"If it flies, floats or fornicates, always rent it.. it’s cheaper in the long run." - Felix Dennis
The Real Cost of Owning a Car
11–20 of 76 posts
Re: The Real Cost of Owning a Car
#12I have a fairly nice car. Have owned it for 7 years now. While there have been minor problems like scrapes on the rims, trim peeling, etc., the engine, transmission and all the real guts of the car have performed flawlessly the entire time. The car has been paid off for 4 years.
I feel I could drive this car for another 5 years at least. That would be at least 12 years without purchasing a car and 8 years without making a car payment.
My car was expensive, but I feel it was engineered so well that it can last. Quality cars last a long time.
Re: The Real Cost of Owning a Car
#13Yes cars are extremely expensive. But for many the ability to live within driving distance of work is worth it. I know people who don't have cars. They really miss them. I can drive 250 miles to see my family on a whim. It takes 4-5 hours. Taking public transit requires 7-8 hours, and only gets me within 25 miles of my parents' house (which is pretty good compared to much of the US).
And something like reliability is difficult to quantify. The difference between a $20,000 car and a $4,000 car is often that the $4,000 car is more likely to fail on you unexpectedly. You'll wake up one morning to find the battery dead, or you'll be halfway to work and your brake lines will rupture, or maybe it's just that the door sticks and is a minor subconscious annoyance. Eventually the amount of money you have to sink into a clunker to keep it running will be as much as it would have cost to buy the newer car.
But yeah, anything more than that, unless you need the car to impress clients, is pure luxury. If I had to blow $50,000 on a luxury, it would not be a car.
Re: The Real Cost of Owning a Car
#14The author makes a good point, similar to those made in the excellent book "The Millionaires Next Door." My wife and I have make it a habit of saving for new big ticket items like cars to avoid debt payments and it makes a difference: both in saved interest payments and fewer purchases. I have worked just part time my whole life making a good but modest living while my brother owns two optometry offices, has lots of income, but not so great investments and buys a lot of "toys." It seems really strange to me that I am ending up with more assets than he has when I took it easy in my career and had fun.
Re: The Real Cost of Owning a Car
#15This is complete bull. Owning anything that depreciates in value is not a smart investment idea.
Most wealthy people don't go around in a Prius. Even if they own one, they will always get a "safer" car for their family (at least) such as a Volvo, Benz or Range Rover.
Re: The Real Cost of Owning a Car
#16I have a fairly nice car. Have owned it for 7 years now. While there have been minor problems like scrapes on the rims, trim peeling, etc., the engine, transmission and all the real guts of the car have performed flawlessly the entire time. The car has been paid off for 4 years. I feel I could drive this car for another 5 years at least. That would be at least 12 years without purchasing a car and 8 years without mak…
This is definitely my approach as well. I have a BMW and take exceptionally good care of it - and feel that this is the best way to deal with the fact that cars depreciate. Get a really well built car and use it for a long time. Due to the "lemon" problem it is not possible to sell a car second-hand at its proper value if you have maintained it well. But this isn't actually a problem if you don't mind driving a slightly older car. My BMW has 60K on it and I expect to drive it for at least 6 more years.
Re: The Real Cost of Owning a Car
#17> How much would I have after three years? Assuming a modest 10% return per year Is 10% really a modest return?
considering that the author is South African and the inflation rate there ranged between 5 and 10% in the past 10 years (http://www.wolframalpha.com/input/?i=south+africa+inflation+...), 10% would indeed be a modest return.
Re: The Real Cost of Owning a Car
#18Owning an expensive car is actually not as bad as the author suggests. Once you get beyond around $80K cars depreciate at a much slower rate than other cheaper cars. One reason for this is that the more exotic a car is the lower the mileage it is likely to carry becomes. Another strong factor is that when you are paying more than $80K for a car you are paying a lot for the brand of the car and this is likely to be ev…
I love it when somebody makes an intelligent distinction in an overarching argument. Thanks. Especially when it's something I can use to talk my husband out of his delusion of getting a BMW as our first car, when we'll drive it 10 hours a month. In Europe, where BMWs are twice as expensive... and four times as common.
BMW's are twice as expensive in Europe? You lost me there. I currently on vacation in Europe, and you won't believe some of the deals (on both brand new and used) BMW's I've seen.
Re: The Real Cost of Owning a Car
#19quick notify ferrari, lamborghini, porsche, maserati, aston martin, jaguar, bentley, audi, cadillac, morgan, rolls-royce, bugatti, TVR, volvo, spyker, saab, land rover, lotus, bmw, mercedes, lexus, lincoln, maybach, pagani, gumpert, koenigsegg, acura, infiniti, weismann, mosler, ascari, mclaren, ssc aero,..that they are in the wrong business.
First of all a luxury car is not an investment. A person doesn't buy a Ferrari, thinking it'll appreciate, they buy it to show off their wealth, and at a certain point, the 200K for a Ferrari is only a small portion of someone's income. And since high end cars tend to hold their value really well, they don't depreciate as much as regular ones.
Second of all, the lost opportunity cost is just the cost of owning a car. Live a little, you don't get to take the money with you when you die.
Finally, there are only a few types of millionaires who don't own a nice car. 1. those who lease the luxury car with their companies. 2. those who are always traveling for business, and who pay the $30K/yr to belong to those super car rental clubs. 3. those who see a car as just something to take you from point a to b.
Re: The Real Cost of Owning a Car
#20Owning an expensive car is actually not as bad as the author suggests. Once you get beyond around $80K cars depreciate at a much slower rate than other cheaper cars. One reason for this is that the more exotic a car is the lower the mileage it is likely to carry becomes. Another strong factor is that when you are paying more than $80K for a car you are paying a lot for the brand of the car and this is likely to be ev…
Yeah, to extend the authors point it's probably worth making a clearer distinction between the cost of owning a car versus the cost of using a car.
If you have a $150,000 sports car that you drive four times a year and keep it covered in a secure garage most of the time, the yearly expensive probably won't be great.