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Save Money -> Buying a Vehicle

Buying a Vehicle

Probably your first major purchase will be a vehicle, so take your time and do it right.

bullet Save up the money.  Don't go into debt for a vehicle.
bullet Carefully consider all options.  This will probably be the first test of your financial decision-making abilities.
bullet You should know exactly what the insurance, gas and maintenance costs will be for any vehicle you are considering.
bullet Compare fuel efficiency for different vehicles before making your decision.  This information is available from the US Department of Energy website
bullet Estimate how many miles you will drive, and you can then estimate your gas costs.  If a vehicle gets mileage of 20 miles per gallon (mpg), and gas costs $4 per gallon, then your gas will be costing you $0.20 per mile.  A larger vehicle getting 15 mpg will cost $0.27 per mile at $4.00 per gallon.
bullet How much will it cost you to park the vehicle at school or at work?
bullet You can save money by buying a slightly used vehicle, and still get some factory warranty.  Check the sales of ex-rental vehicles.
bullet Newer vehicles usually require less maintenance than older vehicles.
bulletIf you don't know much about vehicles, and maybe even if you do, it would be wise to have your chosen vehicle inspected professionally for mechanical problems.  The American Automobile Association (AAA) is one organization that will do a mechanical inspection for a fee.  Their website also offers tips and other help for buying new or used vehicles.
bullet Do a search to see if there are any liens against the vehicle.
bullet A careful inspection by an experienced auto body repair person would be advisable (this saved our bacon at least once!).
bullet Once you determine how much you can afford to spend on a vehicle, and what the operating costs will be, use these numbers to determine what you would have in the future if you invested the money instead.  This might convince you to use public transit instead of buying a vehicle.

We have never borrowed to purchase a vehicle, and have never purchased a new vehicle.  We seem to have done well buying vehicles that are one or two years old, and still have some warranty.

Tip:  Pay cash, know your costs, and get a mechanic and a body repair person to check a used vehicle.

Revised: July 10, 2020

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