Buy A Used Cars

Q.I'm not looking for rants or complaints or flamewars... please don't do that. What I am wondering is how do people afford to buy new cars? I am a professional software developer... I make a very good salary. I've got a mortgage for a nice, but reasonably-priced house, no credit card debt to speak of, no current car loans (we managed to buy our used cars with cash), and a stellar credit rating (I can qualify easily for low interest rates... even the 0% ones). I am now looking to find a new car that's large enough to stuff a family of four in (two adults, one toddler, one baby), but small enough and gas-efficient enough for a commuter. I am also looking for something that is reliable and that has a warranty. My past experience is that if I buy used, I am just buying someone else's problem. Unfortuantely, that has happened a number of times to me, so I really don't want to buy used again. I am also not wanting to have a car loan of longer than 3 years. There is something unsavory about paying on a car when the warranty has already lapsed. So, I started looking around for a car that would fit all of those requirements. I have come to the conclusion that a car that is about $20,000 would do. After calculating the payments on a 3% (and even a 0%) 3 year loan, the payments are in the $500 to $700 range! Now, we don't spend frivilously (not too much, anyway), and we keep a tight budget, but that isn't anywhere near what we could afford to add to the budget. What is concerning is that just about everyone we notice has the same type jobs, approximately the same housing, and same family size, but have one (or two) new cars. > How do they do it? Are they running up personal credit for the daily things > so they have funds to pay for car loans? Are they extremely long loans (or > leases)? > Any insight on how the average family swings this is greatly appreciated. > If nothing else, perhaps it will open my eyes to better ways to manage my > finances.

A.I have no credit card debt - I pay it off every month, I have a mortgage, & I've been driving my present car loan-free for a little over 2 years now - it was paid off in Feb. 02. I don't know how the average person/family pays for cars which are economically less frugal than what I buy. Perhaps they *are* in over the heads, re: debt. Maybe, maybe not; it's not something one tends to ask other people. ;-) When I buy a new car, it's only for myself, & therefore it can be smaller than what you - with a family - might want to buy. Otoh, I'm a teacher, so have never been rich - & while I'm a lot older now & my salary's way better than it used to be, never will be rich. So far I've owned - paid for, myself (my father paid for my very first car, a '72 Plymouth Duster) - a '76 Datsun B-210 (only options were an AM/FM radio & carpet - I really could afford nothing more back then), then 3 Corollas: an '84 liftback - don't remember the trimline, but adding a/c was a big splurge that time, a '90 LE sedan, & a '98 LE sedan. I have kept each car for 6 - 8 years, & except for the '90, have sold them privately, Vs. trade-in (less money return on a trade). I've lucked out so far - in that each time I've sold them privately, I've been approached by a friend, acquaintance, or relative, asking to buy my car. I'd like to be able to pay my cars off in 3 years, but so far that hasn't been feasible. If needed, to be able to afford a 4 year loan - Vs. 5 yr., I take a couple of thousand out of savings, along w/ the sales $ for a down payment. So far, my loans have been $300/month or less. Since I keep my cars a minimum of 6 years, that gives me at least 2 years of driving them loan-free, before I buy another new car. I've found the Corollas to be a good compromise for my needs: high quality, extremely reliable, decent depreciation - as far as cars go!, & not too small, yet big enough - for my needs, & affordable - even at the high-end trim level, with a bunch of options added in this last time when I bought the '98: cruise, ABS, side air bags, & a moonroof. I am now in the market for a new car, since I've promised - since last year - to sell my present Corolla to my niece. I'm selling it to her for less than the actual private party price, yet more than what I'd get for a trade. I am looking at either another Corolla LE or else a Prius. The Corolla would be more economical for me: I got a quote of $200 over dealer invoice for whatever one I wind up choosing, & I'd actually be able to pay this one off in 3 years! Otoh, it'd be my 4th Corolla in row, & I'm not only starting to get a little bored w/ the idea - no matter how much I've liked/loved them, I'm also not very excited about the interior of the present LE. (I disagree w/ Consumer Reports on their positive review of the quality/looks this generation's interior - just personal taste, I think.) For the Prius, I'd need a 4 year loan, & would need to use another grand or two of my savings. But it'd be do-able - I think I could still manage to keep the payments at $300 - $325/month. I'm still waffling... I like the Prius better - both in concept - re: environment, & the actual car - incl. the liftback styling & its sleek interior, but the idea of paying off a car loan in 3 years is mighty appealing...

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