Rethinking Vehicles

How can you save money when you need to buy a vehicle? One way is to consider buying a different type of vehicle, such as a pickup truck instead of a car. The cost of the truck may be less expensive, you’ll save money on sales tax, interest, and insurance, plus you’ll have a vehicle you can use for many purposes.

For example, let’s say that you want to buy a new four-door car. The make and model that you want will cost you around $25,000. Like most people, you don’t have an extra $25,000 sitting around to pay for it in cash, so you’ll need to finance much of the cost of the car. You’ve saved up $2,500 as the down payment.

While walking around the car lot, you see a truck. It’s four years old and costs $14,000. What could you save if you bought the truck instead of the car? Would you be able to help out friends and family members more often if you owned a truck rather than a car? Consider the following chart:

This chart is only an example. Your state sales tax and loan interest rate may be different. However, be wary of low interest rates advertised by some car dealers. Usually, these rates are offered only to people with near-perfect credit. The rate they actually offer you may be much higher. Check with your bank or credit union to see if they have a better rate.

When thinking about how much vehicle you can afford, don’t forget to check on other expenses, such as the cost to register your vehicle and get license plates and auto insurance. Insurance often is less expensive for a used vehicle. You might also consider the cost of fueling different types of vehicles.

Remember, a vehicle is not an investment. It won’t go up in value. The paint will fade, dents will happen, and that “new car” smell will disappear. Thinking “used” instead of “new” could save you big bucks.