5 Common Money Mistakes on Cars

People recognize themselves in its raw materials; they find their soul in their automobile, hi-fi set, two-story home, kitchen equipment.

Bob Edwards

Not having to own a car made me realize what a waste of time the car is.

Diane Johnson

Car designers are just going to have to come with a car that exceeds the payments.

Erma Bombeck

The car gives rise to intense passions in both sexes. A few decades ago, car dealers were places where women dare not go to leave the complex negotiations for a new car for their husbands, brothers and uncles. "Upside down on my car" was a phrase in the American lexicon entrenched long before the current economic crisis turned "upside down in my house" for the slogan of the decade. The cars are expensive, but they are the biggest waste imaginable money and own a vehicle defies all the laws of good financial sense it is based. There are 5 common mistakes money most people make when buying a car.

1) Put the money on a new car
2) car rental
3) Trading in a car
4) Buy a new car every 3-5 years
5) rolling old car debt into a new basket

Put money on a new car

The author of financial blog read and well distributed, the simple dollar writes that you put money on a car to avoid GAP insurance. What is GAP insurance? Gap means automatic protection and guarantee insurance is an additional form of car insurance that covers the difference between the residual value of the car if it is totaled out and the loan amount on the car. GAP insurance is an additional expense, especially if you buy a car that does not take its value over time (most do), but worth giving up to $ 3000-5000 to avoid the cash prize? Cars are the depreciation of assets. All the money has new advice from the buyer of the car will not translate into equity in the car, but will disappear in the air at the time of the new owner drive that car off the lot. If consumers choose to obtain insurance GAP, which is based on the value of the new car and expected depreciation. For high-ranking cars in terms of less depreciation, GAP insurance will cost less. For cars that depreciate more, GAP insurance will cost more.

Kelly Blue Book publishes an annual list of cars that depreciate the least. No car insurance offers full coverage for a car? Consumers do. Auto insurance will only cover the residual value of a car accident, not the total outstanding amount of the loan on a car. Pay $ 20,000 for a new car and destroy the first year, your car insurance will only cover the residual value of the vehicle. Here are the basic things you can do to prevent this calamity depreciation and take your money:

1) Only buy new cars that retain their value and negotiate the best deal possible
2) Only buy used cars (someone paid for depreciation)
3) Send a demon for you "self-insure", ie., Covering a difference in case of accident
4) If you do not do 1.2 or 3 buy GAP insurance because it is tiny compared to the cost of the pocket of a deposit
5) Do not let your kids drive your car

Renting a car

The monthly payment due to a car lease is much less than the principal and interest on a car note is that the tenant does not pay back the value of the car with the payment. The lessee depreciates the only cost recovery and to pay interest to do so! For example, if the 3-year depreciation charge in a car $ 20,000 car is $ 10,000, the monthly lease payment is based on that 10K with the interest rates. If the car back in perfect condition other than anything, the tenant will have to pay in the form of hard mileage and wear and tear penalties. Rent a car back to back and you lose big time because you're always taking the cost of the depreciation of someone else.

Negotiating a car

Basically, my philosophy is that you buy the most reliable car, of great value that you can negotiate the best price you can afford, and drive the vehicle for at least 10 years. The dealer will make money twice: once at the new car you just bought and again in your trading when re-sell for the maximum detail. Your dealer does not need your charity. Here are the basic things you can do when you have a car to trade:

1) Sell the car on Craig's List or advertisement in the newspaper to get the best possible deal for your car.
2) Sell the car at the same authorized dealer. Buying a new car every 3-5 years

Buying a new car every 3-5 years means you are always enclosed in a payment of principal and interest on something that is still losing value. The only way to "win" with a car over the years, you are basically driving this car for free.