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James Kinson is a Cash Car Convert – it even says so on his website.
He has purchased 20 used cars over his adult life and owned most of them for six years or more. He found there is a lack of information available to help people make wise, informed decisions when buying a very inexpensive used car.
The reason James is so passionate about helping people buy used cars is because he understands the impact new cars have on an individual’s personal finances – and buying new is what most people do.
James says: “Cars are notoriously bad investments. The reason for this is they depreciate so quickly”.
He goes on to say, “Most of us were taught that we will always have car payments. Within the first year a new car will lose about 19% of its value and 60% over five years. It is because depreciation isn’t directly hitting a person’s wallet that most people don’t consider the financial impact.”
Here’s the numbers:
The average new car sells for $32,000. In the first year you will lose $7,800 to depreciation – and that’s on top of the car payments you’re going to be making (about $5,600 a year). This means you are out $13,000 the very first year of ownership.
The median household income in America is $52,000 a year before taxes. Losing $13,000 to car payments and depreciation puts a huge dent into a family’s net worth that could be better spent elsewhere.
The solution? Buy a beater
Okay, maybe not a beater, but James believes there are inexpensive, gently used, reliable used cars out there – you just have to know what to look for. He consistently finds great deals on CraigsList.org and through AutoTrader.com.
If you want to learn more about how to find a good, used car for less than $10,000 then check out James’ post “The 14 Steps to Your First Cash Car”.
But that’s not all! Continue listening to hear why James thinks auto debt is a bigger concern to our country than student loan debt.
Other noteworthy bits of our conversation:
- Can a vehicle last more than a dozen years or so?
- Is a $5,000 used car reliable?
- How does one get out of car payments and into a cash car?
- Are 3 year leases a smarter move?
How to get out of car payments
A) Sell the car
- What if you are upside-down?
- What would I drive? (Buy a beater)
- Trade in to lower-value debt car
B) Accelerating the existing loan payment
- Sell some stuff (garage sale)
- Cut costs in your budget
- Get an extra job
C) Getting out of a lease
- Swapalease.com and LeaseTrader.com
- Sell the car, pay the difference (if any)
- Turn in early and pay the remaining lease payments
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