A 2021 Car Question

Hey Jeremy!

wondering if you had any adjustment in thoughts on this topic considering the current climate in 2021.

Earlier this month my car died after inheriting it from my mom 17 years ago. It was a gently used car purchased from Enterprise rentals, completely paid off when I got it, and I’ve never had to have a car payment for it. I maintained the car as well as I could, and drove it into the ground. It was worth about $550 and I donated it to charity.

My problem is that now I need a replacement car to get to work. My original plan was to mimic my last strategy by buying a gently used car in cash and driving it for 10+ years, but as you likely know the used car market is inflated right now. I’ve been looking at Hondas because of their reputation to last long and require less maintenance over time, but the used car prices are way overvalued for a depreciating asset.

My main question is do you still suggest looking for a used car in this market? I could pay cash (which would most eliminate money I’ve been saving for a DP on a home), or finance at the current low interest rates. Predictions are in 1-2 years when the chip shortage has worked itself out there’s a high likelihood for negative equity and significant depreciation based off of 2021 sales prices. I’ve started looking into purchasing new with cash (again losing all DP savings), or leasing new for 1-2 years until this is over and buying a used car at that time. I’ve just had it in my head for years that buying new/ leasing was a “waste of money,” but the thought of purchasing an inflated used car also feels the same.

Any thoughts?

Hi @Lola_O!

I’ll cover this in tonight’s office hours (7/28/2021) with the recording available afterwards on the course site!

If you’re not signed up for office hours, you can sign up here.

Go Blue!