"I still stand by my belief that if you can't afford to pay cash, or in the event of an urgent circumstance, pay it off within one year, then you probably shouldn't buy that car. You need to stop thinking of the purchase of a car as a monthly payment, and look at the total price as a one-time purchase."
I think Debra makes a solid point here. There is no one a car salesman loves more than a "payment buyer," because that person will be so busy thinking about getting their payment under a certain amount, he'll stop thinking about how much he'll actually end up paying over the life of his car loan. One thing she said, though, I have to disagree with:
"Also, he does not mention that in order to stay in warranty that you must get your car serviced at a dealership (whose rates are usually higher than a certified independent mechanic), and at a schedule that is determined by the manufacturer."
The idea that you need the dealer to do all maintenance in order to have them honor a warranty is a common misconception. A 1975 law called the Magnuson-Moss Act largely prohibits manufacturers from forcing consumers to buy their branded product or services as part of a warranty's terms and conditions.
I'd also dispute that a mechanic, however skilled, can predict a used car's longevity with absolute certainty with one inspection. Catastrophic failures of expensive components such as engine computers aren't always easy to predict, even for an expert mechanic.
Meanwhile, commenter "jimboh" gives us a blueprint for managing car costs:
"Over the combined 22 years of ownership, we have had to make actual repairs totaling $4,100 on the 2000 LS (converts to about $35/month over its 10 year life). The '98 Mountaineer has had only $1,500 in repairs but will need another $2,000 this year for AC and oil leak. So the total $3,500 converts to $24/month over the 12 years. I also belong to AAA for roadside towing assistance $8 per month. So unless something VERY major happens, the wise financial choice at least for us is to stay with our existing cars."
I think doing the kind of financial calculus "jimboh" gives us is a good template for the cost-benefit analysis we should undertake before replacing an old, paid-off car: Would the car maintenance + repairs for an old, paid-off car over a period of say, 5 years, be greater than the cost of paying for and maintaining a new or used car over the same period? If the answer is no, then buying a replacement is more of a want than a need.
One note: Buying a car, used or new, is an individual decision that should be based on your particular circumstances. My goal here is to explore different ways of car buying and examine the merits of each, not make blanket recommendations.
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