Previously on The Billfold
Every now and then, friends will instant message me for advice. Here’s a one-minute chat I had with my friend Max, who lives in Los Angeles, about buying cars.
Max: Mike Dang—quick Q. Do you know any trusty source about buying cars?
Mike: Definitely check out Carmax for used cars.
Mike: Also, use Edmunds.
Max: Yeah, I have used Edmunds. It’s good.
Mike: Sometimes buying a new car is cheaper and smarter than buying a used car.
Max: Yeah, I think I’m going for new just because I want to have this for about 10 years.
Mike: Yeah, I get asked this question sometimes, and I always suggest used because cars are depreciating assets, meaning they quickly lose resale value once you start driving it.
Max: One more question—would it be dumb to buy it in cash, as opposed to financing?
Mike: Um, totally not dumb!
Max: Hmmm. The car dealer told me it would be a bad idea because I would be forgoing a way to build credit. But then again, he might have an interest in me financing.
Mike: Forgoing a way to pay interest? Yeah, he wants to sell you financing. And you only need to build credit when you want to buy a house or a car and borrow money. And in this case, you’re not borrowing anything, so it’s pointless.
Max: Got it. Right. Okay. Yeah, that’s what I assumed.