Unreliable car? Don't think so!
Question: Donna's husband got his commission cut in half and it cut their income from $100,000 to $50,000. They just bought a car for $18,000 so now they are in debt. Donna argues they need a dependable car, but Dave thinks otherwise.
Dave Ramsey's advice: You're telling me the cheapest dependable car out there is $18,000? He's on the road all the time, destroying this car. Even if you had a million dollars in the bank, I would not suggest you destroy an $18,000 car. I suggest you destroy a $10,000 car. There are lots of $10,000 cars out there that are reliable enough to be on the road.
With the miles you are putting on this $18,000 car, you'll turn it into a $4,000 car in about 20 minutes. Sell this car, move down in car and put that on a car loan and pay it off as fast as you can.
Rather than buy a 10K used car with no warranty, bad brakes, a rusty exhaust, and four bald tires - catch yourself a brand new Chevy Aveo of Hyundai Accent for about the same price - each come with a new car warranty and peace of mind that is well worth it.
Don't subject yourself to the stress and loss of time associated with used car problems if you can possible avoid it. One breakdown can cost you several days of work plus hours of sitting around at some scam car repair place. Just not worth it.
If your credit is OK, you can have a new car, just be smart about it.
For example: I recently purchased a brand new 2007 Saturn ION ($16,000) at 0% for 72 months and also used a $1000 GM rebate (paid the sales tax) - so my payment is only $220 per month and I'm using GMAC's money for free (ZERO interest). Rather than forfeiting the cash, now I have that 16K freed up for other purposes...so look for 0% car deals and rebates on Edmunds.com.
Used cars depreciate just as fast, if not worse. If you don't believe me, buy a used car and then try to trade it back in the next month. Uggh.
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