@ClementsMoney Saturday Critical Action – Buying a Car?
Welcome to the Saturday Critical Action. Each Saturday we take the weekly action from Jonathan Clements‘ blog Humble Dollar and “militarize” it for you. Jonathan Clements was a longtime personal finance columnist for The Wall Street Journal, and he offers great advice at the best price you can get…free. Here is this week’s critical action:
BUYING A CAR? Think twice before financing it through the dealership. While dealership loans are convenient, the interest rate charged will include the dealership’s markup. That means you can likely get a lower rate by going to a bank or credit union—or by using a home equity line of credit. One warning: Interest on home equity borrowing for a car purchase is no longer tax-deductible.
I have a few thoughts on car buying:
- if you can’t pay cash don’t buy the car. Buy a cheaper one. You should not take out loans to buy assets that depreciate or drop in value.
- Buying a used car is the way to go.
- I’m a huge fan of this Mr. Money Mustache post that lists some very functional and reliable cars that you can get for the right price – cheap. It is a little old as it is from 2012, but it is a good start on some reasonable used car options.