Should I buy a used car or finance a used car ?

I would really appreciate anyone helping me through this. I want to make the best choice for myself. I'm 24, just learned how to drive last year and only have 3000 to spare. My question is, should I buy a used car or should I finance a used car as the heading states. I've thought about the pros and cons in each situation but need some extra help.

If I buy a used car 

1. I wouldn't have any savings left

2. If the car breaks down on me I couldnt afford to repair it 

On the bright side 

1. I wouldn't have monthly payments 

If I finance a used car

1. I can get the car I really desire

2. I can build my credit 

3. I'd have some savings left

Cons

1. If I lose my job I couldn't afford the payments 

Not to mention registration fees and insurance...

Thank you guys 

3 Answers

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  • 1 month ago

    I at first was going to say buy using your cash but looking at it that way you do have something to gain by getting a loan.    

    So the two considerations. 

    (the cost of finance is something you will have to look into in your area and based on your circumstances,  so the following is just numbers. its not a quote.)

    A hypothetical. 

    If you got a load for $3,000 over 3 years and the repayments were $104 per month.

    At the end of the 3 years you will have a car and your savings $3,000. 

    If you used your savings to buy the car and then forced saved $104 a month. 

    At the end of the 3 years you will have a car and $3,744.

    You raise a good point about repairs,  but repairs are something you should be budging for when buying in the low end of the market.   That said, if you drive the vehicle correctly it could last with out lots of major repairs,  if you drive it like its on a race track I guarantee you will be paying out and big time.  Domestic cars are not designed to be driven hard,  doing so wears things out very quickly. 

  • Jay P
    Lv 7
    1 month ago

    Vehicles are expensive to keep on the road.  Find out first how much insurance will be ( hint, as a new driver, it won't be cheap ) on 2 or 3 different vehicles you may be considering.  Factor in the yearly fuel and maintenance costs of those vehicles you've short-listed and then compare that to your current income ( after you deduct your current other fixed expenses, such as rent, utilities, phone, etc. )

    Depending on how much you make, you may want to consider saving up more money first before buying your first ride.

    Having said all that, my general consensus on car buying is buy what you can afford.  Taking out a loan on a depreciating asset doesn't make financial sense.

  • Anonymous
    1 month ago

    I'm always concerned when people justify financing a car by saying they can build their credit. While its true, if you say that you may not have the credit to qualify for the loan on fair terms.

    If you made it this long without a car can you make it longer while you save more cash?

    Paying cash for a $5000 car gives you better odds.  Buy from a private party, not a dealer as you will save $1000-1500.

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