Today we’re talking about reasons you should NOT buy a car. I know we’re car salespeople, but there are times we look at situations and our advice is, “Don’t do it right now.”
We recently had a client that was working with one of our salespeople, Bonnie. Bonnie sat down with this customer and at the end of the conversation we decided that we did not need to get them a car. These young people came in, lovely young people, very smart and on the right track in general. One of them was working for “Big R”. This company sells western stuff and stuff for livestock, and she was hauling hay on the side. She wanted to trade in a running trailblazer for a truck to carry hay, and to move stuff. She was looking for a used Dodge. The issue was that this truck would have been a ‘97 by the time we had found her something that was in her budget. We also discovered in the process of the conversation that she actually owed money on the Trailblazer as well.
These clients would be getting rid of a running vehicle that they had, and going with an older vehicle that they would still be financing for a long period of time. We thought this was a bad idea, and that the solution was to get a flatbed trailer for $1,500 instead of spending $10,000 on used old truck.
When you come to our office, it doesn’t mean you need to buy a car. It just means you need to analyze your situation and make the best decision for your unique situation right now. Sometimes when you come in that’s what we will tell you, that maybe this isn’t the best time to buy a vehicle… or maybe there’s some things to do to prepare for the next vehicle. People don’t expect that when they are coming to buy a car, but we want to do right by the people who come in. We’re going to go over five top reasons we think you should not be buying a car.
GETTING AN OLDER VEHICLE AND FINANCING IT FOR A LONG TIME
Number one, when the payments are too high for your budget it is not the right time to get an older car and finance it for a long period of time. That is the incorrect answer. It may just mean it’s not the right time to get a vehicle. It’s not uncommon for people to come in and think that that’s the way to do it, because it’s how people used to do it. You could fix the car by yourself and it made sense to have it for six years or have an eight year loan, but the industry has changed and cars have changed. That is no longer a financially sound decision.
Your common sense works against you in the car business. If you are having to buy an older vehicle and financing it for a long period of time to get your payment low enough it might make sense, (common sense wise) but trust me it doesn’t work out in the long run. Doing this takes away all the fun stuff, like having a warranty.
WHEN YOU OWE MONEY ON A VEHICLE THAT IS WORKING
Number two, is if you still owe money on a vehicle and that vehicle is working! If you have a loan that loan is not going away. You’re going to owe that money whether you have the vehicle or not and in many cases you cannot sell the vehicle for as much as you owe on it. What happens to that money? Well that money ends up getting rolled into your next loan. If you get rid of the next car… it ends up in the next loan and before you know it you have a $2,000 a month car payment just paying off all these cars from your past. The thing to do is to pay it off and then think about getting the next car. If you’ve been buying your cars, with the way that the industry is and cars being so expensive, that it can take a long time.
BUYING AN OLDER VEHICLE THAT IS IN HIGH DEMAND
Number three is buying old vehicles that are in high demand which means they’re overvalued and unreliable. You don’t want to do that because that’s just going to get you in financial distress. These vehicles are sought after by people. Like Jeep Wranglers, Toyota Sequoias, 4 Runners… all those types of things. You end up paying way more than what they’re worth just so you can own one. In the long run you just end up losing that money.
IF YOU HAVE BAD CREDIT
Number four… if you have really bad credit because of whatever happened in your life. Sometimes you have medical bills, sometimes things impact your credit, and make it less than desirable. Just getting a car to be getting a car is not the right answer. You need to work on repairing your credit first and then move into getting a car that fits your budget with better terms. I think it’s important to note here that in that kind of situation there are times when you absolutely just need a car for one reason or another. In that kind of case we can work with you and try to make sure that you can get a vehicle. BUT sometimes people will come in and they just want a new car and if you have bad credit it’s not the right time to get one just for the sake of getting one. If you’ve got something that’s running keep it! Don’t buy just for the sake of getting something new.
LOOKING AT OTHER OPTIONS
Number five doesn’t quite fit in but it’s something that we encounter a lot which is that people come and, like we say, people tend to buy cars the way that their parents bought cars. Things have changed, a lot of times people will come in with the idea of buying an older model vehicle to save money, but this isn’t always necessarily the best way to do it. Maybe it’s not the best way to do it because it’s not financially sound, or it’s going to end up bad over a long period of time, and so what we have found is that it’s time to start looking at other options.
Like leasing, paying cash for a car right now until you can afford to get the right car for the right term. Here’s a good example for you, my wife’s car is a $31,000 car. We could buy that car and finance it for five years and pay about $650 a month to own that car, but we leased that vehicle for $350 a month. Which means if you do the math we can actually lease three of them over nine years and spend about the same amount of money as you would spend on one car over five years. It’s like having three new cars under warranty the entire time. I’m not saying this is the only way you can do it, but at some point in time when we’re saying you shouldn’t be buying a car it may be time to look at some different options for yourself.
I think it comes back to that point that we’ve been making that the industry has changed and what we think of as the best way to buy a car isn’t necessarily still true.