Should we pay cash or get a loan for a new car? This is a recent question from a subscriber and I want to take some time to address the question.
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I'm also going to address why I need more context in order to respond to this question properly. So I'm curious, how would you answer this question?
"I've been following you for a while and am still working with my husband to get on a budget and stick with it. One question has been haunting me as we face some difficult decisions, and I thought I'd reach out for your advice.
We do not have a car payment fortunately, but the one car we do have is starting to cost us more money than it is worth to put into. For example, it's leaking oil, there is something wrong with the starter that I can't figure out, The A/C has been on the fritz for months and we've paid $400 to have it worked on but still isn't working properly.
Thankfully we're heading into the cooler months in NC, but something we must consider if we plan to keep the car into next summer. The list goes on, but the main reason for reaching out is I want to know what your thoughts are for a car purchase in our current situation.
We bought our home a year ago and within a year, we've had to replace all the windows (which we took out a loan for $16,000 to do) last November, and this summer the A/C went out and had to replace that, which cost us about $7500 but were able to pay cash for thankfully. We are now in a position where we need to purchase a car.
We only have one and it is starting to cost us more to keep it running than it's worth. Since having to replace our home's A/C over the summer, we've pretty much depleted our savings and I'm afraid we won't be able to save enough to pay cash for something before our car completely dies.
Our hearts are to get out of debt and not go into any more debt, but I feel like we're faced with the dilemma of having to take out a loan to purchase a reliable car since we will more than likely not be able to pay cash for it.
Such a long story, but what should we do in this situation?"
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Thanks so much for reading and we’ll see you in the next video post!