I’d like to see where you stand on this: Is it worth it in the long run to buy a brand-new car? Here’s a scenario:
You have your eye on a car. This four-door model has all the latest safety features: Front, passenger and side airbags, anti-lock brakes, even an emergency release in the trunk in case somehow you get locked in there. You have a five-year warranty on parts. You plan to keep the car for at least 10 years and 150,000 miles, and if you can get 15 years and 250,000 miles out of it, you’d be fine with that. However, you’ll be making payments on this car for 4-5 years.
This used model is five years old. It has 75,000 miles on the odometer. It has driver and passenger airbags, and the previous owner has kept all oil change receipts. Yep, this car has been serviced every 5,000 miles or every three months, whichever happened first. It has no warranty. Because you were unable to save money before buying this car, you’ll still have to finance it and make payments for at least 3 years, but most likely 4. You still hope to get at least 150,000 miles out of the car, but realize that could happen within five years from now.
Do you buy the new car or the used?
Here are some things to consider:
-For the next five years, you’ll either have a full warranty with your new car, or you won’t have a warranty with the used car. Consider the cost of typical repairs each car might have during these five years and the cost.
-If you buy the new car, you’ll probably have it for five years payment-free. If you buy the used car, there’s a chance it will survive longer than your payments, but then again, you might have to buy another car as soon as you pay this one off.
-What are the final costs? How will the monthly payments affect your monthly cash flow?
-What will your insurance rates be for each car?
What else should you consider? Please comment!