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I don't think it's fair to compare the prices of todays cars with cars from yesteryear because they are better in every way by miles. Cars decades ago were incredibly simple and didn't last very long compared to modern cars, you get a ton more for your money than you used to. After you adjust for inflation, value needs to be added for a ton of research and engineering that went into it. That said, I would still never be willing to suffer the first few years of a vehicle's depreciation loss simply because I could afford the monthly payment. I'm glad there are those who are willing though, so people like me can take them off their hands when they are ready to bend over for their next new car purchase.
I already posted this once, but here you go again:
"These summary visualizations illustrate two visible trends between the absolute and inflation-adjusted costs of a car since 1967. Though the absolute price of a car has steadily risen due to inflation, the inflation-adjusted price has remained relatively stable. This means car buying over time has likely had a similar impact on American budgets, regardless of the year of purchase."
Also, while I love Dave Ramsey and am generally a used guy myself, I think putting hard and fast rules on individual scenarios isn't prudent. There are times when new is the better way to go. Amongst others:
"Not all cars depreciate at the same rate. Some brands are known for holding their value exceptionally well. When you add in possible new-car incentives and low-interest financing, there are times when buying a new car doesn’t cost much more than buying a 1- or 2-year-old car."
I'd have to be independently wealthy to justify the price of new vehicles these days. Especially when I can do the same job for a *tiny* fraction of that cost by buying and maintaining a used vehicle.
Not that I have a problen with people spending gobs of money on shiny toys. That's their business. I just happen to prefer investments is stocks and real estate rather than depreciating assets.
Not really. I'll use my daily driver as an example.
My 2016 F-150 Lariat SuperCrew had a sticker price of $58,000. A fully loaded F-150 SuperCrew Lariat in 2001 was about $41,000 sticker price.
$41,000 in 2001 is equivalent to $55,563.45 in 2016.
Now, consider that my 2016 truck has about 125 more horsepower than that 2001 model, about 100 ft-lbs more torque, tows 4,000 lbs more, 1,000 lbs higher payload, gets 5 miles to the gallon better fuel economy, is much safer, and that's not even mentioning the hundreds of options this truck has that we hadn't even dreamed about in 2001.
I think that $3,000 is more than justified.
Now, when it comes to used cars that depends. With all the manufacturer rebates and programs out there, you can buy most vehicles cheaper brand new than you can 1 or 2 years old. I really don't know how they manage to sell them or who buys them, maybe there are some super negotiators who come in there and talk them down $5,000-$10,000 off their asking price to make it worthwhile. Then you add in the fact that most banks and credit unions charge you a higher interest rate if your financing a car that has been titled before...
Not to mention that I've seen listings for F150 Lariats for $39K, less if you don't want 4WD.
Yes, new car prices have went through the roof, and salaries have not increased at the same rate. And I disagree with an earlier post saying that if one's salary hasn't increased at the same or better rate, then you're in the wrong career. We can't all be executives and senior sales people. There are just some areas that don't pay six figures a year, and even yet, people don't always get into certain careers solely based on the pay.
Having said all that, I believe anything over $30k is expensive. Even if I was making six figures a year, I would still think it was expensive.
You meant the reply below.
Quote:
Originally Posted by notnamed
If your wages aren't keeping up with inflation you need to find a new career. Otherwise you're doing the same(or more) work every year for effectively less money and everything is more expensive, not just cars.
I don't think 90% of wages are keeping up with inflation because a $100k job in the 90s should be paying in the $250k area today, less than 25% of the US population make over $200k wage. I take home a little over $200k last year as an IT Security Consultant but I still feel very middle class. While I could enjoy 2 car payments a month I rather put my money into appreciating assets. When I'm too old to fix cars then I'll buy a reliable new car. I spent $20k last year on AMD stocks is worth over $60k now enough to buy myself 2 new cars.
I already posted this once, but here you go again:
"These summary visualizations illustrate two visible trends between the absolute and inflation-adjusted costs of a car since 1967. Though the absolute price of a car has steadily risen due to inflation, the inflation-adjusted price has remained relatively stable. This means car buying over time has likely had a similar impact on American budgets, regardless of the year of purchase."
Also, while I love Dave Ramsey and am generally a used guy myself, I think putting hard and fast rules on individual scenarios isn't prudent. There are times when new is the better way to go. Amongst others:
"Not all cars depreciate at the same rate. Some brands are known for holding their value exceptionally well. When you add in possible new-car incentives and low-interest financing, there are times when buying a new car doesn’t cost much more than buying a 1- or 2-year-old car."
5-10 year old used vehicles with reasonable mileage that have been garaged and taken care of are what I look for when I want a change. Comparing new with 1-2 years old isn't avoiding nearly enough depreciation loss for my taste, although it's a definite improvement over brand new.
On avg, a car loses about 60% of it's value over the first 5 years. (the worst cars lose 60% the first 3 years!) What specific brand are you referring to? as an example, a 2013 EX v6 Honda accord msrp was $33k plus sales tax, today's value on that same vehicle is about $15k. As far as holding value, Honda is one of the best and it's not much better than the avg of 60%.
5-10 year old used vehicles with reasonable mileage that have been garaged and taken care of are what I look for when I want a change. Comparing new with 1-2 years old isn't avoiding nearly enough depreciation loss for my taste, although it's a definite improvement over brand new.
On avg, a car loses about 60% of it's value over the first 5 years. (the worst cars lose 60% the first 3 years!) What specific brand are you referring to? as an example, a 2013 EX v6 Honda accord msrp was $33k plus sales tax, today's value on that same vehicle is about $15k. As far as holding value, Honda is one of the best and it's not much better than the avg of 60%.
Oh, I agree with you, and that's my wheelhouse too. But, I also have a couple of things you need if you want to own older cars: a) at least a semi-working knowledge of automotive repair, at least up to the point where you'd have to drop the engine or transmission out of the car, and b) liquid assets that can be used for any major repair. Many people have neither, let alone both.
Case in point: recently a co-worker needed a new tranny. His mechanic quoted $2800. He didn't have the knowledge to replace the tranny himself. He didn't have $2800 in cash lying around to pay for it. He really needed a working car. So...he went down to the car lot and got himself a $260 a month car payment.
Oh, I agree with you, and that's my wheelhouse too. But, I also have a couple of things you need if you want to own older cars: a) at least a semi-working knowledge of automotive repair, at least up to the point where you'd have to drop the engine or transmission out of the car, and b) liquid assets that can be used for any major repair. Many people have neither, let alone both.
Case in point: recently a co-worker needed a new tranny. His mechanic quoted $2800. He didn't have the knowledge to replace the tranny himself. He didn't have $2800 in cash lying around to pay for it. He really needed a working car. So...he went down to the car lot and got himself a $260 a month car payment.
The smart thing would have been to, one way or another, try and borrow money (reasonably of course) to replace the transmission. That's an expensive tranny too. I'd have gotten a couple quotes.
The other thing is, that you don't necessarily need that level of expertise, just a knowledge enough about what needs to be done, should be done, what it should cost. Some of that involves doing research.
Oh, I agree with you, and that's my wheelhouse too. But, I also have a couple of things you need if you want to own older cars: a) at least a semi-working knowledge of automotive repair, at least up to the point where you'd have to drop the engine or transmission out of the car, and b) liquid assets that can be used for any major repair. Many people have neither, let alone both.
Case in point: recently a co-worker needed a new tranny. His mechanic quoted $2800. He didn't have the knowledge to replace the tranny himself. He didn't have $2800 in cash lying around to pay for it. He really needed a working car. So...he went down to the car lot and got himself a $260 a month car payment.
I've been lucky, never had a vehicle I paid more than $500 (when I was young driving junkers) have a trans or engine failure. There is always a risk buying a car out of warranty and if you get unlucky then yes it can be a financial disaster.
I do agree with you that if you are the type of person who is challenged just to be able to check your oil that you may be better off buying a new car with payments, but only if they make really good money and the depreciation lost is worth their peace of mind. Otherwise it's still better to buy a low mile 2-3 year old vehicle and pay someone to fix it, the odds you end up with repairs even coming to half the depreciation lost by the first buyer are very, very low.
I don't think 90% of wages are keeping up with inflation because a $100k job in the 90s should be paying in the $250k area today, less than 25% of the US population make over $200k wage. I take home a little over $200k last year as an IT Security Consultant but I still feel very middle class. While I could enjoy 2 car payments a month I rather put my money into appreciating assets. When I'm too old to fix cars then I'll buy a reliable new car. I spent $20k last year on AMD stocks is worth over $60k now enough to buy myself 2 new cars.
Yes, there are better ways to spend your money. But the point remains that if your wages don't keep up with inflation you are making less every year...and you need to do something about that.
Location: San Ramon, Seattle, Anchorage, Reykjavik
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No, cars are priced exactly where they should be. Too many buyers think they entitled to a high feature car, when all they can afford is the base model. In this case, they should buy used.
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