My emergency fund would only cover 2/3 of that .
That 12% would be motivator to pay that off so fast!!!
Financial graphic comparison of buying a new or used car
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That 12% would be motivator to pay that off so fast!!!
The overall takeaway has merit - don’t be car poor - but there are also realities to daily life that make new cars attractive: 1. Minimizing inconvenience and unpredictability of repairs (both time and money); 2. Safety - both features and the potential dangers of breaking down when you live in certain areas; and 3. Life is short, enjoy yourself a bit within sensible limits.
Respectfully, the other thing DIY types don’t often consider is the value of their own time. We had a neighbor with a fleet of cool but older Euro cars - Volvo sedan and wagon, Porsche 944 turbo, BMW M3 - but every weekend he is fixing or servicing something, and sometimes during the week too. This is not because the cars are junk it is because they are old. You would have the same thing with older Japanese or American cars. I often would wonder if he realized that perhaps if he invested the time in himself - on his career, not to sound like a selfish jerk - if he would have the money to own a much newer version of those vehicles (still keep them a while, I get the point about wasting money on cars) and more free time.
At the end of the day, different strokes for different folks.
Wow. I had to have about $8K done suddenly 10 years ago and I thought that was tough. I only recently have become able to afford something like that.
I don't know too many people that can come up with $50K. What do those people do?
Money isn’t everything. It seems many people on this site entertain themselves going on about others choices and playing Dave Ramsey.
Many get that awful loan.
Surely you are right yet some wisdom to be had can be quite valuable
I had never heard of pay yourself first when I was a kid. Oddly my parents who were great savers never mentioned it. Simple thing really- but I completely ate it up.
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I think I responded to this thread, but I don’t think I mentioned here (apologies if I did) that we ordered a new car from GM. I think it will arrive late September as order accepted a week ago. That took almost four weeks.
This car is so expensive, it’s double and then some, compared to what we last spent on a new 2011 GM.
Through no actions of our own, our 2011 was a total loss in May.
We will not need to touch savings nor will we be taking out a car loan as that’s like 4.05 while savings is 3.5.
I sold two Fidelity mutual funds last Monday (keeping short term gains, while selling all long term). It was at the time back to back historical highs. Being me, and illogical, I rooted for the market to go down on Tuesday in order to validate my timing of the sale, stupid because what I sold was almost 3% of my portfolio—actually sad and scary to say that—almost 3% on a car. It makes more sense to have sold and never looked back. But I tend to be a woulda coulda shoulda type.
It’s life. We didn’t do anything to necessitate having to get a new car. We didn’t do anything to make cars so expensive today. We got 13.5 years out of the 2011, falling short of the 15 year target. That mutual fund was my first and opened in 1994. It was for someday, and someday came in 2025. It likely would have been worth more by October, but I need to be locked in. Can’t be down 10% when the new car arrives.
So in our buy new decision we are using a mutual fund that is almost 3% of my portfolio. We are buying new fully knowing that when we drive off the lot $10k is gone. Like all our cars we plan on 15+ years of driving it. We don’t need to touch savings nor have an auto loan. This is our reality. And I know many here would say well that isn’t smart. Your mutual funds > 4.09% you should have borrowed 100%. Well, we simply don’t use leverage around here. And generally speaking we can’t time the market.
On this new car, 2021-2024 is recalled, and the 2025 has a refresh and the interior is imho much nicer. So we definitely want new.
Long winded but I thought I’d share, for what it’s worth (not much
).
btw the best car purchase I will have likely ever made. 2006 LS430 in 2016
For $14k. Still a daily driver and no real
Issues in 8.5 years and 70k miles.
This car is so expensive, it’s double and then some, compared to what we last spent on a new 2011 GM.
Through no actions of our own, our 2011 was a total loss in May.
We will not need to touch savings nor will we be taking out a car loan as that’s like 4.05 while savings is 3.5.
I sold two Fidelity mutual funds last Monday (keeping short term gains, while selling all long term). It was at the time back to back historical highs. Being me, and illogical, I rooted for the market to go down on Tuesday in order to validate my timing of the sale, stupid because what I sold was almost 3% of my portfolio—actually sad and scary to say that—almost 3% on a car. It makes more sense to have sold and never looked back. But I tend to be a woulda coulda shoulda type.
It’s life. We didn’t do anything to necessitate having to get a new car. We didn’t do anything to make cars so expensive today. We got 13.5 years out of the 2011, falling short of the 15 year target. That mutual fund was my first and opened in 1994. It was for someday, and someday came in 2025. It likely would have been worth more by October, but I need to be locked in. Can’t be down 10% when the new car arrives.
So in our buy new decision we are using a mutual fund that is almost 3% of my portfolio. We are buying new fully knowing that when we drive off the lot $10k is gone. Like all our cars we plan on 15+ years of driving it. We don’t need to touch savings nor have an auto loan. This is our reality. And I know many here would say well that isn’t smart. Your mutual funds > 4.09% you should have borrowed 100%. Well, we simply don’t use leverage around here. And generally speaking we can’t time the market.
On this new car, 2021-2024 is recalled, and the 2025 has a refresh and the interior is imho much nicer. So we definitely want new.
Long winded but I thought I’d share, for what it’s worth (not much
).btw the best car purchase I will have likely ever made. 2006 LS430 in 2016
For $14k. Still a daily driver and no real
Issues in 8.5 years and 70k miles.
Here's my take on new vs used, and why I'll always buy used: you get more bang for your buck letting someone else take the initial depreciation hit, period. Here's an example that I just priced out:
New 2025 Honda Pilot Touring: $50.5k
Used 2024 Acura MDX with 17k miles: $51k
Personally, why would I buy the Pilot when for the same money I can get the premium brand version of the same vehicle slightly used for the same price? 17k miles is nothing, and one model year older is inconsequential. Still have factory warranty, still a "new" car, so no maintenance advantage and it won't "need more work" just because it's used. Someone else's loss on the MDX is my gain.
New 2025 Honda Pilot Touring: $50.5k
Used 2024 Acura MDX with 17k miles: $51k
Personally, why would I buy the Pilot when for the same money I can get the premium brand version of the same vehicle slightly used for the same price? 17k miles is nothing, and one model year older is inconsequential. Still have factory warranty, still a "new" car, so no maintenance advantage and it won't "need more work" just because it's used. Someone else's loss on the MDX is my gain.
Exactly; as I've said before, depreciation is my friend. A 1-2 year old CPO car that I really like compared to a new car that I would have to tolerate?
No contest.
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Some more thoughts. New means it’s possible (but not given) one can get exactly what they want. Color, interior, options.
2013 S550 AMG, I’d want the P30. Good luck finding one used. At the same time I’d never be able to get one new back then. So a used shopper says well I can’t find a P30 I’ll just get one without.
Our ordered car will have air ride and magnetic ride control. I didn’t see a single vehicle in our color combo with that suspension.
Lastly, if one doesn’t sell, did the owner lose? On April 7, stocks were 23% lower than Thursday. Did we lose if we held? It’s up 29.9% since. Did we gain that? Only if we bought or sold. Jmoymmv the new v. Used is case by case and dependent on our own situations. Used may be the only way with vehicles that are normally out of our price range. My LS is a good used purchase. $65,700 new and I bought it for $14k and it’s a car driven daily and loved. 8.5 years so far.
2013 S550 AMG, I’d want the P30. Good luck finding one used. At the same time I’d never be able to get one new back then. So a used shopper says well I can’t find a P30 I’ll just get one without.
Our ordered car will have air ride and magnetic ride control. I didn’t see a single vehicle in our color combo with that suspension.
Lastly, if one doesn’t sell, did the owner lose? On April 7, stocks were 23% lower than Thursday. Did we lose if we held? It’s up 29.9% since. Did we gain that? Only if we bought or sold. Jmoymmv the new v. Used is case by case and dependent on our own situations. Used may be the only way with vehicles that are normally out of our price range. My LS is a good used purchase. $65,700 new and I bought it for $14k and it’s a car driven daily and loved. 8.5 years so far.
You are 100% correct.
Having money does help reduce stress….. it doesn’t guarantee happiness.
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Third situation in this story: Bob purchases a $35K certified used car, put $10K down, and takes out a loan that fits in his budget. Bob’s car is much nicer than Sarah’s but definitely not as nice as Sam’s. Bob plans to pay this vehicle off and enjoy it debt free for a while after. It will probably last much longer than Sam’s and Sarah’s cars cause it isn’t as fancy or as old. Bob also invests every paycheck in his company sponsored retirement plan and gets the full match plus adds additional funds to help grow his retirement faster. Bob has balance in his life and is likely much more fulfilled than both Sam and Sarah cause he isn’t being reckless with money and also isn’t waiting until 65 to enjoy his life.
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Indeed, and yet I gave the definitive answer to it in post #12
We can agree that spending too much on a car relative to your income is not a wealth builder.
That may, or may not, include buying new.
Understood.
Some people don’t feel comfortable buying a used CPO vehicle because of previous owner driving habits.
I would not feel comfortable buying a CPO that was driven very hard for 2 years.
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This we can certainly agree upon. Put bluntly, a car is to get from point A to point B. Our interest in them, greatly changes the purpose of a car. I do see cars as a waste of money. So, I have to be able to come to terms with that. No different than folks who go to a casino--they accept losing in our relatives' cases, $5k per trip. But you should see how happy they are when they win $10k. It makes up for losing the other $100k prior.
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Just look at the way people drive, say, when a road is being repaved. It's been milled, or, there are exposed manholes, etc. Or over the speed "humps" the city has put in place to slow vehicles down on local streets. There are many new vehicles going through these conditions reminiscent of my buddy absorbing moguls on Outer Limits when we were kids. I assume these are leased vehicles, who would drive that way if they owned them?
CPO is a money maker for the dealership, not to be confused either with a bumper to bumper warranty. They have deductibles.
You both make good points. I like to think about the type of vehicle in figuring out where I am comfortable. So a two year old “pre-owned” Challenger 392? Might have some concerns. A year or two old BMW X5? Less concern. But on the luxury cars, the depreciation is so bad (or good if you are the next owner) that there is definitely some reward. I also think it helps to be a knowledgeable car person. If you are clueless, safer to go new. Savvy about cars you can better judge the risk reward. But there isn’t a right or wrong answer per se it is really the question of your risk tolerance. Have a good day.
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