Car? Or Maybe a Used Car?
Here are some
good and some not-so-good reasons to buy a new car.
Or a used
rates on used car loans and shorter loan periods . . .
youll pay a higher interest rate on a used car loan
in part because the loan term is usually shorter. That, in turn,
can lead to a higher monthly payment vs. what you might have
paid for a new car.
a used car for $400 a month for 36 months means that for the next
three years youll have very little reserve cash on hand to
deal with unexpected expenses, it might be smarter to sign up for
the new car loan at $250 a month for five years if it means
youll have more financial cushion in case something you didnt
anticipate comes up.
A good rule
of thumb if you really want to be safe is to
figure out the absolute maximum monthly payment you could afford
and then cut that in half and buy whatever car that sum will
allow you to buy. New or used.
pay cash. This way, you avoid the problem of interest payments
and the car is yours as soon as the paperwork is done. No
liens, no debt hanging around your neck. Its a nice feeling
even if the car itself is nothing more than a $6,000 used
higher and sooner maintenance costs if you
buy a used car . . .
A new car will
usually not need major repairs and if it does need
them, you wont be the one paying for them. They
will be covered under warranty. This may be the single biggest plus
of buying a new car especially if youre not someone
who works on cars and so have to rely on others to fix them when
they break. And pay them to fix them.
Also, the normal
wear and tear items things like tires, brakes, tune-ups,
etc. are distant, down-the-road issues with a new car. Other
than gas and routine oil/filter changes, you shouldnt have
to worry about having to get stuff fixed or replaced for
at least the first four or fives years.
When you buy
a used car, on the other hand, you may need to buy tires for it,
too. Or get brake work done. Right away, too. And unless
you buy a used car that still has some time left on its factory
warranty (or you buy an extended warranty) anything major that blows
up in your face will be entirely your problem.
This adds a
level of due diligence to the process its
up to you to carefully check the car over (or have it checked it
out by someone competent to do so) before you buy it. A given make/model
new car sold at one dealership will be exactly the same as the same
make/model new car sold by the dealer down the road. You can focus
on the deal rather than the car. But with used cars, the deal can
matter less than the car or at least, it (the condition of
that particular used car) matters as much as the deal. A good deal
on a crap car is no deal at all.
Be aware, also,
that some makes/models require very expensive service at certain
time/mileage intervals. For example, timing belt replacement. Be
sure to educate yourself about such potential costs and factor
them into your buying decision.
And: If you
buy used even if the car seems solid - its a smart
idea to set aside some money for just in case repairs.
Because more likely than not, youre going to have to deal
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[send him mail] is an
automotive columnist and author of Automotive
Atrocities and Road Hogs (2011). Visit his
© 2012 Eric Peters
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