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It probably does not make financial sense to buy a new car, no. However does it make sense in general to buy a new car, for some people yes. There are folks who are car enthusiasts that purchase new cars every year or two because it brings them joy (of course its an expensive hobby). Not everyone that spends money on cars is 'car poor'. I have a few friends that go through cars like I do jeans, and they still save and max out retirement accounts.
Anyways back to the main point. When rates are so low IMO it makes no sense to pay for a 30k purchase in cash. Look at Mark Zucherburg... Recently purchased a house for a few million (guessing), of course he has that kind of cash laying around, but he chose to finance it. Why have your loot tied up into a non liquid asset when you can park it elsewhere?
Agreed.
I don't know who would pay 250k for a house or 3 mil in your example up front. What is it 2...3 percent.....that's nothing.
I wouldn't extend a car loan to almost 9 years though.
Does it make sense to buy a brand new car for 30k and in 2 years it is worth less than 20k? This is what the graph several posts back is saying.
Does that make any financial sense?
New cars are a depreciating asset. Shouldn't even be called an asset really. At least buy a 3-5 year old car and your not losing 2k when you drive off the lot!
what % of the things you spend money on arent a depreciating product? a car isnt an investment; you get one to take you places. so the fact that it has some value when you are done with it is a positive. how much is your clothing worth after you are done? your food? your household items? your jewelry? your electronics? your appliances? some of this stuff may have some value, but typically i think they all depreciate faster than a car.
i know thats not 100% the case when you look at specific products within those categories; but for most of us just about everything we buy depreciates 100% and we get nothing back from it.
With the average cost of a new car being in the about 30,000 dollars which is about 2000 dollars higher than it was last year and the average American salary is $50,100 dollars. Now I know a lot of people who are out there saying I don't make anywhere near 50,000 dollars but there are a lot that make over a hundred thousand so it's an average. I think really this is the only way the car companies can sell new cars to us at the prices they want to sell them for. Personally I don't think if you look at these numbers that the average new car is affordable to the average American citizen. I mean think about it it's a little over half a years salary to buy a new car and that doesn't include insurance or gas or repairs. Can you really afford that new car?
I think a lot of people might be better off taking the cash that they have and buying the best used car they can afford and driving it into the ground. We need to stop seeing cars as a status symbol and start seeing them as simply the tools that they are to get around town and to work. Not to mention that the cheaper your car is the less you have to work to support it.
Updated the chart I posted before to be a more likely scenario. I tried to make it self-explanatory and dragged it out to 10 years (still a 8 year loan).
what % of the things you spend money on arent a depreciating product? a car isnt an investment; you get one to take you places. so the fact that it has some value when you are done with it is a positive. how much is your clothing worth after you are done? your food? your household items? your jewelry? your electronics? your appliances? some of this stuff may have some value, but typically i think they all depreciate faster than a car.
i know thats not 100% the case when you look at specific products within those categories; but for most of us just about everything we buy depreciates 100% and we get nothing back from it.
But if its only for "get(ing) one to take you places" why do people need a 30k car.
If you making hundreds of thousands a year 30k might mean nothing stretched over 5 years. For the average person who is strugging at 30k which we always see in the "personal finance" forum why do they always have a new car paying $300-600 a month. That is why their struggling.
This is America though throw 10k away in 2 years when your car loses 12k in 2.5 years.
However, those who overbought and were oversold a house in 2005-2007 and are now underwater are crying "foul". You don't make money when you sell real estate...it is when you buy it...and buy it right. Same thing with a car only you know going in that thing will depreciate faster than a lightning bolt....but, we buy anyway. The trick is to buy something that will last a long time as inexpensively as possible. Not easy with today's dollars.
But if its only for "get(ing) one to take you places" why do people need a 30k car.
If you making hundreds of thousands a year 30k might mean nothing stretched over 5 years. For the average person who is strugging at 30k which we always see in the "personal finance" forum why do they always have a new car paying $300-600 a month. That is why their struggling.
This is America though throw 10k away in 2 years when your car loses 12k in 2.5 years.
they dont NEED it. they pay more because they want a higher end product. just like a hamburger will fill you up just like a fillet mignon, but many people still choose to spend more on the fillet. im just saying the fact that the asset depreciates isnt significant.
Last edited by CaptainNJ; 04-10-2013 at 08:13 PM..
they dont NEED it. they pay more because they want a higher end product. just like a hamburger will fill you up just like a fillet mignon, but many people still choose to spend more on the fillet. im just saying the fact that the asset deprecites isnt significant.
If you want to throw away over 10k in two years go ahead. Were talking about tens of thousands of dollars just "poof" and it is gone. Your talking about $100 at most for a speciality. Big difference.
If you want to throw away over 10k in two years go ahead. Were talking about tens of thousands of dollars just "poof" and it is gone. Your talking about $100 at most for a speciality. Big difference.
over the course of your lifetime, you are probably paying for many fillet mignons and upgraded products that you dont really need. most people have something they like to waste money on because they think its worth it. for some people, its cars.
the amount of money is only too much if the person cant meet their financial goals while spending the money. i just assume that they can even though i know thats not often the case. so even though i dont spend a lot on cars; im not going to say someone else is making a bad decision or wasting money if they do.
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