Our dear 1997 Chrysler Town and Country, Kate, is headed to the glue factory. Or at least to someone else's care. She needs a new transmission, which would cost $3,500, and a new computer. Then the electrical problems can be diagnosed. This is way more than we want to put into a ten-year-old minivan with over 165k miles.
So, we did a little searching and found a good deal on a 2005 Chrysler Town and Country with 45k miles. We put a deposit on the van on Sunday and will pay off the balance with a certified check later today.
All but the most classic vehicles depreciate heavily during the first few years, so getting a used vehicle instead of a new vehicle is usually a good trade-off between cost and performance. (Buying used whenever it makes sense is the best piece of money-saving advice I can give.) This, and my 2004 Corolla, are the newest vehicles I've owned. I've heard that two to three years is a good trade-off for cost vs. performance in a used car, so I hope that the extra money we've spent on the newer cars pays off.
Anyway, we liked the T&C. Lots of nice features, and power seats, which was the most important feature for my wife, who needs to be comfortable so that her back and arms don't start to hurt. We almost missed getting this van, though. A couple got to the vehicle before us, drove it, loved it, and put down a deposit on it. However, their financing didn't go through, and they couldn't purchase the vehicle. So they had to give up on it. (The car dealer returned their deposit.)
This is another great reason to build up the resources to pay cash for things as much as possible instead of financing them. Cash is king. You don't have to wait for cash to get approved if you have it already! The same goes for even more expensive purchases. Another friend had a contract inked for a property near where we live. While he was getting the financing together, someone swooped in and made a cash deal. Ready sources of financing are good, but a suitcase full of bills trumps the best-laid plans.
If you want another reason, I just wrote about my latest fiasco with my wife's car loan. The declaration on my insurance expired and the insurance company no longer had my financial institutions information, so the financier has started charging me $90/mo for insurance! Shouldn't be hard to fix once I get all the information passed to the right hands, but still a pain in the butt. The more debt you have the more chances you have of the bank messing something up.
Cash is King, I agree. There was 2 offers on the Aunt's house. One was sure to get it. They put down $2,000 earnest money and had a huge down payment and all their finances was in order. Guess what -they lost the bid. Why? Someone came in and offered Cash for the house!!!! As you said no need to wait for approval.
My dream is to get to the point where I can pay cash for a vehicle. I was in a dealership with my dad once when he paid cash for a used truck. The dealer treated him with such an air of respect. We have bought three used vehicles on credit. It's very humbling to have to go to a bank and ask for funds and sit there hoping you are worthy.
Congrats on the new(sed) T & C. I think it is definitely worth the extra $ for a 2-3 year old vs. 5-6 year old vehicle – they've been driven long enough for the new car bugs to be worked out and covered under warranty but not long enough for the really expensive items to kick in (shortly after your purchase, of course).
But you forgot the most important item…the color! 😉
There is NOTHING like a paid-for vehicle!!! Congratulations on paying cash for your new-to-you car!
It is amazing that if you just drive a paid-for car for three or four years and continue to pay yourself the payment you were making to the finance company, you break the cycle of having car payments! You can just pay cash the rest of your life!
Great job!
AUTO INVESTMENT !! cj
Yep, it's great.
Funny story re used cars. My son (age 18 at the time), found a classic muscle car, a 1971 442 Cutlass convertible. In good shape, excellent price, on a small lot next to an auto parts store. He was grubby, having been working on his own car, and probably looked rather disreputable, I will admit.
The guy wouldn't even talk to him, let alone let him take it for a test drive.
He comes home HOT under the collar, cleans up while I scoot over to the bank.
He goes back, now there's a young Marine, spiffed up with a WAD of cash. The guy changed his tune PDQ LOL.
Two lessons: Never judge a book by it's cover and cash is KING.
While there have been some very valid points made, I'd have to say whether or not cash is king all depends on the interest rate you're getting. In this situation, where you'd be purchasing a used car, then, yes, cash could be king. However, if you are making very sound investments that are beating that would be beating said interest rate, financing it is definitely the way to go. Remember money doesn't come for free, and it does require work.
Cash is NEVER king if the dealership offers you 1.9% for 3 years. (This mainly applies to new vehicles, though 🙁 )
CASH is the best! I just bought a used car, and paid upfront. It's hard to see the money go, but do it all at once, and you aren't reminded every month that you don't own the car; the bank does. Just like my dad said, "Being debtfree is the most liberating to live life!"
Cash is king when you are buying a used beater for cheap. If you are a young, unmarried male like me, financing to a low rate would probably be a wash at best. The money you could make in savings and investments would be trumped in insurance payments. I bought a 1991 Festiva that gets 40 to the gallon, and I only paid $800 for it in March this year. Best 'investment' I ever made so far.
This leads me to my suggestion to buy private party cars. Search with craigslist to start.
You simply have to be able say ‘no, thanks at that price’ at least once to the dealer. This gives them a strong message that you are serious about your research.
You should also bring a piece of paper to the dealership and make sure you do all the math of the finance calculations yourself. The point is not that they will do the math wrong. The point is you will see exactly how the deal is structured. Do not be afraid to take the time to do this or look like a fool for mapping out your car deal in the dealership.
My dad swears by this process.