How to win the financial battle against your car

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Think long term (for models)

Buy the car you want, but only if it is at least two years old and three, it would be better. This will automatically save you hundreds of thousands of dollars during your life.

At 23, I wanted to buy a beautiful four-door sedan and carry the Cadillac STS. The new model had a base price of more than $ 50,000, and with all sorts of extras, the sticker was worth almost $ 55,000. I was fine at a young age, but it was not very nice to blow up 50 Grand with a new car.

I flipped through my local paper (yes, before the Internet changed everything) and saw the announcement of a two-and-a-half year old Cadillac STS for $ 19,500. The car had less than 40,000 miles and an extended 90,000 mile warranty. It was beautiful, brilliant and just wait.

It was an attractive price because the first owner had consumed the depreciation.

An average car will lose 11% of its value once it is released and another 15 to 20% in the first year. Depreciation (loss) in the second year is an additional 15%, with a loss of at least 45% in the first two years.

Depreciation is usually deducted from the base price, not extras. It could be the $ 10,000 sports package that makes you only $ 2,000 after the first year or two. It is therefore quite possible to find beautiful cars with manufacturer’s warranties and pay 35 to 50% less than the first owner, who bought a new owner.

I drove the car for four years, had few repairs and managed to sell it for $ 3,500.

What agreement could you get today? When I was young, one of the dream cars was a Ferrari Testarossa and its price was around $ 200,000. Now you can buy one for about $ 50,000 and most do not have many miles because they are fried by the owners.

Think short term (for loans)

When you finance the purchase of your car, you can save a lot of money by keeping it up to 36 months. This increases the capital base in the car and saves interest.

This can be difficult because the monthly payment is higher than a six-year loan and a higher rent than a monthly rent. If you fund $ 25,000 with a five percent interest over three years, your monthly payment will be $ 749.27 and your total payment will be $ 26,974. If you extend this loan to six years, your monthly payment will fall to $ 402.62, but your total payment will increase to $ 28,989. That’s € 2,015 more for your car.

Assuming you buy the car with a small down payment, if you finance for six years, the repayment of the loan will take place much more slowly than the devaluation of the vehicle, which will result in an “immersion” in the car. During the three-year program, you pay for the car faster than you write off and you have the option to sell the vehicle.

If you really can not afford this payment over three years, choose an option for five years and send a little more each month to the customer to pay first.

Taking a new model seems interesting because the monthly payment is lower, but you may not want it. I explain why the next article, if I offer various other options, is to save a lot of money when buying a car.

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