Comment by bb0wn | Hacker News Reader

Comment by bb0wn | Hacker News Reader

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Just bought my first new car in November. I tried really hard to get a used car, but honestly, it just didn't make any sense -- the cost of financing was much higher, and the cost of the vehicle itself was nearly as much as a brand new model year (this was the case for both the '15 Toyota Corolla and '15 Honda Civic, and their '11 to '13 model year used counterparts.) This doesn't even touch on how difficult it was to find a decent used car in the first place.

I guess if you're comfortable with dropping $10k in cash for a decent used car, then you'd save money, but when/if you can finance a new car for very low interest rates, why tie up your liquid cash like that?

> For those families, a new-car payment is a burden — but it’s one they can predict and live with. It sucks to “throw away” $300 or $400 every month, but it’s never a surprise and in exchange they have freedom from surprises.

How exactly is paying $300-$400 monthly for a new car "throw away" money? It's going towards the ownership of a useful piece of property. Maybe the author is talking about leasing? I don't know.

>> How exactly is paying $300-$400 monthly for a new car "throw away" money? It's going towards the ownership of a useful piece of property. Maybe the author is talking about leasing? I don't know.

He's talking about the difference between that monthly payment and paying cash for cheap used car and not having the payment. If you spend $2000 on a crappy car that you maintain yourself, that monthly payment seems like throwing money away. The whole point of the piece is that's not even close to the whole story.

Because for some families those $3-400 could be better spent elsewhere so putting it towards a nice new car might seem like a waste, hence the air quotes.

Low interest rates on new cars are a smoke and mirrors game. If you weren't getting low interest rates, you'd be getting a better cash price. I bought a used car earlier this year and financed it at 3%. I'll pay around $1500 in interest. I save several times that in depreciation, and even new with 0% interest, the price still would have been close to that $1500 more.

Also, the decision isn't necessarily between brand new car and a 10k used car. If you're buying a two or three year-old car, it's probably over 10k.

> If you weren't getting low interest rates, you'd be getting a better cash price.

Not necessarily. If dealers get a kickback on the financing, they can actually charge less for a financed car then a cash one.

That can be true, but if you're not getting a subsidized interest rate, the difference in interest you'll pay on a new car vs. a used car isn't big at all. Not enough to make up for depreciation.

This is also a good tip -- if you go into buying a new or used car with financing lined up, you can tell the dealer that, but tell them you'll go with them if they can give you a similar rate because you might get a better price.

Not if the interest rate is low.

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