So you’re in the market for your first (or third) car. So sorry. 😥
OK, not really. I just didn’t want to say, “Congratulations!” 🙄
Whether you buy new or used, whether you buy something to last a long time or something to get you by for now, whether you buy with cash or with credit — use these five principles to help you weigh your options and make your decision:
- Don’t buy more than you need
- Try to avoid debt
- Don’t presume on income in the long haul
- Beware of pride
- Dependable first, looks last
That’s kinda skeletal, so let’s beef them up just a bit…
1. Don’t buy more than you need
An automobile is primarily for doing the “Point B, here I come from Point A” thing. So if you need to go from home to school over the one-day-in-a-covered-wagon distance of 15 miles, get a decent, dependable, elderly, four-door car for that task. You don’t need something to last you five years or easily carry you to a 2,480-mile destination.
Neither do you need a hot 🙄 car that will go from zero to 60 in less than 10 seconds. Nope, you don’t. Just get something that will go from zero to 15 miles in 20 minutes on, say, half a gallon (or even 3 liters) of fuel.
2. Try to avoid debt
Most cars lose value merely by being purchased-and-driven-off-the-car-lot. Why go into debt for that?
Buying anything on credit automatically increases the cost of that thing. The only exception I know to that is buying something with interest-free credit.
If you follow my advice to get “a decent, dependable, elderly, four-door car,” you probably won’t need to cross the debt bridge. If you have to go into debt to buy more of a car than you need, you’re getting off on the wrong foot. Why do that?
Better to own a well-used car free and clear, than a trophy car with a debt burden to match.
Here’s an idea. Buy that nice, owned-by-a-grandma-who-only-drove-it-weekends (on the drag strip?) Buick LeSabre on Craigslist for $1400. Save $200 a month for a year. In twelve months, sell the LeSabre for $1000 (if you can — check with your folks first; they might want to buy it). Now you have $3400 to buy a better car, if you need it. On the other hand, you might be quite happy with your LeSabre, so hang on to it and leave your $2400 in the bank or credit union (hopefully both of those will still exist by then) or use it for something else, perhaps gifts for others in need.
3. Don’t presume on income in the long haul
If you follow #1 and #2, #3 shouldn’t be an issue.
Presuming on income is assuring disaster…if that presumption leads you to overextend yourself. In other words, don’t figure that making that weekly $100 car payment will be a breeze for three years just because it’s no sweat right now. Your job security isn’t. But your weekly $100 obligation will be there, whether or not you can afford it.
4. Beware of pride
It’s a strange thing, how we can become proud of our transportation. (Weird, huh.)
If you base your purchase on that, plan for trouble.
Except, if you plan for trouble, you won’t base your purchase on that.
To do otherwise would be quite stupid, no? No, it would be worse than stupid. Foolish.
5. Dependable first, looks last
By now you know these five things are numbered for handy reference, not to show order of importance nor to denote scale of priority.
This one is actually a combination of #1 and #4; a child of them, if you will. Like parent, like child — no need to say more.
Hmmm. Those points apply to more than just purchasing a car!
Of course, if you’d rather go by what Larry Burkett
And if you are in ‘hood sometime and would like to borrow my copy of a really good book by Ron Blue, just ask me for Master Your Money
I’m no expert in buying cars. Nor in money management. Nor in staying out of debt. 😳 (And my Amazon affiliate links don’t do so hot either.)
Well, what advice would you add? Do you have another principle to contribute to the list? Please enrich this post (and the entire Web, for that matter) by chiming in using the comment section below!
I like to pay myself a car payment. If every month I transfer $85 into my “Vehicle Replacement Fund”, that’s just over $1000/year that I’m saving up toward replacing my current vehicle when it’s no longer reliable. The way I do it, every four years I can buy a $4000 car with cash, without needing to dip into my normal savings account.
A VRF with $85 a month is certainly more attainable than the $200 I suggested. Thanks for presenting a more do-able plan, Philip.
I have been blindsided by a corrosive move east. I always took for granted that if you kept a car in decent running condition, you could use it as long as you stayed humble and didn’t care what it looked like. In Hoosierville, the salt on the roads can turn a 10-year-old car into a crumbling bucket of rust, slowly but surely imploding in on itself. You don’t see nearly as many older cars on the road out here, and I was not prepared for this. I still don’t know what to do about it.
For instance my van was 8 or 9 years old when we bought it and in good shape. It didn’t take long for the rust to start to poke through, and last summer a chunk of rocker panel literally fell off. The worst part is the corrosion takes a toll on very expensive stuff like ABS systems and gas tanks. It just turned 13 years old, and you hate to keep fixing expensive issues if there’s an unending string of them waiting in line to nail you after you fix the current one.
So your options are buy an older car that is ready to start literally falling apart, or spend a ton of money buying a newish car. The middle ground is very narrow and I don’t know where to find it.