Am I THAT much of a sucker if I buy a new car?

[Ja Rhule]

I had a preowned and it sucked... Previous owner never took care of it... I bought it with 47k miles on it and around 100k my car was having issues after issues. I bought a new Toyota Camry right out of college... Sticker price was $27k but after 3 hours of negotiating they agreed to drop sticker price to $23.5k and do blind trade in on my old car (offered $3.5k) that required $3k in fixing and was priced at $400 by Carmax. So I got a brand new Camry for pretty much $20k interest free... Kelly Blue Book on my car was $26k. I drove my car for 60,000 before my first major maintenance.

You have to be smart when you buy a car... Preowned doesn't mean a better deal, you have no idea what kind of person drove this car before you and if this person maintained this vehicle.

My friend purchased 3 year old BMW with 42k miles... That car spend more time at the shop than his garage.

[KSpan]

I had a preowned and it sucked... Previous owner never took care of it... I bought it with 47k miles on it and around 100k my car was having issues after issues. I bought a new Toyota Camry right out of college... Sticker price was $27k but after 3 hours of negotiating they agreed to drop sticker price to $23.5k and do blind trade in on my old car (offered $3.5k) that required $3k in fixing and was priced at $400 by Carmax. So I got a brand new Camry for pretty much $20k interest free... Kelly Blue Book on my car was $26k. I drove my car for 60,000 before my first major maintenance.

You have to be smart when you buy a car... Preowned doesn't mean a better deal, you have no idea what kind of person drove this car before you and if this person maintained this vehicle.

My friend purchased 3 year old BMW with 42k miles... That car spend more time at the shop than his garage.

 

Agreed that buying a clunker defeats thepurpose - properly vetting a used car before purchase is an essential part of the value equation. 

 

And your friend's key mistake was buying a BMW. 

[KendrickPanther]

I prefer to buy new in all walks of life. I just know it was taken care of if it's always been in my possession. With that said, cars/trucks can be defective off the line and that is a hassle too.

[KendrickPanther]

As the fuzz said the best thing to do is pay cash. I actually did this upon returning to the states and literally wrote a check for $80k for two used Acuras. The financing guy was incredulous that I wouldn't choose the financing option.Wanted to punch him in the face.

 

No I am not madhatter. I had been saving for 6 years in a place where I couldn't really buy a car.

 

But the monthly payment can be paralyzing if your situation changes. I'm in awe at friends of mine in financial stress but they have two 60 month car payments at $1000 total. Back in the day loans were like 4-6%

 

But these days if you have the cash flow it isn't financial suicide to take any loan out at 2.5% which is the current car loan rate

 

Yeah I always save and let the banks pay ME interest then pay cash. It requires a level of discipline most people are incapable of but it's the best way to stay out of trouble.

[Happy Panther]

Yeah I always save and let the banks pay ME interest then pay cash. It requires a level of discipline most people are incapable of but it's the best way to stay out of trouble.

 

And it also takes discipline to take out a loan and invest the cash. For many the temptation is too much to spend it.

 

Plus the risk free rate these days is like 1.5% on a 5 year time frame

[Happy Panther]

At 0.9% interest, you should max out the loan.

 

Take the money that you would have used for the downpayment...invest it....use that to make the additional amounts of the car payment.  You would be better off financially.

 

Same priciple as witholding taxes.  People think getting a big refund is a good thing...it is stupid.

 

Withould as little as possible without being assessed a penatly.....take the extra money each paycheck that you would have had witheld and put it in a separate invesment account....do not touch said money during the year....earn interest on the money....pay taxes at the end fo the year from the investment account.  You get the earnings instead of the gov't.

 

Interest rates are so low that the benefit of having forced savings may be helpful to some people.

 

Even if you get $20k back with the interest at current rates you lose like $14 in guaranteed return.

[The Saltman]

I'm a car nut so I've always paid the price. I've gotten to leasing my last two cars since I just wanted to enjoy a new car without having to keep it for 5 years, worry about maintenance, etc. I don't drive extensively, and my current car is about 2000 miles under the cap with a November return date, so I need to take it on a couple of road trips - my dream is to return it after 3 years with 35,999 miles on it.

There are other things than money - but if you are NOT a car guy, then be a smart money guy and listen to the great advice here.

I'm a car guy. Doesn't mean I would fleece a car. Don't get a car with payments. Just save up for a used car and put the money you would have spent on payments into a good mutual fund and make good money.

[MadHatter]

Interest rates are so low that the benefit of having forced savings may be helpful to some people.

 

Even if you get $20k back with the interest at current rates you lose like $14 in guaranteed return.

 

Yeah....but it is my $14.  Not the government's.

 

If you have $14 lying around I would be glad to take it off any of your hands.

[Hawk]

buy within your means....new or used.

 

 

 

[h0llywood]

 Depends on if you're majoring in Psychology. All the psych majors I know can't get a job in their own field.

[Kevin Greene]

Avoid being hosed by purchasing something reliable, fuel efficient and with great resale value.

 

If you go buy yourself a new Chrysler PT Cruiser you're an idiot and just lost 40% when you drove it off the showroom floor.

 

Buy a Honda, BMW, Toyota etc and you've made a good investment when you figure economy, low cost of maintenance and resale value.

[Kevin Greene]

I'm a car guy. Doesn't mean I would fleece a car. Don't get a car with payments. Just save up for a used car and put the money you would have spent on payments into a good mutual fund and make good money.

 

But the Op says he has a beater with problems.

Put a transmission in most cars and you've just made 8-10 months of payments on a new car and are waiting for the next component to fail. Hard to save for a newer car when the beater is bleeding you dry.

Move from a car that gets 22 MPG average to one that gets 32 MPG and the savings can be substantial there as well.

[PhillyB]

yes. don't do it unless you can pay cash

[Doc Holiday]

I'm graduating soon and my current jalopy is having some issues and so I will be in the market. 

 

The manual for being a frugal and wealthy individual says I should buy something anywhere from 8 to 15k and drive it into the ground. I will not pay for any of the 5 years of depreciation but I'll still get a decent vehicle I can trust for around a decade or so. 

 

One of the problems I'm having is when I look at the main commuter cars they seem to hold their price so well that it barely seems worth it to get a used car right now.

 

I'm so, so tired of driving a beater. 

 

I can get decent out of college financing and maybe some rebates on a 2013 model. 

 

I'm trying to live modestly. But if I'm living within my means why is such a sin to get a new car? I don't even know where new cars come from when apparently only stupid people buy them. 

I've been going through quit a bit of a reasoning process lately myself asking the same question, I am right now making decent money and could afford the payment (spending what could be a payment for a Personal trainer right now) but I'm wondering if the advantages of me owning a nice car out weight the benefits of not having the financial obligations related and being able to spend the money on things I'd rather have/do then just drive around in a nicer vehicle.