One of the biggest roadblocks to accumulating wealth we see in our practice today is the need to purchase a shiny new vehicle. The costs of vehicles have far outpaced wages. So what do we recommend, especially for those just starting out? Consider purchasing a pre-owned vehicle and save some money back for your future. Purchasing a vehicle that is two to three years old allows someone else to take the hit of depreciation (a car’s value drops the second you drive it off the lot) but still has plenty of life and miles ahead. If you take good care of it, you could get 8 good years of service before the next car is needed.
For example, a 2017 Honda Civic EX Sedan that lists for $20,565 financed with a 5-year loan at 3.75% would equal a payment of $375.25. A used 2014 Honda Civic EX Sedan that lists for $14,500 financed with a 5-year loan at 3.75% would equal a payment of $264.58. By purchasing a three-year-old vehicle, the savings are $110.67 per month, or $6,640.20 over the five-years that you could save.