Having a vehicle in this day and age is pretty important. Unless you live in a super dense city like New York or San Francisco you’re all but forced to own a car to commute to work or run errands.
If you live somewhere with a temperate climate and are motivated you could ride a bike, but let’s face it, the majority of us are not nearly that motivated.
So that leaves us with having to buy transportation. Such an expensive hobby it is, with monthly payments and insurance premiums, let alone the maintenance costs of keeping it running. But does buying a vehicle have to be a super costly affair?
Buying used vs new
According to current depreciation rates, a brand new car off the lot will lose 20 percent of its value in its first year of being driven. The following four years you’ll lose 10 percent per year. So in five years of owning a brand new car, you’re going to lose 60 percent of its original retail value.
I drive a 2006 Chevy Aveo. It’s nowhere near a fancy or even nice car for that matter, but it gets me from place to place and does so safely. Maintenance costs aren’t crazy on it and some things I’ve even just let go, like the blower motor for the hvac system.
This car in 2006 was MSRPd at $11,450, in 2015 I drove it off the lot with only 80,000 miles on it for 1,600 dollars. I paid the car off in a little over a year, which in hindsight I should’ve paid for it in cash but that’s another story.
My point is, for a little more than ten percent of its original price I bought a car that gets me everywhere I need to go with little maintenance, great gas mileage, low insurance cost and still in the 100,000 mile range even though I’ve owned it for almost 4 years now.
If I had bought a brand new car I’d be paying car payments still, likely in the 4 to 500 dollar range per month and well over 100 dollars per month on insurance. I’d be up to my eyeballs in debt and not able to save any money.
Don’t get me wrong
If you have the money to buy a new car, I’m not telling you that you can’t spend your money how you want to.
I’m just giving you guys some information about the difference in pricing and how much money you can stand to save if you buy used and maybe more if you pay cash up front.
The savings from not paying interest on financing a car alone will save you a ton of money!
If you haven’t realized it yet, I like saving money and this is such a small choice for me to say that I’m going to drive used cars so I can save more!
Here’s the other thing too, if you’re a car person who likes working on cars, you can apply this line of thinking to car repair or even modifications.
On top of that, if you decide that this is a good option for you to just stick to used, you can have more money to save or use elsewhere that’s much more important to you.
That’s my big deal with this, I don’t really care what kind of car I drive, however I love having a super nice computer for gaming.
I’d trade in a fancy car for a brand new gaming machine that I built any day and probably still spend less because I’m a good bargain hunter when it comes to computer parts.
What are your thoughts on buying used vs new and what would you do with the money saved from not having car payments?