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If you buy a Camry (just picking a random boring sedan that won't impress anyone! )
New $25000, drive it 15 years = $138.88 a month amortization
Used Camry- 3 years old for $18,000, drive it 15 years = $100 a month amortization
The cost difference between the brand new car and the used car is $1.29 a day/$9.72 a week. Those kind of numbers can easily get erased in the financing costs alone if the manufacturer offers low interest financing vs. used car rates. Heck a set of tires and a battery could eat up those savings in the first few years.
Assuming the maintenance/insurance is very similar on each car and considering the new car starts off with new tires/battery and you can maintain it since new vs. the risk of what the previous owner did to the used car for the first 3 years then really what is the difference for buying new. Also at resale, you might get a few bucks more for the new car (after all it is 3 years newer) and the fact it was a one owner car/all the maintenance records etc.
For me, easy choice, I buy new.
Need a good rationalization: That new car takes me to work and generally a tool used for mobility in day to day errands.
There is a lot of reliable miles in that 3 year old car for $7,000 less. $7,000 is a lot of money.
$7,000 will buy a lot of tires, batteries and repairs that I doubt that new a car will need much of.
Your parameters are weak- there is a huge spread from 0-150K in income! Nobody making 0-20K would likely get approved for a new car loan if they aren't living at home. Someone making 100-150K can easily afford a reasonable new car as well as a nice home.
I've told this story before.......
My buddy has ordered/bought 7 brand new Ferraris. Broke even (including sales tax) on the first one, made money on 4 (highest profit was 75K). Lost 35K on one. #7 will be delivered this month and it is a rare model, he should be able to make 100K easily.
Still feel new cars are a bad idea? In this scenario the new car costs LESS than the used model!
Google the MSRP on a new Ferrari 488 Pista, then call any Ferrari dealer and offer some depreciated rate and please report back with their response.
Everybody has a "buddy" that is one example of one vehicle they broke even on. Go look at the mass of what Americans are buying. It's like you read my post and ignore exactly the spirit of what I'm trying to get at.
JFC people use your brains on this one, the math is not the difficult.
Reality is the economy needs people buying new overpriced things to keep things humming along. If everyone suddenly got smart and practical the economy would collapse.
The trick is to be part of the group that reaps the benefits of those who buy things foolishly and not be part of that group.
An economy based on the "always a bigger sucker" theory....
You're playing semantics.
Cars, in general, are not considered investment vehicles (no pun intended).
You can say some fancy stuff, but that's like saying fixing my own doorknob was an investment of $100 bc I didn't call a handyman or whatever other nonsense.
It's not the intended use of the word.
Which is exactly why most people don't do well financially. The premise of this thread is "investments" and every purchase I make, whether it is a steak dinner, clothing or an automobile, I want the highest return on investment I can get. If I save $7K on buying a slightly used vehicle that means I get a higher ROI for my money. Losing LESS money is the same as making MORE money........ie: a better return on my spent dollars. An investment does not always mean you're trying to make money, it can also mean you're simply trying to gain a better result.
Everything is an investment, whether it goes up in value or not. Certainly if I am spending $20,000 on a new vehicle but if I wait to buy it a year later with 15K miles on it and can save $7,000, that's $7,000 I can put to work elsewhere. So absolutely I look at a car as an investment. To look at it any other way is....well....."ignorant."
Mod cut. philosophically, you can say everything is an investment but its my understanding that we are dealing primarily in financial terms here.
a car is an expense, not an investment. of course, there are a variety of different ways that you can manage this expense and it can cost you different amounts depending on what you buy. yes, money saved on one item can be spent elsewhere. that is as much true with a car as it is if you buy a hamburger vs a fillet mignon (its just going to be more money). that is an opportunity cost of buying something that is more expensive than something else.
Mod cut.
Last edited by PJSaturn; 10-08-2019 at 09:39 AM..
Reason: Personal attacks.
its not really about insulting you, its simply a fact that you dont understand finance. when you say that "everything is an investment" you have just moved from finance to philosophy. philosophically, you can say everything is an investment but its my understanding that we are dealing primarily in financial terms here.
a car is an expense, not an investment. of course, there are a variety of different ways that you can manage this expense and it can cost you different amounts depending on what you buy. yes, money saved on one item can be spent elsewhere. that is as much true with a car as it is if you buy a hamburger vs a fillet mignon (its just going to be more money). that is an opportunity cost of buying something that is more expensive than something else.
maybe in some simplifying dave ramsey way it makes you feel wise calling a car an investment. it doesnt really make any kind of sense other than what i guess works for you mentally. its not an investment.
I stand by my philosophical garbage as you put it, I'll see you at age 65 when I'm driving that Maserati paid for in cash after having saved tens of thousands of dollars buying used cars, investing the rest and you'll be driving that BRAND NEW Ford Fusion that you got a such a great deal, ONLY 2.5% INTEREST!!!
I stand by my philosophical garbage as you put it, I'll see you at age 65 when I'm driving that Maserati paid for in cash after having saved tens of thousands of dollars buying used cars, investing the rest and you'll be driving that BRAND NEW Ford Fusion that you got a such a great deal, ONLY 2.5% INTEREST!!!
im not calling it garbage, im calling it philosophy vs finance.
are you sure that buying that maserati will be a wise investment? surely you will be able to go from point A to point B in a nice used corolla.
It's not wasting money if it's important to them. But if it isn't important to them, then other people are wasting money.
I assume all these people advocating the bare minimum used car lifestyle live in one room, wear only $5 t shirts and $5 pants, consume only the bare minimum calories of only nutritious food, don't have smart phones, don't have entertainment devices, don't have streaming services, don't go to movies/museums/plays, don't travel, don't buy gifts...I mean, to do otherwise would be 'wasting money.'
Great post. It's all relative and that's the great thing about this country: Pursuit of happiness means something different to each of us. We see this subject come up around here from time to time, and I'm always amused by how "right" the "never buy new" crowd is. If never buying new is your thing, great. But it's not always the losing proposition for everyone every time. This forum is full of people who buy new and do so efficiently, and secondly for those who buy new as a matter of indulgence. You work hard for your money, why not pay yourself? It doesn't mean they're wasting money.
Everything is an investment, whether it goes up in value or not. Certainly if I am spending $20,000 on a new vehicle but if I wait to buy it a year later with 15K miles on it and can save $7,000, that's $7,000 I can put to work elsewhere. So absolutely I look at a car as an investment. To look at it any other way is....well....."ignorant."
Which a stupid way of looking at it. If I decide not to snort $20,000 of cocaine that's $20,000 I can spend elsewhere. It doesn't mean not snorting cocaine is an investment.
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