Transportation 2

So your car has broke down many times and the cost to fix it is more than the vehicle is worth.  Time to go to the new car dealership and buy a new car with six to seven years of payments.  Wrong move.

This is a critical point in time.  You are fustrated and sick of bumming rides or waiting at the bus stop.  You have had enough.  You have paid your dues and it is high time for a new car.  The problem is the next 72 hours will determine your finances for the next 72 months.  Choose wisely.

You are not the only person who views the new car as symbol of your arrival.  It is just that a status symbol.  This is the reason why new cars depreciate so fast.  A three year old car typically has depreciated 50 percent, yet has 80 percent life left.  Driving a car off the new car lot causes the car to depreciate 10-15 percent.  Worse yet, financing the car for seven years means you will never build any equity in the car.  Your only resort is to trade it in near the end and have the dealership fold the gap into a new car.  Thus repeating the wealth destroying process.

It is no secret that the majority of millionaires drive a old car.  They know the math.  Most people recommend buying a 3-4 year old car with less than 15,000 miles per year.  Stick with cars known for their reliability.  It is always recommended to have a mechanic check out the car and to look at the maintenance records for the car.  Make sure they did all the preventive maintenance in the manual on time.  You can do a lot of the check out yourself with some training. (Future post).

When you settle on a make and model you are looking for go to a credit union to secure financing before you look.  After you buy the car use the owners manual to do all preventive maintenance.  A used car is a great way to build wealth and it also saves on Auto insurance.  I use a online search tool called TrueCar, there are others.  

theLateFrugal