[LiteraryLark]

I went out today and got various price quotes on both a car loan and insurance. It's a heck of a lot of money to be paying for both at the same time. I want all my ducks in a row before I jump into buying a new car. I want to be able to afford all my bills and have enough money left over for savings and mad money, and at this point I can't do that with both an auto loan and higher insurance. I don't understand why I would take out an auto loan vs paying in full. I know it's good for my credit, but at the same time, I'm borrowing money I don't have and the bank owns my car until the loan is paid off, and if I miss a payment my car gets repossessed. I'd like to say I worked my butt off to save up the money. It's the idea that I worked hard every month to put away money for this car, and the car I have now is 20 years old but if I take care of it, it will last me until I can get a new one. So why jump into an auto loan and make monthly payments just so I can have the car now when I can work hard at my job, put in as much money as I'd like every paycheck, and in a year or so I'll enough money to pay for it in full? I can understand why my brother took out an auto loan, he needed a car ASAP. I have a dependable SUV that will get me from A to B and it will last me a solid couple more years, more than enough to save up for a new car without taking out a loan. I really don't understand why people take out an auto loan instead of paying it in full when the golden rule is to never spend more than you can afford, and an auto loan means you're borrowing money for something you can only afford through monthly payments, and it's not considered yours until it's paid off.

[TishaBuv]

You are right. Don't pay all that financing interest if you have the money to just pay for the car. Good for you!

[LiteraryLark]

Originally Posted by TishaBuv

You are right. Don't pay all that financing interest if you have the money to just pay for the car. Good for you!

It takes a lot of effort, determination, and patience. Having what I have saved up now is a HUGE DEAL!!! I've been working really hard to budget and save.

Have you considered leasing?

[LiteraryLark]

Leasing, according to the google definition, is to rent. I don't want to rent a car. I want the car to be fully in my name.

[zijax]

I only buy used cars up front and in full with no payments. I take care of them and keep them a long time.

[winter4me]

I do like zijax
There are other ways to build credit if you need to do that (a credit card you pay off every month, paying all bills on time etc)---I much prefer buying outright vs a loan.
Now, I am short of money which wasn't always the case, but at least I have no debts.

Well leasing is the way a great many people in Canada pay for their cars. Your payments are sometimes half that of regular payments. Leases are generally 2 or 3 years. After the lease is over, you have the option to either turn the car back in, or pay out the rest owing (and hence you own the vehicle).

Another word of advice... don't look at the advertised MSRP (Manufacturer's Suggested Retail Price) as it is rare you will actually find a vehicle with that sticker on it. The MSRPs you see advertised are for base stripped down models. Only about one in every hundred vehicles come off the factory floor without any options installed. It is consequently really hard to find a model at the MSRP. If this is what you desire, you may end up paying thousands more anyway for the delivery charge encurred by having to get the vehicle to you.

If you do end up opting to get a car loan - make sure you do so through a bank and not through the dealer or car company financing.

(I once worked for a car company and saw this in practise)

One reason to get a loan on a car is that you would have an investment that might pay more. For instance, I have an investment that gives me 10% on my money. But the car loan is 3%. By getting the loan I would be making 7% on the money - but I would be using the money to get the investment.

But I agree, I only pay cash for a car. My biggest reason is that when you get a loan you are required to have a ton of insurance. I like to just have the minimum insurance so I pay cash. Other good things of paying cash.

- You have more negotiating power to get a better deal.
- none of the "extras" they try to sell you while you are waiting for finance to come write up the paperwork.
- IMHO less paperwork.

Leasing is technically only paying the depreciation on the car. Thus the payment is much less than if you had a car payment. I always wondered how some of my very poor friends were able to ride around in expensive cars. But for me this is also a bust because you must maintain a full slate of insurance (plus numerous other costs at the end).

Another tip, be sure you use "true car" and "kelley blue book". My last car I went in with both in my pocket, true car for the new purchase and kelly for the trade in.. and they gave me exactly what those indicated. I agreed to both and we had a deal. Easy peasy. But had they tried to snow me on either I had the paperwork in my pocket to tell them they were over charging.

What are you thinking in terms of insurance? Be sure you are getting what you need. When I first started driving my insurance agent loaded me up with everything under the sun. When I finally started questioning what they were for, I thought a lot of it wasn't worth it. EVERY SINGLE YEAR... my insurance agent, no matter who they are, loads my policy with everything they can and I have to tell them to remove it. If you are a good driver I would probably only get the basics.

That is interesting about the insurance. Here the insurance is government and everyone gets the same.

[LiteraryLark]

Originally Posted by Emily Fox Seaton

One reason to get a loan on a car is that you would have an investment that might pay more. For instance, I have an investment that gives me 10% on my money. But the car loan is 3%. By getting the loan I would be making 7% on the money - but I would be using the money to get the investment.

But I agree, I only pay cash for a car. My biggest reason is that when you get a loan you are required to have a ton of insurance. I like to just have the minimum insurance so I pay cash. Other good things of paying cash.

- You have more negotiating power to get a better deal.
- none of the "extras" they try to sell you while you are waiting for finance to come write up the paperwork.
- IMHO less paperwork.

Leasing is technically only paying the depreciation on the car. Thus the payment is much less than if you had a car payment. I always wondered how some of my very poor friends were able to ride around in expensive cars. But for me this is also a bust because you must maintain a full slate of insurance (plus numerous other costs at the end).

Another tip, be sure you use "true car" and "kelley blue book". My last car I went in with both in my pocket, true car for the new purchase and kelly for the trade in.. and they gave me exactly what those indicated. I agreed to both and we had a deal. Easy peasy. But had they tried to snow me on either I had the paperwork in my pocket to tell them they were over charging.

What are you thinking in terms of insurance? Be sure you are getting what you need. When I first started driving my insurance agent loaded me up with everything under the sun. When I finally started questioning what they were for, I thought a lot of it wasn't worth it. EVERY SINGLE YEAR... my insurance agent, no matter who they are, loads my policy with everything they can and I have to tell them to remove it. If you are a good driver I would probably only get the basics.

Thank you for the tips.

I use AAA and they are wonderful. Never had an issue and tons of benefits and perks.