With all the hub-bub about GM, Chrysler, etc and I think maybe because I'm going to Detroit Wednesday, I've been thinking more about cars. Maybe too because my very reliable Toyota Camry, 2002, has 87,000 miles on it and at SOME point I'll have to replace it. Mind you, that day is not near in my mind, but it is out there.
My thought was, if you bought a $30,000 car, for how long could you RENT a car instead? At 3% interest and a 5 year payment schedule, your payments would be $540 a month and you'd pay $2,343 in interest, which sounds pretty reasonable to me. Anyway, I'm wondering if you couldn't rent a car for $25 a day if you committed to an entire year's worth of rental at one shot. If you could, you'd pay on average $750 a month for the car and $9,125 a year. So that's much more than buying one, which is to be expected.
Now let's say you spend $40k on the car instead of $30k. Now you're almost equal in monthly payments!! Granted, the type of car probably won't be the same, but you could still get a car of some sort.
By the way, if you only spend $20k on a car, then your payments are only $360 a month.
Joisey Ken and I were talking about this today. JK has a truck with 108,000 miles on it, which he bought with (I think) 11,000 miles on it. We both marveled at why anyone would buy a new car when they could buy a slightly used one at a greatly reduced price. My Camry had 1,700 miles on it when I bought it.
So my entry isn't the most coherent and not all apples to apples, but the message is, don't buy a new car. Buy a lightly used one, from a dealer, and you should still get the full warranty. And don't spend $30k on a car if one for $20k will do just fine. It's just a car, it's not your house. It will eventually be worth nothing. Guaranteed.
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6 comments:
yikes I forgot how expensive cars were! And here I've been sweating over whether to buy a new bike or not.
But Joe- it's won't be neeeeewwwwwww.
Now that's just funny Stef. :-)
I'm thinking the same things these days. The oldest kid needs a vehicle and the hubby is ready to look for something new(er). The kid will get hubby's truck and we're looking for new-used trucks. I'm happy with my 04 Impala for as long as it holds out.
I'm with JK. My Durango has 135K miles and is still chugging along. We'd qualify for the gas guzzler bailout but even so a new vehicle even with the gas savings would be way, way more than my cost of operating the Durango. I will let it go another 5 years and then get a slightly used car.
That's undoubtedly true for cars under $50K or so, but I figure that if you went out and got an Aston-Martin, a Ferrari, or a Lamborghini, those will have value over the long run (if properly maintained).
An expensive proposition to be sure, but nevertheless . . .
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