Because that is how he became a millionaire. Just because you have a little money doesn’t mean you have to spend it. What the millionaire learned long ago is that the satisfaction from saving a little green and seeing your bank account grow far exceeds the temporary satisfaction you get from buying the nicest car on the block.
Let’s do the math. Say you are looking at two cars, a two year old Accord with leather and 20,000 miles and a brand new Infinity G35. The G35 will probably cost $15,000 more in total. Assuming you put $3,500 down on both and got a 7% interest rate over 5 years, you’d end up paying $18,000 more for the G35.
Your comparison probably won’t be as extreme. The dealer counts on the fact that they can talk to you in terms of payments and you won’t do the math. Paying $50 per month more over 5 years will result in an additional $3,000 more over the life of the loan. I’d rather have the $3,000 and have a little less ego in my car.
Before you buy, you need to do your homework in three areas:
1) Know what the car is really selling for so you can negotiate the best price
2) Figure out what you really need versus what you want (I.e. Honda vs Infiniti)
3) See what interest rate you qualify for so the dealer will try to beat it
In the end, as long as you go with a quality car and realize that the new car thrill won’t last as long as the payment, you’ll be happy. I’ve provided a payment estimator on our website for a 4 year and a 5 year loan. Find where the interest rate intersects with the loan amount (don’t forget taxes) and you’ll get an approximate payment. Print out the sheet and take it with you next time you buy a car.
Good luck and shop smart!
Reid is one of two professionals with 20+ years experience in the financial services industry that founded Addventure Capital, an alternative to big banks when it comes to getting a loan. Find out how you can get a small loan through a network of thousands of individual investors (think of it as the Ebay of lending). Click on the link below to see how we can give you an insider's perspective that the big banks and mortgage brokers don’t want you to know! http://www.prosper.com/groups/group_home.aspx?group_short_name=AddventureCapital
Source: www.articlealley.com
