BEFORE YOU BUY A CHEAP CAR, CHECK OUT THESE TIPS
Today we're talking about $5,000 cars and why I choose to go a different direction when it comes to them. I'm going to lay out exactly the difference between owning a $5,000 car for cash and leasing one for 3 years.
There are people that want a vehicle that they can buy for cash for $5,000 or $7,000, cars that are below $10,000. Let's talk about that for a little bit. I want to explain that particular situation and see how I can teach you to forecast your vehicles a little bit better. That way you don't end up in a situation where you have to buy a car like this at all times.
I've seen a lot of different scenarios where people have a car that breaks down, or they have a car that gets totaled in an accident. That's where this scenario starts... so if you're driving a vehicle that's out of warranty right now you have to realize that at some point in time that vehicle is not going to run anymore. It's going to have some issues. (Some vehicles do better than others we're not having that argument today.) BUT you know your vehicle is not going to last forever. I'm even willing to bet that, like me, you've probably heard someone say, "Hey I'm gonna drive this car 'til the wheels fall off!" They're thinking they're just going to do the regular maintenance and take care of it, and one day the wheels are going to fall off then they might have to do something else. The question I usually have for people that tell me that is - What are you going to do when the wheels fall off? When they hear that question clients typically tell me "they don't know". They don't have a clue as to what they're going to do.
Remember guys, these cars are getting more expensive every year. They keep stepping up, they keep getting more expensive, and adding more valuable items like the safety technology. So please understand this, whatever your current situation is, it's going to come to an end at some point in time. That being said, let's talk a little bit about how you can start thinking about your transportation needs and a little bit better light.
YOUR CAR IS NOT GOING TO LAST FOREVER
So, I already said the first thing, understand that this isn't going to last forever, you're going have to do something. Whether you buy a $5,000 car today or if you're driving a brand new car right now at some point that situation is going to come to an end. What can you do to make sure that your plan is bulletproof? I think the first thing is understanding that! Understand that even if you get a $5000 car today, know that it has a limited shelf life and isn't going to be around forever. Make the most of it, and then do some backup planning when it comes to what you're going to do next.
So I wanted to say this first, if I was in the market for a $5000 car and looking for something reliable I would look for something that's going to suit my needs for an undisclosed amount of time. I would probably be doing what most of my clients are doing. They're looking for Honda's, they're looking for Toyota's. I would definitely stay away from Audi 's and BMW's and Mercedes. All the higher-end luxury cars tend to have a lot of issues once they're in this particular price range. I will say that it's easier said than done. Finding $5,000 cars is something that I'm not good at. Doing it on your own on Craigslist is going to be a challenge, so the next thing I would have in place is a mechanic that you trust. I have great mechanics here in the Springs that I can recommend you to. One of them being Honest Accurate Auto Service. Those guys are amazing, and they will look at the vehicle before you purchase it. That's the first thing I would do, in that order, is find the vehicle that I can have a mechanic inspect and look at it as deeply as possible. Then maybe that would be a good purchase for you. That's step one if you're going to do a $5000 car. Look for it on Craigslist, go drive the car, and have a mechanic look at it before you buy it.
Step two, enjoy that car and plan for what's going to happen when you no longer have that car! Even though you just got it today, it's not going to last forever. I've got to get you guys to think in that mindset of 'this is temporary'.
GETTING A LOAN ON A VEHICLE
Option two is to get a loan on a vehicle. If you've got $5,000 cash and you were looking for a car like that and you can't find it... option two is use that money as a down payment on a vehicle that you can purchase over short-term financing period like three to five years. I am always a big fan of a newer car. It seems as though our common sense goes away when we're looking at used cars. It's like, "Hey, older is cheaper!" Yeah, it's cheaper today, however, as time goes on and you have to do tires and brakes and alignments and oil changes and the car is leaking in your driveway... then you start realizing that you are spending more than what you would have spent if you just would have purchased a more expensive vehicle that is newer.
So that's option two, use your cash that you were going to use to purchase a car and apply it as a down payment on a vehicle that you can get a loan on. That is what is going to help you long term as far as being able to plan the longevity of your car. Typically, with that type of a scenario you're looking at being able to get a car that will last for five years.
LEASING A VEHICLE
Option three is leasing a vehicle. This is not a fix-all for everybody situation but some people overlook it, and what I mean by overlook it is they are about to spend $5000 on a car that's fifteen years old and expect it to last a long period of time. If you had a payment of $275 a month for 36 months that's about $9900! So for $4000 more you could have a brand-new vehicle under warranty for the entire time that you're driving it. I'm not going to say one is better than the other, or one is right and one is wrong. I don't believe that myself, however as I've gotten older, I've realized that I don't like doing maintenance on vehicle. Even though I was a mechanic I don't like working on my car.
To me, a $5,000 car means I'm going to have to do work on it, and it's not going to have the technology that I'd like it to have. It's not going to have Bluetooth, and all of those things. So looking at a different option, like taking out a loan on a vehicle, or leasing your vehicle... it's just more appealing to me. You are going to have to decide which option is best for you, and which suits your lifestyle.
I like the leasing option because you can forecast six, seven, eight, nine years of vehicle use and you don't need any money down. I always look at leases with zero down because I think putting money down just means we're buying too much car, and the payment is just higher than what we're needing it to be. So, if you have to put money down give that some thought, contact me. So, if you're looking to put $5,000 into a car... for a little bit more money you can have a brand new vehicle at a payment you can afford and keep that car for three years.