Before we start with today’s post, I just realized that I didn’t post yesterday! I actually put all my article for the week in draft but the post from yesterday was set to be published on the 23rd… of May! Don’t worry, posting schedule will now be back to normal 😉
I’m still looking for cars as I didn’t make my final decision yet (I have tried the Tribute, the Rav4 and getting into an Outlander tonight!). Some readers asked me why I was looking to buy a new car instead of looking into a used one. Is it about pride? Fear? Many people think that buying new is a waste of money as the car drops in value so much after a year that your loan will be bigger than the car value! However, there are still good reasons to buy a new car:
I plan to keep my new car for several years
I have bought my present car in 2002. Therefore, I am with the same car for the past 7 years. If I was not planning to have a kid, I would probably keep it another year or two. Back in 2002, I rented the car for 4 years and then bought it. The price of the car was $23,500 back then. I will now sell it for about $4,000. So the actual cost of my car is the equivalent of a monthly payment of $232 a month for 7 years. So I figure I am loosing much when I figure that I have put about $3,000 total in maintenance and reparation during that period. If I would have bought used at the very beginning, chances I would have paid much more in maintenance.
I am willing to pay to not go to the garage
I hate when my car break. Since I only have one car and I don’t use it to go to work, it is quite a pain to coordinate my schedule with my mechanic when I need to repair something on my car. It happened only twice since I bought my car new (I didn’t have to go to the garage besides for oil changes for the first 4 years). Therefore, I am willing to pay an extra cost in order to buy the piece of mind for the first 4 years.
Can’t trust mechanics, dealerships or individuals selling used cars
Some people may argue with this, but I personally heard too many stories about fake repairs or cars that had 100,000 miles done but showing 55,000 miles on the odometer. One of my friend was actually suggested by the dealership to modify his odometer for free if he was buying another car…
Since I don’t know anything about mechanics, I would not be able to make the difference. When I buy a new car, I don’t have this problem!
Financing options are more interesting
I did some interesting calculations: if you buy a new, many car dealerships will offer 0% financing right now. However, if you buy a used car, the interest rest goes easily to 6.5% and higher (this was the best deal I found so far… some are financing at 8%!). So calculate the payment on a 35K car at 0% for 5 years: $583 per month. If I buy a 2008 instead of a 2009, I would probably buy it for 30K (which is 15% less than the original price). At a 6.5% interest rate over 5 years, the monthly payment becomes $586. In order to make a real difference, I would need to find a used car that dropped 30% of its value (so 25K) and I would save about $100 a month on my monthly payment ($489 with a 6.5%). If the interest rate is 8%, I would only save $75 a month ($506). Does it really worth it to buy a used car? I’m not quite sure…
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