How car buying attitudes have changed
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I'm not going to buy the eBook to read the rest of the story, but I will say I disagree with many points in that article. First, there are still low payment lease deals and 0% interest payments on a regular basis. Honda always has a 0% or 1.9% sale each year, and I see lease payments on new cars from almost every manufacturer for $199 or less on their "volume" cars. Second, there has actually been a movement from auto makers into microcars and very cheap compact cars, such as the Mirage, Fiat 500, etc. There are tons of great quality choices for under $15k brand new. So maybe they are trying to target the rich, but they are also expanding the low end of their lineup to cater to fresh college grads and young adults who they want to buy new cars rather than used.
The author also failed to mention (besides saying that cars were the best quality ever) that cars have become much more reliable in recent decades. A couple decades ago 200k miles was reserved for Japanese imports. Now it seems like with basic maintenance any car can last 150k+ miles. The warranties are longer than ever as well. It's also a fact that the average age of car on the road is at it's oldest ever. So I was surprised the author didn't mention that as a cause of why people are not buying new cars. I haven't bought a new car because I hate monthly payments. The Civic is at the point where I've put 2 times the money into it as it's worth, but even with that I've spent less than $6k on it (not counting gas/insurance) and it's put up with me for 100k miles. Most new car buyers buy a new car and never put 50k miles on it before they trade it in for another new car. Not only are they hit with taxes and depreciation, they are paying interest for a loan in most cases. I'll drive the Civic until it rusts away, or until I cannot buy parts for it anymore. |
Interesting to see a general inverse correlation between income and new car purchases. Households with top incomes have a lower proportion of new vs used car purchases, and the lowest end of the income spectrum has a higher proportion of new vs used car purchases.
Perhaps this is further evidence that the rich live as though they were poor, and the poor live as though they are rich. While cars are still seen as a powerful status symbol, I would imagine the car culture of days past placed a higher priority on owning a cool new car. There are many other things competing with the car as a status symbol now days. It's difficult to own a new car when making payments on the latest iPhone, iMac, iPad, iPod, and ... iRack https://www.youtube.com/watch?v=rw2nkoGLhrE |
Nowadays even the compacts and subcompacts have more amenities available, so it makes them feel less unattractive to people who would rather get a bigger and heavier car, either brand-new or used. Traffic jams also can be pointed as a favorable point to the subcompacts due to their improved maneuverability in spaces more constrained. Needless to say anything about the fuel bills...
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If you don't have much money to spend but want a car, new might make sense. I didn't want to spend 15- 17k on a new car, but spending 10 or 12 on one a few years old with maybe 40 or 60k miles doesn't make much sense. The expensive cars' initial owners are more likely to flip them sooner and they've got a lot more room for depreciation- so a highline used car is a much better deal, relatively speaking. It's not that the poor are making worse purchasing choices, it's that they have worse purchasing options to choose from. Edit: Someone at the Fit forum I go to just reported paying 13,250 for a 2012 with 58k. I paid 14,998 for one with 11 miles on it (and two of them were my test drive). He paid a couple bucks less, but I got more car for my dollar. |
We're pushing 18 years without debt. Married 25 years Nov 4th. A big part of that was recycling cars that were damaged and written off by insurance companies. You would be amazed by amount of damage some cars incur and are totalled. My first rebuild was 1973, a 66 Chevy van that had 42 kmiles, bought for $300.
Over 4 decades I have rebuilt, or had rebuilt, over 150 cars. My Fiesta is the latest one. It had no broken glass, no air bags deployed and no significant suspension or structural damage. The only parts available were OEM. It took my buddies shop 6 months to fix the car. regards Mech |
When I sold my shop I built a house. It took 16 months to finish. We lived in it for 3.5 years and sold it for $335K. It cost me $160k (even including the cost of a truck). At one point it was appreciating at $500 a week and when we sold it the gain ($165K) was tax free, no Fed, state or social security. We used the gain from the first house to build the second house. 10 years living in house #2.
The wife buys a new car when she wants one and pays cash. Her combined income is much higher than mine, which can cause problems at times but overall it works out OK. regards Mech |
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The guy that bought the used Fit for nearly what you paid new, probably did so at a stealership and didn't negotiate the price. He likely allowed the Con Artist to pull out a sheet of paper and draw the absurdly stupid 4-square and then convince him that the monthly payment amount is the only thing that matters. Hypocritically, I did purchase my TSX from a sealership because the exact car I was looking for was very difficult to find on the private market. The slimy salesman drew the 4-square and started asking me questions. His initial offer for the 4 year old, 36,000 mile car was $24k. I laughed incredulously. The new MSRP was $30k. I told him the only thing that matters is the sale price, and he can put the 4-square away. I operate on a 1-square. When asked what I thought was a fair price, I responded, "17." He countered a few times, going lower and lower, and I maintained my $17k price. I had no intention of buying the car when I went to look at it anyhow, and hadn't even done much research concerning the price. At the end of the negotiation, the stealership had come down to $17,500 but was unwilling to go down to $17k. I walked out. Several phone calls by the stealership, and 2 weeks later, they accepted my $17k price and I drove the car home. If I had taken the initial offer on the car, I would have lost $7,000. I once also had a girlfriend that had bought a new Chevy Aveo. I believe it was the cheapest car sold in the U.S. at the time. 2 years later, she traded her Aveo in for... a new Aveo because she wanted AC and liked the color of the new car better. Both cars were easily the crappiest cars I've ever been in. She could have saved money and driven a much better car, but she allowed someone else do the thinking for her. Needless to say, she is an ex-girlfriend. My point is that anecdotes are not worth much. My experience is easily countered by the story of your experience, but the fact is that there are plenty of good and affordable used cars to choose from in most markets. Quote:
I know plenty of people that make much more money than I do, and they are poor. They are the people that come to me for a (free) loan so they can make their rent. |
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My elder sister just borrowed money from me. I have an old Civic. She has a Lexus. However, she bought it used, and I was surprised when she told us about purchasing it, she had planned on spending more, but realized that she did not need to. Still, she is making payments. I only needed to do that once, my car was totaled, and since I only had comprehensive on it, I did not receive much for scrap. |
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If one lived 10 miles from their job, their time has a different value if they can drive that ten miles, or have to walk (I have heard of a bike, but if you want to try and bike 10 miles in Northern Ohio during winter, you need a straight jacket first). A $300 vehicle that runs is an investment for a person who has close to nothing, and wants to expand the range of jobs they can get to. Or, move further from their job to get more affordable housing. Saying he only lost 17k instead of 24k is a bit...well, absurd. The car is not completely valueless. Even if completely totaled or stolen, I'm sure Redpoint has insurance, let alone the value of the car as a fun car, and any utility he gets from it. To say buying a car is the same as burning money, a total loss, is not accurate. |
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Agreed. When my house or car has an issue, I use a tool that I invested in to fix it.
I had to build a cabinet I bought, I used a tool I invested in to drive it home instead of carrying it for miles, and I used a tool I invested in to build it :thumbup: |
Anyway, I read several other synopses from that author and I thought she was spot-on. :thumbup:
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Yeah, I think most missed the point. Still I think it was a shameless plug to sell a book.
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The Prius, Corolla, Golf TDI, and Outback were also on my list of used vehicles I was considering purchasing. I choose the TSX because my grandpa generously donated $6k if I choose the TSX. He just wanted to see me drive a nice car. Quote:
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No, I expected to get back the money I INVESTED in the stock market, plus more, but that didn't happen. I invest in food but that gets turned into poop right away. Many investments are investments even though you don't get "more" back.
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The question is are you willing to trade you life for what you are buying. Because for most of us that is what it comes down to. We trade time for money. So when you go out to by something figure out in hour and days of your life your giving up for it. Don't forget the interest that you are charged, the pound of flesh the government extracts and lets not forget the commute time. Quote:
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When putting money into something, it's investing. I've grown up my entire life being taught this. One has X amount of money, and money going out is usually an investment, if there is any return or tangible gain(Google and I share this view: https://www.google.com/#q=define+investment). I don't consider food an investment, because I need it- it is not something extra, or above the bare minimum.
If I rent a house, it is just money being spent. If I am buying a house, it is an investment. If I don't have a car, and I buy one, it is an investment. If I have a commuter car, and buy a sports car, I wouldn't call it an investment naturally, but it's an asset. It may not be an appreciating investment, but putting money going somewhere and getting something back is investing, in my opinion (and most). For me, I had a (better not say sports car) front engine rear wheel drive performance oriented vehicle, and bought an Insight to preserve miles. When the entire cost for every factor (oil, gas, tires, insurance, loan, interest) is put into the Mustang, it's about $1 per mile. Buying a 3k car that turns out to be $.10/mile, and actually became free after the deer accident, it was FREE 5k miles. That time and energy turned out to be free 5k of miles, which could be thought of as $5k off the Mustang. Investments have risk. I think there is a VERY slim chance a car will appreciate, but when one makes 13k per year, saving up to buy a running car for $500 to expand ones job range is an investment, or moving to a place with $250 cheaper rent, is a good investment. Being a multimillionaire, and purchasing a Bugatti Veyron- I am not arguing if it is a WISE investment, I am making the point that turning money into something tangible is an investment (regardless of turning a gain or loss, or being smart or not). |
I understand your point. I just use a less encompassing description of investment.
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As for whether someone lost money on a particular investment, that's inherent in the risk/reward thing. You can invest your money in T-bills: very little risk, but only a small profit. At the other extreme, you could invest in speculative startups, where the odds are against success, but you make a lot when a startup does succecd. The point, though, is that you make an investment with the idea that you will make a profit. Excepting e.g. taxi or car rental businesses and the like, that's not why people buy cars. |
I agree that the idea of buying a car now in the idea it will appreciate faster than inflation is not very good, but ifI didn't have my Mustang, I couldn't have moved up from hourly to salary and doubled my income, do my side work, or work to be fully employed in another field.
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I believe "investing" is the "...input of value today with the expectation of accumulating increased value tomorrow..." or similar wording.
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One can also invest time...
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Yeah, I too agree with the you cant call your car a positive investment. Its going to be a loss all around. A better car than you had is less of a loss than you had before. :eek:
Fuel, taxes, registration, inspections, SMOG Testing, insurance plus maintenance. You got parts plus labor. You can call your tools an investment, but unless you sell the car for more than you paid it or money comes out the tail pipe its not going to work that way. |
Best investments for me.
Ammunition, bought for 8 cents a round, sold for 24 cents a round X a few thousand rounds, 3 years later. House, built for $160k, sold for $335k, no tax on the gain, 16 months labor. Cars, bought for 25% of retail value. Fixed for another 25%, driven tens of thousands of miles, sold for a profit, sometimes enough to cover all operational costs. Motorcycles, in some cases sold for more than the total cost of operation including gas insurance, taxes and all other costs. In todays economy with so few investment opportunities, it's best to "invest" in debt elimination. Next best "investment" is home improvements but only those that offer useful purpose and a real return on your cash and labor. I made $100 an hour tax free building two houses. I paid $10k for my Fiesta, or you could consider I traded 100 hours of my labor which was tax free building my first house, less than one months work. A friend, since passed once chided me for having money in 5% insured CDs when he was making bunches in the stock market. That was 2008. He lost over $300k, I made 12K a year until the CDs matured and they would not renew them. regards Mech |
It may be an investment in the comfort and time saved to commute or to haul stuff around.
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It seems like most see an investment as solely financial, and always expecting a positive return. I just see it as putting my money into something tangible, and getting SOMETHING back. So I invested in an aluminum single piece drive shaft- I am not expecting to make money off of it or see great FE returns, but I have put money into it a tangible object that does something for me. I don't expect to resell it and make money, although I purchased it for <50% discounted value, but it will continue to help my FE, add value to my car, and worse situation, remove it, sell it, and sell the Mustang with the old DS.
My car has not paid for itself, but what it's allowed me to do, and the hobby, fun, passion, and development/testing with this site has been more than worth the investment :thumbup: |
Oh, contrare: Education is "...an investment..." one makes in ones self.
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Or to take something similar, I can't do my work without a computer, so I buy them from time to time. Are they investments? Well, I don't expect anyone to pay me for couple of old 586 towers, or even the old ThinkPad or Dell notebook that are sitting in the closet. (Heck, I probably couldn't get more than a few bucks for the T61 ThinkPad I'm using now.) So they're not investments, they're business expenses - and get deducted as such on Schedule C, rather than on Schedule D. Or to go a little further, I need electricity to run them, and reasonable internet access for work, and I get monthly bills for those. When I pay the bills, am I investing? No, I'm consuming. |
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regards Mech |
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So like food, you consume electricity...but if you are using electricity for business, can it not be written off? Some solar panels and batteries can't be written off? I don't work at home, and file simple taxes. I guess I invest in electricity when I am messing with my stocks or a website of mine, never really thought of it that way. Good point! :thumbup: |
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regards Mech |
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Cars can be considered an investment, just like a hammer or a screwdriver. They're all basically tools, but some can be fancier, or cheaper but still retaining a reasonable functionality. Eventually, what led to the attitudes change regarding cars is that newer cars are getting kinda mediocre, so it's easier to see them as just another tool.
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