Cars. In the words of a family member: “The automobile keeps the average man down.” I believe it. Saw many a car payment help a family get to bankruptcy court.
So why the pic of the old Saab. I’ll get to that in one moment. First new car talk:
I bought one new car and figured out it cost me $0.45 per mile. Here’s how I calculate that: I owned it 4 years (sold it to buy a minivan). Paid $28,000. Sold for $13,500 plus received pro-rated extended warranty refund of $1300. But for a while I spent $$$ each month on a car payment. Figure $200 on average went to car payment interest for 3 years for a total of $7200 in interest. 28,000-13,500+1300= 13,200 + 7200=$20,400. Owned for 4 years (48 months). 20,400 divided by 48 mo= $425.00 per month.
I drove the car 45,000 miles. So it cost me $0.45 per mile just to own. Excludes gas, insurance and tags.
Now for the Saab. It’s a 1989. I had an odyssey looking for a car. I tried leasing but the $300 per month lease either really costs $500/mo when you factor in the down payment or the salesman would upsell me to a more expensive car. Used car prices are ridiculous. Finally, I found the Saab, this is my 3rd Saab 900. $500. That’s right. So it basically pays for itself in one or two months use. As long as it meets my $1500 per year in maintenance, I’m copacetic. Two weeks after buying it I replaced the radiator.
So why a cheap car: 1) can’t lose that much. Cars are utilities not assets. I might even go so far as to say they are liabilities; 2) I have a classic car addiction. Presently I’m feeding that addiction with the restoration of an Austin-Healey 3000. 3) I only drive about 7000-8000 miles per year on my regular car and this $500 beater (the picture is not showing it’s rougher side. The car is a a 20/20: looks decent 20’ away or going 20mph) serves 95% of my need. It gets me from point A to point B and back to A. Really, do I need a Mercedes S-Class to do that?
Now I don’t go pulling up at the front door of the country club in this baby, at least not until it gets some body work touched up.
Thanks for reading the Ramblings of the Triad Lawyer
Mark Lamb said:
Kirk, all very good points. However, and coming from me you know this is a bold statement, used cars are NOT for everybody. Now for those that don’t know me, my average car cost me around $500. I drive "cars with character." I don’t mind their foibles, and I actually enjoy working on them when they require it. Many people don’t, though. Most folks don’t have the ability, tools, or desire to work on their own cars when major things go wrong. And it’s very difficult to find a mechanic you can trust. I’ve seen it happen many times. Somebody buys a cheap car thinking it’s going to save them money. After dumping several thousand dollars into repairs, they’re left with a still unreliable vehicle and a bad taste in their mouths. It’s even worse when the car is their only means of motorized transportation, and they bought the car to be a daily driver, not a project. Buying a new car can seem like throwing money down the toilet, but so can paying for insurance, and they both share similarities. The peace of mind that can come with owning a fresh car is important to some. Then there’s the warranty. Something breaks, you’ve got a place to take it and you might even get a loaner car! A car payment, unlike surprise repair bills, can easily be fit into a family’s budget. Repair bills can knock a guy down pretty quickly if they’re already living paycheck-to-paycheck, whereas the payment on a Kia can be worked in pretty easily. Now you know I could go on and on about the benifits, both financial, ecological, and spiritual of driving used cars. The fact of the matter is, though, if people stop buying new cars, then eventually guys like us will run out of used cars to drive! Somebody has to eat that depreciation and get them into the market for us, Kirk!
Kirk Sanders said:
Mark, Excellent points. Likewise I agree.1. Buying a used car: you better have it looked at by a trusted mechanic before you buy it. Even, or especially, if it’s at a dealership. The mechanic’s eye has saved me from buying a money pit. You learn a lot when a car is on a lift too.2. New Car’s and warranties: I’ve noticed that a lot of manufacturers are reducing their new car warranties. What does that say about their faith in the car? The manufacturer also makes more money selling parts.3. New Cars and parts. Now manufacturers, eg. BMW & Volvo, are coding all their parts so that you can’t get used parts or aftermarket. You have to get it from the dealership. One example, BMW dealership has to "Code" a replacement battery or it won’t work on your BMW!