Money Monday inspired by a conversation I just had with my mentee. During the conversation, I dug in my car glove compartment and texted her this picture. I bought my car in 2016 for about $7K. I bought it because I liked the vehicle, it had clean carfax, and MOST important because I didn’t want payments. So this meant whatever car I bought had to be based on money I already had, NOT money that a bank was willing to let me borrow. That’s not buying a car, it’s financing one. There’s a BIG difference.
And THIS. This is what we don’t often teach those coming behind us. We need more real talk about finances. Especially with our youth because you can get an auto loan starting at age 18 when people usually know VERY little about money and interest!
So I’m inspired to share a few tips I shared with her. [And the best news is, I think she’s now going to wait til next year to get the car so she can pay cash! 🙌🏽] 1. Cash is king. You may not get your dream car with all the bells and whistles, but the financial freedom and peace is worth it to get a reliable, paid for car!
2. Interest. When you don’t pay in cash, you are financing a vehicle. Essentially, you are borrowing the money from a bank and guaranteeing to pay it back. But borrowing that money comes at a cost and it’s usually a percentage of the money you borrow! For example, a $15,000 vehicle could end up costing thousands more than that by the time you’ve paid off the loan.
3. Do not lease a vehicle! PLEASE.
4. You need a fund for car maintenance. This can be in your general emergency fund, or kept separate. But with cars, just like any other machines, something will need to be fixed.
5. Do your research to minimize the amount of issues your car will have! Look up reviews, recalls, and any issues with a vehicle that you are planning to purchase. You can check for accidents and damage by pulling the car fax.
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