Alright, personal finance blogosphere. Enough with the haterade for new cars. Are they depreciating assets? Yes. Is interest bad? Yes. Is financing a car the worst thing someone could do financially? Not necessarily. In fact, as someone who financed a $27,000 car several years back, I wouldn’t change a thing. Except maybe I would have spoken up sooner.
Car shopping was hands down the most stressful money exchange I had ever participated in. Mostly because I hadn’t yet bought a house. Thankfully, I had a secret weapon: my dad. A man of few words with an incredible poker face, he’s also owned an auto repair for essentially my whole life and tinkered with cars for all of his. To say he knew more about cars than most people in the showrooms was an understatement.
Once I had landed on my sensible Camry, I spent hours pouring over the research online. Yes, I knew it was going to lose a hunk of its value when I drove it off the lot. But I also knew how absolutely uninterested I was in driving a car that someone else owned. Every ding, every dent, every french fry crumb hurt my heart. Plus, I was swapping out a 1996 Chevy Camaro with a rebuilt engine (thanks, Dad!) and over 200,000 miles on it. It was my dream car, but it started to get old. Like, headliner-sags-onto-your-head and dashboard-cracks-from-temperature-changes old. This was 2011, after all. And if you’ve never had the privilege of driving a Camaro in a Chicago winter, it’s a lot like ice skating uphill.
So, I researched my new car, landed on a price, and walked back into the dealership. In the middle of the negotiation, my dad picked up a piece of paper, scribbled down the number I settled on, turned the paper face down, and pushed it in front of the salesman. He didn’t say a word. The salesman hemmed and hawed. He called his boss. We even walked out the door. Sure enough, my phone rang. The car was mine, but they couldn’t–no, they wouldn’t–go any lower. But they would offer me 0% financing.
I had enough money in my savings account to pay cash for the car. Instead, I crunched some numbers, settled on $400 a month, and agreed to finance my car for five years. Five years of payments meant a lot of things. I didn’t technically own my car. I definitely wouldn’t walk away with the title. A chunk of each paycheck was already earmarked for an obligation.
And yet, I was also free to pay off the loan at any point. And while I made my monthly payments, I got free car washes. While free car washes are remarkably exciting, so was the interest that I was actually earning on the money that was free to sit in my bank account. Imagine how much cooler this story would be if it were an investment account. You win some, you lose some.
And that’s the part that no one talks about. I could have bought my car. I did buy my car. I just bought it differently. But I still bought it in a way that fit into my financial plan at the time. It wasn’t the general sabotage that the blanket condemnations make it out to be.
Perhaps you disagree with me for buying a new car. You find me materialistic or impractical or just plain irrational.* Maybe that’s true. But you should also know this. I bought that car six years ago. It has 32,000 miles on it. I will, in effect, drive that car until it dies or my blue-haired, wrinkled self no longer passes her driving test. And at 5,000 miles a year, if Toyota really stands by their pledge of 200,000 miles, it will be close.
If you want to write posts about the benefits of used cars, please do. Share your numbers. Tweet about the value of thinking hard about these kinds of decisions. Explain what it actually means to agree to pay the same bill every month for 60 months, how painfully tedious that can become.
But don’t say everyone is wrong. Don’t say everyone is stupid. And don’t you dare tweet that I’m not adulting. You know what really isn’t adulting? Putting other people down because they have different financial plans, dreams, or goals than you. Last I checked, signing on for a responsibility and carrying it out actually is a sign of maturity. It might actually be the defining tenet of it.
You drive your car, I’ll drive mine.
So Tell Me…Has someone ever misunderstood one of your money decisions?
*If you still think I’m foolish for buying a new car, relax. You’re in good company. The family mechanic (hi, Dad!) agrees.