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Hey Taylor
- I'm thinking about buying a certified used car, but want to make
sure it's the right choice. I've got an older car with 120,000 miles
and there's a 2014 BMW with less than 50,000 for $17,000 I can get
good financing on. My total car payments would be less than what I'm
putting in savings each month, and it wouldn't affect my ability to
pay down my student loans. Your thoughts? - Eric
Hey Eric - This is an interesting situation and I'm glad you
reached out. On the one hand, it's great to get a good deal on a good
car. On the other hand, cars are always a financial drain, and you
need to be in the right situation before taking that on. |
1.
What are you replacing? You need to replace your car for the
right reasons, and being tired of whatever you're currently driving
isn't a good reason. If the car you've got starts, drives, and doesn't
put you at risk, you've got no real reason to replace it. Now, if
you were facing a deal that was so good it would ensure you saved
money over the next 10 years, that's definitely worth considering.
However, 120,000 miles isn't that much these days. As long as you
take care of your car, you should be able to get it over 200,000,
which is hopefully another four or five years of driving.
2. What are you taking funds away from? When you're debt
free, you get to think about buying all sorts of things with your
extra income (provided you're taking care of your investments).
However, since you still have student loan debt, you're paying money
on interest each month. Should you decide to take on a car payment,
those are dollars that could be getting you out of debt, but instead,
are going to a leasing agent.
3. What's your real motivation? Are you interested in this
BMW because of the excellent price tag, or because it looks better
than your current ride? I've driven nice cars and beaters, and I
totally understand the desire to sit behind the wheel of a car you
love, but if your desire to get a new car stems from superficial
reasons that aren't financially motivated, you should probably try
to resist the urge of making this purchase.
Your budgeting
seems solid and you seem to have a good grasp of your financial situation.
I think you could get this new car without setting yourself back too
far, but I think it's a better decision to hold off and keep putting
miles on your current vehicle. Best of luck, Eric!
© Taylor Kovar
May 8, 2018
More "Go Far With Kovar"
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purposes only and is not an offer or solicitation for the sale or
purchase of any specific securities, investments, or investment strategies.
Investments involve risk and, unless otherwise stated, are not guaranteed.
Be sure to first consult with a qualified financial adviser and/or
tax professional before implementing any strategy discussed herein.
Past performance is not indicative of future performance. To submit
a question to be answered in this column, please send it via email
to Question@TaylorKovar.com,
or via regular mail to Lessons on Wealth, 106 E Lufkin Ave., Lufkin,
TX 75901. |
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