Getting a car loan - good idea or not?

[German_LDS]

Hi everybody,

as usual I would like to ask you for your advice on something.

My car broke down and it looks like I will need to get a new one. Maybe it can be repaired (transmission is gone) but chances are it's gone for good.

I don't have the money to by a new used car. If I had to buy one I would need to ask my bank for a small loan.

We're advised to get out of debt whenever possible. There are a few exceptions like home and student loans. Just recently our bishop read a letter from the First Presidency about business scams and it was mentioned again to remain (consumer) debt free whenever possible.

I'm living in a big city with a good public transport system. I don't need a car in order to get to work. I can ride the sub. However it's very difficult to do my weekly groceries without having a car. The next temple is two and a half hour drive away. Without a car I will have to ask ward members for a ride every time I want to go to the Lord's House.

In short: I would survive without a car but things would get very complicated.

So what would you do in such a situation or what have you done in the past in a similar situation? Would it be wrong or against the recommendation of prophets and apostles to get a loan in order to buy a new used car?

I know I will have to decide for myself. But I value your input because it often let me see things from a different perspective.

[rameumptom]

If there's a need, go ahead and borrow the money. That said, make sure you borrow for a basic, modest car, that easily fits into your budget. Then, pay it off as fast as you can.

[mnn727]

Need vrs want.

How about you go without for a while and save up as much of a down payment or even the full amount of a car that you can?

Yes, shopping will be difficult, but how much shopping do you do? Use a back pack to carry groceries.

Temple attendance - if a ward member is going why not bring you along?

I'm not saying go forever, but go as long as you can and save money for a car.

[MrShorty]

My car broke down and it looks like I will need to get a new one. Maybe it can be repaired (transmission is gone) but chances are it's gone for good.

If all it needs is a new transmission, I would attempt to weigh the costs associated with rebuilding the transmission against the costs associated with a new/used car. Just about everytime I do this, I decide that it is cheaper to rebuild/replace the transmission than to buy a new car. Oftentimes, I decide it is cheaper than buying a used car. It is rarely a clear "black and white" decision, but I would not be too quick to decide not to fix your existing car.

[Guest]

Sometimes, sacrificing for the short term with a goal in mind for the long term makes us stronger and have greater appreciation for the accomplishment of the goal.

There have been talks by the prophets about how much sacrifice some LDS members have to go through to attend the temple. These are character building moments. Not only do you gain the opportunity to humble yourself in seeking service from ward members, it also gives them the opportunity to exercise service.

Groceries can be shuffled - instead of weekly, do it daily. Or, seek assistance from ward members as well.

And then tighten the belt so that you can get that car much faster. So that when you do get it, then you can remember the times that you received service from others so that you can seek opportunities to drive somebody else who needs a ride to the temple or to the grocery store in your car.

Hope this helps.

[skippy740]

This is only my opinion:

Part of provident living is being able to take care of oneself independently, without requiring dependence upon another. Without a car, your ability to serve others would be hindered. You would need the kind acts of service in order to serve others. That's not necessarily a bad thing, but it's an area to take into consideration.

Yes, we should avoid debt where ever possible. Particularly debt for excessive or lavish things. I agree with rameumptom to get a basic car that will serve your needs. (Okay, get a good car and get the options you want on it... instead of the top-of-the-line luxury car for example.) I think there are too many people that take out maximum debt "because they can" or "because they deserve it" on items that don't necessarily generate greater happiness. As a result, they are in greater debt, don't have enough savings, insurance protection or even retirement savings.

I'd feel better about being in debt for a Toyota Corolla/Camry than a Lexus LS. It's just being prudent with your financial resources.

As a note though - today you can find great deals on financing NEW cars. The old adage about buying used being cheaper is not necessarily so today. Dealers are looking to move inventory and, if you have decent enough credit/job, you can probably secure 0% financing on a new car for a maximum 60-month loan term.

Certified Used are a great option too... but you might not be able to secure 0% financing. You could end up stretching the loan out to 6 or 7 years, have a lower payment and pay a small interest rate, but I personally think that's an excessive amount of time to have a loan on a car.

If you take good care of your car with proper maintenance (which is easier because my Corolla even has a "Maintenance Needed" light on the dashboard now), a new car can easily last you 10 years.

The way to make a new car cheaper than a used car is to keep it at least twice as long as you would a used car. If a used car is generally good enough for 5 years, keep your new car for 10 years+ to maximize your purchase. Plus, since you are the original owner, you know your car and its history.

Now, Anatess would tell you how to find a good used car from a private party and spend WAY less. I would agree with her advice. (It's elsewhere in the forum, if I remember correctly.) I suppose it depends on how much you rely on your car every day. I like having a reliable car that I took excellent care of from day 1. I did have a much older Camry (1994) with over 240k miles... and it was good enough for a couple of years. But once I began doing heavier driving, it just wasn't going to be cut out for the job.

So, weigh out the options and make a sensible, prudent decision for you. There's no "absolute rule" on how to buy a car. Get a reliable car you can be proud of, but not spend excessive money and I think you'll do just fine.

[Guest]

This is only my opinion:

Things might be different in Germany. I know in the Philippines, even a serviceable Yugo is a luxury (pedestrian society). But, yes, when you have one, the amount of service you can perform with that Yugo can be quite amazing.

Edited April 30, 2013 by anatess

[Saldrin]

buy a cheap "beater" car, then start socking money away for a new vehicle. a car loan is a bad idea

[Vort]

Used cars are almost always a far better value than new cars. I agree with Saldrin, buy an old beater and start saving until you can afford a good used vehicle. (So I agree with Saldrin except for the "new" part, I guess.)

[Saldrin]

Used cars are almost always a far better value than new cars. I agree with Saldrin, buy an old beater and start saving until you can afford a good used vehicle. (So I agree with Saldrin except for the "new" part, I guess.)

sorry to clarify, I meant new as in newer. A car will lose most of its value in the first four years. so yes a good used vehicle.

[Guest]

Used cars are almost always a far better value than new cars. I agree with Saldrin, buy an old beater and start saving until you can afford a good used vehicle. (So I agree with Saldrin except for the "new" part, I guess.)

Not necessarily true in Germany.

The opening of the EU also opened trade across EU countries. You may be able to purchase new EU cars for cheaper than used cars...

[pam]

My car is now 11 years old. I'm going to need to purchase a newer car sometime soon. But man, I don't want the car payment again.

[Vort]

Not necessarily true in Germany.

The opening of the EU also opened trade across EU countries. You may be able to purchase new EU cars for cheaper than used cars...

Basic economics seems to make this highly unlikely. If used cars cost more than new cars, no one buys any used cars. Demand plummets, so prices follow. Inevitably, used cars will sell for less than new cars. Or so it would seem to me.

[Guest]

My car is now 11 years old. I'm going to need to purchase a newer car sometime soon. But man, I don't want the car payment again.

We did this last year, Pam. Bought 2 cars in the same year. We've had our old van and car for 12 years each, both topping 200K+ miles. The cost of upkeep of the 2 cars just became more than just shelling out the cash for newer ones. We bought a pre-loved SUV and a brand new car within a month of each other. Why brand new? We got this deal with the dealership that made the brand new car cheaper than the pre-loved one! It's a trick the dealerships do with the trade-in values...

[Guest]

Basic economics seems to make this highly unlikely. If used cars cost more than new cars, no one buys any used cars. Demand plummets, so prices follow. Inevitably, used cars will sell for less than new cars. Or so it would seem to me.

Germany, Vort. Germany. Germans are very patriotic in commerce. "Buy German" is a cultural norm. And in addition to this, there are giant contracts you have to go through to sell a used car, German or otherwise, which increases the demand for new cars dropping their prices. But then too, there are dealerships that let their employees drive new German cars for a year so they can sell it used (not sure why - just something I learned from my workmates). It's a different world out there. And if you're not too picky about it being an Audi, Benz, BMW, or VW, new versus used car is not so much about the difference in price anymore. And neither one of us know it enough to be able to offer a good applicable suggestion.

Edited April 30, 2013 by anatess

[Vort]

Germany, Vort. Germany. Germans are very patriotic in commerce. "Buy German" is a cultural norm. And in addition to this, there are giant contracts you have to go through to buy a used car. There are dealerships that let their employees drive new cars for a year so they can sell it used and get more profit margin. It's a different world out there.

There are no used BMWs, Mercedes, Opals, or VWs?

[Guest]

There are no used BMWs, Mercedes, Opals, or VWs?

The price of a used BMW can be more than a brand new EU import. Quality still good, it's just not German. Remember, you can't just buy a used "beater car" in Germany regardless of whether it's a German or EU import car. There are lots of rules and regulations on car condition to be able to sell it used.

In any case, all I'm saying is - what is cost-effective and practical in America may not be applicable in Germany.

Edited April 30, 2013 by anatess

[Vort]

The price of a used BMW can be more than a brand new EU import. Quality still good, it's just not German. Remember, you can't just buy a used "beater car" in Germany regardless of whether it's a German or EU import car. There are lots of rules and regulations on car condition to be able to sell it used.

In any case, all I'm saying is - what is cost-effective and practical in America may not be applicable in Germany.

I don't understand where you're getting this from. According to this site, you can get a used car in Germany for less than 500 euros. Are you saying that Germany legally prohibits people from selling used cars for cheap?

In any case, I would expect principles of provident living to apply anywhere, even if the specifics differ.

[Guest]

I don't understand where you're getting this from. According to this site, you can get a used car in Germany for less than 500 euros. Are you saying that Germany legally prohibits people from selling used cars for cheap?

In any case, I would expect principles of provident living to apply anywhere, even if the specifics differ.

No... Germany legally prohibits people from selling cars that don't pass certain criteria of condition. You can sell it for 1 EU if you want. Of course you can find used cars for cheaper than new ones. How much you're going to spend to maintain the car is another subject. But fact remains, in Germany, commerce is different so much so that the American reasons for buying used does not always apply. So yes, provident living as it applies to Germany is the main point of discussion, not necessarily the details of how it is accomplished.

I work for a German company so I get my info from "breakroom" talk. Quite a bit of Americans transferred to German sites and vice versa.

Edited April 30, 2013 by anatess

[Vort]

No... Germany legally prohibits people from selling cars that don't pass certain criteria of condition. You can sell it for 1 EU if you want. Of course there's a reason why it's priced at 500 Euros.

But it must meet the conditions the German government sets, since you just now said Germany legally prohibits sales that don't meet those conditions. Therefore, you can indeed get a functional car for cheap -- which was the advice. So what's wrong with the advice?

[Guest]

But it must meet the conditions the German government sets, since you just now said Germany legally prohibits sales that don't meet those conditions. Therefore, you can indeed get a functional car for cheap -- which was the advice. So what's wrong with the advice?

I was responding to this:

Used cars are almost always a far better value than new cars. I agree with Saldrin, buy an old beater and start saving until you can afford a good used vehicle. (So I agree with Saldrin except for the "new" part, I guess.)

It may not be true in Germany that used cars are "almost always a far better value" than new cars. Because a good used vehicle in Germany may be more expensive than a good new EU import in Germany.

Make sense?

[Vort]

It may not be true in Germany that used cars are "almost always a far better value" than new cars. Because a good used vehicle in Germany may be more expensive than a good new EU import in Germany.

Make sense?

No, it's absurd. If a used car in Germany costs more than a new car, then there is no market for used cars. Used cars do not exist. If used cars do exist in Germany, then it is axiomatic that they sell for substantially less than new cars.

Do you have any evidence at all to back up your incredible claim that a used car in Germany costs more than a similar new car?

[EarlJibbs]

What I weigh against is repairs. Is the used beater I am getting going to need a repair every month to keep it going? How much is that going to be? A few hundred a month? Will those repairs cause me an extreme amount of stress, worrying if it will die any moment?

I once jumped around from used junker to used junker, each with the hope that nothing would go wrong. From my experience, it is better to go with a nicer vehicle if possible. Not necessarily more expensive, but when I have purchased low mileage newer vehicles, they have broken down a lot less, and in the end have saved me money and stress. Just my opinion, but it has worked for me.

[prisonchaplain]

buy a cheap "beater" car, then start socking money away for a new vehicle. a car loan is a bad idea

Yeah, getting a used vehicle can be a great idea. You get more for less, right?

I did say it was used, right???

[Guest]

No, it's absurd. If a used car in Germany costs more than a new car, then there is no market for used cars. Used cars do not exist. If used cars do exist in Germany, then it is axiomatic that they sell for substantially less than new cars.

Do you have any evidence at all to back up your incredible claim that a used car in Germany costs more than a similar new car?

That's silly. You are deliberately misunderstanding what I said. I did not say ALL of them do! I said, the market in Germany is not the same as the USA. Fact. Do you really need me to have to back that up?

Used Benz in the US is more expensive than brand new Corollas. Yet, there is a market for it. Is there not? Brand new Yugos are jillions cheaper yet there's no market for it. That's the US. Germany is different. The economics of used cars versus new cars is different. You can't just assume that just because the math works out in the US that it works out in Germany. What you know about Germany is just as much as what I know. Not much. Hence, both of us should not assume such economic statements as true or false in Germany. I wasn't trying to tell you used cars are more expensive. I was merely pointing out that used cars MAY NOT be "almost always" the economical route. You're a logic guy, surely you see the difference.