After graduation, I’ll inherit my parents’ 10-year-old Honda. Originally, Mom was going to buy me a new car as a graduation present, but after discussing it with her, we’ve decided that I’ll get Dad’s old Accord. I don’t really mind. True, it would be nice to be driving a shiny new whatever, but the lower car insurance alone on an old car will make it worth it to me.
According to this calculator, a $20,000 car, with a $2,000 down payment, $4,000 resale value, 9% interest rate, and 48-months financing will cost $348.39 per month. Since I am a recent college graduate with a short credit history, I won’t qualify for the best rates.
During the 6 months after graduation I am trying to save aggressively for my emergency fund because I won’t have student loan payments (yay for the grace period). Getting a new car, or even a “new” used car, would get in the way of that goal and have some not-so-short-term ramifications.
I don’t have enough money to save as much as I want to for retirement and emergencies, AND pay for a car loan, (and, you know, live). A new car would be nice, but I guess at the end of the day I’d rather have more savings and nicer meals out.
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Building up an emergency fund is definitely a good idea. But if your interest rate on your loans is over 5%, it might be worthwhile to run some calculators and see what an early payment or two would do. If you can make a payment and have all of it go to principal upfront, that can shorten your term by quite a bit.
At any rate, I think you’ll appreciate not having the car payment. Enjoy the Accord!
Cars, shmars. Who cares what you drive, money saved is more important
I grew up in California, and after graduation moved to Boston. I sold my car before I left Cali b/c Boston is a walking city and I could easily access everything by public trans. The Loser Cruiser (bus) rules! I don’t miss having a car at all. I drive twice a year, when I go home to visit my parents and rent a car.
Good for you! If I’d have found all of you PF bloggers two and a half years ago, I would have done the same thing instead of cursing my car on the 22nd of every month
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Although, I was only out of school six months and I got a much better interest rate than that…
That’s great! My dad and I discussed buying a new car when I needed one for an internship in Oregon but I firmly believed a new car would have been a bad idea. Not only would it cost a lot to make extra payments and cut into spending in other areas, we ended up buying a used car for $2,000 that I drove 800 miles to and from Oregon. And the car still runs great after a few years and it’s now sitting idle at my relatives house since I have no need for one.
I don’t own a car, I walk everywhere. Granted, I live in the city and everything is accessible by walking.
walking is definitely more green!
you should be able to buy a ‘new car’ fragance for your car!