Posted on 07/02/2014 3:29:01 PM PDT by Lorianne
Thanks for answering my question above re the high costs and lack of sales to anyone with half of a brain as Rush would say.
“Sorry, there is no way in h*ll I can justify spending $45G’s for a new sedan, when my older car runs just fine.”
Thanks for the feedback.
If you are young and upwardly mobile, a seven year loan is security. The budgeted auto ownership expense is known and can be covered. As wages/salaries rise to inflation or merit or both, the ownership expense remains constant and a decreasing fraction of the total expense.
The low interest means that the inflation is money made and no subtraction need be made for the cost of interest. The inflation rate becomes earnings. The intrinsic value of the car might not depreciate at a rate greater than the compounded inflation. We read here of at least one vehicle that has maintained or possibly exceeded the depreciated used car purchase price.
Rationalization? Perhaps but it points to a different view if you are not old, curmudgeonly and tight. Left out of all the equations is pride of ownership. Owning a new car provides great satisfaction.
Anyway...... there is a different point of view
After Bubba totals out the $45,000 Hyundai SUV (I ain't kiddin') with 6.5 years left on the loan, and Achmed buys the salvage title from Progressive, patches the thing up on his frame-stretcher and paints it red, (after cleaning the blood off the Genuine Leather upholstery and making sure the USB port works,) wholesales it for $3500 on his shylock's floorplan to Wayne's Buy-Here-Pay-Here, who flogs it to Betty for $7995 on the never-never, our wonderful financial people will have potentially created three more derivatives.
Of course, the engine blows after this and Betty stops paying because with no car, she loses her job. But not to worry. A gay African POTUS will surface to guide us out of the quagmire. Allah The All-Wise will handle it. Perhaps with Chinese money?
I drive an 2001 Ranger with 131 K miles. I’ll drive it until I don’t trust it anymore, simply must have reliable transportation here in Montana.
Last new vehicle was a 2009 Rav 4. That was a replacement for a 1991 4 Runner with 183 K miles on it. Would still have the 4 Runner but something electrical happened to it and nobody could chase down the problem and fix it. I traded it in on the Rav 4 and saw it for sale three times in the next 6 months. Looks like I got rid of it just in time.
Finance professor taught me years ago that transportation from A to B is what vehicles are for. You shouldn’t be paying to haul your ego around. That lesson has served me well over the years.
Your story ... which by now I have heard coupla hundred times ... really chaps my hide. With cars just full of electrics, electronics, computers, sensors, etc. ad nauseam, one would think they could add E-Z-to-use read out ports for complete diagnostics on every circuit, not just the engine. Wiring ... it's just so 19th C .... . Instead of surrounding me with airbags, spend 25¢ more on wiring diagnostics.
Just fixed a wiring problem for a friend on a late 80s Benz. Mice!
If the only way they can buy a car is to take out a 7 or 8 year loan, they probably can't afford it even at these low interest rates. Unless they put a healthy down payment on the car, the car is going to be worth less than is owed until the day its paid off. If one is disciplined and wants to use the low interest rates to manage cash flow, I'd say go for it.
You are correct...... however the payment per month is of very significant import
I have several young and upperly mobile relatives, and they drive older cars than my wife and I do and their parents. Often they end up with the parents old vehicles by their choice.
They take pride in their kids and families not a pos costing $40-50k with high insurance rates. Many are paying high tutitions for private schools for their children.
My 2007 Honda Ridgeline would be considered a new vehicle by them. In fact many have asked to be on the list to buy it, if I should decide on something else in the next few years. I had a similiar list for my OJ Simpson Bronco before the Ridgeline came along.
Most of them, their parents and we have older tvs and often Trac Cell Phones instead of the latest I phone. Three of these guys were given new I Phones by their companies and told to use them. My wife still has a Princess cell phone in our bedroom, because it works when the power goes off due to a storm or downed power pole.
I guess in a way, we are un American because of our non consumerism ways.
Thanks for the BOL of the day.
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