At least last year, "new car loans" had a really low rate, and I think as long as it's newer than 3 years old and less than 30k miles or something a used car still qualifies.. if you have money making more in interest than the loan percentage, you shouldn't pay cash (assuming you have greater than the financed amount earning interest)…
Interest isn't the killer, it's the insurance. When you owe money on a car, you're typically required to hold full coverage insurance on the car. That is not cheap.
That's not "certain." When market conditions change, you'll occasionally be able to get a new car for less than what you'd pay for a used one of the same type. Drastic changes in fuel cost and manufacturers discontinuing an unpopular model are the sorts of things that lead to this situation.
What on earth do you mean. Have you ever bought a car?
You negotiate the price you are willing to pay. The dealer has no idea if you are leasing, paying cash, or financing. The all-in price is either financed or leased at a specified interest rate. They do not "add in" an up front payment. That doesn't even make sense, and would be incredibly misleading.
If we negotiate $25,000 for the car,and I finance at 0%, you are saying they up the price to $27,500 to "build in a profit"? Nonsense. The numbers are in front of you and you can do the calculations yourself with high school math. 0% is 0%.
You are totally out of your element and shouldnt be providing financial advice. Maybe that's why the dealer rips you off.
You're wrong. Cash back rebate offers usually don't apply to the 0% apr deal, so the amount financed will be higher. Which option is better depends on the size of the rebate, what interest rate you can get outside the low apr deal, and the amount financed.
If the choice is between you getting a "sweet deal" or the dealer making a profit, you will lose every time. Rebates and magic 0% interest are designed to get you to sign on the dotted line without reading the fine print.
1. The two-word phrase sensible car was not defined by the comment I replied to; it was left up to interpretation.
2. Even if I take your assumption as the other poster's definition of sensible and remove any car payment, gas + insurance + maintenance yields a 6 year cost above $12k. My point stands.
> gas + insurance + maintenance yields a 6 year cost above $12k
This will depend on the individual circumstances. Liability insurance is significantly cheaper than full coverage. Average annual liability insurance is ~$552/year [1]. Driving the ridiculous 12k miles per year that average americans drive, a Prius would burn roughly 226 gallons of gas. At today's price of gas ($2.94), that's $664/yr. At 6 years insurance and gas will run you $7,296. I'm very skeptical of depreciation + maintenance blowing $4,704 over 6 years on a Prius...
The high cost of car insurance, coupled with the low wages in this state, are a significant factor that kept a lot of my peers in poverty well out of high school. The usual story goes like this:
- Reliant on a hand-me-down car to get to work.
- Work barely pays for rent, car insurance, gas, and food.
- Car needs maintenance but no money for that.
The end result is predictable: A lot of Floridians work for just enough money to be able to get to work, and as soon as this equilibrium is shattered, our lives fall apart.
Charitably, I think the lowest I've seen anyone's insurance payment in this state is $89/month, because they were over the age of 25 and their car fit the requirements for lower insurance rates nicely. They still had a car payment ($400/mo. IIRC) though.
> the lowest I've seen anyone's insurance payment in this state is $89/month [...] They still had a car payment ($400/mo. IIRC) though.
Again: liability insurance is a different thing. When you don't own your car (aka when you take a car loan), you are required to have insurance that can cover the cost of the car. When you own your car, you only need to pay for liability insurance, which is much cheaper.
Your story is all too common in the U.S. It's expensive being poor here. The frugal solution is to have money to buy a car outright. It's tough getting out from under that dilemma.
Yup. There are plenty of sensible options that you can buy outright. Plenty of japanese cars will last well over 200k miles. If you can't afford a new car, get a used one. There's a culture in the US that makes us way to comfortable taking out loans.