Why Should I Buy A Used Car?

from daveramsey.com on 07 Aug 2006

Because you'll save a ton of money and heartache!

Buying a new car is not something 98% of the people out there need to be doing. It is a luxury item. Only buy a new car if you're filthy rich. The money saved by buying a used car is because of depreciation (the loss of the financial value of an object due to its use). Used cars have already depreciated (60% to 70% in the first five years). Buying used allows the person who bought the car when it was new to eat the cost of the depreciation. Then the person who buys the car used can get a great car for much less than the new wholesale prices.

Say you are looking into financing a sports car with payments of $400 per month. The car that you are driving now is worth around $1,500. If you take that $400 and pay yourself instead of paying it to the dealer, you will save $4,000 in 10 months. You will have $1,500 from selling your old car, so you will be able to buy a $5,500 car just 10 months from now. Continue doing that for another 10 months and you will be able to buy yourself a $10,000 car. That is only 20 months away. You can do it!

There are alternatives to buying new. Used lots are overflowing, and millions of cars come from expired leases. If you want to know what used cars are selling for these days, look online at the following sites:

Also, call some of the banks in your area and ask them how they dispose of their repossessions. If they have a repo auction in your area, this is a great way to find good deals. But the best deals you can find are usually from individuals because they are trying to get rid of their vehicles. Look in your area papers and find what's for sale. No car fever! Go take a cold shower! No new car!

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i'VE BOUGHT USED CARS FOR CASH ALL MY ADULT LIFE. HOW DO YOU RESPOND TO FRIENDS/RELATIVES WHO MAKE FUN OF YOUR OLD CAR & THINK YOU CRAZY FOR PAYING CASH WHEN YOU (MAYBE) CAN GET A FINANCE DEAL FOR 0% INTEREST. I HAVE A VERY GOOD FICO SCORE.
aNNA wNUK March 02 2010 3:32 PM

I got a discount from my dads ford plan, but had no credit, and a lost my wife of 35 years. I needed some thing to make me feel better. well I got the truck for a good deal. well soon I will have had it 2 years. I have all my bills payed up. just the monthly things. rent, truck Ins, life Ins, and I CAME ON SOME $ I HAVE MY 6 MONTHS MONEY. WELL I HAVE BLOW MONEY! I WILL BRING BACK THE TRUCK AND BY IT CASH. EVERY THING HAS BEEN DONE FREE ON IT FOR 2 YEARS. ITS 2 YEARS OLD, AND I KNOW THE OWNER ME. HOW DO I DEAL WITH BUYING MY LEASED TRUCK AS A USED TRUCK NOW!AND THE CAR SHARKS. YES I CAN PAY CASH ON A 10,000 TRUCK OR THE LETS MAKE A DEAL. I HAVE $3000 EXTRA, BUT THEY DO NOT KNOW! I EM FREE FROM DEPT. SINGLE AND HAPPY. YOUR CLASS GOT MY PAST BILLS GONE! I HAVE NO CREDIT CARDS. BUT A DEBIT CARD YES. THANK YOU DAVE"
WAYNE March 02 2010 12:43 AM

yes, I made a big plunder buying a time share one year ago. a 10 year, go any time dream vac, right! I payed it all off, so I would not pay $1,000s in interest. And I figured I would sell it later for a profit. Vegas flamingo, bay. Did I get sucked in. I won 10,000 on a slot, machine. That was nice. but but it into this time share, plus moneys trying to sell it. I em going after my money lost to scams! But I most likely have lost out!so I em stuck fees for up keep off 550 year. I wish I new how to dump this off. people do not by a time share, you can not sell them, or give away.
WAYNE March 01 2010 11:51 PM

Friend of mine turned me on to salvaged cars. Many autos are in rear end collisions that total the vehicle. The engines and parts on the front end are still in perfect working order. You can get a full engine replaced for under $2000. If you take car of the body of the vehicle, you keep replacing the engines for cheap. Car collectors do this all the time.
Tim February 02 2010 9:09 AM

I believe there are rare situations where buying a new car may be smart. I bought a new car at a very low interest rate and paid it off within a couple years. I plan to keep and drive this vehicle until it bites the dust. The new car also came with a 10 year/ 100,000 mile warranty which is peace of mind for me.
Kate January 29 2010 10:11 PM

Dave you are a very smart man... thank God for being so young and having young credit... I got married at age 18 and my husband and I have tried to finance a couple of new cars and have been denied several times and I'm thankful... we need another car but we're following your baby steps, then are gonna save for a cheap one we found I couldn't even imagine how much debt we would be in if we have been approved for one of those ridiculous new cars!!! we will live like no one else now so that we can in the future live like no one else :)
Leah January 07 2010 1:01 AM

Hey Dave, Im in 7th grade and we are doing a project with taxes. We get to buy a house, car, and one expensive item. "My" income salary is 45000 dollars a year and we're supposed to see how long we can go before going bankrupt, or in debt. Wish me luck.
Daniel December 15 2009 11:23 PM

We have 2 older cars, all paid for - yeah but we are now spending $200-400 / month in repairs. When does it make sense to dump 1 of them for a newer, more reliable car?
Mickey November 10 2009 11:22 AM