7 Pros and Cons for getting a new car and car loan
Is it worth it to purchase a New car and get a new car loan?
Currently, automotive manufacturers and dealers are trying to sell new cars with lots of incentives, including 0% interest rate, cash back, delayed payments and more. Some are even offering 7 years or more loans. Does having a 7 year car loan make sense for your budget?
Let’s dig into it all.
My husband and I have had several used car loans over the years and never have we seen 0% interest and deferred payments. This is amazing, but is it worth it?
It is shocking when you look at the true cost of car ownership, especially new cars. The cost of the loan, cost of the car, taxes, tags, insurance and repairs. Plus, if you live in a state or county that has personal property taxes, car registrations, state inspections and emissions you still have a lot of hidden costs beyond the financing. Cars are expensive.
I like doing Pro and Con sheets when making big purchases and decisions. It makes sense to see what it really costs and what factors that might cost more really mean to me and my family. The same goes for you and your family. Below I discuss what goes into my list.
How do you make this decision?
As you can tell, I clearly like making Pro and Con sheets when making big purchases and decisions. What do you think makes more sense for you and your family? Did the Pros outweigh the Cons? Or did the Cons outweigh the Pros? That is what you and your family need to discuss to see if this makes sense. If you decide to purchase a new car you will be paying more for the extra convenience and even if you can get a 0% financing, just make sure you pay the debt off as soon as possible so you don’t have a car that is underwater in value as it ages.
There is nothing wrong with a used car. As you can tell from my comments we are a used car family and don’t have a car loan. Buying a used car might be a better option since the car is already depreciated and in some cases the maintenance might have already been done. If maintenance is your fear with a used car it is best to look at what issues the cars have before purchasing it. I like CarComplaints.com.
Another option is to search for a forum or group dedicated to the vehicle you are interested in. You’ll find a group of people who love that vehicle and will talk for hours about the good and bad. In a lot of cases, you can find some great money saving tips and tricks on maintaining the car yourself or how to find a good local mechanic.
If you own a car that doesn’t have a maintenance plan, finding a good local mechanic is the best investment. It takes a little time to research and ask for references but it is definitely worth it. Remember: You don’t have to run to the dealer for maintenance. Save receipts for any maintenance that you have done. The Magnuson Moss Warranty Act covers you when you have maintenance work performed someplace that is not at the dealer.
The best thing to do is to save up a rainy day fund towards paying cash for your next car and having extra funds for maintenance when you need it because it will happen. In most cases, maintenance is not a lot compared to a car payment. So if you learn you need to spend $2,500 on some maintenance just remember that $2,500 is far less than a $600-$800 monthly car payment. It is best to consider buying a newer car when the costs start to reach $5000+ in costs you know for sure the costs may not stop. Then a newer car would be the best option. Plus, your awesome mechanic will tell you if it is worth it as well. They know the cost of labor and parts and can guide you as well.
I hope this helps!