Yep, how we jumped from $15K to $36K is a big question. At any rate, its just math. I don’t know why people get so upset with all this and insist on paying cash or not buying. Money has time value, that’s all. If you rent the money to pay for the car, you need to pay the rental fee which can be from 0% on up these days. If you pay cash, you are losing the rental value of your money which these days can range from 1% on up. There is no inherent advantage or disadvantage in paying cash or making payments. Besides, these days you will find much more attractive sales and interest rates on new cars versus used cars plus all of the warranty issues.
Why is having no mortgage such a religious thing? I would much rather have a $250K mortgage on a $500K property than live in a $100K free and clear farm house in the sticks. You can do world travel, have a nice house, have a good retirement, and drive a new car, if you manage your money and watch normal expenses. That doesn’t mean to be debt free, just solvent, and assets greatly exceed liabilities. IMHO.
A few comments to ponder…
-
You know that one day you will need another car so you must start saving for it now so you can pay cash. Cash gives you power with price bargaining as well as making it possible to avoid interest payment money.
-
Buy new so you can enjoy the first part of a car’s life as well as the middle or last part.
Why is having no mortgage such a religious thing?
Having a mortgage is not bad. A car loan is not bad. They both can be very good choices. However I have seen a lot of people who have gotten into financial trouble because of not using debt wisely.
Personally I planned a long time ago to own my own car, home and have money in the bank with zero debt. I am there and I am very happy I made it. I gave up a little on the way, but now I am retired having fun, no money worries (Even in today’s economic situation) while many of my friends, who lived a little higher are still working. For the most part it was an informed choice on their part, just as my choices were for me.
However I do know some people who are very unhappy with their economic situation and most of that was due to debt.
That is exactly why several US states require the seller to show you the overall cost after interest. That is also why I don’t trade in cars. I sell them on my own.
“Die Broke and Stiff the Undertaker.”
…and that attitude is why some people’s families will never break out of the middle class. At the same time, families that create a “culture of wealth” will continue to rule the world.