As I’ve been sifting through the blogosphere, I’m finding more and more that people are afraid of automobiles. And I get it. I used to be there. When I was 16 years old, I bought an old, crappy car for $1600 and it lasted less than a year. I didn’t even know where the oil dipstick was in the engine bay. It wouldn’t start after a while and I ended up selling it to a friend because I had inherited some money and could buy another vehicle. He ended up blowing up the motor on that car because he knew as little about cars as I did at the time.
What Vehicle Should You Buy?
I’ve been seeing a lot of articles pop up lately that have to do with purchasing a vehicle. This can be your first car, a replacement vehicle or just a newer car because your old one is getting high in miles. Living in a developed country, especially America, means that at some point in your life, you will probably own a vehicle to transport you to work, store, etc. Since owning a car is inevitable (unless teleporters are developed soon [I'm looking at you, Science!]), you should probably know what you are getting into before dropping thousands of dollars of your hard-earned money into your transportation device.
And what is wrong with my current vehicle? If it still fits all of your needs but has higher miles or is in need of repair, you may end up saving yourself thousands in the long run if you just do a little maintenance yourself. If you absolutely cannot do that, have a buddy check it out or repair it for pizza and beer. If you don’t know anyone who can do that, price out a local repair shop with good reviews online. It’s still cheaper than replacing your car.
If you still think you need to buy a car, then you should commit to doing some homework before buying. There are tons of options to research your impending 2-ton purchase, including car forums and review sites like consumer reports and edmunds.com. Personally, I open up the google machine and type in things like “common issues with (insert the car you want here)”. In 15 seconds, I can find common issues with the car I want to buy and know what to look out for and what to ask the seller. Here’s an example:
We are looking at getting a minivan, because we’re cool like that! We’re not getting very soon, but with our growing family, I wanted to do a bit of research ahead of time, because I like saving money and knowing what I am buying. I knew that I would probably want to look at a 10-year-old Honda or Toyota, because those are the vehicles I still see driving on the road. After one look at the older Toyota mini-van’s, I almost puked because they are so ugly, so we decided to look at the Honda Odyssey. I google’d “2001 Honda Odyssey common issues”. I went to the edmonds.com site (3rd link down) and found a long list of transmission issues. So now, when searching for a car, I am looking for a rebuilt or replaced transmission in the car. Just 15 seconds, and I just saved myself from breaking down on the side of the road and dropping a few extra thousand dollars on my minivan. It really is that easy!
You Don’t Need a New Car
New cars are horrible investments and a waste of your hard-earned cash. You will lose 10% of the value just driving it off the lot, and another 60% over the next 5 years. Not to mention that most people reading this blog can’t actually afford a new car at all. You will end up financing this depreciating asset that’s value is dropping faster than the IQ of a NASCAR fan. New cars are also unproven. Who knows? It might be a lemon or only last you a few years. Hopefully it would at least last you long enough to pay it off and waste all your money .
Still don’t think it’s a waste?
Let’s play with some numbers, shall we?
Average Cost of New Car – $28,860 -ish
Loan Term – 60 Months
Interest Rate – 3%
Monthly Payment – $519
So you’re going to drop $519 a month for 5 years to buy this awesome, $28,000 car. Cool. Well, bummer, because your car is losing over 10% of it’s value every year. No worries, at least it’s an awesome car. Fast forward 5 years. Your finish dropping $28,000 on your car + $2,200 in interest to have your new car. During that time, your car dropped about 70% of it’s value. So you paid over $30,000 for your car that you can now sell for $8,400! Right on! If this were a stock that you invested in, I’m sure you would drop your entire nest egg in that hot commodity because with returns like that, YOU’RE GOING TO TAKE OVER THE WORLD. Don’t worry, I won’t depress you more with what your $28,000 could have done if you invested it, because hey, you didn’t even have the money in the first place!
I have a ton more to say about cars, because I think they are one of, if not the biggest place where we can save money. We’re talking tens of thousands, maybe hundreds of thousands of potential dollars that you can keep if you start to make better purchasing decisions with your vehicles. I’ll put together a “How to Buy a Car” post, or even series coming up, but for now, I’ll sum everything up in this flowchart: