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Home > Home or Car?

Home or Car?

March 17th, 2010 at 09:40 pm

So one year ago this April, I leased a car after mine died. My old car, my first car, died when the transmission started leaking fluid. Considering that was the newest part on the car, I decided it was time to retire the old girl. We decided to lease a car with that idea that in 3 years I might want more of a "family" car as we looked at having a child. At this point, I'm not really sure what that means.

Anyway, after placing the $15,000 away in a CD, I've been wondering if I shouldn't start putting money away for a car. After the problems we both had with older used cars, I will probably buy a certified pre-owned car from a dealership. Neither H nor I know enough about cars to really vet a privately owned car, and I really hate car repairs. So this means I would need to put away another $15,000 for the car.

My debate is basically, with an end goal of buying a home wherever we want to move, I want to make sure I can afford a bare minimum home. When we approached a couple realtors in our area a month ago, they laughed at our budget (that had more to do with a cost benefit analysis than what we could afford). I don't want that to happen when I graduate.

The question is basically, which will hurt me more? A lower downpayment but no car payment OR a higher down payment and a car payment.

Why is this a choice now? Because if we are putting the money toward a house, in 6 months I will put the money in another CD.

Posted in Personal Finance | 3 Comments »

3 Responses to “Home or Car?”

  1. Mcneri Says:
    March 18th, 2010 at 01:42 am 1268876542
    1268876542

    You have a nice problem for this time of the year. The bottomline is if you already know what your needs will be when you get your new home in the future, then go ahead and buy. However if you are not sure, and possible may be living very close to or very far from your workplace, it is adviceable to see where you find your home first and then get a car that fits.
    To elaborate, if you have to commute 60 miles daily to work and back, then buying a Toyota Prius may be a good idea. However if you live in the same block where you work, a car may not be ideal, just not yet.
    Visit me and we can talk some more on www.Personalfinance.mcneri.com

  2. Single Guy Says:
    March 18th, 2010 at 03:58 am 1268884691
    1268884691

    One thing I would say is that you should be able to get a good used car for less than $15,000. I'm no car expert, but I know the (usual) best price range for used cars is in the $7500 - $10,000 area. That should get you a car a few years old but still has plenty of years on it. Hopefully in a year or two there will be a glut of used cars on the market (from the cash breaks given for new car buyers this past year) and getting a good used car will be easier than it is today.

  3. snshijuptr Says:
    March 18th, 2010 at 02:19 pm 1268921987
    1268921987

    Mcneri, neither of these purchases will be made now. The car will be purchased April 2012 and the house sometime in 2013. I have to wai until my lease is up and I graduate, respectively.

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