One of the most expensive items that people pay for every month, is their car. The average car payment in America is over $400. If you have two car payments every month, you could be spending as much as $1,000 every month just making your car payment. If people were able to reduce or eliminate their car payments, they would be able to save a substantial amount of money. This article will teach you how to save a lot of money, and how to avoid some of the pitfalls of car ownership that will steal your money.
Used Versus New Cars
The first thing that most people do wrong when they are out buying a car, is that they decide they want to buy a new car. New cars are very attractive because people figure they are going to save money by not repairing them. Plus, that new car smell is nice and it is great for their image. But, people fail to take into consideration that they are also going to be making a larger interest payment on the car, and that a more expensive car is going to depreciate much faster. People who are broke, always want to buy new cars. People who are rich, carefully consider whether or not it is worth it to buy a used car, and what their return on investment will be if they buy a car that is two or three years old for half the price.
The next thing you should do when you're looking to buy a new car or even a new RV, is trying get a discount. Sometimes you can save 30 to 40%, just by buying your car from a repo car auction. Car and RV auctions are not the only place to save money, you can also buy repos directly from the bank, if you're willing to invest a few hours of your time to find out which banks and credit unions have car repos for sale.
If you are able to save 30 to 40% on a used car, you might even be able to just pay cash for it. Paying cash saves a ton of money, because you don't have to pay interest, and it doesn't cut into your monthly cash flow. Cash flow is essentially the money that you have left over every month after paying your bills. You need to have cash flow before you buy a car. However, once you buy one with a monthly payment, then your cash flow is reduced by the amount of your monthly payment. If you want to become wealthy, you need to have a positive cash flow every month. You need to make more money than you spend, and save and invest the extra capital.
Make sure to properly inspect the vehicle. You want to know if it is going to have a lot of problems before buying it. And yes, this applies to cars you buy from a dealership as well. Paying a car mechanic $50 - $100 to do an inspection, is well worth it, if it can save you thousands of dollars of repairs later on with the vehicle. Also, if you have a mechanic that you use on a regular basis, they may be willing to do this inspection for you for free.
Don't go out and buy a new car just because you have a flat tire. Even though this sounds kind of ridiculous, it is actually the way that a lot of people think.If they have to put in 100 or a hundred and $50 of repairs for one or two months in a row, they might be, well, I'm putting a lot of money in for repairs, I might as well own a new car. Whether they felt they didn't account, is that the average car payment in America, is over $400. And that when they buy a new car, they're going to be making this payment for the next five years. It is a lot more instances than owning a used car. In addition, five years from now, that new car that they buy is only going to be worth about 30% of what they pay for. This means that on top of making the $400 payments every month, they are losing about 300 of those dollars to interest and depreciation every month. The way I see it, that is the equivalent of having to spend $300 towards repairs every month for the next five years. From a financial standpoint, it just doesn't make sense.
This article was written by Spencer, an online expert who specializes on the subject of buying and selling cars and RVs. His website is a valuable source of knowledge, tips and advice on how to save money when buying repo cars and bank repo rvs.