Is financing a new car really stupid?

[Anonymous]

Suze Orman is probably the dumbest of all the financial gurus. She's only a hair better than Michelle Singletary, whose irrational aversion to debt and ceaseless and insulting commentary about her "Big Mama" are beyond tedious and stupid.

[Anonymous]

We bought both our cars new, hondas. Now they are paid off, well taken care of and we plan to keep them for as long as possible.

[Anonymous]

No. I bought a new car with a killer warranty and the maintenance costs have been minimal. That most decidedly has never been my experience with any used car I've ever had, so the overall costs have been pretty equal - plus I haven't had the headache of repairs that I've had with used cars.

[Anonymous]

Anonymous wrote:A new car costs almost the same as a used one now. THe way that people drive leases and forgo maintenance and the low cost difference made me reconsider my used only stance .

+1

[Anonymous]

Finance can be a smart tool. No car loans might have been smart advice in the era of high single digit or double digit rates, not so much in an era of rates hovering at or around 0%

Depends on your individual situation, but anyone telling you that plopping down your own 30k when you can get 0% financing, has a pretty meager understanding of both economics and finance.

[Anonymous]

Anonymous wrote:Finance can be a smart tool. No car loans might have been smart advice in the era of high single digit or double digit rates, not so much in an era of rates hovering at or around 0%

Depends on your individual situation, but anyone telling you that plopping down your own 30k when you can get 0% financing, has a pretty meager understanding of both economics and finance.

True.

Thanks for the replies, I feel more confident in my decision now

[AroundTheBlock]

My wife and I both recently purchased new cars.

Pros with buying with interest:
1. The dealer prefers this because they make more money from the interest. This sometimes can lead to a better deal.

2. You don't have to unload the full amount at once.

3. If you pay off your loan regularly it really helps your credit score.

Cons with buying with interest:
1. You have to unload the full amount.

2. The dealer may withhold .5 or 1% lower price.

I bought a car a year ago and while I could have easily paid for the car in full I decided to finance only 30% of the price. I placed a large down payment and financed the rest. I have a low interest rate and only pay a few hundred a month. What's nice is this helps my credit score greatly even though my score is almost 700.

[Anonymous]

Yes. Only pay cash like Suzy.

[Anonymous]

Rule of thumb - never finance an asset with declining value (car, clothes, etc.)

nuanced answer - Depends on the deal and how you handle debt. Can't judge the deal here, but if you are good with debt, can afford it, and have steady income or money in the bank to cover the balance, it may be fine to finance the car.

My dad's rule for financing a car - you may have to finance your first car. After it's paid off, keep putting the payments into a bank account. When you need a new car, pay with those savings (never finance again).

[Anonymous]

I'd buy used from a reputable dealer.I bought used while my sister bought the same car new.They have had more problems with the car than I have had with mine.So you never know which one is ends up being the "lemon".

[Anonymous]

The rule of thumb is: buy used if you like to change fairly often. Buy new if you like to keep it forever. Cars are outrageously expensive, so the used is priced at about exactly what the new one would be if discounted for the depreciation. In other words, if you bought a 2013 for 20K, you could buy a 2010 for exactly what the 3 year old 2013 would be worth (plus inflation). So much depends on the resale value, the interest rate, and how much cash you want to tie up. There is something to be said for buying new and knowing the history. The days of cheap used cars is long over.

[Anonymous]

Anonymous wrote:Rule of thumb - never finance an asset with declining value (car, clothes, etc.)

nuanced answer - Depends on the deal and how you handle debt. Can't judge the deal here, but if you are good with debt, can afford it, and have steady income or money in the bank to cover the balance, it may be fine to finance the car.

My dad's rule for financing a car - you may have to finance your first car. After it's paid off, keep putting the payments into a bank account. When you need a new car, pay with those savings (never finance again).

I agree with this. Sometimes I sell at 6 years, take the profit, roll it into the new car and refinance the difference. I am not crazy about driving a car more than 10 years old. It is worth it to me to pay a small amount each month.

[Anonymous]

I understand all the reasons not to finance a car. But I still think for us it was a good decision.

-My DH is out of town a lot. I need a reliable car. The last thing I want to deal with is a break down with five kids and a husband out of the country. Could I handle it? Of course. But I try to prevent as many surprises as possible.

- We knew exactly what we wanted/needed in a car. Buying new made it easy to find the perfect car.

- We make frequent, long trips with the kids. Reliability is important.

- Most important. We got 0% interest and we'll drive the car for at least 8 years.

[Anonymous]

Personally, I buy new when the cars that I am looking at depreciate slowly. We looked used for Honda's/Toyota's before and haven't had good luck ( only depreciate 2k-3k per year) so we bought new. Interest rates are so low, I don't think financing a car is necessarily a bad decision as long as you have somefinancial security.