To buy a new car or not.

[BehindBlueI's]

Do you give up a rebate to get the 0% interest? Typically you do.

If you should buy new or used varies. Used prices have gone up and its not the truism it used to be. *IF* you keep a vehicle long term, say 10y or 200k miles, you'll likely find its a wash in terms of cost. Buying a 3 year old car will mean you're in the market again 3 years sooner, paying sales tax again, and the depreciation curve flattens out quite a bit. If you flip every 5 years or less, yes, you're taking a beating. Figure in plates and insurance and you're probably still losing some money to buy new and keep for long term, but not as dramatically as it used to be.

Go to truecar.com and see what you can realistically buy the vehicle for. Make sure you are getting all the rebates you qualify for and that trading a rebate for financing makes sense. Then if you have the money and want it, go for it. You lose money every time you go out to dinner, too. It just depends on what you value in life.

If you can't comfortably make the payment, pay it off in 48 months or less, and while doing so still contribute 10% to retirement and maintain an emergency fund, then pass until you can.

 

[rob63]

agree but if the APR is 0 percent then im haveing inflation work for me by letting Ford eat it while my payments stay the same regardless of loss of value. But i am torn i also HATE debt and im to wishy washy to know what to do. LOL.

How comfortable are you with your job security? Lack of debt = peace of mind, especially if you lose your job. It's a simple truth that I have lived too many times. It is never fun to lose your job, but I have watched co-workers totally melt down in a complete panic while I calmly started looking for my next job.

 

[spec4]

You car payment, along with any other monthly payments including housing expense should not exceed 36% of your gross monthly income. If it does, you're reaching. The 1.9% isn't bad if they aren't hosing you somewhere else such as trade in, etc.

 

[CampingJosh]

Do you give up a rebate to get the 0% interest? Typically you do.

You lose money every time you go out to dinner, too. It just depends on what you value in life.

Hear, hear!

 

[nickf2005]

Do you give up a rebate to get the 0% interest? Typically you do.

If you should buy new or used varies. Used prices have gone up and its not the truism it used to be. *IF* you keep a vehicle long term, say 10y or 200k miles, you'll likely find its a wash in terms of cost. Buying a 3 year old car will mean you're in the market again 3 years sooner, paying sales tax again, and the depreciation curve flattens out quite a bit. If you flip every 5 years or less, yes, you're taking a beating. Figure in plates and insurance and you're probably still losing some money to buy new and keep for long term, but not as dramatically as it used to be.

Go to truecar.com and see what you can realistically buy the vehicle for. Make sure you are getting all the rebates you qualify for and that trading a rebate for financing makes sense. Then if you have the money and want it, go for it. You lose money every time you go out to dinner, too. It just depends on what you value in life.

If you can't comfortably make the payment, pay it off in 48 months or less, and while doing so still contribute 10% to retirement and maintain an emergency fund, then pass until you can.

I'm nickf2005 and I approve this message.

 

[VERT]

My Brother-In-Law is a finance manager for a large car lot. He put me onto truecar.com Great way to get a good idea of what new cars are actually selling for.

Call Ford and tell them you are a new car buyer. They have incentives for current Ford owners. They have incentives for Chevy owners. They have incentives in addition to dealer incentives. They might give you a code for additional cash back. Do not let the dealer figure this into the price. This is extra incentive after the dealer sets the price. They enter the code into their computer and get a cash back rebate.

Usually it will be a special interest rate or some type of cash back. Check your local credit union for current rates.

Do not finance used vehicles. With the factory incentives and better interest rates a new car with a full new car warranty really does make more sense. Used car market is high right now. Personally if I am going to make a payment I will buy new.

Do not pay cash for new vehicles. They depreciate quickly the first year. Much better cash deals to be had private party used.

Currently we have a car payment on a 2013 crew cab pickup for the family. I drive a company truck to work and my wife drives a well used 2004 Ford Taurus. But we keep a newer vehicle around in case the car breaks down and so we can have a reliable family truck.

 

[Que]

Cars are like guns. Just wait for someone to trade in the one you want and get it at a lower price.

 

[IndyGlockMan]

I'm an insurance adjuster and I've seen person after person get hosed on new cars it's not funny.
A new car becomes a used car right after you drive it off the lot. Just like firing the first shot out of a new gun.
People get hosed when the car is totaled in an accident and the insurance company runs a value on it through a 3rd party service to determine it's "current market value".
If your loan is more than the value, you are still responsible for what's left on the loan (unless you have GAP insurance to cover the difference).

Based on all my dealings like this, I would not buy a new car.
If you listen to Dave Ramsey, he always says you should never buy a new car unless you have at least a million in the bank.
You loose so much on the depreciation, you need to be a millionaire to take the blow.

If your ego insists you must have a newer car, look for a good deal on a lease trade in that's about 2-3 years old.
Generally they are well cared for, serviced regularly, and are in above average condition.

With the idea of making loan payments on everything in our culture now-a-days, it's tough not to fall prey to the marketing and get a new car that's only $$$/month.


If you want a new car every couple years, some lease deals are not too bad, but you are roping yourself into forking over payments every month for the rest of your life.

 

[looney2ns]

Used can be good still. My son just wheeled and dealed a 2 yr old mint condition Honda Odyssey. He saved $19,000 over a new one.
Too many people confuse the difference between want and need.
If you need credit, you are living above your means.

 

[CitiusFortius]

agree but if the APR is 0 percent then im haveing inflation work for me by letting Ford eat it while my payments stay the same regardless of loss of value. But i am torn i also HATE debt and im to wishy washy to know what to do. LOL.

You're over thinking it. Fords not eating anything since Trucks and SUV's are where they make their money.

Let's think about it - if offering 0% was bad for the dealer THEY WOULDN'T OFFER IT.

They sell a truck, you get 5+ years of monthly pyments, and if you screw up they get to take the vehicle back. Don't ever think you're smarter than the finance companies, because you're not.

 

[spec4]

If you keep your car over six or seven years or more, depreciation is a non event.

 

[Denny347]

How much will it be driven? Some people put 20k miles a year on their vehicles, a used one might not last long, depending on the age. If you drive little, then a used car with moderate miles could last a long time. Don't finance over 4 years for a vehicle, even at 0%. My family have used the 0% from Ford (my grandpa retired from there) and it has always worked out for them. My grandpa bought a 2001 Ford Ranger to replace his 1983 (that he bought new) Ranger diesel. It was right after 9-11 and Ford was trying to move car sales and I think there first time offering 0%. He still has that truck. My mom bought a new Ford Explorer in 2008 at 1 or 2%, she still has it. I bought my 2006 BMW 330i used in 2010. I financed it and it added 1k to the cost of the car but I got a really good deal on it, I actually could have bought it then resold it for a 3-4k$ profit. But I only put about 5k miles a year of it, it will last a loooong time. If you plan on keeping your new car for 10yrs or more, 0% is a no brainer. Even low APR can still be worth it.

 

[CampingJosh]

If you keep your car over six or seven years or more, depreciation is a non event.

It's stretched out more, but it's still there. Losing $15k over six years is much worse than losing $7k over five years.

 

[BehindBlueI's]

It's stretched out more, but it's still there. Losing $15k over six years is much worse than losing $7k over five years.

Don't look at it in a vacuum.

 

[CampingJosh]

Don't look at it in a vacuum.

Oh, I bought new for our most recent car. I understand that there are a ton of factors.

Decreasing the depreciation per year by stretching it out doesn't mean it isn't happening. It still happens. It can still be what the buyer wants to do, but he shouldn't use faulty logic to justify it.

 

[lovemachine]

The last last time I bought a brand new vehicle was in 2005. I'm still driving it, every day

 

[PistolBob]

From the Ford site, the 0% is only for 36 months. If you plan to go 60, 1.9% is the best offer. Just an FYI.

And that is ONLY if you have a spotless credit history. I'm guessing you need a FICO score of at least 775 to qualify...

 

[BehindBlueI's]

Oh, I bought new for our most recent car. I understand that there are a ton of factors.

Decreasing the depreciation per year by stretching it out doesn't mean it isn't happening. It still happens. It can still be what the buyer wants to do, but he shouldn't use faulty logic to justify it.

Depreciation is only one cost. Factor in maintenance, financing, earlier replacement, etc. and the difference is less than many assume before doing the math. Used car prices are higher then historical norms, meaning both a higher buy in cost and lower depreciation. Just figure in sales tax. If I buy new cars every 10 years vs a 3 year old car every 7 years, how often over 45 years of driving do I avoid sales tax and other acquisition costs?

 

[SSGSAD]

My 2005 Dodge that I bought in 2004, lasted 10 years, and 350,000 miles.

200,000 miles were put on it, in two years.

I drove 475 miles every day, for 6 months.

IF you maintain a vehicle, they will last.

NO Engine work, NO Transmission work.

Just regular maintenance.....

YMMV.....

 

[cce1302]

Brand new??

No way.


3-5 years old seems to be the sweet spot in my limited experience. I've owned 9? autos. I'm currently driving a 2002 pontiac that I bought in 2005 for $10k even. it was originally sold for $26K I think, so it depreciated $16K in 3 years, and if it's worth zero right now, $10K in the next 10 years ($1k/year). I also own a 2011 Nissan Xterra (wife drives it), bought 1 year ago for $18K. Original price $32K. $14K depreciation in first 3 years, probably about $1-2K in the last year.



I don't know if anybody quoted Dave Ramsey above (I scanned the thread, but didn't read everything) but he says something to the effect that "we all drive used cars. some of us just pay a lot more for them."


Another way of looking at it: let's say (for sake of argument) you want to buy a brand new Ford Taurus Limited. You can get one for 33,710. 2015 Ford Taurus Limited, $33,710 - Cars.com


Or, take that same 33,710 and you can buy a 2014 Lincoln MKS 2014 Lincoln MKS , $33,246 - Cars.com
or a 2011 Navigator 2011 Lincoln Navigator Base, $32,998 - Cars.com
or a 2013 Lincoln MKZ 2013 Lincoln MKZ Base, $32,995 - Cars.com

*Note: these are illustrative of my point. You can buy a nicer car at the same price if it's already broken in. I chose Ford/Lincoln because it is easily recognizable as standard/luxury line but could have illustrated it with Chevy/Cadillac, Nissan/Infiniti, Honda/Acura, Toyota/Lexus, etc.