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Date: Fri, 16 Sep 2005 06:54:02 GMT
From: Malcolm William Mason <mwm1(spam)nospamedu>
Subject: Re: Re: Financing vs. buying for cash

On Fri, 16 Sep 2005 05:29:35 GMT, "James Sweet" <> wrote: > >"Intrepid Observer" <no-nonospamet> wrote in message >news:cNjWe.677$ >> If you have the $20,000 (US) or so to spend on a new car is it wiser to >buy >> the car for cash or take out a loan? >> One salesman advised me it is better to get a loan so you pay less for the >> car upfront in case it is in an accident as the insurance will only pay up >> to the current value of the car as used/depreciated. Was he just saying >that >> to sell me a loan or does it make real world sense? >> >> > >It's a toss up really, you're screwed either way. > >Financially the obvious best choice is to buy a car that's at least a year >or two old and let some other sucker take the big depreciation hit, of >course if it just has to be a new car you can probably afford it either way >so go with whichever is more convenient. > We used to use a 33% loss just to drive the car off of the lot and another 25 % after a year (to the end of year two. This was a good general figure. Is this still the same? +/- al little? This brings you to a depreciated value of 50% of sticker price. for a two year old vehicle which has probably 60 to 70 k miles and two years on the warranty which has always been a good deal for me. The only way to get reasonable depreciation is to maintain and run the car well for seven or eight years but this still does not make sense with a two year old kept for five or six years. You can do a lot of looking for the Saab of your dreams for $25 to 30k. Malcolm

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