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Gas and insurance alone can easily hit 300 of you drive enough. Say you keep it at 200, 100$ a month to fix minor things isn't unreasonable. But that assumes yo

Gas and insurance alone can easily hit 300 of you drive enough. Say you keep it at 200, 100$ a month to fix minor things isn't unreasonable. But that assumes you bought a car cash, from my experience people tend to finance cars just because they can't get three or four thousand dollars together at one time. Then you're paying $400 a month

buescher 6y ago
Middle class perspective: if you can buy a car for cash, but you can get a good interest rate on a loan, you may be better off taking the loan. The opportunity cost of having cash sunk into the car can be greater than your financing costs.
- chrisseaton 6y ago
  A basic, simple loan like this also is often good for your credit record.
  - throwaway99997 6y ago
    Unless your credit score is absolutely perfect, the APR on a used car loan is easily 8-10% That's a pretty big chunk of change to spend to boost your credit record https://www.bankrate.com/loans/auto-loans/rates/ https://www.bankrate.com/loans/auto-loans/rates/
    - chrisseaton 6y ago
      Right I was thinking about new car loans which I've seen at zero, which is why it makes sense to work the money somewhere else.
    - buescher 6y ago
      Yeah, that's another way it costs to be poor. But you can read that page as "a new car loan can be as low as 4.2%, even if you only have fair-to-good credit". It can still make sense to hang on to the cash if you don't otherwise have a cash reserve.
- offtop5 6y ago
  The problem is most people buy more car than they can afford when they finance it. If I have to save $10,000, and I have it in my mind that I don't buy things on credit, I'm only going to buy a $10,000 car. But if I have $1,000 for a down payment and the car dealership talks me into a $30,000 car with zero down, I might take that deal.
  - buescher 6y ago
    True, but a complementary problem is that your $10000 used car is probably overpriced, driven up by the demand for lower-cost-up-front cars. Edmunds' 5-year TCO on a 2015 Corolla is only about $20/month less than that of a 2021 Corolla. There have been years where their estimate was for slightly higher TCO on the five-year-old car.

buescher 6y ago

Middle class perspective: if you can buy a car for cash, but you can get a good interest rate on a loan, you may be better off taking the loan. The opportunity cost of having cash sunk into the car can be greater than your financing costs.

chrisseaton 6y ago
A basic, simple loan like this also is often good for your credit record.
- throwaway99997 6y ago
  Unless your credit score is absolutely perfect, the APR on a used car loan is easily 8-10% That's a pretty big chunk of change to spend to boost your credit record https://www.bankrate.com/loans/auto-loans/rates/ https://www.bankrate.com/loans/auto-loans/rates/
  - chrisseaton 6y ago
    Right I was thinking about new car loans which I've seen at zero, which is why it makes sense to work the money somewhere else.
  - buescher 6y ago
    Yeah, that's another way it costs to be poor. But you can read that page as "a new car loan can be as low as 4.2%, even if you only have fair-to-good credit". It can still make sense to hang on to the cash if you don't otherwise have a cash reserve.
offtop5 6y ago
The problem is most people buy more car than they can afford when they finance it. If I have to save $10,000, and I have it in my mind that I don't buy things on credit, I'm only going to buy a $10,000 car. But if I have $1,000 for a down payment and the car dealership talks me into a $30,000 car with zero down, I might take that deal.
- buescher 6y ago
  True, but a complementary problem is that your $10000 used car is probably overpriced, driven up by the demand for lower-cost-up-front cars. Edmunds' 5-year TCO on a 2015 Corolla is only about $20/month less than that of a 2021 Corolla. There have been years where their estimate was for slightly higher TCO on the five-year-old car.