When To Buy A Car, What Car To Buy, & How Much To Pay
Having a car is a necessity for everybody. Those that do not have a car are missing out on the value that a car adds to your life. The first thing to consider in a vehicle is to fit your needs. If your car is breaking down every month then it is affecting your ability to get to work, not to mention wasting your time and money. So depending on how much you value your time and how often your current car is breaking down this will affect when you need to buy your next car. Obviously a realtor listing/showing million dollar houses cannot afford to drive around in a clunker. So rationalize when the right time is for you and your requirements.
The second question is to determine what type of car to buy. If you have kids then you need a car with a back seat. If you are a construction worker with tools you carry with you, then you need a truck or some vehicle that matches that need. Once you recognize the right type of vehicle for your needs you have already narrowed down the options drastically. If you do not have any particular restrictions then great you have all of the options still available.
cash my car
Now the most important question is how much to pay. This is often overlooked by most people. They typically only look at what type of car they want or need and try to justify the car because they should be able to afford the payments. Don’t be that buy anymore. There is a right way to buy a car. The ideal way to pay for a car is to pay with cash. That is correct, go to the dealer with a wad of cash or a personal check or a money order. This is extremely liberating, because when you are driving that car off of the lot you know that you have already paid for it and will not have a payment due at the first of the month or any month while driving that car. Now I realize that all of you are not at a point that you can pay cash for your next car. But you need to get to this point.
Now for everyone that cannot pay cash for their car you need to have some self control so that you do not overextend your finances and so you will eventually get to the point where you do pay cash for your cars. So now you need to set up a budget for your monthly car payments. When doing this do not get a loan on the car for more than 60 months (5 years). This will help limit the amount of time you are upside-down in the note. This is one degree of independence, since you know that when you are not upside down in your car note that you will be able to sell it and not go broke in the process if you have to sell the car. When budgeting, you need to determine how long you will keep the car. Once you decide on the number of years you plan on keeping the car you need to make sure you pay off the note before this point. You will also need to put away extra money so that when you buy your next car you can put down a bigger down payment or the full amount. You can do this by putting away an extra $100 or $200 away each month in addition to your car payment to build up this extra cash. Another way to do this is to pay off the car note, keep the car for several more years, while you continue making car payments but make them to an account for your next car.
accident car
Here some rules of thumb for adding value to your next car purchase. First, do not buy a new car, especially when you are not paying cash. Cars lose value extremely quickly in the first 2-5 years. This means you should look to buy cars that are 3-5 years old. Second, keep the car for as long as possible. Do not trade it in for a newer model in 3 years. I would like to see you keep your cars until they are 10-12 years old. That means you could buy a 4 year old car and keep it for 7 years when the car becomes 11 years old. This is typically when today’s cars really start to wear out. To learn more about your financial education, please be sure to visit my site.
get money for my car
Now you do not have to follow these same rules, but you do need to analyze the actual cost associated with your purchases. If you are looking at a new car that sells for $25,000 it may sell for $15,000 for the 4 year old model. So if you buy the new one and keep it for 4 years and buy another new one you are spending $10,000 over 4 years or $2,500 per year. But if you buy the car after 4 years and sell it 7 years later for $1,000, you are only spending $2,000 per year. You say big deal you only saved $500 per year. But you will also have the more expensive car note or down payment. This is the real cost since you will be paying several hundred extra every month for the new car purchase. This may add up to another $10,000 over the life of the car. So this may save you $10,000 - $15,000 every 5 years. Now add that up for all of the car purchases that you are going to make during your life, and you have saved/made a significant amount simply by rationalizing your car purchases.
