I’m about to finance a 21000.00 car at 6.9% over 48 months.
In other words, that car will cost me around 25000.00 in 4 years.
Thats 4000.00 im giving away to the bank.

I 100% agree that car is a very investment. Financing it is even worst.

But sometime you just want to enjoy your life sooner, have some fun sooner. We all die anyway.

Its a big dilema, should i save every single peny, take the city bus, use my bicycle to go to work and eat sandwiches everyday, and buy myself a franchise like Mcdonalds after 30 years of saving ?

or should i finance a car every 4 years over 30 years ? if you do that you will spend 500000.00+ in transportation after 30 years if u include gas and insurance.

With 500000.00 you won’t have enough to buy a mcdonalds but you certainly will have enough to finance another 500000.00 to buy a 1mil franchise. or open your own.

Now who will be richer after say 50 years ? Does it worth it ?

I see so many youngs wanting a camaro or a mustang or tuning their car into a 50000.00 modified car.
Also if a car can enhance your social life, meet new people possibly help you to get married,, money sure can’t do that… only thing you can buy with money are sex workers or people wanting your money.

Its really a choice you have to make.. Die poor and happy or die rich and wishing something you never had when you were younger.

I believe in living for today, and working for what I want. It’s a luxury to own a new car, especially one you really wanted. I work, save for retirement, and budget for a car payment because it makes me happy. That’s an investment I get a return on every day when I drive to work: a car I want to be in.

Thanks for comments! First let me say there may sometimes be exceptions to our advice and some are based on personal opinions (and in this case, our contributor Robert).

I’d agree that there could be many times when financing a new car could be the best route. For example when I purchased our last new vehicle which actually happened to be new, they offered a couple thousand discount for financing through them. I made sure there was no prepayment penalty. I then took my savings for financing through Ford credit but then paid off the loan in a matter of a couple months.

In regards to “running into someone else’s trouble.” I’d advise to always get the vehicle first checked out by a qualified mechanic. Were not talking about buying a 15 year old clunker. But looking for a vehicle that is just a couple years old with low miles can possible save you a lot of money.

“and scores of studies have shown that retaining ownership for 5 or 10 years is the best way to wring the most value out of a auto purchase.”

I would agree to that as well.

It is true however that most new cars DO depreciate in value substantially the moment you drive it off the lot. Some vehicles much more than others. “Most” vehicles are not considered investments. I’m not against splurging on a nice expensive vehicle but most people have to make a lot of sound financial decisions in order to get to that point (which may include cutting down on expenses elsewhere and making good investment decisions).

Thanks again for your comments. It brings in some good points to the discussion.

The financing of a new car is a red herring in your argument. I financed my last new car at 1.9%. Moreover, I paid it off in 10 months, not the 48 or 60 months that the suckers go for. My bill for financiing: $122.

Moreover, the whole notion of buying “used” is overworked. So your car is significantly depreciated the moment you buy it? Doesn’t it follow I should buy my clothes at a second-hand store? And my furniture from the Goodwill? And buy food brands I do not prefer merely because I have a coupon?

That’s a lifestyle that’s not for me.