When was the last time you looked for a new car? It can be fun to consider buying a new car, and fun to fantasize about the new car you want, a Jaguar perhaps? Maybe you are a Mercedes kind of person.
The last car I bought was a 2002 Honda CRV. I still have it. I don’t drive much, so it only has about 85,000 miles on it. At the rate I’m going it won’t have to be replaced in my lifetime if I can keep it going until it hits 200,000 miles, which, according to my spouse, is not unheard of. If I drive 5,000 miles per year, it will last another 23 years. I’ll be 81 years old by then. And actually, I drive less than 5,000 miles per year. I just have to keep taking it in for regular service and I should be fine.
But if I were to buy another car, I guess I would get an economy car. I don’t care much for cars or driving, so it's not a priority for me. In fact, when I first met my spouse and he bought a car, a friend asked what he purchased and I correctly let them know it was a sedan!
A lot of people do care about their car, as a status symbol. My spouse has a Lexus sedan that he adores. It has leather interior and a fancy backup monitor so he can see what’s behind him. It is very comfortable and quiet for road trips.
We were chatting the other night about a car commercial we saw. It was for a Ford pickup truck. I noticed they no longer advertise the price of cars on television commercials. I can understand why. Currently, in 2023 the average cost of a new car is $49,388. Compare that to just ten years back when the average price of a new car was $32,890. That’s an increase of $1,650.00 per year. The average car payment in 2023 is $780.00 per month. The very popular Ford F150 pickup fully loaded is around $92,000.00. That’s about the amount the average home sold for in 1986.
The average cost for full coverage car insurance is $140.00 per month. That brings the monthly output for a new car to about $920.00 in 2023.
I’m so happy I don’t have to buy another car in my life, as long as everything goes as planned.
Buying a used car is a great option. They are more affordable and often you can find used cars that are in good condition and that have been well cared for.
I bought a used car back in 2010. It was an economy car that I bought from a rental car agency. It was about three years old and had 30,000 miles on it. I was happy to have it, it cost $8,000.00 and it is still running well. Currently, my daughter uses it as a run-around town car for minor errands. She is the second daughter to use this car; originally I gave it to my youngest daughter when I realized I didn’t need a second car at my home.
The car I have right now had about 40,000 miles on it when I bought it used in 2018. The couple who owned was older and used it similarly to how I use it, to go to the grocery store on occasion. I paid $10,000.00 for it. I paid cash.
If I had purchased a new car, at the going rate that year of $37,577.00 with a $7,500.00 down payment my monthly payment would be $615.00 plus the cost for full coverage insurance at $140.00 leaves me with a monthly output of $755.00. That’s almost $10,000 a year. By the end of the loan with average financing, the output would be about $45,000.00 not including the cost of insurance.
Needless to say, I’m a big fan of used cars. I will never complain about my car payment, because I don’t have one.
Alternatives to buying a new car are
Find a great used car
Use public transportation if it is available to you
Car share with your partner if possible
Find a job that offers a work-from-home option eliminating the need for a car
Use a bicycle if practical
Figure out if you can carpool with someone in your area
Obviously not every solution mentioned will be a solution you can use, but it’s worth the effort to consider the possibilities. Having an extra $10,000.00 each year could go a long way toward paying off credit card debt, student loan debt, or personal loan debt. If you don’t have these types of debt but have a mortgage you can reduce the term of your loan by ten years, and save about $193,000.00. Very nice!
If you are saving to buy a house, having a hefty down payment is nice when negotiating terms.
My suggestion to everyone I speak with about cars is to buy the best most affordable used car you can find. Do the research and find a car that typically lasts a long time and has a good record of low maintenance costs. Reliability is a huge factor. Remember that if you buy a BMW, you’ll pay a lot to drive off the car lot and a lot for maintenance and repairs. Some cars are simply more affordable to own.
Check your ego. There are people who will think highly of you because you drive a nice car. But if that is the criteria they use for admiration, you may want to reconsider your relationship. I admire people because of their skills, their conversation contribution, their good work, and especially if they are funny. These skills/qualities can be identified; they last and are actual attributes. Cars, jewelry, and other outward signs of prosperity are nothing. They don’t tell you anything about the quality of the person. I would rather have a person in my life who I can relate to who will laugh deep belly laughs with me than a person with a swell car.
Some people can afford fancy cars. Some people can afford fancy cars but prefer to spend their money differently. Cars are just a tool and have nothing to do with your quality as a human, nor do they say anything about your value system. Your worth is not determined by the tool in your garage.
If you aren’t convinced, look at a great example, Warren Buffet, an old, rich, American man. He has a reputation for having bought many used cars over his long life and no one is looking at him as though he is some kind of a slob.
If you absolutely must buy a new car, get a reliable car that is affordable to maintain, and pay cash. Financing is not a sound investment strategy. Remember if you aren’t investing you are spending. Spending won’t get you the reward of debt-free living and financial independence.
Comments
Post a Comment