Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The Real Cost of Owning a Car

startupceo.co.za

Post reply on HN
Print view View original

41–50 of 76 posts

Re: The Real Cost of Owning a Car

#41

Post by matwood »

seltzered wrote: post #33

The one thing worse than car ownership? Taking a loan out to buy the car: http://www.itulip.com/forums/showthread.php?t=634&pagenu... . I'm shocked at how we allow people to take 5 year loans for cars that depreciate 30+% over that time. I live in Texas where a car is required, and bought a "new-to-me" year old used subaru a year after graduating college, with a couple years of warranty left on it. It was mentally be…

No, the worst thing is buying the car new. When you drive off the lot a car gets hit with immediate depreciation. The first year captures a lot more of that 30%. If you simply buy cars that are 1 year used you save a ton on the deprecation to the point where a 3-5 year loan at 6%ish never puts you underwater if you put a little money down.

Re: The Real Cost of Owning a Car

#42

Post by matwood »

ahoyhere wrote: post #40
binarycheese wrote: post #18

Earlier quoted context omitted.

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.

Where are you? In Austria, a Toyota Yaris (different name) costs 15,000 - 16,000 euros. That's around $19,000+ even with the weak euro right now. A BMW X3 SUV starts at 41,500 euros. That is $52,000 now but, before the colossal euro drop, it would have been more like $62,000. Last I checked, a Yaris costs $12k in the US and an X3 starts around $37,000. So you're right, it's not double, but it's close enough for me. E…

I don't know how it is in the EU, but in the US it makes very little sense to buy a new luxury car. Many people who like luxury cars also like owning the newest one. This means they lease and/or buy them and only keep them for 1-2 years. If you look in the used luxury car market you can find great deals. So great in fact that I'm amazed anyone buys one new, but that's what people like to spend their money on I guess.

Re: The Real Cost of Owning a Car

#43

Post by philk »

Not a good article at all.

a) Nobody has ever confused a car with an investment.

b) "Assuming a modest 10% return". 10% after taxes and inflation is not a modest return by any stretch of the imagination and I'd be thrilled if I could achieve that consistently. If he hasn't factored inflation and taxes in then all his sums are wrong.

c) "Here, look, my $4000 student car costs more than $4000 in running costs and depreciation over three years" is not a useful example in the context of luxury vehicles. With luxury vehicles your running costs will be a much smaller fraction of the original outlay. (Although I admit depreciation will still be a big factor. Probably best to get one second hand that's a couple of years old.)

d) It's just a generalization of the general truism that millionaires have often become millionaires because they're frugal.

e) If you've got, say, five million dollars, you can cheerfully drop a hundred grand on a car and it's only a small fraction of your wealth. Not a sensible idea, but not fatal either.

f) In the second paragraph he essentially says "Millionaires often drive cheap cars except when the drive luxury cars". This is not a particularly impressive insight.

Re: The Real Cost of Owning a Car

#44

Post by jarek »

philk wrote: post #43

Not a good article at all. a) Nobody has ever confused a car with an investment. b) "Assuming a modest 10% return". 10% after taxes and inflation is not a modest return by any stretch of the imagination and I'd be thrilled if I could achieve that consistently. If he hasn't factored inflation and taxes in then all his sums are wrong. c) "Here, look, my $4000 student car costs more than $4000 in running costs and depre…

g) He also states he assumed 8% yearly depreciation, then goes on to use 10% yearly depreciation in his math on the very next line.

Re: The Real Cost of Owning a Car

#45

Post by dedward »

a4 wrote: post #37
jdrock wrote: post #6

Earlier quoted context omitted.

No, it's not. If you're steadily earning a 10% return on your investment, year over year, you are doing amazingly well and should stop doing whatever day job you have now.

Not in South Africa. Look at the rates on South African government retail savings bonds: https://secure.rsaretailbonds.gov.za/ViewHistory.aspx .

Statements like that generally assume that that's an investment adjusted against inflation or devaluation......looking at the interest rate alone on a currency is meaningless without the rest.

Re: The Real Cost of Owning a Car

#46

Post by baha_man »

mrtron wrote: post #39
baha_man wrote: post #35

Earlier quoted context omitted.

I know that, what I don't understand is the connection to the article, which is about cars. If you're very rich, joining a supercar club rather than buying a supercar probably makes great financial sense. If you're on an average income and want a 'normal' car, I doubt renting would work out cheaper than buying.

The article is also about large hidden costs, which the above mentioned 3 contain.

Well, the article is pretty useless, as pointed out by philk above, so here's some advice for everyone who's not a millionaire:

http://www.banking.state.ny.us/brblc.htm

"Leasing can be beneficial if you want the newest model car, plan on getting a new car every two to three years, plan to drive fewer miles than the lease limit and plan to take very good care of the car... If you plan on driving the car for more than four years you are probably better off buying."

And for those with money to burn, here's a George Best quote:

"I spent a lot of money on booze, birds and fast cars. The rest I just squandered."

Re: The Real Cost of Owning a Car

#47

Post by dedward »

blackswan wrote: post #3

Owning 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…

They may depreciate slower, but the insurance and maintenance costs are a heck of a lot higher in absolute terms.... I'm sure they more than make up for the lesser depreciation.

Cars aren't investments.... bottom line. You buy an aston martin or ferrari because you want one and can afford to treat yourself to one..... not because you've somehow rationalized it's resale value into some kind of pseudo investment - if you think that way you probably won't keep your millions very long.

Re: The Real Cost of Owning a Car

#48

Post by ahoyhere »

matwood wrote: post #42
ahoyhere wrote: post #40

Earlier quoted context omitted.

Where are you? In Austria, a Toyota Yaris (different name) costs 15,000 - 16,000 euros. That's around $19,000+ even with the weak euro right now. A BMW X3 SUV starts at 41,500 euros. That is $52,000 now but, before the colossal euro drop, it would have been more like $62,000. Last I checked, a Yaris costs $12k in the US and an X3 starts around $37,000. So you're right, it's not double, but it's close enough for me. E…

I don't know how it is in the EU, but in the US it makes very little sense to buy a new luxury car. Many people who like luxury cars also like owning the newest one. This means they lease and/or buy them and only keep them for 1-2 years. If you look in the used luxury car market you can find great deals. So great in fact that I'm amazed anyone buys one new, but that's what people like to spend their money on I guess.

I'm from the US. Here's why I previously bought a new car (the high-end trim level Matrix, not luxury though):

I wanted a low mileage car because I had owned several high-mileage, but reliable, used cars, and calculated that I spent at least $200/mo over the year on routine repairs and maintenance.

A low-mileage (sub-30K) late year model, otherwise identical used car cost only $2,500 less than the new car.

The interest rate on a no-downpayment loan for the new car was 0% for 12 mos and 3.9% after. The interest rate on the no-downpayment loan on the used car was 13% from the start.

On the new car, I wouldn't have to pay for the first major service for about 18 months. On the used car, it was coming up in a matter of months. (The 30k). Not to mention it would soon need new tires, brake pads/rotor turning, and it was the half-life for the struts and major transmission services, too. (That's $1000 right there.)

You have no idea how the used car was treated in the breakin period and early oil changes, etc, and by only 30K miles, the damage won't have shown itself the way it will have by 80K miles. So when buying a low-mileage used car, sometimes you're actually making a greater gamble.

As you can see, all the logical points added up to buying the new car. It would actually cost less because of the financing and repair bills I would be less likely to pay during ownership.

Additionally, I was able to buy it right away, without having to hunt around, because the first few used ones I found with the trim level I wanted were safety cone yellow. Ugh.

Moral: BUYING USED ISN'T ALWAYS A SMARTER DEAL.

I love splurging on things, but not when the splurge comes back to haunt me month after month. ;)

EDIT: I agree with you about the luxury car, period, and also I wouldn't buy one used. That's why I'm trying to talk my husband out of a BMW, period. IMO the cost difference between a low-end BMW and a high-end VW isn't worth it.

Re: The Real Cost of Owning a Car

#49

Post by dedward »

matwood wrote: post #42
ahoyhere wrote: post #40

Earlier quoted context omitted.

Where are you? In Austria, a Toyota Yaris (different name) costs 15,000 - 16,000 euros. That's around $19,000+ even with the weak euro right now. A BMW X3 SUV starts at 41,500 euros. That is $52,000 now but, before the colossal euro drop, it would have been more like $62,000. Last I checked, a Yaris costs $12k in the US and an X3 starts around $37,000. So you're right, it's not double, but it's close enough for me. E…

I don't know how it is in the EU, but in the US it makes very little sense to buy a new luxury car. Many people who like luxury cars also like owning the newest one. This means they lease and/or buy them and only keep them for 1-2 years. If you look in the used luxury car market you can find great deals. So great in fact that I'm amazed anyone buys one new, but that's what people like to spend their money on I guess.

Any time I've looked at leasing a car, it's a bit more expensive than what it would have cost me if I had purchased the car, used it for a couple of years, and then sold it.

With the lease, I'm paying a premium for not having to worry about being able to sell the car afterwards... it's certainly simpler.... but I'm not at all sure that it's cheaper in the end.

Re: The Real Cost of Owning a Car

#50

Post by Zak »

ahoyhere wrote: post #40
binarycheese wrote: post #18

Earlier quoted context omitted.

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.

Where are you? In Austria, a Toyota Yaris (different name) costs 15,000 - 16,000 euros. That's around $19,000+ even with the weak euro right now. A BMW X3 SUV starts at 41,500 euros. That is $52,000 now but, before the colossal euro drop, it would have been more like $62,000. Last I checked, a Yaris costs $12k in the US and an X3 starts around $37,000. So you're right, it's not double, but it's close enough for me. E…

I suspect a BMW 1-series hatchback, which is much more comparable to the Yaris is also much closer in price. Perhaps that would provide a good compromise for you.

I suspect the utility your husband sees in the X3 has little to do with a car's supposed function of transporting people and property and much more with its value as a status symbol. Unfortunately for him, displays of wealth tend to hinder one's attempts to accumulate wealth.

Post reply on HN