When it comes to buy a car you have 3 options: buy a new car, lease a car or buy a used car. Which option is best for you?
From a financial planning stand point you should avoid purchasing new cars and leases on new cars if you want to pay debt faster.
Why? Because a new vehicle looses its value drastically, this is called depreciation. Did you know that on average a new $38,000 car will lose about $23,000 of value in the first four years that you own it. The money you save by buying a used car can help you get out of debt much faster. However, if you were to buy a new car you should keep it at least 16 years so that the impact of depreciation is eliminated.
When it comes to lease a new vehicle the impact on your cash flow is even more dramatic. A monthly lease payment of 400 dollars for 16 years could add up to 76,800 while purchasing a 23000 used car that last 16 years could save you 53,800 and help you pay debt faster. By purchasing a used vehicle or even a new vehicle that costs 23,000 dollars you would likely be paying 80 dollars a month if you own the vehicle for at lease 16 years.
Looking to buy a vehicle? Here is the best place to start. If you need financing to buy a car here is our recommendation for the most convenient and smartest way to buy a car:
Here is our recommendation for the most convenient and smartest way to buy a car:
This article is an expression of the author’s personal opinions. The Company will not be held liable in any way for the opinions expressed herein.
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