When you are looking to buy a used car, there are a few questions you should always ask the seller to make sure you are getting a good deal.
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Many people do not consider that they have a choice when buying an automobile they need for
transportation. They assume since they usually buy new shoes and new underwear that a car is
something that should be bought new also. In our culture if you don't have enough money saved to buy
something now, there are always plenty of hawkers of loans and credit to lend you the money to do so.
Is this always the wisest thing to do?
What if you owned a 2003 Toyota Camry, sold it this year for $6,000, and took the money and made a
down payment on a new $24,000 car? You would have to finance $18,000. According to Yahoo, the
current national average for a car loan is 5.75 percent, and government statistics inform us that the
average car loan is for a period of more than four years. Let us say you finance the car for six years. Your
monthly payment would be about $320 a month. Six years later you would have paid $23,000 out of
pocket for the St George Used Cars and you will have only $6,000 to show for it if you took very good
care of the car and are able to get that price when you resell it. That means no accidents, no eating or
drinking in the car, and getting the oil changed and other maintenance taken care of on schedule, and
keeping the mileage low to average. In other words, you will need to have a bit of luck and be very
conscientious in taking care of your car if you want to get a good resale value on it six years later.
Now pretend that you keep your 2003 Toyota Camry or that you are the buyer this year that bought it
for $6,000. You have no car payments, so if you get laid off from your job or have other temporary
financial setbacks, there is no stress from the possibility of the car being taken by the repo man. Granted
it's a used car so we might need a little extra for repairs, let's say $100 a month. You still need to get the
oil changed and regular maintenance done on the car like the new car, but you don't need to sweat over
a few coffee spills on the upholstery or scratches and dings on the paint since you know the car will be
worth little when you are ready to get rid of it anyway. Where will you be in six years if you sock away
the extra $220 dollars a month in a rather lousy investment CD with a rate of one percent? You will have
$16,000 in savings. That is surely plenty of money to buy another nicer and newer car.
So who is the smarter consumer? Who is on their way to being able to always buy nice cars? Just from
one or two times abstaining from borrowing money to buy a new car a consumer can have the money in
the bank to buy all their cars new, if they so desire. Also, after a little time of driving an asset they own
free and clear, consumers may find they like the way that feels, even if the car does not look showroom
perfect. They say there is an air freshener you can buy for that new car smell. Also bear in mind that our
calculations did not take into account the amount you can save every year on ad valorum taxes and
insurance for less-than-new cars.