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Ask Dave

The Deal Ain't So Great

What is so bad about buying a new truck? Because a used one is a better deal, says Dave.

QUESTION: Mary and her husband make $170,000 a year and owe that much on their house. They have $70,000 in savings. He wants a new truck, but she doesn’t want to buy it if they can’t pay cash. He has found 0% financing at several places. Dave tells her why, when you factor everything in, it’s not so sweet a deal.

ANSWER: You guys make a lot of money and don’t have any money. You don’t need to buy a new car unless you have a $1 million net worth, and you don’t. I just bought a truck and they are a dime-a-dozen now. You can get a deal on something with a big engine and horrible gas mileage. The bottom didn’t fall out on new trucks, it fell out on used trucks. Go pay cash for a 1-year-old truck with 10,000 miles on it, which is basically new, and see how big the difference is between that price and the price of the one he’s looking at. You can save up to 50% on a truck that’s just a year old right now.

If you ever want to be wealthy, you have got to develop the habit patterns of wealthy people. You have to spend like wealthy people. Don’t try to rationalize buying this new toy. The difference between $28,000 and $17,000 is a lot of interest. He’ll lose money buying a new truck off the lot, so buy a used car.