My car was totaled two weeks ago while it was parked. I was asleep at the time and awoke to find her pushed partway out into the road. I’ve been looking at newer cars because she is 23 years old, but have been dragging my feet because I didn’t want to take on another debt. I really wanted to get my debt to income ratio down and have a budget that wasn’t quite so tight. Funny how some decisions are made for you.
Now I’m looking at cars and trying to decide whether I buy the car I really want or find a car that I can pay cash for. I read some time back an author (I really apologize for forgetting who it was) that recommended you buy a $500 car. When you have enough money, you trade that in with more cash for a better car. Like David Ramsey’s snowball method of debt repayment, this works the same way only backwards. Buying a $500 -$3000 car is a huge risk. While I’ve been driving an old car for a while, I know her history, I know her quirks and I know all of the work she has had done to her. I wouldn’t trust any other car her age or trade in value.
My other option is to take out a car loan and add to my debt. Luckily, I qualify for at least $10,000 so I should be able buy a decent used car. I’ve done a decent amount of research so I know I can get a good used Honda for that amount. Now I have the pleasure of calling and scheduling test-drives. Can you say torture?!?