Economics of New Car buying

[bennelson]

Found this on the Dave Ramsey web page - a financial advice guy who promotes getting out of debt and living within your means.

This is a slideshow talking about how much money people REALLY spend when they buy a car.

http://www.daveramsey.com/etc/lms/drive_free/player.cfm

[Gone4]

I've seen this before and I must say, it is an excellent slide show. Some of the financial math is boiled down a bit much at the cost of accuracy, but it still proves the point (don't tell me car prices won't go up in 4, 6+ years, with inflation). What impressed me more the the message was the actual show

[RH77]

I got bored at an airport terminal and bought the "Intellichoice Used Car Buyers Guide". My life was changed forever...

Intellichoice.com

Basically, it outlined the depreciation of vehicles over the last 5 years. ALL but 2 models depreciated drastically in the first year (In this case, the Mini Cooper and BMW 3-series appreciated in the first year, but took a nose dive thereafter).

The advice? Buy at least a 3-year old vehicle to avoid hassles of depreciation, but remember not fall victim to high miles and older models (unless you're a good wrencher).

I love my payment-free, 10-year old 'Teg. The money saved, goes to -- umm, well, my wife's new TSX It was her turn to get the new car, and I'm driving her car she bought new in '97. Works out, right? Maybe

My next car will be used. That's for sure.

RH77

[cfg83]

Hello -

Ha ha, yeah I did this calculation with my mechanic the other day. If I had a new car, I would probably have a payment in the $300 range. That's $3600 a year. If I pay $1800 in unscheduled repairs, I would still have $1800 in my pocket, in addition to lower insurance.

In the last few years, I think I have transmogrified into a used-car-only person. Most of the cars I end up "wanting" go out of production before I am tempted to pull the trigger anyway, .

The 25% loss driving off the lot is a real version of my computer joke to people. It's a play on the 3-Step Poisonous Snakes in Vietnam :

When you buy a PC at Fry's, the PC loses 10% of it's value on your first step out the door. On your second step, it loses 25%. On the third step, it's lost 50% of it's value ... Time to get a new PC!

(my notebook PC is 5+ years old)

CarloSW2

[basjoos]

Another advantage to buying a used car is that you can look at the Consumer Reports reliability records, whereas when buying a new car, all you can do is hope that the new model will be as reliable as the previous year's models.