Posted on 04/01/2014 7:14:21 AM PDT by TurboZamboni
I'm trying to steer him away from financing a new car.(Trying to get him to buy used and pay cash)
I know my chances are weak, but maybe reading advice from people other than dad my have better odds. He banks at USAA, FWIW.
I figure he’ll get deployed and have to make payments(and full coverage insurance payments since it’s financed) to only have it city in a mud yard with no little to no security where it will be vandalized or stolen.
One word, used or new: Toyota
You’ll never regret it.
If he does buy new, make sure that he really reads the terms of the loan and understands them before signing it. I had a friend who bought his first new car and didn’t bother with that. After a few years, when he lost his job and couldn’t make the payments, he found out that he could not sell the car to pay off the loan, because they had applied all his payments to the interest, so he still owed 100% of the principal. His only choice was to let them repossess the car as a total loss.
Explain why and then let it go.
The lessons one learns well are from personal experience. After you've shared your experiences and your advice, you are done.
God didn't rest on the 7th day because he was tired. God rested because he was done.
First, he’s an enlisted MAN.
The military doesn’t take kindly to the “my car broke down” excuse, so a $1000 beater isn’t a good idea unless he lives on base.
The used car market right now is such that a car that’s a couple years old costs almost the same as a new one. I just bought a new car and was amazed at how a 2 year old Camry sells for the same as a new one. And they wanted more for low mileage 2 year old F-150’s than Ford is selling them new! (Are the auto manufacturers manipulating the used car market to steer people towards buying new?? Perhaps.)
If he gets a 3-5 year old car with low miles, it will still cost quite a bit and require a loan and then he owes money on a car with high mileage and that could mean payments PLUS repairs. If he has the $10k to pay cash, then that would make a good down payment on new or slightly used.
If he doesn’t fall into the “trade every two years” trap, then starting out with a quality new car or truck while he has a good dependable paycheck (a rare thing in today’s economy) and keeping it until its paid for is not a bad idea.
I was going to say the same thing. My son was lucky that I gave him my 2006 Sonata when I bought a new one. Now I wish I had kept the old one. (: Still going strong.
I have had good luck so far with USAA for car insurance.
He lives on base. Single/no dependents.
good point.
Tell him to invest in a good camera and save his car money. The pictures will be worth more to him in 10 years than any car he buys now.
I really regret how few pictures I took when I was in.
Chariots, of course.
Actually, the Wonder Cart was available. Power was only one horsepower, but it came with a nifty whip holder. Wooden spare wheel was optional.
>>Then show him how financing a car is like throwing away 10,000 dollars over the life of the loan.
Have you looked at interest rates lately? You can get new cars at 1.75%. That’s less than $1000 in interest over a 60 month loan.
It has been totally reliable, it is easy to work on, and parts are dirt cheap.
It really depends on what he is buying. I have bought and sold lots of autos, all used. I have never bought new but over the past 3 years have found that many Honda and Suburu cars with 30K or less have retained almost all of their value. A 2012 Civic LX goes for about $13,500 (wholesale) and about $16,500 (new with rebates from a good deal). There is a trick to buying used vehicles that will save you between $1,000 and $3,500 dollars pretty easily if you are comfortable negotiating and have some time and patience. You should not expect to get the wholesale price (per black book auction rates for your area) as the dealer has to make some money too. But you can get close if you know where to negotiate from.
When daughter got her license back when she was 16, she was driving our Old ‘98 Expedition . . .Blackie . . . she wasn’t too happy with it but it was what it was, had to leave home early so she could do a “pull-through” in her assigned spot at high school .. . . I watched and watched and searched for a reasonable priced car . . . as I knew her Dad would be perfectly happy with her driving the Expedition . . . finally after 6 months searching I found the little 2001 Ford Escape, looked great, with about 180K miles on it for 2995.00 so we got that . . . she only drove it to school and dance for two years . . . then sat for a year her first year away at college, too many miles for back & forth, so now son is driving it to high school and hopefully next year, so IF we get 5 years out of the little car and I hope to sell it for pretty much for what we paid for it.
Oh in my comments earlier . . .with buying her the CR-V, she earned tuition with her ACT score for 4 years . . . so she is a hard worker and I don’t feel bad for getting it for her . . .as a sophomore Spring semester her scores have already “paid” for the car.
Ask him if he would like to pay $250 a month for a 3 year old car with 50k miles on it. Then tell him that is what he will be doing I 3 years if he gets a 5 year loan.
True, true. In some cases, the evidence was destroyed ;)
Give him the present of Financial Peace University (FPU), the Ramsey program. It’s $120 or so and he is at PRECISELY the time of life when he needs it. My daughter and future SIL are taking it with us right now.
I’m a JAG and have had more legal assistance sessions than I can count with E-3s through E-6s and O-1s through O-3s that have the same refrain: “I bought this car cuz I could afford the payments. Then I got a credit card cuz I could afford the minimum monthly payment. Then I missed a payment. Now they’ve repossessed the car and the credit card company is hounding me. What do I do?”
Unfortunately, younger people who are for the first time getting a regular paycheck seem to thing they’re rich and/or financially bulletproof. I hope your son sees the light before becoming car poor.
Did I mention FPU?
Colonel, USAFR
Bought a 2008 equinox for a daughter away at school. We bought the extended warranty—something I do for my business truck, but not for my cars. She has more than paid for that with a couple of dealers.
Depending on how good he is with repairs and if he has that much of a down payment, buying new is going to be better. We looked for both of our girls—and the best we could do for either of them was recently used, 50,000 miles, and about $18k.
Out there now, there are $20k decent used, and $2000 beaters. Nothing in between.
People are not buying new cars these days because they want to. They buy them because they have to.
This I learned from my son while he was in the Army. There are always cars for sale by other enlisted personnel. My son bought one and paid for it in two payments. He drove it for 7 years. He saved his money and bought a dream car for cash - no car payment. The thing about buying a car on base is you can ask around. People will know whether the car has been troublesome.
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