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The Cost of Buying a New Car

"Take cars, as another example. Say you put $4,000 down to buy a new car worth $24,000. You finance $20.000. Say you are charged 10 percent interest for 48 months. Your monthly payments are $507.20. You have paid not $20,000, but over $24,000. Plus, you probably have zero in your bank account. So now you have a shiny new car with which to drive yourself to the job you'd like to leave but can't, because you have no money saved.

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Hmmmm. How about if you reversed this scenario and paid $4,000 for a good used car, then invested that same $500 a month for the same 48 months at the same 10 percent interest, compounding monthly? At the end of 48 months you would have a car plus $29,605.92 sitting in your bank account. Hello? Is anybody listening?" lol

Source: The Simple Living Guide, a book, by Janet Luhrs page 34.

By Carol from Wyoming, PA

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March 18, 20080 found this helpful

You have also forgotten to include depreciation once the car is driven of the lot.

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March 19, 20080 found this helpful

I totally agree with you!! JoJo

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March 19, 20080 found this helpful

That's Exactly what my husband and I are doing!!

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Silver Post Medal for All Time! 364 Posts
March 19, 20080 found this helpful

"A good used car" ---does this really exist?
The older they are, the more expensive the repairs.

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By Mary Jane (Guest Post)
March 22, 20080 found this helpful

Great idea, but where do you find 10 percent interest compounded monthly these days?? LOL

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By Mary (Guest Post)
March 31, 20080 found this helpful

10% interest, you have got to be kidding! Plus, many car offers are 0% now, we have NOT paid more than 5% in the last 15 years!

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Budget & Finance Auto BuyingMarch 18, 2008
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