Military Media
Posts
How to Buy a New Car in 3 Simple Steps

How to Buy a New Car in 3 Simple Steps

We're here to tell you how to save for a car that won't break the bank

Adrian Bonenberger & Holden Lindblom
January 17, 2024

THE BIG STORY

So You Need to Buy a Car

Buying a sweet ride… in a responsible way

Let’s be honest, we all want to save and be responsible with our money. Absolutely, of course. With that being said, it’s nice to have dreams and to have goals to achieve. And sometimes those goals can be monetary. Life is full of big buys, and the bigger they are, the harder they can be to pull together. A house or apartment. College. Retirement. A trip to the Kokomos–shout out to The Beach Boys.

Me heading on my next vacation—flights were too expensive | Giphy

All these goals require you to save money–unless you want to rely on a dinghy for vacation or bicycles to get to work in the snow– and the earlier you get started the better.

Honorable service in the military can take a lot of the burden away from saving for home ownership (the VA Home Loan) and college (the Post-9/11 GI Bill and Vocational Rehabilitation). But what about other big items — like a big trip 🚢, or a car?

First, figure out what’s feasible. Your buddy’s cousin back home might be driving a 2024 Mustang GT Fastback with black matte finish. He probably paid around $50,000 for that–how? Where do people get that kind of money at 18? Do you have $50,000 laying around? You probably don’t–no offense. Otherwise you wouldn’t be reading this, you’d be down at the dealer picking out options for your new ride.

My guess is that you probably have a few thousand bucks. I know because I was once there myself. If you’re in the military, you have a paycheck. That’s a dangerous place to be, because there are dealers out there, salespeople, who are not looking out for your financial security. They’re trying to make money. I promise you, they’ll try to rip you off.

The car dealership after selling a mustang at 25% APR | Giphy

Step One

I’m not going to sit here and tell you not to buy a Mustang. But step one in buying a big thing is figure out what you can afford. The going price for a used 2012 Ford Mustang GT is $10k-$20k. That's a great deal AND 2012 is a classic look for the car. By going for a slightly older model you just saved yourself $40k. Now, Mustangs are more expensive to maintain than, say, a Toyota Corolla–don’t look at me like that!–but I know that you’re probably not interested in any run-of-the-mill car. Fine, you’re set on a Mustang. 2012 it is.

Newer doesn’t always mean better | Giphy

Step Two

Step two — you’ve set a reasonable budget ($10k-$20k) that’s a lot more achievable than $50,000 (which might as well be $500,000). You need a plan to get there. Setting aside a thousand bucks a month would give you $12,000 by the end of the year. On top of the money you already have in your account, that’s enough to buy the car outright. Nice!

But what if you need the car sooner? For work, for trips, for your peace of mind. No problem. Save for a few months — enough to get 2/3rds of your 2012 Mustang GT paid for — and float the rest with a loan. It’s not ideal, but it’s good enough–and that’s better than the alternative.

The loan you get for a car is called “financing,” and it can be a good way to build credit (more on that another day). If you listen to the ads they play on YouTube or Netflix or the radio when they’re selling cars, you’ll hear people talking about financing. The long and the short of it is, they’re going to charge you interest on the loan you take out. Free money is rare — their incentive to give you the money you need to buy your car is not altruism. Their incentive is profit.

Loans aren’t inherently bad, but you have to be careful! | Giphy

Step Three

Step three is financing the rest of your car with a loan, and the single most important thing you can do is making sure the APR (annual percentage rate) is between 4-7%. Every other piece of information and number you see on the loan is there to deceive you. You know how your soccer or basketball coach said to keep your eyes on the ball? The APR is the ball. Higher than 7%, you do not want that car. Higher than 7% you buy that car and you should go down to Dick’s Sporting Goods and have them shackle 40lb dumbbells to each of your feet. That’s what a high APR should look like, you shambling around, your quads screaming in pain and fatigue with each step you take while your friends point and howl with laughter.

Seriously, high APR loans aren’t worth it! | Giphy

So (1) figure out what you can afford, (2) start saving to buy most (preferably all, but, ok, I get it, you need it ASAP) of the car or truck or whatever and then (3) find a loan through the dealership or USAA or a bank to cover the rest with an APR of 4-7%. Then get diligent about your plan. It can be hard to say “no” when everyone in the barracks is heading out for the weekend. But once you know how easy it is to save money for bigger things, your world will never be the same. You just gotta lock that money up. 🔒 Lock it up!

HUMOR

Disgraced former Army Colonel Douglas MacGregor has taken to defending Satan in the prince of darkness’s war for human souls, per Duffel Blog.