$15,000 to buy a nice used car!

Dear Dave,

I was recently in a car accident that killed my car. My old car was paid off and the insurance company is writing it off and giving me $15,000. I’m a physical therapist who does home care treatments, so I need a reliable car for work. I am debt free and in the process of depleting my emergency fund, but I can’t seem to find a car like my old 2014 Toyota Camry with all the accessories.

My rental car is paid for by insurance until the end of the month, and I have looked at used cars at a few dealerships, but the dealers and salespeople tell me that used cars still cost the same as new and that I should just finance a new car. I’m not sure what to do.

– Valeria

Dear Valerie,

Asking a new car dealer if you need a new car is like asking a dog if it’s hungry. The answer will always be yes.

The smart answer, though, is this: If you have a $15,000 insurance check in your hand, go buy a $15,000 fancy car. You might not be able to find the exact car you had before, down to all the bells and whistles, but Toyota Camrys aren’t exactly rare either. That money will get you pretty much the same car, one that is very comparable in equipment, reliability, mileage and overall quality to the one it was totaled for.

I understand that this is all a big inconvenience. And you probably feel a little pressure to make a decision. But the line you have about used cars still costing the same as new cars is bullshit. Used cars no longer cost as much as new ones. That was true for about five minutes at the end of the pandemic, when the Mississippi River ran backwards and used cars rose in value. It was an absolute miracle!

There seems to be something in the human brain that tries to tell us to upgrade if we get a car. I want you to wrestle with this idea, because you don’t need to destroy your emergency fund for something that isn’t an emergency. Get online and look around without the pressure that always comes with being in a car lot.

And I’ll just say this out loud: a $15,000 car today is a much better vehicle than anything I drove in the first 30 years of my life. The quality of used vehicles and the life left in them are much greater than even a new car back in the day. You know that old saying, “They don’t make ’em like they used to”? Well, thank goodness for that!

But a $15,000 used car in today’s world? It’s a good car!

-Dave