Automotive

At what salary til you should invest into a new car?

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  • Jun 13th, 2015 10:32 pm
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Jenuine wrote:
Jun 10th, 2015 1:50 pm
I think the issue people had with your argument was that you were generalizing everyone in both of those groups into one group. Sure, the majority of people probably do fall into #2 but there are also a lot of people who don't.

Btw, I bought my car with the intention of keeping it for 10+ years. Obviously buying a brand new car and then selling it in 5 years is a stupid financial decision.
i would say people who fall into #1 is a very small minority

selling a car in 5 years isnt necessarily a bad thing, really depends on a person's circumstances and change of needs and lifestyle. perhaps a person who bought a coupe now has a family with kids in 5 years and needs to change to a different and more fitting vehicle

you are generalizing just like you are claiming the other dude is
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I thought i would settle the arguments by posting this (lets hope logic wins):
[QUOTE]"Buy a new car for the warranty"

Let's say the payment on the new car you want is $375 per month. Let's say that the monthly payment on a considerably cheaper, but still fairly nice, used car is $150. That is a difference of $225 per month. In other words, you are basically paying an additional $225 per month for the new-car warranty. That works out to $2,700 per year. If you had to spend $2,700 each and every year on repairs for your used car, you would still break even! You may end up paying that once or twice for repairs on your used car, but I doubt you would have to pay that much in repairs every single year for the five years of the car loan.

And actually, it gets worse. You see, we didn't even take into account the depreciation of a new car. By the time you pay off your new car in five years or so, it will have lost about 65% of its original value. That means that the $23,000 car you bought five years earlier is now worth about $8,000. You lost $15,000 in depreciation in the five years it took you to pay off the car. That works out to a loss of $3,000 per year! Add that to the $2,700 per year in additional payment and you are spending $5,700 per year for your new-car warranty. For that kind of money, you could pretty much put a new transmission in your used car twice per year, and I just don't see that happening. Buying a new car for the warranty is usually just an excuse that broke people use because they want to buy a brand new car. Never buy a new car for the warranty. Buy a car the right way, and just put that extra $5,700 per year into the bank.[/QUOTE]
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LOL, I truly don't understand why some people insist on paying cash upfront for a car when interest rates are so low. Everyone should be taking advantage of the low interest and putting that money somewhere else. It gives you much more financial flexibility down the road should something happen.

As for the OP, the best values on luxury cars are usually buying a certified pre-owned 2-3 year old model that are coming off lease deals, as they come with extended manufacturers warranty and qualify for low interest financing. The largest chunk of depreciation has already occurred in the first 2 years. Of course this doesn't apply if the car is from a different generation than the current new model.
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chroma_cg wrote:
Jun 10th, 2015 2:31 pm
i would say people who fall into #1 is a very small minority

selling a car in 5 years isnt necessarily a bad thing, really depends on a person's circumstances and change of needs and lifestyle. perhaps a person who bought a coupe now has a family with kids in 5 years and needs to change to a different and more fitting vehicle

you are generalizing just like you are claiming the other dude is
lol umm what did I generalize? Do you even know what that means?

You can't argue that selling a brand new car after 5 years is a dumb thing to do FINANCIALLY... because it is and that's a fact. But I didn't say anything about WHY people need/choose to do it, you brought that up all on your own. Changing cars because your family expanded, for example, would be a smart decision for the family but that's separate from a financial perspective.
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Jenuine wrote:
Jun 10th, 2015 2:50 pm
lol umm what did I generalize? Do you even know what that means?

You can't argue that selling a brand new car after 5 years is a dumb thing to do FINANCIALLY... because it is and that's a fact. But I didn't say anything about WHY people need/choose to do it, you brought that up all on your own. Changing cars because your family expanded, for example, would be a smart decision for the family but that's separate from a financial perspective.
by calling it outright "stupid" you are pretty much generalizing

also, you seem to neglect the fact that repair costs will start to climb after 5 years of ownership as well, after your warranty is out
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chroma_cg wrote:
Jun 10th, 2015 2:54 pm
by calling it outright "stupid" you are pretty much generalizing

also, you seem to neglect the fact that repair costs will start to climb after 5 years of ownership as well, after your warranty is out


I'm saying... if I bought a brand new car and sold it after less than 5 years, I'd be making a stupid financial decision. If I had to sell my car because I needed a bigger car for a growing family, that would be a SMART decision for my family but a STUPID financial one because I should've bought used or even leased a car to save money.
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Jenuine wrote:
Jun 10th, 2015 2:59 pm

I'm saying... if I bought a brand new car and sold it after less than 5 years, I'd be making a stupid financial decision. If I had to sell my car because I needed a bigger car for a growing family, that would be a SMART decision for my family but a STUPID financial one because I should've bought used or even leased a car to save money.

buying a car and keeping it for 10+ years isn't the smartest financial solution either as you may think, as you absorb the highest amount of depreciation yourself for the first couple of years of ownership. buying a 2-3 yr old car and driving it to the ground is.
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chroma_cg wrote:
Jun 10th, 2015 3:02 pm
buying a car and keeping it for 10+ years isn't the smartest financial solution either as you may think, as you absorb the highest amount of depreciation yourself for the first couple of years of ownership. buying a 2-3 yr old car and driving it to the ground is.
Buying a brand new car was the smartest financial decision for me after considering all factors. You, like treva84, act like you know everyone's financial situation when you don't. Buying a used 2-3 year old car isn't necessarily the better financial decision over buying a brand new car.

If you like to buy 2-3 year old cars then do that lol... does it bother you that some people buy brand new and have the financial means to do so? I don't see how it affects you what anyone does with their money.
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Jenuine wrote:
Jun 10th, 2015 3:13 pm
Buying a brand new car was the smartest financial decision for me after considering all factors. You, like treva84, act like you know everyone's financial situation when you don't. Buying a used 2-3 year old car isn't necessarily the better financial decision over buying a brand new car.

If you like to buy 2-3 year old cars then do that lol... does it bother you that some people buy brand new and have the financial means to do so? I don't see how it affects you what anyone does with their money.
i never claim that i know everybody's financial situation, you just jumped the gun on it yourself

what makes your statement that "selling a brand new car after 5 years is stupid financially" is any better than my statement about "buying a 2-3 years old car and driving it to the ground is best financially"
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why would you not buy a 2-3 year old car when someone else would have absorb the biggest portion of the depreciation for you?
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chroma_cg wrote:
Jun 10th, 2015 3:41 pm
why would you not buy a 2-3 year old car when someone else would have absorb the biggest portion of the depreciation for you?
- Can't find the model you want
- Can't find a quality used car
- Warranty
- Don't want to inherit someone else's car/problems
- Time
- Features
- Can afford a new car and to absorb the depreciation
- Price difference, might make sense to just pay a little more for a brand new car

And the list goes on. Who cares what someone's reasons for buying brand new are?

Edit: And insurance costs... in my case the used car cost $100 more per month to insure than the brand new one
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Jenuine wrote:
Jun 10th, 2015 3:47 pm
- Can't find the model you want
- Can't find a quality used car
- Warranty
- Don't want to inherit someone else's car/problems
- Time
- Features
- Can afford a new car and to absorb the depreciation
- Price difference, might make sense to just pay a little more for a brand new car

And the list goes on. Who cares what someone's reasons for buying brand new are?

Edit: And insurance costs... in my case the used car cost $100 more per month to insure than the brand new one
most of items on your list is pretty subjective and personal and does not apply to everyone so i will ignore them for now

but i dunno if paying 30-40% more is considered "a little bit" (assuming that a car depreciates around 30-40% for the first few years, give or take depending on condition and mileage)

here is a good read for you:
http://www.consumerreports.org/cro/2012 ... /index.htm
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chroma_cg wrote:
Jun 10th, 2015 4:19 pm
most of items on your list is pretty subjective and personal and does not apply to everyone so i will ignore them for now

but i dunno if paying 30-40% more is considered "a little bit" (assuming that a car depreciates around 30-40% for the first few years, give or take depending on condition and mileage)

here is a good read for you:
http://www.consumerreports.org/cro/2012 ... /index.htm
"a little bit", as well as 30-40% more is also subjective and personal, and depends on a person's financial situation. $10,000 might be a lot to you but not to someone else.
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Jenuine wrote:
Jun 10th, 2015 4:21 pm
"a little bit" is also subjective and personal, and depends on a person's financial situation. $10,000 might be a lot to you but not to someone else.
i agree that $10K is subjective depending on a person's finances, but 40% more is not subjective from a financial sense, more like a fact
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chroma_cg wrote:
Jun 10th, 2015 4:23 pm
i agree that $10K is subjective depending on a person's finances, but 40% more is not subjective from a financial sense, more like a fact
Not really... 40% of what? 40% of $20,000 is $8,000 and that might be chump change to some people.

Again, that depends on a person's financial situation.

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