveramsey.com/article/saying-no-to-new-cars/lifeandmoney_automobiles/

Thinking about buying a new car?

Try this instead: Take your current car out for a drive, open the window, and repeatedly throw $100 bills out the window. Now that sounds dumb, doesn’t it? But when you buy a new car, you’re doing the same thing the moment you take it off the lot.

If you’re a millionaire, then feel free to go nuts and buy yourself a shiny, new car. But 98% of Americans simply can’t afford it. You’ll save a ton of money and heartache if you will just buy used!

So why are we making such a big deal about new cars? One word: depreciation. New cars lose 70% of their value in the first four years. When you buy used, the original owner has already eaten the cost of depreciation. You, on the other hand, get a great four-year-old car for a great deal—one well below the expensive wholesale prices of new cars.

Let’s dig just a little deeper. Say that you are thinking about financing a new car with payments of $400 a month, just a little below the average car payment. Your current car is worth around $1,500. If you take that $400 and pay yourself, instead of the dealer, you’ll have a $4,000 paid-for-with-cash car in just 10 short months.

Sell your old car and you’ll have $1,500 to bank as you continue saving $400 a month. Ten months later, you have $5,500 for a used car. Repeat this process again, and you’ll have a $10,000 car just 30 months after you started saving. How much more sense does that make than buying a new car and watching its value drop like a rock?

Used car lots are overflowing. Millions of cars come from expired leases. For-sale-by-owner magazines are easy to find. Usually, the best deals come from individuals who are eager to get rid of their cars. They have one car to sell, not hundreds of cars like a dealer, so they will be more desperate to get the car out of their yard. Also, call some of the banks in your area and ask them how they dispose of their repossessions. Repo auctions are a great way to find good deals.

Before you buy a used car, make sure you come prepared. Know the value of the car you are considering. Visit websites like KBB, Edmunds and Carmax and do your research, especially if you are working with a dealer.

Remember, unless you’re a millionaire, you can’t afford a new car because you can’t take the hit in depreciation! The new car smell just isn’t worth it.



Posted on CafeMom Mobile
Veni.Vidi.Vici.
by on May. 5, 2012 at 2:38 PM

This is all stuff that I've come to realize on my own through research and what-not. I suppose some people don't make the same cosiderations I do and need this kind of wake up call.

Quoting Stephanie329:

I know a new car payment is not cheaper.

Oo, I get to whip out my Dave Ramsey stuff?

http://www.daveramsey.com/article/saying-no-to-new-cars/lifeandmoney_automobiles/
Veni.Vidi.Vici.
by on May. 5, 2012 at 2:40 PM


Quoting mommy0708toJC:

I don't think that financing a car is cheaper than owning a car out right. I will say this, america runs on credit. Everything is based on credit. Hell job applications are based off a credit report also. I'm glad that you have no credit cards, but your personal loan might be what helps you buy your house in a few years. I'm not all up in your business nor do I want to be. I'm just stating that credit is something that is not over looked but is a very important thing when it comes to just about everything in this country. 

I wouldn't say this is good advice.

I understand that you feel that way, but it's simply not true.

I'm not disputing that credit can be an imortant to some people, but it isn't to all people.

Also, there are much better ways to build your own credit then to finance a car.

Veni.Vidi.Vici.
by on May. 5, 2012 at 2:42 PM
1 mom liked this


Quoting stacymomof2:

I wonder if it's not so much the value of a new car as the fact that some people need to make payments because they have no money saved or whatever.

That being said, I have always bought used cars outright, and my current one I have been driving for about 5 years.  It gets good mileage, has been reliable, and I've put on a set of tires ($500) a brake job plus some other maintenence ($800).  Add in the usual oil changes and such it has been a very cheap car to own.   

That's what i said, too.

I rode the bus, rode my bike and walked for 6 months to save money to buy a decent used car so that I didn't have a payment. I get that some people don't have the options because they live in a rural area or don't have mass transit.


stringtheory
by Gold Member on May. 5, 2012 at 2:47 PM
I have researched how to live without credit and it is possible to buy a house with no credit... If a credit check is required for something other then debt incursion (such as a job), it is a simple explanation from me and better then bad credit. I see someone has already mentioned Dave Ramsey :), but even before I had read or listened to any of his stuff, I had never had a single credit card and have survived to the surprise of many ;). (Ramsey is also the one who has tons of info on getting a mortgage without credit).

Quoting mommy0708toJC:

I don't think that financing a car is cheaper than owning a car out right. I will say this, america runs on credit. Everything is based on credit. Hell job applications are based off a credit report also. I'm glad that you have no credit cards, but your personal loan might be what helps you buy your house in a few years. I'm not all up in your business nor do I want to be. I'm just stating that credit is something that is not over looked but is a very important thing when it comes to just about everything in this country. 

Posted on CafeMom Mobile
Add your quick reply below:
You must be a member to reply to this post.
Join the Meeting Place for Moms!
Talk to other moms, share advice, and have fun!

(minimum 6 characters)

close Join now to connect to
other members!
Connect with Facebook or Sign Up Using Email

Already Joined? LOG IN