I think I drove one of those once, felt like I was going off both sides of the road at the same time
IMHO, no car is worth making a financial commitment that stresses your finances. Unless you’re nearing retirement or terminally ill, keep driving what you have and save for what you want.
Delayed gratification is what built the middle class.
When time comes to buy another car be sure to double-check what Consumer Reports Used Car Guide says about its reliability. Reliability is a super-important factor when personal disposable funds are limited, such as is the case w/students, younger folk just getting started in their career, senior citizens, etc. A good choice on reliability can make your everyday life much easier. A bad choice, owning a car w/predicted poor reliability, may well bring re-possession doom. If you work hard and effectively in your job you’ll likely get to the point where you’ll have plenty of disposable income. That’s the time – if you want – to take a chance on a car w/lower than normal reliability. But based on what you say, that time is not now.
Be sure to take a look at the rental agency’s car sales lots too. They offer 2-4 year old cars, well equipped, good warranty terms, & for pretty good prices. And there’s an excellent chance they’ve been well-serviced to the exacting manufacturer’s standards over their entire life on the road.
I recommend B♭
Huh ? …………………
I’ve seen great points up in this thread, both on proper financial planning and on risk management.
I wanted to bring to your attention that $19K target you are setting may be the overstretch and you have to aim lower.
A couple of year back, I was able to get a great-looking 4-years old Mazda 3, which needed some cleaning inside, but mechanically and on external finish condition it was in A- condition, for $10K.
What I’m saying, unless you want to go to some higher class than Stratus (which you clearly do not want), you can aim substantially lower than $19K and get good results for roughly half of that.
It will immediately make some improvements into your monthly budget math.
I look at it this way: If you’re stressing over whether or not you should get a new car, you probably shouldn’t do it right now. You can always get a newer car later on, but once you sign on the dotted line, you’re kind of stuck. It’s much easier to get a new car than get rid of one (without being upside down). I like cars and trucks. But at the end of the day, they’re really just transportation. The new always wears off pretty quick! So, I like Rod’s idea of deferring a car payment each month to yourself. Once you’ve got a pretty nice wad of cash saved, then go for the new car if you’ve still got the new car bug.
It almost always makes NO SENSE to take out a loan for a car purchase. At this time, in the present economy, it makes no sense! It’s foolish.
This means you cannot afford one. As others have suggested you need to start saving for a car now, not borrowing for a car.
I see how people can afford them and I can afford them, but I think new cars are a waste of money. Cars are not an investment, but there are many things that are great investments.
What knd of warranty covers tires and brakes? I have never seen a warranty that covers wear items like brake pads, wiper blades, clutches, tires etc on a new car. I have seen dealers make goodwill replacements in the first year or year and a half.
Car note, B flat, a musical note. Get it?
As others have suggested, a wise move is to keep driving what you have for now while you put aside an amount equal to a car payment each month. That builds up money. Dedicate the first year’s worth…yes a full year’s worth, if at all possible…to being an emergency fund you never touch unless truly needed. Stick it in an interest bearing savings account of some type and let it grow. You mention being worried about losing your job. An emergency fund helps pay for neccesities in such a case!
Then keep saving. Worst case scenario, you accumulate toward a down payment that then leaves you with smaller monthly payments. Best case, you could buy a car outright without any car payments in a few years.
Yes, driving a car that you are tired of, that is needing some repairs, and listening to co-workers urging you to spend money you don’t think you can afford is frustrating. But staying as debt free as possible with emergency funds saved up is more satisfying in the long run and far, far more secure than satisfying a want you can’t afford or even think you could have trouble keeping up payments on.
I’ve been in your shoes, driven an aging car some years past what I wanted to several times, had others pressuring me to buy more car than I knew I could afford, etc. But by delaying my car wish gratification I ended up several times owning a new car with no loan or lease payments which proved the worth of my patience when I got laid off from my job; I still had a car to use while finding a new job without fear of it being repossessed.
Since you are asking, my advice can be summarized as this: You have a car that although aging and needing occasional repairs is currently working reasonably well, so keep it well maintained and keep driving it while you start making car payments to yourself to first build an emergency fund and then toward a car down payment or, even better, outright car purchase with no debt.
We often advise on the subject of when to trade a car.
I give the following reasons, and not the opinion of co-workers:
- The car is unsafe due to rust or other component failures.
- The car has become unreliable and won’t do as a daily driver.
- The car cannot meet and pass safety and environmental inspection.
- The car faces a major repair exceeding the value of the vehicle.
- The car has become so unsightly due to rust and dents that it has become an eyesore.
- The car has many smaller repairs that are nickle and diming the owner to death.
Your car does not appear to fit any of these categories, so I would just keep driving it.
Don’t feel like the Lone Ranger!
And it’s not just car payments that are expensive…
Before buying any car, and particularly a much newer make/model, check the exact cost of insurance. I will assure you that your insurance premium will be increasing, especially on a newer vehicle that an owner or a bank would demand adequate collision/comprehensive coverage.
This premium increase would be offset somewhat by having a car covered by warranty and probably being more reliable and possibly getting greater fuel economy.
@Ddw2020_157071. I used the plan others suggested for putting money into savings for a car. In fact, I would have a certain amount taken out of my check each month and deposited in my savings account at the credit union.
The disadvantage of that plan was that as my savings account grew, I became more and more reluctant to spend the money! I would keep driving my present car until it would only take half of what I had saved to buy a newer car. Then, instead of buying the newer ride, I would put half the money I had saved into mutual funds.
Yes, we have bought new cars but for cash. I like having the sense of power that comes when negotiating for a new car to say “I have some money and you have a car. All we need to figure out is how much of my money it is going to take to buy the car”. I let the dealer know that I am shopping other dealers as well.
I taught a general studies computer science class a couple of times. I had the students write a program to calculate the payments on a $20,000 loan where we assumed the person was buying a $25,000 car and had a $5000 car to trade in as a down payment. We wrote the program to calculate the monthly payments over different time periods and at different rates of interest. Finally, we calculated the total amount paid to the bank and subtracted the amount of the original loan to see what one paid for the loan. The students were shocked. Several students came up and thanked me for the assessment. One student blurted out “Professor, I now understand why you drive an old heap”.
We then modified the program to see what would happen if we made an investment and how much the investment would grow over time at different rates of interest when the interest is compounded. Again, the students were amazed.
+1 to everything @Marnet posts. The very reasons for NOT working for the bank in a great summation.
It does seem that people are much more practical in buying a car when they spend money that they have saved. Those who are already upside down on a car they will trade in are the least practical and seem to jump in deep for all the bells and whistles they can get based on the monthly payment they have determined they can pay. And then there are those who have accumulated a sizable equity in their home and spend the equity like it was money pulled off trees never considering how many years they are paying interest on the slowly declining balance.
Cheap money is making living well look so easy going in.
Stratus is running. Sell it. Buy a more reliable non-dodge car. If you had a Corolla or civic you would be bored. And rarely go to shop or parts store. Or know bob the tow truck driver by name.
My hope is that with probably 25k miles or less I will not have to worry brakes or tires.
Like I have said before, I don’t disagree with paying cash for a car or anything if it makes you feel better and helps you control your finances. However, my return last year on my mutual fund investments was +30%. I thought it was 13% and was a little disappointed until I clicked a few times and saw that was the 5 year annualized return. I owe a couple thousand yet on a 2% car loan and of course the mortgage is 3%. So again if I withdrew money to pay for a car, I would be losing the 13% or 30% gain for a 2 or 3% cost of money. It’s simple math. But everyone should do what makes sense to them.
@Bing what you are doing makes very good sense because you already have sufficient funds saved and invested profitably. When the interest being earned on the invested principle is greater than the interest being charged on a loan then it makes sense not to deduct a large portion of that income producing principle for a cash purchase of a big ticket item such as a car. But if someone lacks such an interest earning investment then saving up money toward having such an invested account definitely makes more sense than taking on large monthly loan payments unless absolutely needed to have secure transportation to maintain one’s employment.