Should I buy a car now?

Should I buy a new car now?

  • Jump now and benefit from desperate dealers/manufacturers to get a great price

    Votes: 8 33.3%
  • Hold fast because taking on debt in a pandemic is foolish

    Votes: 9 37.5%
  • Wait just a bit more and see if I can do even better

    Votes: 3 12.5%
  • Something else

    Votes: 4 16.7%

  • Total voters
    24

trever

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BC (Before Covid) I was starting to think about buying a new car, and now I'm seriously considering it.
I'm not in a place where I need to immediately replace my current vehicle so I can choose to wait, but it seems like now is a great time to buy.

The car will be a sensible choice and in line with my income, but if I buy, it will be on credit (60 month 0% interest)
 

kirchhausen

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It all depends on how comfortable you are with your personal financial situation. As far as car deals go, the sheer number of 0% offerings (so many models, and so many finance term lengths) are better than they were even during the 2008 recession. I never saw 0% for 72 or 84 months then, but I'm seeing it now.

If you are considering a pre-own vehicle, a lot of dealers were adding inventory to gear up for March (histrocially the start of selling season) and they have a lot more capital tied up in aging units than they are used to.
 

kirchhausen

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I mean if you can get 0% financing, (assuming you arent worried about your job/ source of income/ etc...) why would you not take that debt on if you need a new vehicle? you basically are paying cash for teh vehicle with the manufacturer's money, freeing up your own maney for other things.
 

Eloe2000

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I have always bought my cars outright in cash (not that they are fancy). I typically don't like recommending financing or leasing cars unless its for your business. But in general it is buyer's market, but I think it still has some room where it will improve.
 

kirchhausen

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FWIW, I dont think you are going to see better deals than you are now. So I would eliminate the "holding out for a better deal" scenario. Either buy now if you are comfortable with your situation (because the deals are better than they ever will be) or don't, because you either don't need a new vehicle or you arent comfortable with your financial situation
 

legend672

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When I watch those Mecum auctions, I see some awesome rides for short cheddar. One might say to himself, for $20 grand would I rather be in a corvette Rag top, or a Hyundai Sonata for that money.
 

kirchhausen

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I have always bought my cars outright in cash (not that they are fancy). I typically don't like recommending financing or leasing cars unless its for your business. But in general it is buyer's market, but I think it still has some room where it will improve.
I don't like financing, because I don't like paying finance charges. If you are financing a $30k vehicle for 60 months, even at a normally great rate of 3.9% you will incur a $3,068.40 finance charge over the term of your loan. But at 0% your finance charge is $0. Truly a no-brainer IMO
 

tabletalker7

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Why do people think debt is ok? I am 40. Paid cash for the house. Always driving used cars cause I could pay cash. Never had a credit card. Are people aware of how much money they donate to filthy stinking rich people all in the name of "interest". It isn't interesting it is actually quite pitiful. I am willing to bet the car you have now is in better shape than my 14 year old Jeep.
Also ask yourself this - is a financial institution going to lend you money for free? A loan with 0% interest is exactly that. Now are they lending you money for free, or is it really just already added to the sticker price before you got to the dealership and telling you "0% interest" got you to sign on the dotted line?
 

kirchhausen

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Why do people think debt is ok? I am 40. Paid cash for the house. Always driving used cars cause I could pay cash. Never had a credit card. Are people aware of how much money they donate to filthy stinking rich people all in the name of "interest". It isn't interesting it is actually quite pitiful. I am willing to bet the car you have now is in better shape than my 14 year old Jeep.
Also ask yourself this - is a financial institution going to lend you money for free? A loan with 0% interest is exactly that. Now are they lending you money for free, or is it really just already added to the sticker price before you got to the dealership and telling you "0% interest" got you to sign on the dotted line?
The financial institutions that are loaning money at 0% interest are the car manufactures. These are manufacturer subvened rates. No, Bank of America wouldn't loan you money at 0% interest. But a car manufacturer that needs to move their product will.
 

David O

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Yes but financing a depreciating asset is bad even at zero percent. You end up paying the full amount of the car and you end up losing in the end. Buy a new used car and let someone else pay for the depreciation.
Now financing a home is a different story. Real estate appreciates!

just my two cents.
 

longflop

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This would be an excellent time to email attack buy a car. Figure out what you want, email every dealer within a 50 mile radius saying you know the car you like and the options you want. Ask them to send you their best deal on a similar model. Tell them that you will be purchasing the car in 5 days and don't have time to test drive each model. Once the offers start rolling in, play them against each other. It takes a bit of work, but you will get a deal for sure.
 

tabletalker7

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The financial institutions that are loaning money at 0% interest are the car manufactures. These are manufacturer subvened rates. No, Bank of America wouldn't loan you money at 0% interest. But a car manufacturer that needs to move their product will.
Why is it that nothing else on the planet when bought brand new depreciates at the same speed as a brand new car? Could it be that the sticker price started artificially inflated to cover that 0% interest? Trust me they are not doing it for free.
 

David O

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Why is it that nothing else on the planet when bought brand new depreciates at the same speed as a brand new car? Could it be that the sticker price started artificially inflated to cover that 0% interest? Trust me they are not doing it for free.
This ‘^^^
 

David O

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Why do people think debt is ok? I am 40. Paid cash for the house. Always driving used cars cause I could pay cash. Never had a credit card. Are people aware of how much money they donate to filthy stinking rich people all in the name of "interest". It isn't interesting it is actually quite pitiful. I am willing to bet the car you have now is in better shape than my 14 year old Jeep.
Also ask yourself this - is a financial institution going to lend you money for free? A loan with 0% interest is exactly that. Now are they lending you money for free, or is it really just already added to the sticker price before you got to the dealership and telling you "0% interest" got you to sign on the dotted line?
Makes sense but you paying cash for your house makes you appear like one of those “filthy stinking rich people” in a bunch people’s eyes.
 

DrStrange

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Why would you want to replace your current vehicle if it isn't causing a problem? 10X this if you are swapping a paid for car and taking on a five year loan.

This sort of decision can be life defining. You can come close to paying for your entire retirement by driving an old but reliable car rather than a new (or almost new) car.

The "deal" isn't that good. Keep your current car, bank the payment you aren't making. Sooner than you might think, you'll have saved the cost of a new car. And yet, your old car is still working fine.

Out last car was 18 years old when we passed it off to Katherine as her college car. It was purchased in the days after the 9-11 attacks. I have to admit the technology upgrade was sweet. Many other people would have gone through three or four cars in the same time frame. We didn't and saved something like a hundred thousand bucks. Actually a lot more if you consider the market returns from 2001 through 2019.

Please let this be you. I'd make the same recommendation in boom times, but in the year of the plague this should be a time for exceptional caution. No one knows how this will work out. You assume a lot when deciding to commit to a five year loan for something you don't really need.

DrStrange
 

kirchhausen

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Why is it that nothing else on the planet when bought brand new depreciates at the same speed as a brand new car? Could it be that the sticker price started artificially inflated to cover that 0% interest? Trust me they are not doing it for free.
No, It couldn't be that actually.

Yes, car manufacturers make money when they sell their vehicles. But they dont sell the vehicles to you directly. In the US, at least, Manufacturers sell to auto dealers. These dealers pay invoice, which certainly is a lower amount than MSRP, or "sticker".

The dealer then sells the vehicle to a customer, at a price that is negotiated between the dealership sales department and the consumer. The Manufacturer has no direct say in what the dealer is selling the product for (other than incentivizing the price, through rebates, or subvened finance rates, etc...)

The manufacturer is not going in and marking up the invoice price to the dealerships. They simply want to move product so they can sell the dealerhsip more product.
 

kirchhausen

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Yes but financing a depreciating asset is bad even at zero percent. You end up paying the full amount of the car and you end up losing in the end. Buy a new used car and let someone else pay for the depreciation.
Now financing a home is a different story. Real estate appreciates!

just my two cents.
Of so if a car costs $40,000 out the door, and you have $40,000 in the bank, sure you can opt to pay cash. But at 0% interest, over 60 months @ $666.67, guess what you are paying? $40,000. The ONLY difference is that you have freed up your cash on hand. You can invest in a freaking savings bond at .2% interest and at the end of the day that money would have earned income, where if you are paying in cash that money is gone.
 

FordPickup92

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This thread has been helpful given that I have NO vehicle and am using/borrowing one to get to work and back. I need a vehicle ASAP and definitely don't have the cash to buy outright
 

Frogzilla

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BC (Before Covid) I was starting to think about buying a new car, and now I'm seriously considering it.
I'm not in a place where I need to immediately replace my current vehicle so I can choose to wait, but it seems like now is a great time to buy.

The car will be a sensible choice and in line with my income, but if I buy, it will be on credit (60 month 0% interest)

Are dealers really offering that much better deals right now? New supply was impacted from the pandemic and the stimulus checks mean more people have lots of cash on hand.
 

longflop

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Yes but financing a depreciating asset is bad even at zero percent. You end up paying the full amount of the car and you end up losing in the end. Buy a new used car and let someone else pay for the depreciation.
I hear what you are saying with the depreciating asset, but in my mind, cars are a bit different. A little less black and white, and a little more grey. You end up spending so much time in them, you should be happy with what you have. Short of my very first car, I have always bought new cars, then drive them until the wheels fall off. I take good care of them, goal is to get to 200,000+ miles. Thats how my parents always did it, and I guess I picked it up from them.

You know what they say, there is more than one way to skin an apple and feed it to a cat...
 

kirchhausen

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Why would you want to replace your current vehicle if it isn't causing a problem? 10X this if you are swapping a paid for car and taking on a five year loan.

This sort of decision can be life defining. You can come close to paying for your entire retirement by driving an old but reliable car rather than a new (or almost new) car.

The "deal" isn't that good. Keep your current car, bank the payment you aren't making. Sooner than you might think, you'll have saved the cost of a new car. And yet, your old car is still working fine.

Out last car was 18 years old when we passed it off to Katherine as her college car. It was purchased in the days after the 9-11 attacks. I have to admit the technology upgrade was sweet. Many other people would have gone through three or four cars in the same time frame. We didn't and saved something like a hundred thousand bucks. Actually a lot more if you consider the market returns from 2001 through 2019.

Please let this be you. I'd make the same recommendation in boom times, but in the year of the plague this should be a time for exceptional caution. No one knows how this will work out. You assume a lot when deciding to commit to a five year loan for something you don't really need.

DrStrange
I agree 100%, I wouldnt buy a car just because it is a good time to buy. But if your vehicle is ending its life cycle, or if you have life changes (baby on the way etc...) that will make you need a new car very soon, it is a great time to buy.

For the record, I drive my cars into the ground too. My last car I purchased I bought pre-owned, and had it for over 10 years and over 249k miles.
 

tabletalker7

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Of so if a car costs $40,000 out the door, and you have $40,000 in the bank, sure you can opt to pay cash. But at 0% interest, over 60 months @ $666.67, guess what you are paying? $40,000. The ONLY difference is that you have freed up your cash on hand. You can invest in a freaking savings bond at .2% interest and at the end of the day that money would have earned income, where if you are paying in cash that money is gone.
So why did the $30,000 car my daughter bought last year for cash only cost her $21500? Sounds like 0% interest cost people 8500 on that model.
 

kirchhausen

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What did she buy? I would not be surprised if dealers are selling that same vehicle (assuming the body style didnt change for the new model year) for roughly the same amount.
 

kirchhausen

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For the record, (and the unfamiliar with buying a car) there are 3 areas in which you can and should negotiate seperately when buying a car:

1) Sell price
2) The finance rate (if you are financing)
3) If you are trading a vehicle in, the trade-in value of that vehicle.
 
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Boother36

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The last time I bought a new car the final negotiated price was $XX,000. I could finance it at 0% and pay $XX,000, or pay cash for it and pay $2,000 less than $XX,000......so I paid cash.

So I don't think 0% is truly "free" financing....just saying.....
 

kirchhausen

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Sometimes the 0% is conditional from the manufacturer. You can get the rebate, or an additional $x rebate. AFAIK now is not that time.
 

Frogzilla

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Why is it that nothing else on the planet when bought brand new depreciates at the same speed as a brand new car? Could it be that the sticker price started artificially inflated to cover that 0% interest? Trust me they are not doing it for free.
Counterpoint: try to resell a TV, furniture, appliance, clothes, etc. How much is a used setup of cards going for? People pay a premium to be first owner for many things including cars
 
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