5 ms·

> Why do people get all worked up over a difference ± a few hundred dollars on a very expensive purchase The size of the purchase shouldn't affect how worked u

by defen 4y ago

> Why do people get all worked up over a difference ± a few hundred dollars on a very expensive purchase The size of the purchase shouldn't affect how worked up you get about a few hundred dollars of overcharge, only the regularity with which you make the purchase. For example let's say you buy a new TV and a new car every 5 years. Let's say the TV "should" cost $500 and the car "should" cost $25,000. Why would you be ok with paying $25,500 for the car but not with paying $1,000 for the TV (or, maybe you're ok with both?)

jeffbee 4y ago
Yes, the difference absolutely does not matter. Most people who own cars have experienced a big exogenous shock in operating costs due to fuel recently, that would have more than wiped out the average advantage from negotiating. Furthermore, the unforeseeable supply shortage greatly benefited existing car owners, again much more than any reasonable amount of haggling could have done. And other exogenous factors such as housing costs will have been far more important to the lives of car purchasers than the nominal prices of cars. I mean, have you ever tried to buy a house? That shit is crazy. The one and only way to save money on cars is to not buy them. The true cost of car ownership is massively, woefully underestimated by virtually all drivers. 1% or 2% difference on the nominal purchase price amounts to nothing in the big picture.
- BeetleB 4y ago
  > Most people who own cars have experienced a big exogenous shock in operating costs due to fuel recently, that would have more than wiped out the average advantage from negotiating. This is a ... weird way to look at it. The increase in fuel costs affects you roughly equally whether you negotiated or not - so it's not at all a factor in the decision making process (unless simply not owning a car is an option). I mean, the price of goods went up a lot too due to rising fuel costs, but we don't consider those when buying a car, right? > The one and only way to save money on cars is to not buy them. Ah, your reasoning makes sense now. Unfortunately, not buying a car is not an option for many. > 1% or 2% difference on the nominal purchase price amounts to nothing in the big picture. I would strongly recommend taking a course (or reading a textbook) on engineering economics. Your way of thinking is precisely what they caution against. If anything, the fact that things have gotten quite expensive makes it more important to cut costs where you can.
  - jeffbee 4y ago
    I might agree with your last sentence but not the rest of it. Car owners systematically underestimate the total cost of ownership by ~50% (i.e. the true cost is ~2x the perceived cost). Under those conditions it is completely bizarre that buyers agonize over 1-2% of the purchase price. It would make sense to micromanage that purchase price if, and only if, the rest of your expenses are known and managed to very unusual accuracy. https://www.nature.com/articles/d41586-020-01118-w https://www.nature.com/articles/d41586-020-01118-w
    - BeetleB 4y ago
      > Car owners systematically underestimate the total cost of ownership by ~50% (i.e. the true cost is ~2x the perceived cost). Fortunately, that's not me. I've been keeping all financial records for all non-cash transactions for over 15 years, and so I know exactly what I've spent on my car - fuel, repairs, addons, everything. I've posted breakdowns far down in my comment history (perhaps in the last year - not sure). What I can say: It's not even close to whatever Edmund's TCO calculator reports - so I'm a bit wary of these estimates. I'm not frugal, and I'm not a car guy, and I do whatever the mechanic suggests.
      - jeffbee 4y ago
        How do you overcome the uncertainty? I paid MSRP for my current car, $23500 in July 2020. Since then it has depreciated at -$300/month. That is to say, net of energy, insurance, and annual taxes my real cost of ownership has been -$150/month. I am being paid to own this car. But no amount of analysis could have told me that at the time, and a difference of $500 either way on the purchase would have been utterly irrelevant to my happiness and well being.
        BeetleB 4y ago
        A recurring theme keeps coming up in your comments: The notion that the amount you can save is only $500. As several commenters have pointed out, it could be a lot more (pre-pandemic). > But no amount of analysis could have told me that at the time That you are "making" money on this car is irrelevant to the analysis. Just as totaling the car within a few months of buying it is irrelevant to the analysis. You'd still have anywhere from $500 to $3000 more in your pocket regardless of the amount (or direction) of the appreciation. You'd still get the negative depreciation you're getting now. Again: I really recommend reading an engineering economics textbook. > a difference of $500 either way on the purchase would have been utterly irrelevant to my happiness and well being. Well clearly, if $500 is irrelevant to your happiness, then it is irrelevant to your happiness. No one is trying to convince you otherwise. What people are pointing out is that the $500 (likely a low estimate) you are down has the same financial impact on you as buying a Pepsi and getting charged an additional $500 for the single Pepsi. That the latter case may make you upset (or not) is up to you. We're not trying to make you feel better - we're pointing out the financial outcome is the same. Of course, if you're simply trying to say that it's not worth $500-3000 spending the effort to get a better deal - that's totally fine. But that should be phrased as "$500 wasn't worth the hassle" as opposed to "It shouldn't matter because it is a small percentage of total ownership cost".
ghaff 4y ago
That's one of the many biases explored by behavioral economics. People absolutely look at percentage premiums even though it's the absolute numbers that "should" matter--issues like fairness aside.

by defen 4y ago

jeffbee 4y ago

Yes, the difference absolutely does not matter. Most people who own cars have experienced a big exogenous shock in operating costs due to fuel recently, that would have more than wiped out the average advantage from negotiating. Furthermore, the unforeseeable supply shortage greatly benefited existing car owners, again much more than any reasonable amount of haggling could have done. And other exogenous factors such as housing costs will have been far more important to the lives of car purchasers than the nominal prices of cars. I mean, have you ever tried to buy a house? That shit is crazy. The one and only way to save money on cars is to not buy them. The true cost of car ownership is massively, woefully underestimated by virtually all drivers. 1% or 2% difference on the nominal purchase price amounts to nothing in the big picture.

BeetleB 4y ago
> Most people who own cars have experienced a big exogenous shock in operating costs due to fuel recently, that would have more than wiped out the average advantage from negotiating. This is a ... weird way to look at it. The increase in fuel costs affects you roughly equally whether you negotiated or not - so it's not at all a factor in the decision making process (unless simply not owning a car is an option). I mean, the price of goods went up a lot too due to rising fuel costs, but we don't consider those when buying a car, right? > The one and only way to save money on cars is to not buy them. Ah, your reasoning makes sense now. Unfortunately, not buying a car is not an option for many. > 1% or 2% difference on the nominal purchase price amounts to nothing in the big picture. I would strongly recommend taking a course (or reading a textbook) on engineering economics. Your way of thinking is precisely what they caution against. If anything, the fact that things have gotten quite expensive makes it more important to cut costs where you can.
- jeffbee 4y ago
  I might agree with your last sentence but not the rest of it. Car owners systematically underestimate the total cost of ownership by ~50% (i.e. the true cost is ~2x the perceived cost). Under those conditions it is completely bizarre that buyers agonize over 1-2% of the purchase price. It would make sense to micromanage that purchase price if, and only if, the rest of your expenses are known and managed to very unusual accuracy. https://www.nature.com/articles/d41586-020-01118-w https://www.nature.com/articles/d41586-020-01118-w
  - BeetleB 4y ago
    > Car owners systematically underestimate the total cost of ownership by ~50% (i.e. the true cost is ~2x the perceived cost). Fortunately, that's not me. I've been keeping all financial records for all non-cash transactions for over 15 years, and so I know exactly what I've spent on my car - fuel, repairs, addons, everything. I've posted breakdowns far down in my comment history (perhaps in the last year - not sure). What I can say: It's not even close to whatever Edmund's TCO calculator reports - so I'm a bit wary of these estimates. I'm not frugal, and I'm not a car guy, and I do whatever the mechanic suggests.
    - jeffbee 4y ago
      How do you overcome the uncertainty? I paid MSRP for my current car, $23500 in July 2020. Since then it has depreciated at -$300/month. That is to say, net of energy, insurance, and annual taxes my real cost of ownership has been -$150/month. I am being paid to own this car. But no amount of analysis could have told me that at the time, and a difference of $500 either way on the purchase would have been utterly irrelevant to my happiness and well being.
      - BeetleB 4y ago
        A recurring theme keeps coming up in your comments: The notion that the amount you can save is only $500. As several commenters have pointed out, it could be a lot more (pre-pandemic). > But no amount of analysis could have told me that at the time That you are "making" money on this car is irrelevant to the analysis. Just as totaling the car within a few months of buying it is irrelevant to the analysis. You'd still have anywhere from $500 to $3000 more in your pocket regardless of the amount (or direction) of the appreciation. You'd still get the negative depreciation you're getting now. Again: I really recommend reading an engineering economics textbook. > a difference of $500 either way on the purchase would have been utterly irrelevant to my happiness and well being. Well clearly, if $500 is irrelevant to your happiness, then it is irrelevant to your happiness. No one is trying to convince you otherwise. What people are pointing out is that the $500 (likely a low estimate) you are down has the same financial impact on you as buying a Pepsi and getting charged an additional $500 for the single Pepsi. That the latter case may make you upset (or not) is up to you. We're not trying to make you feel better - we're pointing out the financial outcome is the same. Of course, if you're simply trying to say that it's not worth $500-3000 spending the effort to get a better deal - that's totally fine. But that should be phrased as "$500 wasn't worth the hassle" as opposed to "It shouldn't matter because it is a small percentage of total ownership cost".

ghaff 4y ago

That's one of the many biases explored by behavioral economics. People absolutely look at percentage premiums even though it's the absolute numbers that "should" matter--issues like fairness aside.