I hate this thread. It reminds me how much I need a car...but I'm to broke to afford one
I hate this thread. It reminds me how much I need a car...but I'm to broke to afford one
I hate this thread. It reminds me how much I need a car...but I'm to broke to afford one
When you do, if you can, buy used and pay cash. It shocks people when I tell them I haven't had a car payment on almost 20 years! My last 2 cars were used and they one before that was new but I kept it 9 years till it went south on me. People just expect that they are supposed to have a car payment. Nope!
100% agree. I kind of mock people who get excited because they managed to buy a car with low payments. I always tell them I got a better deal because my car payments are $0. It's nice having that money in my bank account instead of someone else's.
Aside from interest from the bank, aren't you still putting money into someone else's bank account but just all at once instead of in payments?
But you are also paying more that what someone else would for paying cash. If I paid $20,000 cash for a car, I pay $20,000, end of transaction. If you get a load for $20,000 over 4 years at say 5% rate you will pay $22,108.32 for that same $20,000 car.
And you can use that money you are NOT paying someone else every month to invest and make it work for you.
[/rant] Sorry, debt is never a good option.
But you are also paying more that what someone else would for paying cash. If I paid $20,000 cash for a car, I pay $20,000, end of transaction. If you get a load for $20,000 over 4 years at say 5% rate you will pay $22,108.32 for that same $20,000 car.
And you can use that money you are NOT paying someone else every month to invest and make it work for you.
[/rant] Sorry, debt is never a good option.
But you are also paying more that what someone else would for paying cash. If I paid $20,000 cash for a car, I pay $20,000, end of transaction. If you get a load for $20,000 over 4 years at say 5% rate you will pay $22,108.32 for that same $20,000 car.
And you can use that money you are NOT paying someone else every month to invest and make it work for you.
[/rant] Sorry, debt is never a good option.
My parents are well aware of that. They factor everything into the total price of the car before purchasing one (including insurance). They can easily afford to spend the extra interest payments.
While cash is generally a good option, if a car company is offering a great finance rate, then it's not a bad idea to take the low APR and apply that cash to some investment that may yield a higher return than the finance rate. If the rate is really great then your money might be better spent on updating your home's insulation. The money you'd save from the gas/electric bill and any government subsidies for making your home more energy efficient could offset any finance rates.
I disagree with this because you're not factoring in the depreciation. Cars lose something like 60% of their value in the first 5 years. (Source: Edmunds) You're not saving cash by buying in payments. If a car costs X, you're going to either pay the seller X in cash or you're going to pay them X+Interest in cash and take a loss on your money while you're doing so. So you're spending the money either way. You are spending less of it by paying cash. Whatever you spend on updating your house is a non-sequiter. The car costs more if you borrow to pay for it and when you borrow, your money goes down in value faster because you're getting killed in depreciation and you're paying interest to boot.
Bankrate.com said:Dec. 2011 $566.14 $441.14 $125.00 $125.00 $29,558.86
Jan. 2012 $566.14 $442.98 $123.16 $248.16 $29,115.89
Feb. 2012 $566.14 $444.82 $121.32 $369.48 $28,671.07
Mar. 2012 $566.14 $446.67 $119.46 $488.94 $28,224.39
April 2012 $566.14 $448.54 $117.60 $606.54 $27,775.86
May 2012 $566.14 $450.40 $115.73 $722.28 $27,325.45
June 2012 $566.14 $452.28 $113.86 $836.13 $26,873.17
July 2012 $566.14 $454.17 $111.97 $948.10 $26,419.01
Aug. 2012 $566.14 $456.06 $110.08 $1,058.18 $25,962.95
Sept. 2012 $566.14 $457.96 $108.18 $1,166.36 $25,504.99
Oct. 2012 $566.14 $459.87 $106.27 $1,272.63 $25,045.12
Nov. 2012 $566.14 $461.78 $104.35 $1,376.99 $24,583.34
Dec. 2012 $566.14 $463.71 $102.43 $1,479.42 $24,119.64
Jan. 2013 $566.14 $465.64 $100.50 $1,579.92 $23,654.00
Feb. 2013 $566.14 $467.58 $98.56 $1,678.47 $23,186.42
Mar. 2013 $566.14 $469.53 $96.61 $1,775.08 $22,716.89
April 2013 $566.14 $471.48 $94.65 $1,869.74 $22,245.41
May 2013 $566.14 $473.45 $92.69 $1,962.43 $21,771.96
June 2013 $566.14 $475.42 $90.72 $2,053.14 $21,296.54
July 2013 $566.14 $477.40 $88.74 $2,141.88 $20,819.14
Aug. 2013 $566.14 $479.39 $86.75 $2,228.63 $20,339.75
Sept. 2013 $566.14 $481.39 $84.75 $2,313.37 $19,858.36
Oct. 2013 $566.14 $483.39 $82.74 $2,396.12 $19,374.97
Nov. 2013 $566.14 $485.41 $80.73 $2,476.85 $18,889.56
Dec. 2013 $566.14 $487.43 $78.71 $2,555.55 $18,402.13
Jan. 2014 $566.14 $489.46 $76.68 $2,632.23 $17,912.67
Feb. 2014 $566.14 $491.50 $74.64 $2,706.86 $17,421.17
Mar. 2014 $566.14 $493.55 $72.59 $2,779.45 $16,927.62
April 2014 $566.14 $495.61 $70.53 $2,849.98 $16,432.01
May 2014 $566.14 $497.67 $68.47 $2,918.45 $15,934.34
June 2014 $566.14 $499.74 $66.39 $2,984.84 $15,434.60
July 2014 $566.14 $501.83 $64.31 $3,049.16 $14,932.77
Aug. 2014 $566.14 $503.92 $62.22 $3,111.38 $14,428.85
Sept. 2014 $566.14 $506.02 $60.12 $3,171.50 $13,922.84
Oct. 2014 $566.14 $508.13 $58.01 $3,229.51 $13,414.71
Nov. 2014 $566.14 $510.24 $55.89 $3,285.40 $12,904.47
Dec. 2014 $566.14 $512.37 $53.77 $3,339.17 $12,392.10
Jan. 2015 $566.14 $514.50 $51.63 $3,390.80 $11,877.60
Feb. 2015 $566.14 $516.65 $49.49 $3,440.29 $11,360.95
Mar. 2015 $566.14 $518.80 $47.34 $3,487.63 $10,842.15
April 2015 $566.14 $520.96 $45.18 $3,532.81 $10,321.19
May 2015 $566.14 $523.13 $43.00 $3,575.81 $9,798.06
June 2015 $566.14 $525.31 $40.83 $3,616.64 $9,272.75
July 2015 $566.14 $527.50 $38.64 $3,655.27 $8,745.25
Aug. 2015 $566.14 $529.70 $36.44 $3,691.71 $8,215.55
Sept. 2015 $566.14 $531.91 $34.23 $3,725.94 $7,683.64
Oct. 2015 $566.14 $534.12 $32.02 $3,757.96 $7,149.52
Nov. 2015 $566.14 $536.35 $29.79 $3,787.75 $6,613.17
Dec. 2015 $566.14 $538.58 $27.55 $3,815.30 $6,074.59
Jan. 2016 $566.14 $540.83 $25.31 $3,840.61 $5,533.76
Feb. 2016 $566.14 $543.08 $23.06 $3,863.67 $4,990.68
Mar. 2016 $566.14 $545.34 $20.79 $3,884.47 $4,445.34
April 2016 $566.14 $547.61 $18.52 $3,902.99 $3,897.73
May 2016 $566.14 $549.90 $16.24 $3,919.23 $3,347.83
June 2016 $566.14 $552.19 $13.95 $3,933.18 $2,795.64
July 2016 $566.14 $554.49 $11.65 $3,944.83 $2,241.15
Aug. 2016 $566.14 $556.80 $9.34 $3,954.16 $1,684.36
Sept. 2016 $566.14 $559.12 $7.02 $3,961.18 $1,125.24
Oct. 2016 $566.14 $561.45 $4.69 $3,965.87 $563.79
Nov. 2016 $566.14 $563.79 $2.35 $3,968.22 $0.00
I guess I'm confused. Let's say I have $30k in cash and I want to buy a car. Why am I better off taking out a loan instead of paying cash? The AC is a non-sequiter. Whether it's a good idea to replace the AC or not is unrelated to the car.
The AC is a non-sequiter. Whether it's a good idea to replace the AC or not is unrelated to the car.
Would you rather be unemployed with a car payment or unemployed with no car payment? Personally, I'd rather the latter.
If they're financing the car at a low APR (Haven't you ever seen the "We're offering 1.9% financing with approved credit!" commercials?) then why not finance at that low rate and invest your money into something that pays a little more than the finance rate? Granted there's not a lot out there that you can invest in that pays great. My lousy bank is only giving me about .01% or so on a CD right now.
So you'd rather have no money in the bank, no car payment and no job over having a car payment of about $566 a month, $30,000 in the bank and no job? Why? With no money in the bank you'd have to take whatever was offered to you so you could eat, pay rent, and pay other bills. With $30,000 in the bank, even with a $566 car payment, you could pay a few months ahead on your car payment, cover a few months' payment of other bills, maybe even go to school to get trained/certified in a field that interests you without having to worry about taking the first thing that comes along.
Honestly, if someone came to either one of us with $30k in hand and wanted to buy a $30k car I'd tell them not to spend every dime they had on a car. I'm guessing you'd probably do the same thing. Personally I would tell them to spend $5-10k on a used car and take the rest to save/invest depending on their personal needs. Sadly, if you're looking at short term investments now, you're not going to get much more than 2-3% if you're really, really lucky.
In this economy, you can be unemployed for a long time and burn through $30k. People have done it. I'd rather have no payments so if all I can scrounge up from a BS part time job is $1k a month I can still eat. Plus, there's no risk of my car getting repo'd. If I'm unemployed, broke and my car gets repo'd then I'm really, really screwed. Having a paid off car eliminates that risk right there.
You're throwing out different scenarios, which is fine. But did you not understand what I meant when I said "Under MOST situations, paying cash is preferred"? There's not a right/wrong answer. Different situations will yield different results.
How about this for a scenarios...Several years ago, your friend offered to let you in on a company's first time public stock offering and offered to let you invest. You said no because you were buying a new car and wanted to pay cash. You paid cash for your car and you didn't have to worry about car payments. 20 years later your friend is calling you because he's retiring at the age of 50. You know that little stock offering he mentioned, it was a small startup company named Microsoft....How's that for a scenario? And yes I know not EVERY initial stock offering is going to be insanely successful like that, but that's life in general. You're not going to account for EVERY situation. So to blindly say that paying cash ALL THE TIME is going to be your best bet is foolhardy.
By that logic though your friend could offer to let you buy in on a lottery ticket. I would pass on that IPO if it was me. I really would. I've passed on good deals before because I didn't have the cash and I would again in the future. I don't borrow money period for any reason.
So you pay full retail price for your cell phones?
I either pay the price that comes with the contract or I buy off ebay, CL, etc....
Contract price = not paying full cash which is practically financing it. You're getting a discounted price for maintaining payments for 2 years. You might as well be financing the phone.
You're saving a lot of money by not having one. That's the bright side of not having a car.
I know, I can't look at it that way for long either. Gotta have a car.
When you do, if you can, buy used and pay cash. It shocks people when I tell them I haven't had a car payment on almost 20 years! My last 2 cars were used and they one before that was new but I kept it 9 years till it went south on me. People just expect that they are supposed to have a car payment. Nope!
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