Cars in Traffic Jam

Is Your Car Keeping You Broke?

What do you think of your car? Are you embarrassed by it? Do you absolutely love it? Or, is it just an okay car that gets you around? Maybe it has always been like this, but it seems that in the recent years people are very conscious about what they are driving. Somehow they think that if they drive something that is incredibly nice, others will respect them more and they will ultimately be happier because of the beautiful car they own.

But….

Many times the cars that people choose to drive are just keeping them broke. Is your car keeping you broke?

The Excuses People Use to Buy a New Car

When people get the itch to buy something new, they start to rationalize the purchase early on. Typically, they know that purchasing a brand new vehicle is a bad idea, but because they really want it they need to trick themselves into believing that it would be the logical choice for them. When these individuals begin to start thinking of reasons why they should buy a new vehicle, this list is typically what they come up with:

1) I need a vehicle that is safe

Somehow people get the notion that the current car they are driving is not safe. If your car is less than 10 years old, chances are that it is perfectly safe. If, however, you own a 1960 Chevy Corvair, then yes, you should probably upgrade to a safer car (but it still doesn’t have to be brand new).

2) If I buy a new car, I will get better gas mileage

This might be true, but instead of dropping $30,000 to save $500 a year, why not buy a 2002 Honda Civic that gets 35 miles per gallon and will only cost you $3,500? Buying that new car to save on gas just doesn’t make all that much sense in this case either.

3) I will drive this new car forever

Even though people don’t typically drive a car for more than five years, they somehow get themselves convinced that they will get their money’s worth out of a new car because they will drive it until it simply won’t drive anymore. This hardly ever happens. Stop kidding yourself. After a couple of years you will get bored with your car and will start drooling over the new ones. It is best to buy a used car so that you don’t have to feel bad about selling it and buying something different after a couple of years.

4) A new car is more reliable

Some cars come off of the line and are reliable, but there are always those new cars are mechanically worse than many of the used Hondas and Toyotas out there. The problem with buying a new vehicle is you just don’t know if your car will be one of the reliable ones or one of the lemons. If, however, you purchase a used car, you can read up on the many years of reliability results.

5) The payments are cheap and affordable

Do you realize why the payments are so cheap for new cars? It’s because they extend the loan for 7 years! After all of those years, you will not only overpay on your vehicle because you bought it brand new (and it is depreciating quickly), but you will also have paid for thousands of dollars in interest as well! Never buy a car on payments. Pay cash whenever you can.

What Is Your Car Actually Costing You?

There are some luxury vehicles out there that are incredibly nice inside and out. My favorite is the Infiniti QX70 – an SUV with sleek lines and an interior from the future. I drool pretty much every time I see it. But, I have easily convinced myself never to buy this vehicle because of what it would cost me in the future.

Brand new luxury vehicles can easily cost you $45,000 (or more, but we’ll stick with this amount since it is practical). When you could buy a domestic vehicle that’s just a few years old for $10,000, I would deduce that you are overspending on your ride by $35,000. Do you know what a $35,000 investment would grow into after 35 years?

Almost $1,000,000!

That’s right. Your spontaneous decision to buy an Infiniti instead of a Chevy could end up costing you one million dollars over the course of your lifetime. So do you think that luxury vehicle is still worth it? I would say absolutely not!

Have you ever purchased a new vehicle? How much do you figure it cost you over a lifetime?

4 thoughts on “Is Your Car Keeping You Broke?”

  1. I bought a new car after college and another one this year. For reasons 3, 4, and 5.

    Before I bought my new Chevy Aveo in 2005, I was used to driving a 1998 Mazda Protégé that my parents “gifted” me. It was AWFUL – would stall out frequently at stop signs and lights even though it was an automatic, leaked a quart of oil per week, and didn’t have an air conditioner (we live in Houston, TX). My parents got it from the bank for $1200. I tried to give it back but they got all upset, so I just parked it at my college campus and walked or begged rides to get anywhere. I only used it once a month to visit my parents and it broke down on me twice in one year. I put $1000-$2000 into it overall in less than 18 months and finally resold it to a guy who needed it for parts about 2 years after getting it for $1400. I hated that car and the fact that it left me stranded all of the time.

    So, after getting my first real job a month out of college, I bought an $11,000 brand new Chevy Aveo. It was a 5 year loan for $217 a month. I ended up paying it off in 2 years and it cost me a grand total of $12,800. Over the next 7 years, I put about $1500-$2000 into maintenance and repairs. I drove it into the ground early this year, so it made it 9 years (it is a badly made car that should have made it another 2-3 years for sure). It wasn’t the best car ever but it did what it needed to. I was only stranded once in those 9 years when the thermostat housing (made of crappy plastic) broke on me on my way home 3 years into owning it.

    In April of this year, I bought myself a brand new 2013 Honda Fit (there is only an electric 2014, so 2013’s were made for 18 months). I paid $16,356 drive out and got 0.9% interest for the next 5 years. My payments are $278 and I will probably not pay it off early. It will cost me $16,680 total and I didn’t even give them a down payment. We have our money invested in more than 0.9% returns. As long as Honda’s are as reliable as people say, I will be driving this one for at least 10 years. I am hoping for more.

    All of this said, my husband bought a 1 year old, used Prius in 2008. It was $21,000, we paid it off in 2.5 years for $22,750 total, and he’s still driving it. We have had to put about $1000 into a few issues in the last year or so. It now has 130,000 miles on it and we think we’ll get another 2-3 years out of it…we’ll see…

    So yes, less than $5k used cars are a better money value, even with repairs. But at some point, I decided that saving money doesn’t beat your day-to-day peace of mind. So I am a supporter of buying awesome used cars or new cars and really driving them for 10+ years if possible. I honestly don’t care if some money is wasted overall if I am not stranded more than once every 10 years for the rest of my life. 😀

  2. I am still in love with my 2001 Honda Civic that gets 35+ mpgs and has never left me stranded. Honestly though, when I get my house paid off I will probably invest about $8,000 in a nice 2009 Honda Civic coupe. But, I will most likely never buy a new car. There is just way too much money to be lost in depreciation!

  3. My in-laws bought a grand cherokee, but when my father in law noticed that their car needs a repair always then he decided to sell it. His old car really cost him too much money and now he bought a new car and he is really happy with his decision.

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