4 ms·

For a brand new car that's not the a lot, the problem is she bought a brand new car. Americans are being groomed to think in monthly payments rather than the t

For a brand new car that's not the a lot, the problem is she bought a brand new car. Americans are being groomed to think in monthly payments rather than the total cost which leads to silly decisions like buying a brand new car instead of a getting a used car.

mod 9y ago
Not only the new car (I will never own one), but bought it before she had the job. And then didn't get the job.
tabeth 9y ago
It's a myth that a brand new car is a bad deal. Brand new cars are way superior to used (1-2 year old). However, this is only true if you own it until it no longer works. This is where most people go wrong. If you don't own it for its entire working life (~20 years) you're better of buying a 5 or 6 year used model and saving ~40%.
- jackmott 9y ago
  I'm going to need to see a spreadsheet or something for that claim. 1 year is about 19% depreciation. but only ~5% of life of car
  - tabeth 9y ago
    I'd have to dig it up, but it's the warranty that makes the difference.
    - jackmott 9y ago
      I see. I imagine that math is going to depend a lot on brand/model and one's skill at identifying and fixing problems themselves.
      - tabeth 9y ago
        Indeed. I only mention the original post because Hyundai's warranty is better than average and their cars are cheaper than average (for new, anyway). Even though Hyundai's depreciate faster than say, Honda, the depreciation curve is a little different anecdotally, e.g. a one year depreciation for a Hyundai is a little less than a Honda in raw price since the car is already cheap, however a 5 year difference will favor Honda greatly.
      - twblalock 9y ago
        Jack Baruth wrote a great article a few years ago about how owning cheap used cars is a privilege reserved for people who have the skills and time to fix their own cars: http://www.thetruthaboutcars.com/2015/02/no-fixed-abode-gotta-rich-cheap-car/ http://www.thetruthaboutcars.com/2015/02/no-fixed-abode-gott... It seems that he was partly inspired to write this by "the TTAC reader whose response to Bark’s article on subprime buyers was to straight-facedly suggest that a working father swap his own minivan transmission in his apartment parking lot." I used to own beater cars when I was in college and shortly after. I never paid more than $3k for one, and I did all of my own work, including replacing all of the brakes on one of the cars myself. But I like working on things, I already owned the tools, and I had access to good public transit when my car broke down. I would not recommend beater cars to most normal people.
    - wnevets 9y ago
      if you buy certified pre-owned like I did you get the warranty without having to buy new.
      - danielvinson 9y ago
        Its not the same warranty with most brands - my current car has a 4-year warranty for almost everything (excludes tires and a few other things that are always excluded), whereas the similar pre-owned models have a 4-year that only covers the engine.
        wnevets 9y ago
        AFAIK for the Hyundai Elantra (the car mentioned and that I bought) it's the same minus the current years and miles on the car.
  - twblalock 9y ago
    It really depends on the brand. When I bought my Prius, I was looking at 1-3 year old used models that were only about $3-5k less than a new one, and came with a worse warranty. The two years of free maintenance that came standard with the new Prius covered a significant part of the price gap, and the new one had more life left than the used ones, which I think covers the other part of the gap. On the other hand, it rarely makes sense to buy a new Chevrolet or Ford, or Mercedes, for example. The resale value on those is terrible.
  - gertef 9y ago
    Buying new saves on the transaction costs of the resale through a dealer and the risk of buying private used. Buying non-luxury cars is NOT expensive. Throwing away a working car is expensive.
- wnevets 9y ago
  >It's a myth that a brand new car is a bad deal. that's not really what I was trying to argue. I'm trying to point out the mindset of someone in her position purely thinking of monthly payments. An "extra" $100 a month doesn't sound like a lot of money and the sales people push this hard because it obfuscates the true cost of the purchase. For example my real estate agent kept trying to do this when I was buying a house, an "extra $200 a month is a small price to pay for the house you love".
  - ahains 9y ago
    The one that drives me crazy is comparing an ongoing expense to the price of a latte each day.
    - thaumasiotes 9y ago
      It's a fair comparison to make in terms of costs. But if your income temporarily stutters, you can just stop buying lattes.
      - watwut 9y ago
        I don't buy latte each day. I know no one who does. If I would be theoreticaly buying latte each day, it would be either because I would love latte so much or because of some social reason (collegues I want to talk with are going there so I have to join etc). Compared product is usually not needed socially and is no more appealing then daily latte I am not buying.
        gertef 9y ago
        The people who respond to sales tactics are the sort of people who buy lattes every day, fo rhte same reason.
- thaumasiotes 9y ago
  75% of the lifetime for 60% of the cost (your numbers) doesn't sound like a bad deal.
  - KekDemaga 9y ago
    When you consider the time value of money it becomes an excellent deal.
  - tabeth 9y ago
    Yup! Personally I'd never buy a new car, but they aren't really that bad of a deal. I will say though, there's an uncertainty that exists that wasn't apparent in my simplification. Transmission failing out at 9 years would basically make your car useless, but if you had warranty you'd be good.
icantdrive55 9y ago
Yea, the car industry has pulled out every trick in the book. I'm looking for a new/used car for a relative, and don't like the terms, or even what's being offered. The average consumer will lose money the minute that new car is driven off the lot. I used to equate it to rolling down your window every morning, and letting a $100 bill fly out the window for months. O.K. The dealerships reslized consumers didn't mind clean low mileage vechicles. They immediately raised those used car prices. Lease the vechicle to someone--win--win. They get back a used car they can off on someone, usually at rediclous terms. What suprized me is the amout of new/late model cars I'm seeing on the road. There's no shortage of people buying new cars. It's almost skin to the housing crisis? I have a ha d time believing the economy is that good. Leases/ownership terms going out six plus years--crazy? Like everything there will be a crash, but for the life of me I can't predict when. On a personal note, the new vechicles I'm looking at just look like a breakdown, and a deslership visit just waiting to happen. I used to be a mechanic, and would never buy a vechicle I couldn't work on. Times have definitely changed though. I had one salesman say, "Oh yea, no one works on their own vechicles anymore. They just bring it in." As I noticed the shop rates at $220/hr. He then offered Starbucks coffee, or bottled water.

mod 9y ago

Not only the new car (I will never own one), but bought it before she had the job. And then didn't get the job.

tabeth 9y ago

It's a myth that a brand new car is a bad deal. Brand new cars are way superior to used (1-2 year old). However, this is only true if you own it until it no longer works. This is where most people go wrong. If you don't own it for its entire working life (~20 years) you're better of buying a 5 or 6 year used model and saving ~40%.

jackmott 9y ago
I'm going to need to see a spreadsheet or something for that claim. 1 year is about 19% depreciation. but only ~5% of life of car
- tabeth 9y ago
  I'd have to dig it up, but it's the warranty that makes the difference.
  - jackmott 9y ago
    I see. I imagine that math is going to depend a lot on brand/model and one's skill at identifying and fixing problems themselves.
    - tabeth 9y ago
      Indeed. I only mention the original post because Hyundai's warranty is better than average and their cars are cheaper than average (for new, anyway). Even though Hyundai's depreciate faster than say, Honda, the depreciation curve is a little different anecdotally, e.g. a one year depreciation for a Hyundai is a little less than a Honda in raw price since the car is already cheap, however a 5 year difference will favor Honda greatly.
    - twblalock 9y ago
      Jack Baruth wrote a great article a few years ago about how owning cheap used cars is a privilege reserved for people who have the skills and time to fix their own cars: http://www.thetruthaboutcars.com/2015/02/no-fixed-abode-gotta-rich-cheap-car/ http://www.thetruthaboutcars.com/2015/02/no-fixed-abode-gott... It seems that he was partly inspired to write this by "the TTAC reader whose response to Bark’s article on subprime buyers was to straight-facedly suggest that a working father swap his own minivan transmission in his apartment parking lot." I used to own beater cars when I was in college and shortly after. I never paid more than $3k for one, and I did all of my own work, including replacing all of the brakes on one of the cars myself. But I like working on things, I already owned the tools, and I had access to good public transit when my car broke down. I would not recommend beater cars to most normal people.
  - wnevets 9y ago
    if you buy certified pre-owned like I did you get the warranty without having to buy new.
    - danielvinson 9y ago
      Its not the same warranty with most brands - my current car has a 4-year warranty for almost everything (excludes tires and a few other things that are always excluded), whereas the similar pre-owned models have a 4-year that only covers the engine.
      - wnevets 9y ago
        AFAIK for the Hyundai Elantra (the car mentioned and that I bought) it's the same minus the current years and miles on the car.
- twblalock 9y ago
  It really depends on the brand. When I bought my Prius, I was looking at 1-3 year old used models that were only about $3-5k less than a new one, and came with a worse warranty. The two years of free maintenance that came standard with the new Prius covered a significant part of the price gap, and the new one had more life left than the used ones, which I think covers the other part of the gap. On the other hand, it rarely makes sense to buy a new Chevrolet or Ford, or Mercedes, for example. The resale value on those is terrible.
- gertef 9y ago
  Buying new saves on the transaction costs of the resale through a dealer and the risk of buying private used. Buying non-luxury cars is NOT expensive. Throwing away a working car is expensive.
wnevets 9y ago
>It's a myth that a brand new car is a bad deal. that's not really what I was trying to argue. I'm trying to point out the mindset of someone in her position purely thinking of monthly payments. An "extra" $100 a month doesn't sound like a lot of money and the sales people push this hard because it obfuscates the true cost of the purchase. For example my real estate agent kept trying to do this when I was buying a house, an "extra $200 a month is a small price to pay for the house you love".
- ahains 9y ago
  The one that drives me crazy is comparing an ongoing expense to the price of a latte each day.
  - thaumasiotes 9y ago
    It's a fair comparison to make in terms of costs. But if your income temporarily stutters, you can just stop buying lattes.
    - watwut 9y ago
      I don't buy latte each day. I know no one who does. If I would be theoreticaly buying latte each day, it would be either because I would love latte so much or because of some social reason (collegues I want to talk with are going there so I have to join etc). Compared product is usually not needed socially and is no more appealing then daily latte I am not buying.
      - gertef 9y ago
        The people who respond to sales tactics are the sort of people who buy lattes every day, fo rhte same reason.
thaumasiotes 9y ago
75% of the lifetime for 60% of the cost (your numbers) doesn't sound like a bad deal.
- KekDemaga 9y ago
  When you consider the time value of money it becomes an excellent deal.
- tabeth 9y ago
  Yup! Personally I'd never buy a new car, but they aren't really that bad of a deal. I will say though, there's an uncertainty that exists that wasn't apparent in my simplification. Transmission failing out at 9 years would basically make your car useless, but if you had warranty you'd be good.

icantdrive55 9y ago

Yea, the car industry has pulled out every trick in the book. I'm looking for a new/used car for a relative, and don't like the terms, or even what's being offered. The average consumer will lose money the minute that new car is driven off the lot. I used to equate it to rolling down your window every morning, and letting a $100 bill fly out the window for months. O.K. The dealerships reslized consumers didn't mind clean low mileage vechicles. They immediately raised those used car prices. Lease the vechicle to someone--win--win. They get back a used car they can off on someone, usually at rediclous terms. What suprized me is the amout of new/late model cars I'm seeing on the road. There's no shortage of people buying new cars. It's almost skin to the housing crisis? I have a ha d time believing the economy is that good. Leases/ownership terms going out six plus years--crazy? Like everything there will be a crash, but for the life of me I can't predict when. On a personal note, the new vechicles I'm looking at just look like a breakdown, and a deslership visit just waiting to happen. I used to be a mechanic, and would never buy a vechicle I couldn't work on. Times have definitely changed though. I had one salesman say, "Oh yea, no one works on their own vechicles anymore. They just bring it in." As I noticed the shop rates at $220/hr. He then offered Starbucks coffee, or bottled water.