IMO nobody with financial sense would buy a new car, regardless of their
income level, because of the enormous instant depreciation when the car
goes from being labeled as "new" to "used" the second the title is
transferred into your name. I know several people who are extremely
wealthy, and most drive used (but new condition) cars they purchase with
cash. People I know who have new cars are generally low income and live
month to month and think of things only in terms of monthly payments
rather than long term costs.
Somebody a few days ago said to me "it's great that you can drive these
old Mercedes, but it wouldn't work for most people unless they knew how
to do all of their own work." I really doubt that even paying a shop to
maintain an 80s diesel Benz like an aircraft and keep it in perpetual
new condition, would cost as much as the payments on the cheapest of new
cars. And a well maintained older Benz only has maintenance costs- it
will resell for it's purchase price.
There seems to be some sort of myth that an older car is less reliable,
which is often used to justify the purchase of a new one. In my opinion
reliability problems are virtually always due to maintenance issues, and
have almost nothing to do with the age (or mileage) of a car beyond the
fact that people are more likely to neglect needed work on an older car
(but that's up to the owner)!
Tyler
LarryT wrote:
That's always made me wonder too - a $30k car (average price these
days) with a DP of say, $5000 in the form of a trade in and you're
still financing $25k. Even at a cut rate interest rate od 3.99% the
monthly payment is ~$460/mo. Add a house/apt - $800 min - and you're
up to $1260. add food and you're at $1560 which is $18720 per year.
To make that you;d need to earn ~$25000 per year. But to be realistic
you need little details like insurance, gas, maintanence, utilities
(not insignificant) so it's hard to image how people afford new cars
much less $50K SUVs.
LarryT
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