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Personal Finances / Credit Cards and Consumer Debt
|Subject: Re: Could I Have an "Attaboy!"||Date: 6/12/2013 3:59 PM|
|Author: Fuskie||Number: 307076 of 308225|
My first care was a 1973 Plymouth Duster that my grandfather had bought and never had serviced unless something was broken. One day as I entered a busy intersection, the car seized up. The engine was still ran but the wheels would no longer turn. When I say we got our money's worth out of the car, it was eventually sold for scrap and the buyer cut the chassis in half and to weld to another of the same or similar make and model.
Here's the problem with car loans. And let me preface this by saying all my cars (I have bought 3 now over the last 24 years) were bank or credit union financed (never dealer). When you drive your new car off the lot, it immediately drops in value (depreciation) and isn't worth what you just paid for it. Depending on how long a loan you take out, it could be years before you get to the point where the resale value of the car equals the remaining amount on the loan.
My car loans have been 4 years; the average term length these days runs 5-6 years. Clark Howard recommends 3 year loans. Or better yet, buying a used car (after having it inspected by an independent mechanic) where the major depreciation of the vehicle has been born by the previous owner. I am amazed at people who trade in a car they still owe money on and have to pay off the difference between what they owe and the trade-in value IN ADDITION to taking on a new loan for the next vehicle.
The best way to leverage car ownership is to drive the car as long as possible, at the very least until it's paid off. The longer you drive it, the more value you get out of the money you put into it. It also gives you time to save up cash to put down for your next car when the time comes.
Whose last car loan was 3.99% from his credit union and would definitely recommend getting pre-approved for a car loan by a credit union before going shopping...
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