When was the last time you looked for a new car? It can be fun to consider buying a new car, and fun to fantasize about the new car you want, a Jaguar perhaps? Maybe you are a Mercedes kind of person.
The last car I bought was a 2002 Honda CRV. I still have it. I don’t drive much, so it only has about 85,000 miles on it. At the rate I’m going it won’t have to be replaced in my lifetime if I can keep it going until it hits 200,000 miles, which, according to my spouse, is not unheard of. If I drive 5,000 miles per year, it will last another 23 years. I’ll be 81 years old by then. And actually, I drive less than 5,000 miles per year. I just have to keep taking it in for regular service and I should be fine.
Economy cars are fine
But if I were to buy another car, I guess I would get an economy car. I don’t care much for cars or driving, so it’s not a priority for me. In fact, when I first met my spouse and he bought a car, a friend asked what he purchased and I correctly let them know it was a sedan!
A lot of people do care about their car, as a status symbol. My spouse has a Lexus sedan that he adores. It has leather interior and a fancy backup monitor so he can see what’s behind him. It is very comfortable and quiet for road trips.
The best selling truck for the past 46 years
We were chatting the other night about a car commercial we saw. It was for a Ford pickup truck. I noticed they no longer advertise the price of cars on television commercials. I can understand why. Currently, in 2023 the average cost of a new car is $49,388. Compare that to just ten years back when the average price of a new car was $32,890. That’s an increase of $1,650.00 per year. The average car payment in 2023 is $780.00 per month. The very popular Ford F150 pickup fully loaded is around $92,000.00. That’s about the amount the average home sold for in 1986.
The average cost for full coverage car insurance is $140.00 per month. That brings the monthly output for a new car to about $920.00 in 2023.
I’m so happy I don’t have to buy another car in my life, as long as everything goes as planned.
Buying a used car is a great option. They are more affordable and often you can find used cars that are in good condition and that have been well cared for.
Find resources to help with a used car purchase
I bought a used car back in 2010. It was an economy car that I bought from a rental car agency. It was about three years old and had 30,000 miles on it. I was happy to have it, it cost $8,000.00 and it is still running well. Currently, my daughter uses it as a run-around town car for minor errands. She is the second daughter to use this car; originally I gave it to my youngest daughter when I realized I didn’t need a second car at my home.
The car I have right now had about 40,000 miles on it when I bought it used in 2018. The couple who owned was older and used it similarly to how I use it, to go to the grocery store on occasion. I paid $10,000.00 for it. I paid cash.
If I had purchased a new car, at the going rate that year of $37,577.00 with a $7,500.00 down payment my monthly payment would be $615.00 plus the cost for full coverage insurance at $140.00 leaves me with a monthly output of $755.00. That’s almost $10,000 a year. By the end of the loan with average financing, the output would be about $45,000.00 not including the cost of insurance.
Needless to say, I’m a big fan of used cars. I will never complain about my car payment, because I don’t have one.
There are options, but it takes sacrifice
Alternatives to buying a new car are
· Find a great used car
· Use public transportation if it is available to you
· Car share with your partner if possible
· Find a job that offers a work-from-home option eliminating the need for a car
· Use a bicycle if practical
· Figure out if you can carpool with someone in your area
Obviously not every solution mentioned will be a solution you can use, but it’s worth the effort to consider the possibilities. Having an extra $10,000.00 each year could go a long way toward paying off credit card debt, student loan debt, or personal loan debt. If you don’t have these types of debt but have a mortgage you can reduce the term of your loan by ten years, and save about $193,000.00. Very nice!
If you are saving to buy a house, having a hefty down payment is nice when negotiating terms.
My suggestion to everyone I speak with about cars is to buy the best most affordable used car you can find. Do the research and find a car that typically lasts a long time and has a good record of low maintenance costs. Reliability is a huge factor. Remember that if you buy a BMW, you’ll pay a lot to drive off the car lot and a lot for maintenance and repairs. Some cars are simply more affordable to own.
Check your ego
Check your ego. There are people who will think highly of you because you drive a nice car. But if that is the criteria they use for admiration, you may want to reconsider your relationship. I admire people because of their skills, their conversation contribution, their good work, and especially if they are funny. These skills/qualities can be identified; they last and are actual attributes. Cars, jewelry, and other outward signs of prosperity are nothing. They don’t tell you anything about the quality of the person. I would rather have a person in my life who I can relate to who will laugh deep belly laughs with me than a person with a swell car.
Some people can afford fancy cars. Some people can afford fancy cars but prefer to spend their money differently. Cars are just a tool and have nothing to do with your quality as a human, nor do they say anything about your value system. Your worth is not determined by the tool in your garage.
If you aren’t convinced, look at a great example, Warren Buffet, an old, rich, American man. He has a reputation for having bought many used cars over his long life and no one is looking at him as though he is some kind of a slob.
If you absolutely must buy a new car, get a reliable car that is affordable to maintain, and pay cash. Financing is not a sound investment strategy. Remember if you aren’t investing you are spending. Spending won’t get you the reward of debt-free living and financial independence.
Want to learn more about frugal living? Buy my book “NEVER WORRY ABOUT MONEY AGAIN: GAIN FINANCIAL FREEDOM BY BECOMING BETTER AT MANAGING THE MONEY YOU HAVE”
