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

[Donald LaFell]

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. 

 

 

 

[KSpan]

While the degree of stupidity depends on the car, in general the answer is yes.

[Brooklyn Bully]

If you can afford it, no.

 

If you live paycheck to paycheck, yes.

[thefuzz]

You buy new, and can't write a check for it....yes you are getting hosed.

 

Just do your research, go talk to a good auto lending bank and know your limits on payment, and only get a 3 or 4 year loan...max.

 

Then go shopping.

What do you want?

[Happy Panther]

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

 

 

[Scrumtrilescent]

We debating paying for our latest new car outright, but at 0.9%...the money we'd put down would make us more money elsewhere. 

 

 

Of course, we still put down 60% of the price, ain't no way I'm having a large car payment.

[SmokinwithWilly]

Buying new is always nice but buying used can save you a fortune. My truck list price was 46k. I paid 22k for it with 41k miles. I checked the body, straight, clean no dings, no rust, etc. I carfax'd it to make sure it was kept up. The person who owned the truck had actually left something in the truck with their address on it so I drove by their house to see how it was kept so I could have a better idea of what their stuff looked like before the dealership had a chance to polish a turd. Motor is a Cummins diesel which have a ridiculously long life on them if properly maintained. Diesels aren't even considered broken in until they hit 100k.

 

If you're buying a used car, head toward the higher end side because chances are, someone who spends that much on a car isn't going to be dogging the piss out of it. Don't be afraid to crawl underneath a car and take a look underneath to see the condition of the metal (snow country and cars from the coast tend to get a lot more damage from the salt). It took me 6 weeks to find the truck I really wanted. Don't rush to buy, shop around, get quotes from other areas of the country and compare. If you find a better deal in Georgia it would be worth the trip to save 1500 bucks.

 

I'm very frugal and hate spending more than I have to on anything. If you are going to buy new, don't forget to negotiate the hell out of it. With my wife's car, which we bought new, I bought it on auto row here (about 15 dealerships side by side) and kept getting up to go somewhere else until they got the price where I wanted it. Ended up getting a 100k warranty and 5k off list price because I was prepared with other offers and was ready to go somewhere else.

 

If they want your money, make them work for it and give up as little as possible.

[Anybodyhome]

You can buy something 2-4 years old and save close to 40%.

 

I'm currently looking myself and the new version of what I want is $45k, I can get the same vehicle 2-3 years old for between $25-30k.

[cookinwithgas]

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.

[ladypanther]

Best value is probaly a certified pre-owned vehicle.  But, it i nice to have brand new. You can get some good deals some places with a model year they want to get rid of .  (As you said a 2013 with 2014 models out.) Financing rates are great.  You can finance for 72 months to get a good payment  (to give yourself some room duting lean months) but can always pay extra.  They are simple interet loans...only pay interest on the part you use and no penalty fo paying off early.

 

What kind of car are you looking at?

 

 

Remember to factor in car insurance and property taxes.

[MadHatter]

You buy new, and can't write a check for it....yes you are getting hosed.

 

Just do your research, go talk to a good auto lending bank and know your limits on payment, and only get a 3 or 4 year loan...max.

 

Then go shopping.

What do you want?

 

Not necessarily the smartest thing to do....depends on the interest rate you can get.

 

If you can get 1-2% on your car loan, you are actually better off getting the longer loan (5 years).  The value of money is greater than the rate you would be paying.

[MadHatter]

We debating paying for our latest new car outright, but at 0.9%...the money we'd put down would make us more money elsewhere. 

 

 

Of course, we still put down 60% of the price, ain't no way I'm having a large car payment.

 

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.

[Scrumtrilescent]

I know the numbers, as does my wife.  Yet having her happy and not wanting a large car payment trumps the few hundred dollars we'd net in the exchange.

[MadHatter]

I know the numbers, as does my wife.  Yet having her happy and not wanting a large car payment trumps the few hundred dollars we'd net in the exchange.

 

Fair points....especially the one about having her happy.  That is the MOST important thing in EVERY decision.