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?