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Why do people waste so much money on cars?
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2013 Jan 25, 12:10am 55,147 views 312 comments
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zzyzzx
2013 Jan 25, 2:23am
I still drive my 1995 Ford Escort that I bought new in October 1995.
The last car I bought 3-4 years ago is a 1999 Oldsmobile that I paid $500 for, and only had 19K miles on it at the time and still is essentially a new car.
MisdemeanorRebel
2013 Jan 25, 2:26am
I never got new car love. If it gets me there, is not a money-pit, and the AC and radio works, I'm happy.
Peter P
2013 Jan 25, 2:39am
Get what you want
If you can afford it ;)
Affordability is all about framing.
coriacci1
2013 Jan 25, 2:42am
no car for 40 yrs. bike only all the way! people say i look a lot younger than my years. i say it’s cause i bike everywhere. saves time, money, and my looks.
From a purely financial perspective, of course you want to drive the refrigerator Honda for 20 years. From my perspective, mental health is the key to wealth. I rather focus on the top line, not below the line.
A happy person is more productive, healthier and ultimately richer. I'm not going to neglect my working years for the sake of retirement. It makes no sense to me. I try to treat every year equally.
So is that saying that people who drive "regular" cars, as in Hondas and so on will suffer from mental health issues? What about the person who buys a Bimmer and spends countless hours at the dealership having its overly-engineered drivetrain and electrical system fixed for the 15th time? Most luxury cars brands with the exception of the Japanese makes are fairly unreliable and failure-prone.
Believe it or not, I'm perfectly happy with my beaters. Lots of good memories with them as Ive had them for as long as I have.
Thedaytoday
2013 Jan 25, 3:06am
Fact is people are holding on to their cars for longer and longer, currently 10 1/2yrs!
I would suggest a lease, full dealer warranty, 100% maintenance free, no oil change costs, no wheel rotation and balancing costs. You get pick up and drop off, loaner all for free!
I have had numerous leases and still have built thousands and thousands in EQUITY! I have had ZERO in MAINTENANCE COSTS in 8 years and I get to drive a BRAND NEW CAR DAY AFTER DAY!
varmint
2013 Jan 25, 3:10am
I bought a new car 10 years ago and never would again.
For my next car I'm thinking of getting a classic (60's) and just using it as a daily driver. Old cars are only expensive if they are show quality (numbers matching/all original etc.). You can get a decent runner pretty reasonably. More stuff will break, but parts are cheap and you can actually do some of it yourself unlike today's computerized vehicles.
Life is hard. The biggest thing is to keep it going. Everybody needs their form of release: fishing, vacations, shopping, hobbies.
With vacations, hobbies, fishing etc, well yes- I would agree. But as far as cars? Most people will grow bored of whatever they buy no matter how much the car cost. Its human nature. Hence why its a waste to blow a large horde of cash on something you'll soon drive as a commutermobile.
Fact is people are holding on to their cars for longer an longer, currently 10 1/2yrs!
Its because cars are better than they used to be. Back when I was a kid in the early 80's you'd be lucky to get 100k out of a car before the thing was totally worn out. My brother had a car that made it past 300k just fine. None of the cars I own look or behave like old cars despite the large number of miles.
For my next car I'm thinking of getting a classic (60's) and just using it as a daily driver. Old cars are only expensive if they are show quality (numbers matching/all original etc.). You can get a decent runner pretty reasonably. More stuff will break, but parts are cheap and you can actually do some of it yourself unlike today's computerized vehicles.
I own a classic myself ( 50's car) and my advice is I wouldn't drive a classic as an everyday driver unless you have a very short commute. Unlike new cars, old cars require constant maintenance. You need to adjust the points, clean and adjust the carb, lube all of the chassis parts, and so on and so on. Additionally almost all old cars are just big steel boxes on frames with very little safety cage, lap belts, hard dashes, and no crumple zones. They're not in any way safe compared to new cars.
I will say mine is very easy to work on and repair and has been surprisingly reliable. But I still only putter around town in it.
Thedaytoday
2013 Jan 25, 3:16am
Its because cars are better than they used to be.
While I appreciate your anecdotal evidence, the answer is yes and no.
The truth is financial not reliability.
Cars have become more expensive to run, maintain and hence people hold onto their car longer. Newer cars cost more and more to maintain by deisgn.
zzyzzx
2013 Jan 25, 3:17am
you can actually do some of it yourself unlike today's computerized vehicles.
Dealing with the computerized stuff is not difficult at all. I'll take fuel injection over a carb every time!
Peter P
2013 Jan 25, 3:18am
Even a well-equipped Honda Accord is pushing 40k now
Where do you shop?
Sorry, I was looking at the crosstour. Didn't realize that it is no longer considered a style of Accord.
It is about 37k pretax.
varmint
2013 Jan 25, 3:19am
I own a classic myself ( 50's car) and my advice is I wouldn't drive a classic as an everyday driver unless you have a very short commute. Unlike new cars, old cars require constant maintenance. You need to adjust the points, clean and adjust the carb, lube all of the chassis parts, and so on and so on. Additionally almost all old cars are just big steel boxes on frames with very little safety cage, lap belts, hard dashes, and no crumple zones. They're not in any way safe compared to new cars.
I will say mine is very easy to work on and repair and has been surprisingly reliable. But I still only putter around town in it.
I agree. The reason I feel I can get away with it is that my commute is only 10 miles. I bike it sometimes when I'm in the mood and can do public transportation as well (though cycling is faster for me).
Thedaytoday
2013 Jan 25, 3:19am
Trust me guys, LEASE. ZERO MAINTAINABLE COSTS! Get a good deal, ZERO DOWN! MIN! and you will build equity year over year.
Make sure you pick a vehicle with a very high retained value , forget the additional extras, leather seats and you will be driving a FREE CAR NOT TOO LONG!
It may take 3 or 4 leases but you will get your free car.
You will need to be a good driver, and keep the vehicle in good condition for the period.
Peter P
2013 Jan 25, 3:21am
Fact is people are holding on to their cars for longer and longer, currently 10 1/2yrs!
I would suggest a lease, full dealer warranty, 100% maintenance free, no oil change costs, no wheel rotation and balancing costs. You get pick up and drop off, loaner all for free!
I have had numerous leases and still have built thousands and thousands in EQUITY! I have had ZERO in MAINTENANCE COSTS in 8 years and I get to drive a BRAND NEW CAR DAY AFTER DAY!
Yep. I lease new European cars and buy used Japanese cars.
Lease cost is very sensitive to initial depreciation, actual discount, and money factor. I only lease when the number makes sense.
Thedaytoday
2013 Jan 25, 3:23am
Lease cost is very sensitive to initial depreciation, actual discount, and money factor. I only lease when the number makes sense.
Yup, if your smart you will realize that the avg running cost are $250 a month. Lease at this figure with zero down and it's all equity after that.
Trade in at the end is key. Maximize your vehicles equity while getting your new vehicle at a low price.
Thedaytoday
2013 Jan 25, 3:24am
SUBARU have incredible residuals and incredible trade in and lease options!
All Wheel Drive is STANDARD this will save you apx $10k on any other vehicle.
They have just refreshed the line for 2014, bigger , better and great value!
Ceffer
2013 Jan 25, 3:25am
With low interest rates, premium used cars are cheaper than ever, go out and look.
If you can't afford an egregious mansion, at least you can tool your sorry ass around in an 8 cylinder eco-burner to try to impress everybody.
While I appreciate your anecdotal evidence, the answer is yes and no
No, that wasn't ancedotal evidence. All you have to do is look up the average problems per vehicle indexes over the past several decades to see that industry-wide, the stats show less problems per vehicle overall. Advancements in manufacturing along with an increase in automation as well as more extensive testing has led to higher quality and reliability. Todays average econo-car has tighter tolerances, fit and finish, and overall quality than the luxury cars of 20 years ago.
Trust me guys, LEASE. ZERO MAINTAINABLE COSTS! Get a good deal, ZERO DOWN! MIN! and you will build equity year over year.
The cost to maintain my two Toyotas is minimal. Partially because Toyota makes very reliable products to begin with. But I can personally tell you that the single most expensive thing I ever had to buy for either of these cars over the years was a rear hub and ABS assembly, which was about $350. I always do the work myself. I also only ever use the cheapest oil and oil filters. That's worked out just fine. I just change the oil every 3,000 miles in the garage and call it a day. Other then that these cars require very little in terms of upkeep and maintenance and they were paid off 15 years ago.
Thedaytoday
2013 Jan 25, 3:30am
While I appreciate your anecdotal evidence, the answer is yes and no
No, that wasn't ancedotal evidence. All you have to do is look up the average problems per vehicle indexes over the past several decades to see that industry-wide, the stats show less problems per vehicle overall.
It's anecdotal unless you provide the information or link. It is also irrelevant as most people cannot afford a new car!
Thedaytoday
2013 Jan 25, 3:30am
Yup, if your smart you will realize that the avg running cost are $250 a month. Lease at this figure with zero down and it's all equity after that.
Trade in at the end is key. Maximize your vehicles equity while getting your new vehicle at a low price
I am at a loss.
I am happy to explain, which part is losing you?
Thedaytoday
2013 Jan 25, 3:33am
I always do the work myself. I also only ever use the cheapest oil and oil filters. That's worked out just fine. I just change the oil every 3,000 miles in the garage and call it a day. Other then that these cars require very little in terms of upkeep and maintenance and they were paid off 15 years ago.
!! You do the work yourself. Congrats. 99.9% goto a dealer.
Your expertise is nice but yet again just anecdotal.
Also how you drive the car and where you drive it makes a big difference.
So you have a 15 year old ++ Toyota what are they worth? You lost every penny you put into these cars.
While I lease and build equity every single day I own one.
I don't change the oil I don't pay for maintenance. I have all the upsides.
They pick up the car and drop it off, give me a loaner, whatever I want. You can too!
Peter P
2013 Jan 25, 3:34am
SUBARU have incredible residuals and incredible trade in and lease options!
All Wheel Drive is STANDARD this will save you apx $10k on any other vehicle.
They have just refreshed the line for 2014, bigger , better and great value!
Do they offer xenon lights? I prefer to have them esp in rainy and dark conditions.
Thedaytoday
2013 Jan 25, 3:38am
SUBARU have incredible residuals and incredible trade in and lease options!
All Wheel Drive is STANDARD this will save you apx $10k on any other vehicle.
They have just refreshed the line for 2014, bigger , better and great value!
Do they offer xenon lights? I prefer to have them esp in rainy and dark conditions.
No idea. Call your local Subaru dealer :)
I have owned 1000's of cars, a Subaru has been my best experience. Mitsubishi has been my worst.
Thedaytoday
2013 Jan 25, 3:40am
Yup, if your smart you will realize that the avg running cost are $250 a month. Lease at this figure with zero down and it's all equity after that.
Trade in at the end is key. Maximize your vehicles equity while getting your new vehicle at a low price
I am at a loss. Subaru does not not have incredible residual value. Based on my experience, the most sought after used cars are Hondas/Toyota and mini-vans.
Have you ever leased?
Subaru has a higher residual at the end of lease compared as a percentage of cost against that of Toyota and Honda.
Go get some quotes!
Without a doubt Subaru has INCREDIBLE RESIDUALS. The Subaru Forrester has the highest residual of any SUV!
It's anecdotal unless you provide the information or link. It is also irrelevant as most people cannot afford a new car!
Look it up. But you can believe as you wish.
So you have a 15 year old ++ Toyota what are they worth? You lost every penny you put into these cars.
While I lease and build equity every single day I own one.
Who cares what the cars are worth? That's about the last thing I am actually at all worried about. The far bigger advantage is the amount of money I've saved my NOT buying a new car every 5-6 years. As I mentioned these cars cost me very little to keep and maintain. In the meantime over the years I saved up a rather large chunk of cash, bought a house last year, and still have a lot of cash as well as retirement savings to boot. One of the reasons I was able to accomplish this was to not have any debts. Cars are a major source of debt for the average American and I haven't had a car payment in well over 15 years.
lostand confused
2013 Jan 25, 3:44am
I have owned 1000's of cars, a Subaru has been my best experience. Mitsubishi
has been my worst.
Do you own a car rental business or some such ?
Thedaytoday
2013 Jan 25, 3:45am
It's anecdotal unless you provide the information or link. It is also irrelevant as most people cannot afford a new car!
Look it up. But you can believe as you wish.
It's your post, do as you wish
Who cares what the cars are worth?
I believe the title of this this is "Why do people waste so much money on cars?"
edvard2 says
The far bigger advantage is the amount of money I've saved my NOT buying a new car every 5-6 years
That's your mistake. You are losing equity year after year. While I am building equity year over year.
edvard2 says
As I mentioned these cars cost me very little to keep and maintain.
Your lucky, the majority spend on avg $250 pm. in loss of equity or maintenance.
edvard2 says
In the meantime over the years I saved up a rather large chunk of cash, bought a house last year, and still have a lot of cash as well as retirement savings to boot
That's good for you but most people like driving a new car and not one from the 80's.
edvard2 says
Cars are a major source of debt for the average American and I haven't had a car payment in well over 15 years.
Debt and equity loss.
zzyzzx
2013 Jan 25, 3:52am
I used to work in the used car loan business. When I was there the average monthly car payment was around $425/month. Mind you that was for used cars.
In so far as to what I fixed on my 1995 Escort over the last year, I think it's around $160 in repair costs. I had some parts rust out that I needed to replace (strut mounts and some cooler lines that also rusted out).
That's your mistake. You are losing equity year after year. While I am building equity year over year.
That makes absolutely zero sense. The very second you drive a new car off the lot it from that very moment starts to lose value. There is absolutely no such thing as gaining "equity" in a car , that is unless you happen to have around a million dollars to buy a 1929 Duesenburg Model J convertible.
I believe the title of this this is "Why do people waste so much money on cars?"
Exactly. Very good observation.
Your lucky, the majority spend on avg $250 pm. in loss of equity or maintenance
I seriously doubt that. Unless they drive a total POS that needs constant repairs and its out of warranty.
That's good for you but most people like driving a new car and not one from the 80's.
Well I'm happy for them then. Personally I like having my own house and a lot of savings to spend on the things I enjoy. As well as the means to not worry about having to eat cat food in my old age.
Thedaytoday
2013 Jan 25, 3:52am
I have owned 1000's of cars, a Subaru has been my best experience. Mitsubishi
has been my worst.
Do you own a car rental business or some such ?
No, I profit from having a car lease and wanted to share the info.
20k from Toyota or 20k on Honda will be more expensive due to residual than 20k from Subaru, get the figures for yourself. I profit on a Subaru and AWD is standard. AWD or 4x4 is a $10k extra on Honda, Toyota, Ford , etc.
Thedaytoday
2013 Jan 25, 3:54am
That's your mistake. You are losing equity year after year. While I am building equity year over year.
That makes absolutely zero sense.
That's your issue.
Thedaytoday
2013 Jan 25, 3:54am
I believe the title of this this is "Why do people waste so much money on cars?"
Exactly. Very good observation.
lol, you are one of them. How much have spent on you cars over 15yrs+ TOTAL!
and what are the VALUED at today?
Thedaytoday
2013 Jan 25, 3:55am
Your lucky, the majority spend on avg $250 pm. in loss of equity or maintenance
I seriously doubt that. Unless they drive a total POS that needs constant repairs and its out of warranty.
No this is true. Ask any dealer.
Its because cars are better than they used to be. Back when I was a kid in the early 80's you'd be lucky to get 100k out of a car before the thing was totally worn out.
I personally drove a 79 fiesta, 83 fairmont, and 86 mustang to high 200k each. They were just fine and all could have continued much further except for an unfortunate demise (totalled by drunk while parked, carb fire, sold when I moved overseas). You are talking about cars before the elimination of leaded gas in 74. Lead killed motors, 100k and the rings were shot. Unleaded gas and frequent oil changes meant 300k was pretty easy to achieve. Interesting that car sales tracked population from wwII to the late 70's then flattened way out in the 80's to today. Population went from 200-220 million in the 70's to 300-330 million in 2000-2010 but car sales only went from 13-14 million to 15-16 million a year.
That being said I agree cars are light years better. EFI is the biggest winner. I was totally amazed with my 5.0 mustang. It just started and run perfectly every time. Carbs were always crude and ragged running at best. Getting rid of ancient pushrod engines was second. Today's ohc engines are like sewing machines rather than farm tractors. The huge push to minimize NVH (noise, vibration, harshness) in the 90's was third. The 2 generations difference between my 89 e32 bmw and my wife's 98 e39 bmw is just amazing. So much smoother and refined it's hard to believe.
Thedaytoday
2013 Jan 25, 3:57am
That's good for you but most people like driving a new car and not one from the 80's.
Well I'm happy for them then. Personally I like having my own house and a lot of savings to spend on the things I enjoy. As well as the means to not worry about having to eat cat food in my old age.
Good for you, but you could make money on your cars instead of losing money. Instead of arguing over nothing with me ask me how I do it?
If you look after your cars well then a lease is perfect for you.
Also you will build valuable credit with leasing. Did you forget that?
Peter P
2013 Jan 25, 3:58am
I am at a loss.
I am happy to explain, which part is losing you?
A lease is just a contract to own the first 24K miles or whatever your lease terms are.
Whether there is down payment, payment, it comes to the same point, the expected residual value of that car with 24K miles on it with mint condition.
A lease is just the same as depreciation. In the first 24 months of the car life cycle, it is by far the most expensive. If your strategy is to lease a car, all you are doing is perpectually paying for the most expensive portion of the car life.
It is not that simple. The business is a network of participants who try to game.
The residual is a make believe number. If you can negotiate a good sell price you get to realize it over a short period of time. The residual will not change if you get a good deal.
Just find deals with unrealistically high residual and low money factor. Then it is down to negotiating a good price.
You will be surprisef.
Thedaytoday
2013 Jan 25, 3:59am
That's good for you but most people like driving a new car and not one from the 80's.
Well I'm happy for them then. Personally I like having my own house and a lot of savings to spend on the things I enjoy. As well as the means to not worry about having to eat cat food in my old age.
Ps. you love make irrelevant anecdotal conversation. your situation is unique to you. you can repair your car. 99.9% cannot. enjoy your cat food!
instead of having two worthless cars you could have two brand new cars year after year.
Would I drive a 20yr piece of shit toyota, no way! A 2014 all day long. Go lease, enjoy a new car at no maintenance cost.
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As someone who lives in the Bay Area, its clear that many people here just love their Bimmers, sports cars, and large luxury SUVs. What's more, it seems many are terribly concerned about having whatever happens to be the newest model.
On each and every day of the week I am surrounded on the freeways by cars that cost 60k,80k, or even 100k+. So much so that many might as well be Camrys and Accords. Oh- another 7 series? Yawn. There's another 50 I'll see on the way home. No, granted these are unquestionably nice cars. But then again, to me its a big waste of money.
I drive two beater Toyotas, one that I've actually had since high school. Both went past 250,000 miles years ago. Neither have any problems. I've always taken good care of them give them a nice wax job every few months, change the oil every 3,000 miles and keep them looking nice. Doesn't matter to me that they're almost 20 years old now. They still run, drive, and look like perfectly fine cars. I make a pretty good income and could quite easily go purchase the luxury car of my choice if I so chose. Its not that I can't afford a 90k car, but more that I'd rather not spend almost 100k on something that's going to depreciate massively as it ages.
If you think about it from a purely financial perspective, let's say that the average luxury car buyer buys the latest-greatest car every 6-7 years. Let's say the average price is around 60k. That equals close to 120k every decade or several million over the course of a lifetime. Had that money been invested in a 401k or stocks, that same person could have literally retired decades sooner.
Lastly, if your car goes 0-60 in 4 seconds and has a top speed of 200MPH, well who cares? The US has speed limits and thus you can't actually really use the car for what it was designed to do. Sort of like buying a blender and only ever being able to use the slowest setting.