Americans spend too much money on their cars. This is because they finance the purchase.
When you borrow money to buy something that loses value, this is a bad idea. And nearly all cars do lose value over time.
A car is conveyance, meant to get you from place to place. And pretty much all cars depreciate. It’s not smart to pay interest on something that is worth less and less, you end up wasting money. Follow these rules instead to make a wise purchase the next time you need a car:
Don’t finance. You are probably going to want more car than you can afford. At car dealerships, there is a loan officer there ready to help us get this car anyhow.
It doesn’t make a lot of sense but it doesn’t have to. Buying a car is often an emotional thing. People get very attached to their cars, they get proud of their cars, and they want cars that are nice and shiny and new. Because of these emotional reactions, we can be talked into taking out loans with horrible terms and extreme interest rates. We pay much more for our cars as a result.
No leasing. If you wanted to buy a house, you wouldn’t rent an apartment instead would you? It would still give you a place to live, but would be a waste of money. Leasing a car is just renting a car, but over a period of years rather than days or weeks. The dealership will also add cost to the leasing agreement to cover the damage they expect you’ll do to the car.
It’s a bad bet. You pay top dollar, for a car and for damage you may not even do to it, and in the end you have nothing to show for your money.
Don’t buy new. A brand new car sells for absolute top dollar. It will depreciate a great deal the minute you drive away in it, because now that you own it, it cannot be considered ‘new’ any more. When you buy new, you’ll lose a great deal of money if you ever want to resell the vehicle.
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Tags: advice, auto, cars, cash, family, Finance, home, home insurance, Insurance, investment, lifestyle, loans, men, money, travel