OT: Should I pay in full for my car, new or used?
Estafador
BIG APPLE
So I'm so close to owning a Nissan Pathfinder Armada (or similar SUV though not a Navigator unfortunately *weep*), I can almost smell the diesel. Yes I know, big cars guzzle gas like water, but if you really like something then you're willing to pay for it (except you're woman's bills. But we don't like their bills anyway). I have been looking online, talking with car owners and trying to do my research on financing vs. full/cash. I do plan to organize a whole crew when it's time to buy, you know those intimidation tactics and all, but I hear pros and cons about paying in cash. I don't plan to sell off my car or just "rent" it for 3 years. I plan to enjoy it and ride it ERRWHERE, and thus don't see the need for me to bog myself down with car payments when I can just save up to buy it in full. I'm pretty good with my money and won't buy things that I can't afford. I also, if I do pay in full, plan to pay for it when I have have the base price+$5K extra saved up for it (the $5K for thoses taxes and fees and stickers and such) and at least a year's worth of car insurance lined up for use along with a year's worth rent pay ready to set aside (I've already set aside two years of phone bill payments so I don't have to worry about that). I don't have my school loans fully paid off yet, but I'll put a little away at a time and worry about that after I'm done with school. I just need a few more months before ALL of that combined has been saved up.
Of course, I do want to try to get lower car insurance faster, and I know that involves having good credit and since I never have outstanding bills, it's kind of hard for me to build any credit with nothing to pay for. So I'm wondering should I just give a big down payment and have a small number of car payments left, or should I just forget all that and buy my car in full, so I don't have to worry about payments and such?
TL;DR read the title
Sorry for making this post SJG long, I just want to make sure I'm understood as best as possible.
Of course, I do want to try to get lower car insurance faster, and I know that involves having good credit and since I never have outstanding bills, it's kind of hard for me to build any credit with nothing to pay for. So I'm wondering should I just give a big down payment and have a small number of car payments left, or should I just forget all that and buy my car in full, so I don't have to worry about payments and such?
TL;DR read the title
Sorry for making this post SJG long, I just want to make sure I'm understood as best as possible.
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29 comments
I own 2 cars for me and if I would never ever buy new because I can't justify buying them new. One was $110k new and the other was $95k new. If I bought both of those new, I'd owe more than my home loan.
I bought both used, low miles, 4 years old and paid less than half the original retail. On both I put half down and have a loan. Since I put so much down I got a 5 year loan on both, at 2.14%, like JS said - money is cheap right now, I could pay the loan off quicker but what's the point? I think I pay around $30 in interest a month. Where I may get fucked? Neither car has a factory warranty so any repairs are on me. I can do brake jobs, fix lights, maintenance and stereos on my own, but engine work is out of my league.
On the other hand my friend had a car that booked at $15k and when be traded it in, they gave him $27k. when he said that I know he got fucked. He bought an $80k SUV brand new. He wants a warranty as he cant do maintenance like I can. In the long run I think he gets fucked more than me but maybe I am wrong. It all depends on what interest rate he got but I doubt he did better than me. Really I have 2 cars for his one, and I paid less than $20k more than he did for one car. I take care of my shit so in two years my then 6 year old cars will look better than his 2 year old car.
Some people are insecure and need to drive the newest shit, but if you take care of your shit, most people have no idea that you're driving a car a few years old.
I bought my wife a 10 year old sports car to fart around in and everyone thinks it's brand new - people don't know shit
Always pay in cash
Always looking for a deal
Even on my ho lol
Smart money says put your money on things that create value. Cars depreciate and even wealthy people will tell you they still drive older used cars because the value that has been instilled in their behavior. That behavior is don't blow shit ($$) on things that suck money. Kind of like spending too much on huuuures.
I think buying a car with cash is smart if you have the funds, but if you are trying to build credit then a finance would be the way to go, put down a good down pmt, and once your credit rises to your satisfaction just pay the car off. But if you have thin/no credit, your interest rates are likely to be higher. However, if you finance you can get more for less money up front, but will obviously pay more down the road.
If your using cheap money to borrow for a home instead of cash, that is the smart play, but when it comes to a car it is always more brilliant to drive the biggest piece of shit you are comfortable being seen in that is reliable. All this talk about "borrowing" and putting the rest into an investment is scuttlebutt, poor advice. He would be better off buying the cheapest reliable vehicle for cash and investing the remainder. 99.999% of success with money is behavior, and if you start with bad behavior of borrowing money for vehicles then you begin to lose when it comes to money. There's no other way to advise it no matter how you spin it.
It's like the car salesman saying "your better off with a lease because you can write the payments off as a tax deduction"! Another example of bad advice. Cash is king.
In my opinion, for those who buy a vehicle and keep it for more than 6-8 years, purchasing a new vehicle over a used one can be advantageous. There are some savings to be had in financing and incentives that offset the accelerated depreciation of a new vehicle. There's also consumables that eat into that (tires, brake pads, air filters, windshield wipers, shit like that.) To me those tend to be more significant than the risk incurring additional maintenance costs during the long term that can be caused purchasing a vehicle that was poorly maintained and/or otherwise mistreated by its previous owner. Add in a couple extra years of warranty and the enjoyment from simply having a new car, and that's the way I tend to lean.
Slightly used vehicles are good for situations where you want or need a vehicle that's a bit out of your price range when new & don't plan to keep it for more than 4 years or so or when you plan to keep it for only a short time, maybe 2 years. This way, you can save yourself the accelerated depreciation and minimize your exposure to significant maintenance costs.
As far as paying cash vs financing. I'd say it depends on the rate you can get and the opportunity cost. If you're going to sit around with 60k in your checking account and dole it out $500 a month, there's no point in financing it. If you would otherwise use that 60k to purchase an investment property, an extra 3% on your car note probably leads to a net gain. If your credit is for shit & you're buying an older car, you might be paying 15% & its probably not worth it no matter what the opportunity cost. Of course, I'm assuming someone with shit credit has questionable judgement when it comes to finances and has already taken some risks that didn't pan out.
Again, there's a shit-ton of assumptions baked in here. For example, if you're the mechanical type and would be doing your own maintenance the value proposition for a used vehicle skyrockets. If its a situation where you actually enjoy doing that sort of thing doubly so. A scenario where you've got a kid and do that sort of thing to spend time with your kid & teach him the trade might be a good example.
You're a brilliant guy Meat72!
Yes cars depreciate, but if you just want to be hassle-free you walk in, get a new car, and use it until you sell it. Unless you're getting some sort of super-expensive car like a Lamborghini or something cars just don't represent a big enough chunk of change to be worth stressing about.
Have fun with a brilliant new car! ;)
now that I'm older, building a credit history is not an issue. I've read or heard buying new vehicles is for millionaires. The financial advice guys usually say buy a good reliable car that has some mileage on it to cut down on the severe depreciation. I know there are program cars that have been driven some and slightly used cars. There is an opportunity cost to what you could use the money for as well. If your cash would be just sitting in a checking account, then go ahead and pay in full for whatever car you want. You might as well enjoy it.
While I know buying American "stimulates" the economy, the fact of the matter is, barring European cars the foreign cars mainly have their factories in america so I don't see how America isn't profiting. Even American car companies import their parts from overseas, so its kind of hard to see where the line is blurred between domestic and foreign for many car companies.
I'm not mechanically inclined when it comes to cars but I hope to be so so I can spend less at the auto shop. so I'm glad you mentioned that. Better prepare myself for that sort of investment.
As a young buck of 24 on my FIRST car, and being that it seems best to buy used, is it even worth it to finance when you're paying $10-17K. That's a high school salary right there.
@twentyfive I think I understand what you're saying about financing when you can get a low to no interest for a good chunk of time, but seeing that I'm 24 and more of a liability to most insurance companies and banks (AND no matter what they say, they always judge you based on where you from, so they may use that against me without saying it. One of those things of living in the hood or an low-income environment AND buying a truck. That's 1 invisible strike and two visible strikes against me), I seriously doubt they'll start me off with a low finance deal. Or at the very least a low finance deal for more than even 6 months much less a year. But I'm making educated guesses. i'm sure you guys know better whether my acusations are true.
As far as new vs used. Yes used is cheaper and cars depreciate the second you drive off the lot. However with used you NEVER know how the previous owner(s) treated the car. So it's always a gamble on if the car will always have maintenance issues or not on used where with new YOU have control over that.
Personally, I would use this as an opportunity to build your credit rating at minimal cost. Put down a good amount, say 30% and do a two or three year loan. Also, a lot of insurance companies provide auto loans at better rates than dealers if you have a policy with them.
Not to go dad on you Staf, but I think your best move is to pick a reliable car that will cost you under $20K. I know it's bad for getting lucky with civvy chicks, but maybe you could just say your black Escalade is in the shop and you got stuck with a shitty corolla for your loaner car.
@ATACdawg certified used dealer huh? Oh boy, I was hoping not to have to get a hustling crew together but if that's the best measure for used then I just might.
@mrrock how about 75% down. i don't mind saving up for that amount.