Serious question, and I'm not a Tesla hater either:
Why does anyone spend $35,000 - $50,000 on a car? It just feels like a number that is at least 5x too high.
A used car from a fairly reputable source can be had for between $3,000 - $6,000, depending on mileage and cosmetic appearance. My 2005 Ford Focus sedan was $3,000 and should last me about 3 years before I need to make a decision about major repairs, so that's less than $100 a month in ammortized costs.
Are there really hundreds of thousands of people who are making $5,000+ a month necessary to justify the purchase of such an expensive vehicle? I'm not far from that number and most of my money still goes to food and rent.
"Why does anyone spend $35,000 - $50,000 on a car? It just feels like a number that is at least 5x too high."
If someone makes $250,000+ a year, it's not unreasonable.
"My 2005 Ford Focus sedan was $3,000 and should last me about 3 years before I need to make a decision about major repairs, so that's less than $100 a month in ammortized costs."
That's completely unrealistic. You have some sort of competitive advantage (REALLY know someone trustworthy), or you are delusional. $3000 cars are generally very high mileage, unreliable, in poor condition, etc. Timing belts, suspension components, drive belts, starters, ac compressors, minor electronics, etc tend to start going on these cars.
"Are there really hundreds of thousands of people who are making $5,000+ a month necessary to justify the purchase of such an expensive vehicle? I'm not far from that number and most of my money still goes to food and rent."
I believe a car should be 3 months income at most. So no, I can't justify anything past a $10,000 car.
What I can say for sure is that unless you are a decent mechanic with tools or have GOOD friends / relatives that are, you shouldn't walk around espousing 3k cars. They just cost way too much in time.
My cars generally cost about 300-500 quid. If it breaks I buy another one. I can buy 5 or more of them for your quoted 3K.
Are they as safe as a Model S? No. Are they substantially more dangerous than other things I do in my life? Probably not.
Once things start to break you scrap it and get another one. Done.
I bought a Civic for 325 GBP, changed the tyres for ~150, and drove it around half of Europe, putting 10K miles on it before selling it because I moved in to a city for a while. I basically just treat cars as a 'subscription cost' model rather than any form of capital.
In the US you have the issue that a car might be a hard requirement to get to work. In that case I'd probably just buy two and drive them on alternate days so there's always a backup. You guys seem to have enough land for this to be viable. Still cheap as chips.
I didn't truly understand what a rust bucket was until I tried buying a used car in Northern Virginia (I had just moved from California). Everything below $2000 USD was a rust covered death trap that couldn't pass a vehicle inspection. I test drove a $1500 car and cut myself on the rust as I got into the vehicle. Another $1900 car was kind of low rust, but it couldn't pass the vehicle safety check.
Yeah. It used to be a lot worse believe it or not. But, still, anything over about 10 years old in the Northeast and other snowy regions are pretty much at EOL. I made the mistake with a prior vehicle (which I bought used) of doing a couple fairly major repairs when it was about 12 years old and it ended up being just a cascading set of failures due to rust.
Uhm ... I drive a -98 Volvo V70, 300 000 km, in central Sweden. It's no way where near EOL and it's snow and salt on the roads. If I change the brakes it's good for maybe 2-8 years more before the gearbox might give up.
The secret is to to preemptive rust measures. Just paint it like you would on a boat and change rusty parts on the underbelly before the rust spreads to the car body.
Preemptive measures are cheap and not that much work. When it's too late though ... I wonder how much greater the average car life span would be if the drivers just took a oil dispenser every third month and oiled the parts.
"Help" is the operative work. Modern auto manufacturers do a lot of things to help vehicles resist rusting out both in terms of the structure and in the various brake lines and so forth. So now they rust out in maybe 10+ years rather than 5 or less.
Having two cars isn’t quite realistic in the US for that context. Someone buying cars like that likely lives in an apartment in a city with limited parking. I’m sure it happens, but it’s not scaleable. Granted, that applies to many things in US life.
I suppose it's hard for me to conceptualise because here in the UK, anywhere with restricted parking also has public transport.
Here, generally restricted parking exists within 10-15 minutes walk of a train station (to stop people blocking up residential streets when they commute in to town).
So if there's restricted parking, you can get by with one car (or no cars), for the most part.
My experience has been more and more highly dense real estate is built with exactly the number of parking spaces as needed and no more. Developers extract the most revenue that way - to the detriment of people who actually wind up living there. That was my experience in LV anyway. It looked to be the case in SV as well.
Is on-street parking generally restricted in suburbs in the US or something?
It's confusing me that you refer to 'parking spaces', that's what I mean by restricted parking - generally anywhere outside of public transport range in the UK is free-for-all - you park at the side of the road. There are no 'spaces', aside from the physical restriction of the length of the road.
It can be, especially in the winter in areas that are prone to snow. Also a lot of "suburbs" don't consist of developments but are just houses along roads. In many cases, those roads don't have anywhere for cars to park.
The roads that you can parallel park at in the Southwest are the vast exception in my experience. If you did that just about anywhere in my town you’d be towed, as a nicer option for the authorities to choose.
We do have problems with inner city parking reducing roads to single lane in London. But in more rural areas, you can just leave your car anywhere. The concern is thef, vandalism, collision, not enforcement action.
Which is nullified for the most part with a crappy old car. :P
Yep, cheap cars are possible and they can work. My last car while still in the US was an old Kia, which I bought off Craigslist for $500. It was a beater but lasted me several years, during which time I might have spent another $500 to fix one thing or another.
Otherwise I had several cars when I was younger, all used, and all of them costing below $6000, without having to spend a fortune on maintenance.
> Are they substantially more dangerous than other things I do in my life? Probably not
Depends on the other things you do in your life, but statistically, I would say: probably. Rock climbing, assuming you use a proper harness and rope, is significantly less dangerous.
Aren't insurance costs way higher than the amortized cost of the car itself? Especially in the UK?
> In the US you have the issue that a car might be a hard requirement to get to work. In that case I'd probably just buy two and drive them on alternate days so there's always a backup.
As long as you're not paying almost double insurance, this sounds like a good option. You could even rent the other car out on the C2C rental exchange.
Depends where you are - with 11 years no claims, I paid around £500 a year in London on a Volvo v70 2.4 litre, currently paying £230 a year (out of London) for a huge people carrier that also has my wife as a named driver who has only just learnt to drive.
Though yes - insuring 2 cars could be costly - some places offer a multi car discount, some with a device that only charges you when you drive.
This is the case, yes, but generally insurance companies are aware that you can only drive one car at once and adjust premiums appropriately.
That said, in the UK it's hard for me to think of a circumstance in which two cars would be a hard requirement for someone who can't 'afford' a decent car.
Here, you probably live in or close to a city. You might not want to cycle in or get a taxi/bus to work every day, but if your car fails you could probably do that whilst getting another one.
So the second car is only necessary if you live in the country, which is a minority, it's nowhere near as common as the sort of "live 30 miles outside of work with no train station" stuff that happens in the US.
If my car breaks it doesn't really even matter. I use it because it's easier to do big supermarket runs and saves a bit of time here and there; the cost equation works out roughly equivalent to using public transport.
"generally insurance companies are aware that you can only drive one car at once and adjust premiums appropriately."
I'm in the US and that's not my experience. My insurance is fairly cheap, but it did indeed nearly double when I got a second vehicle despite there not being any additional people to drive it.
For many, many years I have had a personal benchmark in mind when purchasing vehicles. I want my TCO to be < $1000/year barring routine costs like fuel, oil, tires.
So if I purchase a car for $3000, I expect to own it for 5 years with minimal problems. There is room for a bad alternator or a starter. But not too many of those over that 5 years. Of course, if I can sell it for $1500 after the 5 years, that's another $1500 I can sink into maintenance and still justify that it cost me < $1000/year.
If I spend $10K, I have to think the car will be reliable for 15 years with ~$5K of repairs along the way.
In the past five years or so I have thought I might need to raise that $1000/year figure to reflect modern practicality. But, surprisingly, I haven't really needed to. Cars are becoming amazingly more durable, and prices in the used car market aren't sky-rocketing the same as in the new car market.
Still, it is time to make the transition to electric. The used electric market is still very immature. I don't want a used Prius. I'm ignorant of how to value used batteries, so I'm not sure what the maintenance costs will be on an 8-year-old Honda hybrid with original batteries. A 10-year-old Tesla is still way beyond $1000/year. To step into this brave new world will probably require me to suspend my $1000 rule until the water settles a bit.
Or I can pick up one more ICE car and stretch it out for 10 more years while things sort... Or compromise and just get a series of 3-4 year clunkers until I'm ready to dive into electric.
Or just bite the bullet and take the plunge now...
Or...
It will probably not get you there, but for TCO electric you really should factor in fuel costs. Even if I think the study is somewhat optimistic (and as far as I see it is talking about new cars, not used cars), it's clear that it's a major factor:
Seriously - I just sold a 1999 Civic with 150,000 miles for $2,000. The car made so many noises and did not feel safe at all. Yet, someone paid real money for it and was happy about it.
Most cheap used cars are pretty junky. That is fine if you want a beater to drive to work and back or if you have mechanic know-how. It's a lot sketchier if you want a car to drive your kids around in or if you want to drive on longer trips where you need reliability.
As someone who prefers cheap cars, one of the keys is basic maintenance know-how. Anyone can learn to do the basics (oil changes, air filter, spark plugs, brake pads, etc.) with a few hours of learning on YouTube.
I'd never waste my money on a new car. My current car is 10 years old and it feels so uncomfortable new. I felt like I was spoiling myself when I bought it.
That basic maintenance worked for my Dad, he got home from work at 3:00 pm and also had whole weekends for car/house/lawn/garage/hobbies.
I work further from home, with a higher paying job, and get home typically around 6:30 pm. Weekends are spent cramming in other household maintenance, recreational activities for the family, etc. So if having that new car (and spending $80 at the dealer every 3 - 4 months for basic maintenance) means having more free time to spend with my family, I feel it is a really good tradeoff.
I think you are overestimating the time costs of an older, reliable car. I've got a 2003 Honda Civic 200k miles that I've had since it had 13k miles. I'd say it goes to the shop overnight once every 12-18 months for a major issue or something I don't want to deal with, goes to Valvoline for 15 minutes every 3 months or so, drop off at tire store for 2 hrs twice a year, and I maintain things like brakes, spark plugs, radiator fan probably twice a year total 2 hours at a time.
And for tools, you don't need much more than the very basics for most jobs that I would want to deal with.
Now if your car of choice is a 69 chevelle or a Fiero then it's going to be a different story.
I can't get it out of my head that I read once that airbags were designed to last ten years. Driving a fifteen year old car seems like having an unexploded munition in my face. At what point is it likely to not work in an accident or to kill you when it does go off? I don't believe it's legal to replace an old steering wheel with a non-airbag one, so there really is no solution that I'm aware of.
I have a 30 year old car, but it doesn't have an airbag.
The good news about the Takata recall is that 50 million airbags out there either have already been replaced (including mine) or are able to be replaced under the recall.
The life of a typical vehicle is 15 years, so saying modern air bags are designed to last the life of a vehicle rather than 15 years doesn't make a falsifiable claim.
The Takata recalls indicate that what specific claims are made about airbag performance are not always accurate, and environmental circumstances and time factor into that.
I don't believe cars are designed for a 15 year span, despite the average lifespan. A number of those are going to reach an early demise due to accidents and improper maintenance. Many of the parts are designed to last 50+ years.
Takata detonated 27,000 airbags and the highest failure rate vehicles had a failure rate of 2.16%. Those were at that time 12-14 year old vehicles with a faulty airbag detonator and still only 2% failure.
Either way, having no airbag in your car is demonstrably less safe than even a faulty, old Takata airbag.
My main point about the Takata recall though was that there are now 50 million used cars out there that have a new airbag system. So you can find a used car covered by the recall and check to see if the airbag has been replaced and if not then get it replaced for free, and then you have the best of both worlds: new airbag and relatively cheap, used car.
"one of the keys is basic maintenance know-how. Anyone can learn to do the basics (oil changes, air filter, spark plugs, brake pads, etc.) with a few hours of learning on YouTube."
I don't think it makes sense to say that is a key, because the basics have to be done equally on newer and older cars and it's easy to find someone to do them for a reasonable price. The issue with an older car is that it is more likely to have non-routine repairs, which tend to both be expensive if done by a professional and hard to assess how much they should cost.
Not at all. You can buy a good, reliable, well maintained car for $3,000. Mileage is less important than maintenance history. The Focus is a particularly good choice IMO. They are reliable, pleasant to drive, and Ford made gazillions of them so you can get them repaired anywhere and parts are cheap.
You can also buy a basket case for $3,000, so you do need to have a bit of an idea of what to look for (or what to avoid).
Wasn't there a year recently where reliability skyrocketed? 2004 or something? I thought I heard there is a clear cutoff point where you should not consider buying a car before that date.
Look for any 1999+ Toyota Carolla/Prism with under 200k. Many camary of that era are bulletproof. Civics all got bought up by ricers, but '3k civic' is literally a meme for being so common.
Not quite $3k, but I paid $4500 for a 2012 Chevy Sonic a year ago with a clean title, a bit over 50k miles and no real issues.
I brought it to the mechanic once for a check engine light and I had it back by lunch with a trivial fix for like $150, and other than that am just doing normal maintenance.
I could buy a Tesla or whatever if I wanted to without it really noticeably effecting my immediate position, but from the perspective of my car being an appliance that does its job, I see no reason to spend more than I did, at least until I can get something that I can go to sleep in and wake up 100s of miles away at a beach or ski resort.
There are other ways to incinerate 50k that I'd get more joy out of than buying a car, but even beyond that I'd rather just leave it all in investments to get my capital gains above my expenses as fast as possible.
If you had enough in capital gains to buy the car from just those gains, or if you are a person that is really genuinely going to get $50k worth of joy out of it and make enough that the expense won't add any stress then I would start to not be able to argue with it financially, but I think both of those are very few people.
I'm in a fairly expensive metro area and 10-year-old Priuses are about $3500. Not hard to find, and if a good mechanic does a pre purchase inspection and doesn't find anything major wrong - they are extremely reliable cars even now. Plan to spend another $500 on tires, as with any used car. The only thing most shops can't easily check is the HV battery cells; even if that goes out, again, there are shops that will replace the battery pack for under $1000.
I'm not sure how much it varies country to country - I'm in Eastern Europe myself (lower labor costs, higher import / taxes etc) but my trusty toyota corolla was bought for about $3000 with no "friend discounts", just a general recommendation that Japanese cars are reliable and a bit of quick looking around the local car craigslist equivalents. I've been driving it for about 7 years (12 years old in total) with no major repairs whatsoever, only routine maintenance and a couple of bodywork fixes that we can contribute to "user error".
And its not that I'm an outlier or anything, most of my friends have stories in the same ballpark. To be honest I even paid a bit too much due to my inexperience, if you're smart and know the right people you could get a better car at close to half the price.
Arbitrage exists - the difference can't be that big because if it becomes so, then lots of people just drive used cars across half a continent to resell them.
International movement of used cars is a big business, generally from more wealthy countries (where more people buy new cars) to less wealthy ones, but also to cover gaps in the market if there's a disbalance in some sector e.g. a surplus of used vans because of some large company selling them off, or a lack of a particular model that's randomly gotten in fashion somewhere.
I haven't bought a car for more than $2,500 in decades. In Minnesota all those decades, with snow and salt problems. I have had to educate mechanics in person by paying mechanics on the internet to answer questions. I do keep a spare car so I don't have to buy one in a hurry when one is on the way out. Only once bought a car from a family member in that time.
But it's pretty well established that near end-of-life cars are cheaper on an annual basis than at other points in their lifespan. I don't know anything about cars myself. Never worked on one. By buying before I need to (mostly) negotiation is easier. I can wait for the right price.
My biggest mistake was buying a (probably) repaired-after-crash car for $2,000 and not reselling it soon enough—everything kind of went at once. Best buy was $100 for a non-running car that a mechanic had been puzzled by that needed only $450 to fix, and is still running, five years later. (It did have a windshield crack that was hit by a tree branch before I could pay to get it repaired, so additional luck there—insurance covered the branch situation, but not the pre-existing crack).
All this said, I'm considering buying a new Model 3.
Here is an anecdote for you. I bought a 2009 pontiac g5 in 2010 for $10k cash used. The car had 30k km on it, and was still under warranty (100km drivetrain warranty). So why would people spend $50k? And how to justify such a high price, while at the same time saying they are simpler and require less maintenance. Yes I believe that is true, so shouldn't they be considerably cheaper to build?
1) Your TCO (Total Cost of Ownership) for a cheap used car can't be $100/month. If you look at Kelley Blue Book or similar websites, they'll tell you that even super cheap cars like that 2005 Ford Focus will still cost you $300-400/month, all included.
2) I almost died in a car accident two years ago, and a result, I value car security way more than before, which means I wouldn't mind paying $35,000 for a very safe car (assuming I'll be able to afford it).
3) Salaries and wealth are not evenly distributed. Something that looks expensive to you, doesn't for someone else.
My TCO for my 2003 Toyota Sequoia has been $70 a month. I paid $8,000 for it 3 years ago and have paid $500 in maintenance (standard scheduled maintenance plus $60 in repairs). I pay $23 dollars a month for liability insurance. Depreciation has been approximately $1,200 (at worst). I'm not so sure I'd own anything but a larger (safety) Toyota (reliability) that old, but just wanted to provide some anecdata.
> Your TCO (Total Cost of Ownership) for a cheap used car can't be $100/month. If you look at Kelley Blue Book or similar websites, they'll tell you that even super cheap cars like that 2005 Ford Focus will still cost you $300-400/month, all included.
My personal econobox, which I've had for a bit over five years, has so far run around 0.17 cents per km, or $155/month, with around 12,000 km/yr. Fixed costs (insurance, registration) add about $75/m.
That sounds about right -- my rule of thumb is that $200/mo TCO is about as low as you can reasonably go "in general".
My last two vehicles were
1. 2005 Chrysler Pacifica. Paid $16,500 in '07. Sold in '17 for $1,900. A few sets of tires, insurance premiums, and (gently) hitting a couple of deer put it around $225/mo over those 11 years.
2. 2009 Pontiac Vibe. Paid $14,500 in '11. Still have it and it's only needed minor repairs (knock on wood). Sitting around $250/mo TCO, but it's still worth a few thousand.
So you either won the car maintenance lottery or DIY'd it and disingenuously priced that at nothing. Good for you -- but not good for planning purposes.
No, neither of those? My per-km costs have been about 30% maintenance, which is pretty reasonable for a $10k econobox between 60k-120k km. I DIY the easy stuff like oil changes or tire rotations, but that bill includes several major maintenance items where I paid dealership labour rates. (shock/strut replacement, broken filler flapper, brake job, water pump replacement)
To be clear, the $155/m is for marginal costs, total marginal+fixed is $155+$75= $230/m.
There are both sociological and economic reasons for it. On the sociological - new cars can be a status symbol - especially in the Luxury markets. Interestingly enough - the European luxury car market is roughly twice that of the United States, despite per-capita earnings being lower then the United States. Are you German and driving a beat up Honda Civic? Not a good look. Tesla is benefiting from this - the cars are highly viral, and aligned with affluence, political persuasions, environmental outlook, sports car enthusiasm, etc. It's turning Americans more willing to buy a luxury car, if it's a Tesla. Then social network comes into effect. If one of your friends buys a Tesla, you are very very likely to as well. This is basically the only marketing program that Tesla Does (Referral codes from friends).
(BTW, I say all of this as someone who finally pulled a trigger on a "Lemur" Model 3 earlier this week).
There is also the practical - when you buy a used car between 3k and 6k, you are basically on the long tail maintenance wise. It's a good bet that the reliability of the car, and the efficiency of the car are both dramatically less then then a new car. I also enjoy snappy acceleration and a car with a low center of gravity. You get into a Model 3, and Internal Combustion Cars just feel like a horrible piece of legacy technology. Could I get away with a old Ford Fiesta or a beat up Civic? Yep - and this is replacing a 15 year old Honda CRV... but I bought that Honda CR-V new, and I have gotten every bit of value from it - and I'm passing it on to family.
The status thing must be important for tesla sales, considering that for its price point it s not a luxurious car, but rather mediocre. The novelty and eco factor however are guaranteed to keep its status icon for a few years, or until the first better competition comes along.
I am in the market for a new car. I looked at the BMW,Volvo, the Mercedes, Audi and Lexus. I am replacing a Honda CRV, but my needs have grown, and my disposable income is reasonable, so I am looking at this segment of cars.
I would (and in fact, am) taking the Tesla over any of the others, despite my early idea that I would get a BMW. I just didn't like the responsiveness of the car, the clutter and BMW nickle and dimeing me for repairs and things like carplay.
I really liked the Volvo, but the things in the Volvo that I liked - the technology, and the panoramic roof, I could get for cheaper with the Model 3.
I finally pulled the trigger when the Midrange ("Lemur") Model 3 became available. At that point, my out of pocket costs on the Tesla was cheaper then the Volvo and the BMW.
If you have not already tried it - go test drive a model 3. It's a lot of fun.
Ah, the good old fool's logic of trying to impress people you don't actually care about. How stupid this can be... Can you actually be impressed by somebody's car? I can't for more than 1-2 minutes even if we talk about porsche/ferrari. Lasting positive impression can't be bought, no matter how much cash you throw at it.
Reliability of an old car can be an issue, but if you find a good mechanic, he will go over junky car, fix and replace what is needed, and on top of 3-5k you spend maybe another 3-5k at most. Even better is to have an used car be shopped around up by such a mechanic, but that often requires a friendship on some level. Voila, reliable car for 6-10k, you just need to get a check once a year (shouldn't be costly if initial one was done properly).
I have 15-yer old BMW 3-series, amazing car. Won't change it till it dies/crashes/gets stolen. Fiancee bought before old Toyota Corrola combi for 5k - amazing workhorse. Driving experience is crap compared to BMW, but it just keeps working, consumes nothing (diesel 2l engine). New one costs easily 4x more, for very little added value.
Unless your pay directly depends on you being reliably on time someplace, or you commute over longer distances in some higher white collar job, this is enough.
So to answer your question seriously, people take out auto loans and lease expensive cars because they like buying expensive things, even if they can't really afford it.
A lot of new cars these days start out at $20-25k. I imagine a lot of people are interested in the $35k Model 3 because it will have lower ownership costs than a gasoline car, is more fun to drive, and is neat. When you take that into account, the difference between a $25k gasoline sedan and $35k Model 3 is not THAT big.
I used to do the whole used car thing, but at this point in my life I spend more to feel safer and to be more comfortable. I still have never spent more than $25k on a car, but I definitely want to drive something that I am confident will not break down.
That's a different question than the parent (albeit a related one).
If there's no one to buy 35k cars, there won't be a steady flow of 5k cars indeed, but I don't think people buy 35k cars because they're nice people trying to provide 5k cars to other people after a while
Of course they don't. But you can't declare dependence on an ecosystem, simultaneously declare that the ecosystem is stupid, then have people take you seriously.
You absolutely can. If everyone in a neighborhood tossed dollar bills on the street cause they didn't like carrying anything smaller than a five, it would make sense to both make a living picking them up and say "why the hell are they doing this?".
The funny thing is if you put forth such a good argument that it changed everyone’s perceptions of the value of old cars then market forces would drive that price up, possibly invalidating the argument in the first place. So... shhh, keep it a secret!
That's still a $12,000-$22,000 car. Nobody can build one for $5,000 like anoncoward111 wants or needs, and it probably will be nowhere as reliable as a 10-year old Honda.
Similar the rental market, I'd guess. Mostly done by those who couldn't afford to buy new but at a greater long-term cost.
I've seen people commenting that the money you save on buying new just goes on repairs instead: I don't agree. There's a fashion and entertainment value to driving something that works just as well as a new car but is newer, so the market gets pushed down.
I used to be a used car person, then after I got my first new car I became a new car person. When I get a new car, it is still a new car to me even after 10 - 15 years. My previous new vehicle cost just over 20K, and lasted about 15 years.
When I bought used cars, in the 2-5K range, they would last about 3 years before I felt I needed to trade them in, and I'd be constantly working on them. A new car gives me a break for about 8 years or more before I really have to work on them (other than regular maintenance). And that is really nice knowing that I can get in the car in the morning, and have a really high rate of confidence that I'll get to work and get home.
The other thing, having a car from day 1 means that I know how it was maintained. The biggest item is having it garage kept, keeps the morning dew off it and therefore have fewer problems with internal components (and rusting) over time.
The short answers are: cars can be resold, so you're only paying for interest, taxes, depreciation, maintenance, repairs, insurance, and gas.
After working with vehicle data for 6 years, I can guarantee that someone who buys a 1-year-old Prius is actually paying less per month than you are for your 2005 Focus.
People who buy brand new cars are obviously paying a huge "drive it off the lot" tax in the form of depreciation, but they know that and think it's worth it. Some people are afraid to buy used, some like to drive a new car.
It's just another example of "it's expensive to be poor". If you can buy a better car, you end up paying less over the course of your owning it.
Of course, that idea breaks down if you buy something unreliable AND expensive. It also becomes fuzzier with luxury cars, since they're expensive to repair.
But a used, super-reliable car that holds value well, like a Prius or a Camry, is generally going to have the lowest total cost of ownership out of the whole spectrum of car options.
To add to your "cars can be resold" comment: my friend drives Masaratis. He always has an eye out on used inventory and snags the under-priced ones. Continuously flips them for same price he bought it for after driving for awhile (6 mo to 2 years). Many sellers are the very rich folk constantly buying new cars or who's work have been re-assigned to a different country.
There are as many reasons as there are people, I don't know if you could really generalize an answer. I spent $40K on my current car because I'm an enthusiast and it puts a smile on my face every time I drive it that a 15 year old Focus definitely would not. To each their own. And in the grand scheme of things, the monthly payment (on a 1.9% loan) is about 3% of my income. As long as I meet my goals for savings, I don't really feel guilty about spending some money on stuff I enjoy.
The most I'll spend is at the low end of that range. I've driven fancy German cars and understand the attraction but not enough to shell out the money.
I like getting a vehicle with the features I want and the room to haul all my various sports gear. I've bought used vehicles but, generally speaking, I like being able to buy a car with the features I want and basically not having to materially think about maintenance for a very long time. I can't say that I've found the used cars I have purchased to be particular deals in the long run. Car maintenance is one thing I'm willing to pay just not to deal with as much as possible.
I do think a lot of people spend more on cars than they can/should. I could spend less myself but on an annual basis I'm pretty frugal and haven't had a car payment for many years.
Because someone wants a nice car. You are spending a couple hours a day in your car so if it small, cramped, slow, vibrates a lot why would you subject your self to that especially if you have disposable income.
(Not limited to cars; see the fact that even well earning individuals in the UK, US, etc, could only weather a few months without work because they scale up lifestyle to match).
That, and that many people actually have money. London alone has over 400,000 millionaires by NW, one years' interest on that pays for a Tesla.
It's not about whether or not people _should_, it's just that our debt-driven society encourages it. Almost everyone these days seems to get a loan so that they can buy a vehicle they don't have the money for. This is one socially acceptable way to burn a huge chunk of your money.
We bought a Model 3 last week because we wanted to support a car company that was all-in on EVs and sustainable technology. We feel climate change will be the defining event of our generation and we want to support technologies and companies that seek to reduce our carbon footprint and combat climate change.
Most auto companies like GM and Ford are producing EVs to meet regulations that they're actively trying to get rid of. Others like VW are only doing it as part of legal settlements. Supporting them financially would be potentially to our benefit and not the planet as given the opportunity they'd dump EVs and go right back to the ICE. The remainder aren't investing in technology, they're just licensing it from the big 3.
We needed a larger sedan and considered hybrids like the Accord or Camry but older models only have efficiencies comparable to small sedans like the Corolla where as the 2019 models see much higher gains. Additionally the hybrid models are a premium approaching the $40k range.
With the full Federal Tax credit, the Model 3 we bought will cost around $44,000. This is the first new car either of us has bought and while it's a non trivial cost, it's something we can easily afford.
I am equally baffled by people's love of throwing money at cars. When I needed a "new" car two years ago, I asked my mechanic what sort of car they would want from a reliability/value standpoint. I was told Subarus or Toyotas not later than about 2007 were very nice. I spent 3 months watching used listings and wound up with a very low mileage 2006 Rav4 (for ~$10k) and it has been wonderful.
>I spent 3 months watching used listings and wound up with a very low mileage 2006 Rav4 (for ~$10k) and it has been wonderful.
People think used Toyotas are made of gold. You could almost have a different Tahoe (in equivalent condition) for each day of the week at that price point.
Toyotas are the lowest maintenance used car you can buy. I've owned many and now only buy Toyota. When I can buy a 9 year old luxury model for less than 10k and drive it for another 200k+ miles putting minimal maintenance into it, that's saving me a ton of money and gives me a comfortable car to drive for my three hours a day commuting.
Tahoes? Yeah. You're going to put a significant amount of maintenance into an over 100k Tahoe. They're nice vehicles but the maintenance costs are more than I want to pay.
The price difference between a Tahoe and 4Runner or Ranger and Tacoma could probably put a new drive-train in the latter. Buying a Toyota (truck/suv, the used prices for the cars are reasonable) is still paying for maintenance, you're just paying up front instead of over time.
If you do your own maintenance then it makes even less sense to "pay for quality" because the cost of addressing issues yourself is minimal. It's very rare to have issues out of the blue anyway.
I drive an early 90s shitbox and have an almost exactly 60mi commute. Obviously it would be a massive waste of time to try to keep it in tip top shape at all times but it's really not the stressful "am I going to break down today?" experience that some would think. The main difference between my current shitbox and the variety of late 2000s and early 2010s cars I used to drive for work is that the 90s interior rattles a lot more and there's more wind noise.
I paid $5000 for a 2001 GMC 2500 with a lift gate and 56k miles. There are some dents and surface rust, but the truck is generally solid. Crank windows and only one working speaker. I call it my luxury vehicle because I have the luxury of not worrying about it.
I will be supplementing this with a 10+ year old hatchback for better gas mileage and less wear on the truck. I'm expecting to pay around $5k for that too.
I have both a MacBook Pro and a Chromebook (Samsung Pro). The Chromebook has quickly become my go-to computer, and I never feel like I'm just "getting by" on it.
I also replaced a LEAF with a Tesla. Ever since doing that, my girlfriend has been asking to go back to the LEAF, because it got the job done just fine and wasn't complicated.
Why would you buy modern PC, if you can buy used Pentium 4 with 2GB RAM and setup some swap for probably $50 or something like that? Some people like fast shiny things and have money to pay for it.
I wouldn't spend that kind of money unless I had fuck you money in the bank, knowing full well they depreciate half their value after the first year (although as an aside: I don't know if that's the case with Tesla cars, less moving complicated parts so less wear and tear. Apple computers and phones depreciate notably less quickly than their competitors, too).
However, I work for a company that offers a lease budget, meaning I am actually able to drive a $35K car at a small bump in taxes (that is, a percentage of the value of the car is added to my annual income and taxed as income tax accordingly. I get free fuel from work though otoh so it's a good deal).
Especially in Europe and / or my segment of work, lease cars are a huge market - tens of thousands of cars - and Tesla will make a HUGE impact on that once they become available over here. Europe and my country are much more suitable for electric cars too, in that distances are generally much lower.
Really not sure (I've always driven 'bangers' that are at least 11 years old) - but shocks me to see friends buying new cars.
That said a number seem to be:
* Company cars
* Bought as part of 'own company'
* Leased
* Hired
* Hire/purchase
Then a lower number:
* Bought with autofinance
* Bought with a bank loan
* Bought on a CC
Very few (if any) are bought in cash. I remember my father (who has never been a rich man) buying his car in cash, (£10,000 in 1996) with the plan that this would last him. It did for 13 years.
I was shocked when my brother bought a new van recently - but at less than £200 a month, it worked out less than buying a banger and having to fix it - he needed a van for his job, so can't afford to have a day or days without a working vehicle. I think that is what it comes down to for most people who do buy new. 'Perception' of vehicle less likely to breakdown.
My prior car was new and I later decided that the added expense of a new car did not justify it. My plan was to get a few-years old "A to B" used car (like a Corolla or something) when it started needing work.
But I did change my mind and get a Model 3.
* Autopilot is quite nice. I'd compare the experience to driving a car with cruise control as compared to one that doesn't have it. It's not the end of the world, but if you have a car with cruise control, it's tough to imagine intentionally buying your next one without it barring financial difficulties.
* Not having to fill up at gas stations is nice. There's a little more planning involved for trips, but for normal day-to-day, it's waking up every day to a full tank.
* Upcoming software updates. The initial Model 3s didn't have summon or the dashcam feature, both of which have been added over the air, and more of which will be added sooner.
* I think the auto industry in general has become stagnant and "safe" in terms of innovation, and I want to support a disruptive entity that will force the others to re-think the ways they're doing business.
* It's got an API, which already has third party tools for an Apple Watch app, detailed analytics, etc.
* They're taking a risk with the interior of the car, with the lack of gauge cluster and spartan design. To me this looks like what happened when the software industry switched from "as many UI buttons and features as possible" in the '90s to the simplified, "overall user experience" focus we see in modern software. And I want to support that.
* There's some "feel-good" factor to damaging the environment less, and supporting the market that will allow for society to join in.
I agree with you in that I can't imagine spending $63k on a non-Tesla. The differences between a basic used car and a new Mercedes or something just don't justify it. But I do feel differently about the Tesla.
> * They're taking a risk with the interior of the car, with the lack of gauge cluster and spartan design. To me this looks like what happened when the software industry switched from "as many UI buttons and features as possible" in the '90s to the simplified, "overall user experience" focus we see in modern software. And I want to support that.
I guess this is fine if you live in California, but a car that I can't operate while wearing heavy mittens is literally unusable to me for nearly half the year.
The car doesn't require touching the screen to operate it.
The nav / media controls do, but those can be voice operated, too. And a lot of the media controls work from the steering wheel knobs (play pause skip back etc.), also.
EDIT: And all Teslas can have their climate control turned on remotely by the app / API, and can be safely warmed up even in an enclosed space (since there are no fumes).
I don't really consider requiring a touchscreen (be it in car, or on phone) for climate controls to be an acceptable replacement for a couple simple mechanical buttons and knobs. In the best case, it's less convenient, and it adds many additional failure cases.
The climate system has fewer moving parts than a typical climate control system, so if anything, it is removing failure cases. It is unique—there are videos on YouTube that describe how it works if you’re doubtful.
In practice, I rarely adjust the climate setting after setting it to the temperature / orientation I want, but I suppose everyone is different.
To me it feels a lot like when many used to claim they could never get an iPhone because they prefer a physical keyboard. But I suppose we’ll see how the industry responds over the next few years.
Yeah, it removes the mechanical failure cases, but I've never had that happen with any of my vehicles. OTOH, I'm pretty regularly in situations where I'm parked in cold temperatures without having cell coverage in a warm location where I can wait for the car to warm up. (And normally, I don't need to "wait" for the car to warm up, I turn car on, set blower to max defrost, clear snow/ice from windshield, and go. Once/if the windshield is clear, I turn blower down for some quiet, and turn off compressor to save on fuel/range, as appropriate.)
Hooking that all up to voice operation sounds fine though (though preferably customizable, so I could have a single command to say, turn on seat warmers, turn blower to max, set output to windshield) - I never use voice operation for my phone because it's obnoxious to so in public, but that's not a problem if I'm in my car.
I am not a car fanatic like these people, but I think I get it. Some people just love cars, like how some people love gaming rigs or skiing. They love the things so much they’re willing to go into debt.
Part of the phenomenon may be branding too. Cars are used as a status symbol. It’s not necessarily used to broadcast that you’re a “better” person than others, but maybe that you have “good taste” and “can afford it” (think something like expensive designer handbags but more functional).
And some people are just dopes who spend money or go into debt with thinking about it. They’re financially illiterate. These are people who make emotional purchases and feel very excited and happy about their new car, who gripe about their debt two months later when reality sinks in. I feel bad for them.
I've found uber and potentially renting a car is more cost efficient to owning a car and paying parking. I drive so little my car was collecting dust. I still have insurance to drive but that is half of what it used to be. Plus I hate driving in congested traffic.
I'm not a fan of electric cars, but I could see myself putting down such a sum of money for an old Mustang if I had the spending money. For people who spend such a sum of money, it's less about having a transport and it's more about hobbying with it.
Outward appearance, vanity, they actually have the free cash, ignorance. There's a bunch of reasons people buy expensive cars... most of which don't make sense other than that's what they choose to spend their money on vs. whatever you've chosen to spend your money on.
It's also an entirely incomplete picture on their financial situation. Maybe they have a paid for living situation so this is their only liability, maybe they don't have any money in their savings account, maybe they don't have a retirement account.
And with Tesla it's probably even more complicated because there are some "feel good" motives to buying an electric car that may outweigh any sane financial decision.
I recently bought a new car that was less than that, but still in the $20s.
I had previously been driving old cars, which was OK, but I had never bought a new car before, so it was nice from that perspective.
It also had some features that I wanted and do appreciate. Like Bluetooth, USB audio storage, and various safety features. Excellent fuel economy too.
I plan on keeping it 15 years and/or 200K miles, or more, so the amortized cost isn't bad. Given my age, it is likely the only and last new car I'll ever purchase, because I'm sure the driving landscape will be substantially different than it is today.
>> A used car from a fairly reputable source can be had...
EVERY used car was once a new car. How many times do you think a car gets sold? Perhaps 3 or 4 including the original new sale? If so then 25 percent of car sales are new car sales. Another thing to consider is the resale price of a car. With an old used car you may think you'll drive it until it's used up and junk it, while the previous owners kept it until it was "used up" in the sense that they sell it and get some money for it.
Sure new cars are generally over prices, but TCO is still an important consideration.
Some don't look at the sticker cost as how much it will cost to them, but the cost of a few years of financing it (on good rates) + the money they lose to depreciation before they trade it in for a new car.
I've always wondered this, too. The most expensive car I ever bought cost $14K. It was really nice while I had it, but the loan and insurance payments added up to more than $500/month. With a car old enough I can pay for it outright, insurance only costs about $90/month, and even budgeting for $1000-$2000 in repair work every year I'm coming out significantly ahead.
Buying a new car seems like such an unreasonably expensive luxury that I am genuinely surprised there are enough people wealthy enough to keep the industry going.
Completely agree my friend! After taxes, insurance, principal balance on the car, and routine maintenance, my beater as described above is running me at $175 a month.
I know so many people who have a car that's costing them over $600 a month all in. That really confuses me, because that's just about the price of a bedroom in our area.
It is entirely feasible to live on $1000 to $1500 a month here as a single person and bank the difference in salary without feeling like you are truly being frugal!
It’s relative to whatever else you want to spend your money on. I spent $90k on my recent car because I love cars, and this was a relative deal (it was worth $110k) with decent resale value.
I have friends that have spent $140k on their Tesla model X, or $190k on their Porsche 911 Turbo. That seems too high for me. Shrug. Everyone is different in their priorities. Most of these are leases where they’re paying maybe $5k a month. When you make $300-400k a year or more with current low rates it’s not terrible.
> Most of these are leases where they’re paying maybe $5k a month
a fully optioned 911 turbo S lease is about $2900/month. most high end 911's lease around $2000/month. most high end bmw's and mercedes sedans (M, AMG, etc.) lease around $1500/month.
these leases are usually tax deductible for business owners and consultants (1099, K1, etc).
and you're right, the problem with HN is some people just have no idea how much money people in technology are really making. these lease payments are a drop in the bucket compared to personal earnings or, more to the point, a successful small business' revenue.
Yeah I'm too frugal to spend like that on a car. At some point I'll buy a used Model 3...once it costs 30% of that.
For now I love my 40mpg and low maintenance and insurance costs of a 10 year old hybrid Civic.
But you have to think about all the people who buy cars for other reasons...supposed signaling, the impression it gives others, devout brand loyalty, good old consumerism... There's just so many reasons that are "misguided" from a financial perspective, but logical from the personal perspective.
Well, a couple of weeks back, I bought a car. I would have bought if 35K Model 3, if one was available. Why? Because I didn't want to burn gas when there might be other options available; because I wanted to do my part in keeping an electric vehicle company alive; because I wanted to be less of an asshole to the future generations that have to live with the consequences of things we do now.
Yes, I know most of electricity is still generated from fossil fuel sources. But baby steps.
There might be comfort features in a more expensive car someone wants, also, new cars come with warranties. Or even certified used tend to be more recent cars with warranties. Car repair can be one of the more expensive unexpected expenses. Not to mention depending on your commute and job detrimental to your life.
Do you live in an expensive area? Seems likes spending most of your income on food and rent at that income level is high.
Most people aren't trying to minimize their transportation costs though, in the same way that people aren't trying to minimize their housing costs when buying a house. People get the nicest car, and biggest house, that they can afford. If you have a long commute, I think it makes sense to get a pretty nice car, considering how much time you spend in it, and how annoying it is to have your car break down or need repairs at random times.
If you buy a new car and resell it after 3 years, you can end up spending the same amount as you would do with a used car. You always run the risk of a bad accident ruining your investment but that's also what insurances are for. With a used car you run a higher risk of having unforeseen failures much earlier than you would want.
All in all I am still buying second hand cars but the investment into new cars is not what it seems at first.
Because they can, and because they want to. If a $50,000 car is 200X your income, that's one thing...if it/s 1/20 your income, it makes the [emotional] decision much easier to rationalize.
Further, that $50k is being more and more hidden in things like low-mileage leases, so it doesn't FEEL like that...it only feels like $400 a month and you get a new car in 3 years...but nothing to show for it after the fact.
It is far from a sure bet that a 15-year-old $3K Ford is the fiscally responsible choice. It's kind of the reverse of the problem of people spending too much on cars -- someone getting focused on the absurdly low price and not factoring in what it will actually end up costing them over time.
It is true that at the moment a conventional (non-electric) vehicle is cheaper. However some people do want to own a car that has a lower negative impact on the environment and are willing to pay more money for that (which is a good thing).
This is a factor for me. I’ve never owned a car and if I can help it, want to avoid ever buying an ICE or partially-ICE vehicle. There’s a tiny used EV market, but it’s mostly filled with early entrant models that make serious compromises, making buying from it somewhat impractical.
So I’m now considering buying a model 3 in the next 1-2 years. If I can’t make it work financially, I’ll just make do without a car until that changes.
Some people like cars. If that's their thing, then cool. I dislike driving and everything having to do with it, so I have typically go your route within reason. Buy a used brand that is known for reliability.
Well, somebody has to buy new cars or there wouldn't be used cars. If most of your money is going to food and rent you must live in a very expensive location.
it seems that people who buy cars fall into two groups.
the first group views a car as an appliance, and will generally buy the cheapest one that will get them where they need to go and haul their stuff around. you tend to see these people driving crossovers.
the second group actually enjoys driving, and will seek to get the nicest car that fits in their budget. the minimum viable car and the nicest car you can afford can be very different in cost.
Not married nope, girlfriend drives a way more expensive car than I do but we usually do road trips on my beater because we don't want to hurt the nice car haha
I've switched to renting cars for large mile trips. Unlimited mileage rentals are so cheap it's worth it to avoid wear and tear even on my older car or my girlfriend's nicer vehicle--and removes the risk of my old car breaking down in an inconvenient place. Last rental was an SUV for $65/week that I put hundreds of miles on. Some of the rentals I have put 1k+ miles on for <$100.
Why does anyone spend $35,000 - $50,000 on a car? It just feels like a number that is at least 5x too high.
A used car from a fairly reputable source can be had for between $3,000 - $6,000, depending on mileage and cosmetic appearance. My 2005 Ford Focus sedan was $3,000 and should last me about 3 years before I need to make a decision about major repairs, so that's less than $100 a month in ammortized costs.
Are there really hundreds of thousands of people who are making $5,000+ a month necessary to justify the purchase of such an expensive vehicle? I'm not far from that number and most of my money still goes to food and rent.