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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 (51-60):
Mom2Just1
by Gold Member on May. 5, 2012 at 5:01 PM

I guess I don't feel the need to justify why we always buy new cars. You're not making my car payment.  I don't care whether someone buys new or used. I am more concerned with my own life too much.  We do put at least 30% down on a car though when buying new.  

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Angeldolphine
by Member on May. 5, 2012 at 5:35 PM

Ha, this is exactly what we did for the first four years of our marriage. It works great if your DH or you are mechanics and great with cars. Not so great if you only know how to do basic repairs. (My husband sure learned a lot in the last few years!)  We went through three used cars though. First one was given to us, but cost us lots of money in repairs. Second we got from a friend and ran well for about six months, then it had a 1500 repair with some belt, some other basic repairs and finally got broken into and the steering wheel column got destroyed and was barely able to get us to our jobs. We bought a car then from a mechanic and traded in our old one. It ran great..for six months when the engine blew up. We didn't have enough time to save up enough cash for our next car, so my husband told me that he wanted to buy an used car and get a loan. I flipped out, but finally told him he could if he did extensive research on it, and we had a warranty that lasted until we had finished paying off the car.  He found a really nice mini van for 8000 dollars. We also got an additional baby to watch, so my income doubled allowing me to pay four times the car loan. See, if you double the amount that goes into the loan, you don't pay interest! This allows us to build awesome credit cause after this car is paid off in a couple more months, we will save up money for a down payment on a house. Hopefully, we can do the same thing and avoid interest.

JonJon
by Ruby Member on May. 5, 2012 at 5:43 PM
1 mom liked this

Dang; what's wrong with my memory?  I have to go record my mileage for the insurance company!  Was supposed to do that a month ago; while I'm out, I'll take back the DVDs I borrowed from the library. 

Thanks, guys.  You always do me some good.

Viva CM!  Heeeyaaaah!

Happy Cinco de Mayo.


Donna6503
by Platinum Member on May. 5, 2012 at 6:22 PM
I respectfully disagree, it depends on the car, model, make, and year. If you can get a $16k Toyota Celica '12 at a special financing at .9% for 5 years (60 months) your payments will be around $275 a month. Compare with say a Ford Escort '07 selling at $9k with a used car financing of 8.9% for 5 years your payment will be around $190 a month.

So how much at the end will be spent at the end of 5 years; $16.4k versus $11.3k; but wait, the Toyota on average will retain 75% of its value at the end of 5 years or $12k but the Ford will only be worth $2k at best. So at the end of 5 years you have $4.4k spent versus $9.3k spent.

So financially in the example above which is quite common, you are better off new versus used. This isn't taking into account the maintenance or fuel ... Just the financing

(FYI, I did these numbers in my head, using mobile ... I wouldn't take offense if someone corrected my numbers but I'm sure I'm close)

Quoting Stephanie329:

Buying new is always a bad financial move - unless you are rich and can afford to throw away money and can pay cash for it.

Quoting Donna6503:

Well that's true, but in general, no.





Quoting AMBG825:

Depends on the car. . I bought a 93 nissan 300ZX twin turbo for $1000. Spent $3000 for a new engine and have already been offered $60,000 for it. I live that car.





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.











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Sisteract
by Whoopie on May. 5, 2012 at 6:59 PM

We go through cars like water as we drive a lot-

We own 4- 3 previously owned and 1 new- all paid for.

This is just one area where we accept that we will be paying- FOREVER

170 K in 21 years- My husband has 80,000 on his < 5 year old car-

Sat.Wed
by Bronze Member on May. 5, 2012 at 7:25 PM
1 mom liked this
To true


Quoting Veni.Vidi.Vici.:


Quoting Sat.Wed:

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

We also still carry collision on our vehicles. Right now my SUV blue book is still close to 5k because it's in excellent condition. Our insurance provider gives us a pretty good discount for keeping full coverage on our vehicles. To remove the collision would save us about $120 (for all three vehicles) a year. I would rather pay an additional $120 annually than be ass out if my SUV were to be totaled.


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1LovelyAngel
by on May. 6, 2012 at 6:42 PM

well i must admit i bought a vehicle before that was like 3-4 years old at the time and paid it straight out and at the most i spend about 300- 500 yearly on something on sometimes nothing and just had to pay insurance and i had a safe ride and passed emissions regulary and it last 10 yers and we still have it that one for the teens and i'm thinking about buying another that way

1LovelyAngel
by on May. 6, 2012 at 6:51 PM


Quoting Veni.Vidi.Vici.:


Quoting Momniscient:

Depends on your situation. And what your goals are.

I agree.


i agree

1LovelyAngel
by on May. 6, 2012 at 6:53 PM


Quoting jehosoba84:

 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.

yes, i think i'm going to do like you guys did and pay it off in about 5 months or so

Stephanie329
by Platinum Member on May. 6, 2012 at 7:04 PM
1 mom liked this
Financing any car is a bad financial move. Financing a new one is worse because you eat that value:70% in the first 2 years (I have to check my stats on that one). By a car at least 2 years old and the previous owner already ate the swift depreciation.

For those justifying the bad financial move (not you) on safety: buying a 2 year old car is not sacrificing safety. They'd be scared as shit to ride in my 10 year old Grand Prix.

It feels good to own something, as opposed to the bank owning it.


Quoting Donna6503:

I respectfully disagree, it depends on the car, model, make, and year. If you can get a $16k Toyota Celica '12 at a special financing at .9% for 5 years (60 months) your payments will be around $275 a month. Compare with say a Ford Escort '07 selling at $9k with a used car financing of 8.9% for 5 years your payment will be around $190 a month.

So how much at the end will be spent at the end of 5 years; $16.4k versus $11.3k; but wait, the Toyota on average will retain 75% of its value at the end of 5 years or $12k but the Ford will only be worth $2k at best. So at the end of 5 years you have $4.4k spent versus $9.3k spent.

So financially in the example above which is quite common, you are better off new versus used. This isn't taking into account the maintenance or fuel ... Just the financing

(FYI, I did these numbers in my head, using mobile ... I wouldn't take offense if someone corrected my numbers but I'm sure I'm close)


Quoting Stephanie329:

Buying new is always a bad financial move - unless you are rich and can afford to throw away money and can pay cash for it.

Quoting Donna6503:

Well that's true, but in general, no.






Quoting AMBG825:

Depends on the car. . I bought a 93 nissan 300ZX twin turbo for $1000. Spent $3000 for a new engine and have already been offered $60,000 for it. I live that car.





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.













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