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Buying a Car (or other vehicle)


So you are thinking about getting a new car? Are you getting a brand-new one? Or a used one? And yes, there is a correct answer.

Buying a car is probably the second largest purchasing decision we make, next to buying a house. So do you buy new or used. You always buy used, unless you are wealthy. And you never ever, under any circumstances, borrow money to buy a car. Why? Interest.

Buying a new car using borrowed money is like asking to have weights tied to your ankles and then thrown in a lake. It takes everything you have to keep your head above water; and even that is sometimes not enough.

The car salesman may be slick and say, "It's only a couple a hundred a month. You make plenty to afford that!" He is lying to you. I know I was swindled like this before.

While in college, I "needed" a new car and so I did my research. I found an economical car that got good gas mileage and because it would be new the maintenance would be minimal. So I bought it. Only later did I learn that my $20 thousand car really cost me $26 thousand and four years of stress and worry (I paid it off early luckily). It was not worth it.

My wife has a used car that she paid $10 thousand for and it is still going strong. Whereas, my new-minimal-maintenance car has had seven recalls and it is barely five years old.

So now that you know that you should not buy a new car and that you should never borrow money to buy a car, you also should know that you should never lease a car. Leasing a car is even worse than buying a car, because you have to make the monthly payments and you don't even get to keep it at the end of the lease (usually)! And the charges associated with overage miles and all the other fees at end of lease are enormous. These factors and others make leasing a horrible choice.

Bottom Line:

Don't buy a new car. Never ever borrow money to buy any car. And never lease any car.