Whatever you do, don’t buy new. It no longer makes sense – and can be very bad for your wallet. I advise this as an automotive journalist, a guy who writes about new cars for a living. This is probably not a good idea. I am not supposed to advise people against buying the new cars I write about. But I do – and here’s why:
In the first place, new cars have become disproportionately expensive.
Meaning, relative to what most people – most families – earn. Last year, the average price paid for a new car (this is called the “transaction price” within the industry) was in excess of $30,000. A record high. But the average family income in the United States is only in the neighborhood of $54,000Â – and has not increased significantly in more than a decade.
The purchase of a $30,000 car is disproportionate relative to the average family’s ability to pay for it. This is why the length of the average new car loan has been extended to six years – and is headed toward seven (and then probably eight). Stringing out the payments over a longer period makes the car seem more affordable, but it’s not. You are still paying an amount that’s disproportionate relative to income.
This problem is particularly acute with certain types of vehicles – full-size trucks, for example. It is very difficult to find a new one that costs less than $30k. For example, a base trim 2016 Chevy Silverado 1500 regular cab with a short bed stickers for $26,655. But most people who need a full-size truck need a full-size bed and four-wheel-drive. Without them, a truck is fairly useless for the things people generally want and use trucks for. But those two items push the MSRP of a truck like the new Silverado to well over $30k. There is no longer any such thing as an affordable (given average family income) full-size pick-up.
Not that’s new, at any rate.
One should also factor into the cost equation such things as property taxes and insurance, both of which will almost always be higher if the car is new. The property tax – in areas that are so afflicted – is based on the current retail value of the vehicle, as described in trade publications such as the National Auto Dealer Association (NADA) “blue book.” The newer the car, the more you’ll pay – and in some areas, you’ll pay a staggering amount over the first five or so years it takes for a new vehicle’s value to depreciate to a reasonable level.
People sometimes forget to budget for this – and end up losing the vehicle because they could not afford to make the payments on it and pay the taxes on it.
For the same reason, be sure you can afford the insurance as well as the payment. You should factor in a possible raise in rates, too. All it takes in many cases is a single speeding ticket to incur significant surcharges. Two tickets and it’s a near-certainty. What are the odds you’ll get at least one ticket over say the next five or six years? Could you afford to pay say 20 percent more than your current premium? If not, think twice about buying the vehicle or you could find yourself in a financially desperate situation.
If you can’t afford the insurance, the vehicle becomes useless because you can no longer legally drive it.
But the real financial peril that comes with the keys to almost any new car is the likely – the almost certain – repair costs you’ll be dealing with a few years from now. The technology being fitted to new cars – LCD touchscreens, “drive by wire” controls, a litany of “active” safety features such as automatic braking/steering assist – is forbiddingly complicated and it’s an engineering maxim that the more complex a given system is, the greater the odds of a failure vs. a simpler system.
Just a week or so ago, I was out test-driving the new BMW 7 (review here). This was not only a new car, it was a press car – a car loaned out to journalists like me to drive around for a week and then review. It’s safe to assume it was thoroughly gone over by BMW’s people prior to being loaned out, to make sure everything was working properly. And it was … for the first two days I had it. On the third day, a chime warbled out from somewhere deep in the BMW’s padded leather dashboard and a “systems down” advisory flashed on the gorgeous liquid crystal display touchscreen – informing me that four of the BMW’s “active driver assist” functions were on the fritz.
The car was still perfectly drivable; the affected systems were purely electronic “safety” systems such as the lane departure warning, or brake assist or the adaptive cruise control or the collision avoidance system. And the cost of the fix would be covered under warranty, if this were my car. But what happens when the warranty runs out? As I wrote in my review of the BMW, it’s a magnificent car that I’d be very reluctant to buy – for exactly this reason.
And it’s not just high-end BMWs that are over-teched and likely to hit you with expensive, computer-related conniptions at some point post-warranty. Almost every new car now has the LCD touchscreen, drive-by-wire throttle and the profusion of electronic “safety” (nanny, if you ask me) technology is as abundant on the lower end as on the higher end.
Which brings me to What to Do.
Lease.
Do not buy.
Leasing used to be the bad deal, because you had a payment in perpetuity and never owned anything. But, consider: When you buy a new car nowadays, the payments are also effectively in perpetuity. Six years, soon seven. Probably eight. And by the time you pay it off, it’s going to begin to cost you money in other ways. Probably, it will do so before then – given that most new car comprehensive warranties will cut out before you’ve paid the the car off. And keep in mind the depressing truth that even after you’ve paid the car off, you still won’t really own it. Because you will still be making payments on it – forever – in the form of property tax payments to the government.
In a very real sense, you are renting even though you thought you were buying.
Why not make it official?
With a lease, you will still have a payment every month, but it’ll be lower than it would be if you bought the car. And you’ll never have to pay for major repairs as these will be covered by the warranty – which will last for the duration of the lease. Property taxes will be the obligation of the lease company.
It’s a much better deal all around.
This form of getting into new cars is likely to become prevalent and even dominant for all of the reasons described above. The cost of cars – especially those that aren’t small cars – Â is going to continue to rocket upward while it’s unlikely the average family’s income will rocket upward in tandem. Taxes rarely decrease – and as new cars become more expensive to repair/replace following accidents due to the cost of replacing multiple air bags and so on – the cost to insure them will inevitably track higher, too.
And, let’s face it. Cars have become disposable appliances. Even the interesting ones. Their complexity makes it very unlikely they’ll be economically viable to keep after 15 or 20 years. Who is going to spend $4,000 to replace the automated manual transmission in a car that’s only worth $5,000 by then?
It’s not like it once was, when a paid-off car could be kept on the road almost indefinitely by a competent backyard mechanic. Now you need an $80/hour “technician” and an array of diagnostic equipment beyond the means (and know-how) of most non-engineers.
Better to cut bait – and rent rather than buy.
Hopefully, GM, Ford and the rest aren’t reading this….
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I will never buy a brand new car, never have, never will.
we currently have a 2000 Beetle tdi and a 2004 Expedition
both are needlesslyoverly complicated
the heater fan speed switch isnt hooked to the heater fan, it tells the computer what speed you want.
same with the power windows, the switch on the arm rest isnt hooked to the actual window motor, it tells the computer to lower the window.
the hvac has all kinds of computers and electronic vent doors, when a cable works just fine.
when we’re empty nesters and no longer need a three row vehicle, my next car will be a 88-91 K-5 Blazer,
they had EFI and overdrive , no plastic , no computer except a simple one for the engine.
why people keep buying super expensive , super complex quickly depreciating, plastic crumple zone of a cars is beyond me.
Love your site Eric and I generally agree with you but leasing new vehicles just won’t work for my broke ass here in Taxachusetts, even though I’m a low mileage driver. Leasing a new vehicle would cost me several thousand dollars worth of sales and excise tax, but they are based on blue book value and so drop significantly on older cars.
I can’t stand touch screens and can’t stand the recent fuel efficiency compromises so I don’t know if I’ll ever be willing to buy a car newer than about 2010. The question for me is what to do to find a rust-free used car from before the craptasticness started. The new stuff they are spraying on the roads here really seems to kill cars, and people here seem to be hanging on to good used vehicles until they rust out. I couldn’t find a small pickup without rust at a reasonable price around here. I did find out about a car carrier with extra capacity, and wound up getting a low mileage ’07 Hyundai Tucson trucked in from California. It’s got no rust and a simple, older design Mitsubishi 2.7L V6 that might not get many MPG, but should last a long time. And my excise taxes for the year are only about fifty bucks.
There might be an opportunity in bringing cars like this from outside the rust belt to New England, and keeping them intact with Fluid Film or something while they’re here.
Or maybe there are too few people like me, and everyone else just wants their touchscreens and Bluetooth, and don’t mind being in debt up to their eyeballs.
Have to say one other thing ,the average person up to the time they sign their life away ,doesnt realize that they cant really afford to live beyond their means ,but it will sooner or later come to their senses ,albeit ,too late .It took me the longest time before I would commit to 4 years of slavery(now its much longer ) people used to tell me you are spending as much on that old truck as you would the payments on a new one (balderdash ) one of my bosses (who had inherited his posiston ) commented when I had bit the bullet and bought a base model 4 cyl truck(without AC )” Kevin always buys the cheapest thing he can buy ” my cousin pointed out {“thats all he can afford “} if I ever have anything new again ,it will be a rental and the only reason I would consider it ,would be because its a drastic upgrade . I do not like to work on this current crop of user unfriendly vehicles.
It really doesnt take a rocket scientist to figure out how much debt you can easily carry ,with the current easy payment long duration plans ,its shameful .
“We have seen the enemy and he is us “
I dont know what to say, what Eric says makes perfect sense ,I stopped and chatted with my bro yesterday ,the mighty stroke was still eating parts (and it doesnt run a bit better ) my other brother bought a 8100 Gm and hasnt had a minutes trouble with it (would start in cold weather too ) the only trouble with the 8100 is its terrible gas mileage(around 9 mpg) and it has plenty of power.One thing that po ‘d me off about GM was when they started dumbing down this big block so they could get out of the big block business (a new 6.0 vortec seems to have almost as much power and gets 33% better gas mileage- shame on you GM , as an aside the 6.0 vortec resides in a lot of UPS BROWN BOX TRUCKS ,that must say something about cost to own .
It seems you cant keep an exhaust system on a dodge around here(already own a Dodge ,probably never again ) my idea of a good pickup ?(not even a ford man ) a long bed F-150 WITH A TWEAKED 4BT CUMMINS ONBOARD,WITH THE 5 SPEED TRANS WITH DECENT GEARS,that is if you absolutely cant bide with the 4.9 I-6 .
A good used car ?a lower mileage late 90s Taurus with the the 3.0 V6 ,those old taurus were a tough car and those things had just enough weight on the front end to go good in snow with xtc s on the front
But on the subject of leasing,if you are going to lease ,get the extended mile lease,I have looked at leases and they would work for me ,back before gas got cheaper ,it would cost me around $75 in gas alone to go to VA Beach to see my daughter .
The only reason I would own a diesel truck (a newer one ) is if I needed to pull a gooseneck trailer ,when you start repairing a diesel engine because of a stupid trick of omission ,you can get sick mighty quick (brothers 685 Mack was a case in point-the pump over fueled the engine and cracked the heads around the injectors cost several thousand dollars we didnt have{ old E-series getting hard to find parts for } .
anyway ,Eric nailed it ,in this land of the free ,we cannot truly own anything .We are slaves to the consumer oriented sunup to sunset economy ,that screams buy me !(you wont feel good till you have the latest gizmo,or your vehicle will generate comparable g’s to an atlas booster heading suborbital ) I look at the posters here as some of the last libertarians .
I always get 300K-400K ouitof the older Fords, with little more than maintenance and minor repairs (albeit, not any of the diesels). I never see Chevy’s going that long. Seems a Chevy is only good for 150K miles…if you’re lucky. After that, it’s major repairs/replacements….
“I always get 300K-400K ouitof the older Fords,”
I favor old Fords, too. Currently I have a ’68 F250 Camper Special Ranger, 360 w/ automatic. Never got that many miles on any vehicle, but I see many more old Fords around here (Southside Virginia) than any other make.
I agree. Last fall I bought a 93 Ranger equipped with a 2.3 liter four and manual five speed transmission. That year Ford got rid of the distributor and added a second spark plug to each cylinder. Those two changes alone increased horsepower by ten percent. It starts instantly even in the coldest weather, doesn’t consume any oil between changes, and gets 29 MPG. I’ve never run across a single negative comment about Ford engines. I like the Ranger because can handles like a sports car on the local county s-curves yet is rugged enough to carry a load of hay bales on a rutted field. I would like to post some shots and commentary but there is no appropriate category in the forum to do so.
Need a new work truck? Just lease one. In 3 years look me up and scream “but you said to lease a truck” and I’ll be laughing my ass off cause I thought everybody was smarter than that.
I got tired of the racket. When you drive 30k-50k a year, leasing doesn’t work. Neither do the disposable cars, even assuming we can afford them. People used to have respect for things made with quality.
Someday, they will figure out how to mass produce an affordable flying car and they will become ubiquitous. Not so sure if it will be in my lifetime. Now then, with the great inventors we have in America, if it weren’t for the dead weight of the scam called “government” which is like having a bowling ball chained to their ankle while they run their race… it would long since have been a fait accompli. Old news.
Until then: a car for work and a car for fun & spare when the work car is being maintained. Finally found the right second one. Yesterday.
Good ones are still out there, you just have to keep looking…
1986 300SDL & 2000 740i M Sport.
Done.
Hi Mike,
I recently found a pristine early ’80s El Camino with about 40,000 miles on it; 305 V8/four barrel… all stock. No got-damned air bags or ABS or “safety” crap. I was in lust!
Hi Eric,
After saving for years, I’m seriously close to buying my all time favorite car… a 77 or 78 Pontiac TA. Probably within the next year. I know you have one, so if you have any tips on what to look for/ what to avoid, I’d be very appreciative! So far, I have found a place in FL that specializes in these cars, and Gateway always has a few in stock. I think I remember seeing that 77 was the last year for the 455. Should I seek out that 455 or just go with a more common 400?
Brian
Hi Brian!
You’ve hit the mother lode! I am a pretty OCD second gen TA guy and pride myself on knowing a lot about them.
Ok, for openers:
1976 was the last year for the 455.
In ’77, to make up for the absence of the 455 as the TA’s top performance engine, Pontiac created the W72 performance option, which was a more powerful version of the 400 V8. It had a slightly higher compression ratio, hotter cam and different tuning from the base 400. Initially, the W72 400 engine was rated as producing 200 hp (same as the ’76 455) but this was increased to 220 for ’78 and ’79 (last year).
The base 400 and 403 Olds produced an advertised 180 hp.
Equipped with the “T/A 6.6” engine, these TAs were fully capable of running low 15 second quarter-miles, stone stock – and with some tuning/adjustment, you could get them in the 14s. Replace the shitty factory exhaust (single cat, emptying into a Y pipe and dual mufflers) with a proper dual exhaust (and replace the shitty stock exhaust manifolds with Pontiac’s cast iron “Ram Air” headers) and you could get mid-low 14s without a cam change or major engine mods. These were very quick cars in their time – quicker than an L-82 Corvette.
You can tell whether a ’77-79 TA has the W72 code 400 by (if it’s stock/original) the “T/A 6.6” decals on the shaker scoop. The base 400 (and the Olds 403) came with “6.6 litre.”
The ’76 TA had either “400” or “455” (last year for old-style cubic inch decals).
Also, the ’77-79 base 400 and 403 Olds always came with the three-speed TH350 automatic. The ’77-’78 could be had with either the Super T-10 4-speed manual or a specially calibrated version of the THM 350 with a higher-stall converter. In ’79, the “T/A 6.6” 400 came only with the four-speed.
The W72 package also included a more aggressive (3.23) final drive ratio – which is another way to tell whether a given car was originally a “T/A 6.6” car. The base 400/auto came with a 2.41 axle.
Pros and cons of the 455 vs. the 400:
The 455 is a long stroke/torque engine; the 400 is a shorter-stroke/hp engine. You can easily install a 455 in a ’77-81 TA. All Pontiac V8s are dimensionally the same on the outside (some very minor differences) and you can swap heads/intakes and so on easily.
Either engine can be made into a great street performance engine. But the 455 will cost you more because it’s much less common than the 400 – which was built in greater numbers and for several years longer.
I would not necessarily reject a TA with the Olds 403 engine, especially if you are ok with an automatic. You will pay much less for the car – and the 403 Olds can be made into a very respectable performer, too.
I agree that you can do wonderful things with the 403 Olds. It’s basically a bored and stroked Olds 330/350 small block. The 400/425/455 big blocks mainly have a higher deck height. Hi-po parts still abound for all Olds engines.
The whole Olds Rocket engine family (except for those crappy diesels) is hard to go wrong with. They excel at making lots of torque at the low end, and play well with the TH transmission.
Woo hoo!
305… just like my old sky blue ’78 Monte Carlo with T-tops and 4 on the floor Saginaw… now you’re talking!
Just today, one of my buddies took me for a ride in his ’57 Chevy, straight six, 3 speed on the column, that is about 3/4 restored… oh yeah.
Welcome to the real America.
Hi Mike –
Yup!
The 305 was a fine little V8 for the duty it was designed for. I have no idea why it gets the bad rap it sometimes get. I’ve owned several and they never gave me any trouble.
eric, Me me me(jumping up and down). I can tell you how it got the bad rap. It was the shortsightedness of GM anticipating what CAFE was going to do and not having enough suitable little shitboxes to sell and offset it like Ford did. So GM was saddled with 305’s in big pickups. This was before, only slightly though, that most everybody worked the whee out of 1/2 T pickups and not many had 3/4T.
When you could only get a GM with a 305 to pull big plows, big trailers and the like, Ford cashed in like crazy but then every GM owner who went to Ford got sick really fast of those Holley-Ford carbs that might last 2 years but mostly didn’t last a year.
This was a time of lose/lose for people who worked pickups. You could only get a GM with a 350 if you went to a 3/4T and a 454 if you bought a one ton.
Ford continued to produce 351’s in 1/2 T but their slushomatics and those bad carbs soon ruined that market. And GM did everything wrong trying to get it back. My 3/4T 4WD diesel ’82 Chevy came with the stoutest transmission, a 425 TH and a 6.2 diesel but a really chickenshit car style rear=end that didn’t last 50K miles. I put a one-ton crewcab rear-end in mine, no mods, the exact same bolt-up just like GM could have supplied from the factory, and never had a rear-end problem again. the latter 70’s and the entire 80’s really sucked for pickups. My ’77 Silverado was the last of the Mohican’s so to speak. The ’78 had a 350 with the same specs but it was a dog that continued on to the(same body style as the ’87)88’s with a fuel injected 350 followed immediately by the ’88 new style pickup with FI and OD transmission. I doubt most people even know GM made a half year ’88 pickup of the same style as the ’87 but with an FI engine.
A friend who worked at a GM dealership called me and said to drop in after work, he had something to show me. I did and he had me get into a “new”’87 and said You won’t believe this. We rode around a few minutes and then he stopped on a back street and matted it. It broke loose and howled. He’s laughing like crazy and stops so we can see that same engine the ’88’s would have. It was only a couple-three months later he called and said come by again. This time he had this futuristic looking round nose Chevy with that same TBI engine and OD. It had an even steeper 1st gear and would scream….for that time period. It would leave my souped up ’77 in the shade.
And that’s how 305’s mostly got a bad rap but another shenanigan, sticking those sorry 307’s in 80’s pickups gave everything less than a 350 a bad taste. And those 307’s were sorry sorry sorry.
Good stuff, Eight!
I can’t say anything (either way) about the 305 in truck applications. But in light-duty passenger cars, it was (in my experience) a reliable engine. I had a ’79 Camaro with one and it was still running well with 130,000-something miles on it when I sold it.
It was also responsive to mild performance hopping up. For example, the L69 (“305 HO”) used in early-mid ’80s Z28s and the Monte Carlo SS. By today’s standards, its 190 hp was pretty weak, but circa 194, it was Big Stuff!
I had a 77 Impala wagon w/the 305. It was a corporate executive car off lease and the engine had been rebuilt because he drove it in rural Arkansas and the radiator plugged up w/some sort of pollen and it overheated. I ended up having the heads done, they had only put in a short block. But at the price I paid it was not a bad deal.
I know GM let a bunch of poorly cast 305 blocks slip through in the mid/late 80’s. If you were the original owner the factory would replace the motor for you, otherwise not so much.
Having to replace the motor at <100k miles would make anyone salty.
The other thing with the 305 is that it's not too good for a performance engine due to the small cylinder bores (harder to let it breathe), but not everybody cares about that…
Yeah, if you drive a lot, the lease costs you even more; and if you don’t drive much, it costs you a lot just to keep the car sitting in the driveway. Either way, it’s a bad deal. Then after a few years, your downpayment and monthly payments are gone, with nothing to show for them, and you have to start all over again. Not an economically viable way to live. (I usually agree with Eric, but not on this one.)
Never spend more than $10,000 on a car and keep it for at least 5 years and your total cost per year would be around $3000.
If you buy something too cheap it may still cost you around $3000 a year because of repairs and that is also very inconvenient to be without a car frequently.
As an example,I recently bought a toyota scion xb 2012 for $9,550 with only 37,000 miles on it.And that is a good quality vehicle that will need little if any repairs.
I have the best wife in the world. I got her a 90s bmw for 1 grand and ran it for a year, until the water pump went and took the rest of the engine with it (plastic impeller and shaft sheared, wiped out the belt system, also blew out the head gasket. No way I wanted to mess with that engine myself, let alone pay 2k for just the parts.
Snagged her a beat up but running 78 vette for a 3 grand to replace it. Redid the valve train one evening. Redid the brakes another. Replaced the water pump and all belt accessories in a few hours. Bought a professionally rebuilt rochester 4 barrel and put it on in 15 minutes. Got the AC running (to her feet, the ducts are vacuum nightmare). Total parts cost, 650 bucks. She is a real peach for putting up with the peculiarities, but otherwise, that car has saved me a monstrous pile of cash as I put her through nursing school with no debt. Bonu, parts are terrifically easy to find, as it shares almost everything with a 90s chevy pickup truck (thanks to a previous owner who swapped in a 90s serpentine belt system)
Good thing gas is less than 2 bucks though, it has some manner of lower engine cam shaft/crank mods and a 3 speed automatic so gets all of 10mpg.
My 2004 Ranger is nice and basic, and just how I like it. However, I still have to put up with getting the truck in for a recall on the stupid airbags (only 2 airbags in the truck thank god, and not the ridiculous amount cars have now). But the truck is still relatively easy to work on thankfully. I hope to keep it for many years to come. Should be bullet proof with regular maintenance. But yeah, great article. New cars are way to expensive. I had such a negative experience buying my truck new back in 2004, that I don’t trust dealers at all anyway.
Great article and great topic.
Interesting perspectives. I see another angle to the high expense angle.
People take different approaches to maintaining their vehicles, ie:
drive it till it drops
constant oil changes and brakes and tires when needed
and some people need a real mechanic to keep an older car on the road.
The newer the vehicle the less likely that your trusted mechanic/shop owner is going to be there to keep them going.
There are plenty of brake and tire shops out there but if you have a real issue or in depth procedure requirement {which many new cars seem to face} you’ll have more and more problems finding a tech/mechanic capable or the shop itself is being priced out of the job. The electronic tools necessary to work on newer and newer cars is obscene and as a tech or shop owner the old idea of having the first several jobs pay for a new tool and then it becomes profitable are gone. The technology and the sheer amount of new systems incorporated into a newer vehicle make purchasing or leasing the equipment necessary more and more daunting. There will come a breaking point and it will happen soon.
The dealer remains an option but most people who keep a car on the road longer then a lease realize you can’t afford to “maintain” an older vehicle at dealership pricing but they’ll be the only ones with the tooling to do the job.
Also, as more and more people think in terms of dating {leasing} and less likely to marry {ownership} how long before the talented shop owner/tech throws in the towel too.
Personally, I have 4 decades under my belt {and running an independent service facility} and I see what’s coming. Car driving will become much more of privilege than the right many people believe it to be. Owning/operating a vehicle will become increasingly expensive and difficult for many to justify. Too many vehicle choices, too many complex systems {non-compatibility} , too much expense, etc.
We’ll need, not a breakthrough in technology but in critical thinking engineering and design. If they don’t drive some basic common sense back into car building and car ownership {and keep in mind maybe they don’t want to} people will have to succumb to a very new reality. Well to do or business people/government types operate/own vehicles. Less fortunate {highest percentage} don’t.
5-10 years left for city folk. Longer out in the country.
Killing the Golden Goose. Well done. {If you’re into those things}
5-10 years eh? I don’t see the economy lasting that long much less vehicles. The Hyundai eric just tested. What were the “new” things? Oh yeah, geo-fencing, couldn’t do without that, keeping your kids honest, a must since kids are liars now since their parents are liars, ought to be some great home scenes involving the car. Getting within range and the damn doors open if you have your key. So, that button is just too much trouble to push.
Those not so honest folks waiting near cars they know that have that auto-opening bs. No doubt they can use that to their advantage. I haven’t figured it all out since I’m not that person who preys on others but hiding in the dark and jumping in the passenger side and cold-cocking the driver comes to mind. Auto=braking, just what you want in heavy traffic when the last thing people expect is to have the car in front brake hard…suddenly.
Nothing a friend could have used recently more than auto-calling the cops when he was driving 15mph and looking at his crops when a deer flew out and set off his air bags. He wasn’t drunk before getting slammed but afterwards he was a bit woozy. Gee, the good old cops to the rescue on nearly every new vehicle, what could be better?
No property taxes on vehicles here in the Dallas – Fort Worth area.
Wait….
no property taxes for vehicles in ohio, outside of the initial tax on the title. unless you refer to the annual license plate renewal
Really glad to see your post on the topic Eric.
One other consideration for leasing is that you are usually required to carry VERY high liability limits in terms of insurance when leasing.
There’s definitely a sweet spot to try to hit in the used car market- that could be a whole nother’ article of course.
Even further though, it might be interesting for you to do a write up from time to time on good used car values….actually test driver 5-15 year old cars for example that have potential to increase in value or simply make good vehicle purchases for driving reasons.(performance, commute, whatever)
One area that still works for new cars, is to use them for write-offs in your taxes, if you have a business – although I understand the 6000 lb GVWR accelerated write-off has now disappeared. With that one we were able to write off almost the entire value of a new pickup in a year.
As to the complexity, yeah. The companies want to squeeze the shade-tree mechanics out of the picture, because they make a lot of money on maintenance. However, a car can be simplified – if nothing else, by letting at least some modules fail and never repairing them. Who cares if the compass goes on the fritz?
’03 is the cut-off year for me, and with each subsequent purchase, I am going for older and older vehicles. Going to go look this week at an ’85 AMC Eagle 4×4 wagon with a carbureted inline 6 !!
I’m middle-aged and have never owned a new car; never will. Even when cars were fairly decent, I thought it a bad idea to buy expensive things which depreciate, but today it’s much worse.
I will not have all the complex electronics; the complex mechanical systems; all the airbags/ABS/various “assists”/etc. And plus, all the new vehicles are freaking UGLY and too small!
I want SIMPLE vehicles, and I want large sturdy vehicles, but without all the luxury BS. Try getting that in a new vehicle, for any price! A truck should have vinyl seats and a rubber floor mat. I don’t want turbos and aluminum bodies; I’m not concerned with saving 1.82 MPG, but having to pay far more than the cost of gas when it’s time to fix the damn vehicle!
I reject leasing too. With leasing, I’d be stuck with a perpetual payment; perpetual full-coverage insurance; and perpetually driving the latest electronic/black-box-laden crapmobiles. Not to mention how they rape you at the end of the lease for every little smudge. I believ e that this is what the gov’t and car companies want- for us to own nothing (car-wise), to be stuck with perpetual payments, and always be driving the latest thing with all of their mandated crap aboard. No thanks!
I’ll stick with old low-value vehicles. I always dispute the value when I register ’em (No, it’s not a show-car, it’s just a crappy old car)- so the property taxes end up being like $20 a year.
Even driving old vehicles, transportation is about my biggest expense. If I bought or leased new or late-model, forget about it! I’d be working just for my vehicle -as many people today indeed are.
(Hey Detroit and DC: PHOOK YOU!!!!!!!)
I have an Eagle wagon – bear in mind that the emission systems on these are like a Rube Goldberg contraption. Miles of vacuum spaghetti along with an electronic feedback carb controlled by a primitive engine computer and air pulse valves to run air through the catalytic converter. If you live in a state without emission inspection you can get rid of most of that garbage. Other than that the main issue would be the same as any old car if you’re in the salt belt – rust.
The engine is the same as a Jeep of the same vintage, so there’s lots of service info out there as well as performance upgrades available.
I have that they make you put your foot on the brake now to start the vehicle. I also don’t like that you can’t just go from N to D like you used to. I also hate the new back windows that won’t roll all the way down for the sake of the children but what about my dog who likes to hang out the window? On and on and on. the newer cars suck.
Amen, Jack –
Here’s another: New automatic-equipped BMWs will not allow you to back the car up with the door open even a crack. The computer will put the transmission in neutral if you try.
Many back windows don’t go down all the way because the wheel arch cuts off the door. Shorter wheel base plus by removing the fixed pane of glass over the arch the part count drops and it saves some money.
There are a few models that limit the window roll down for the sake of limiting it, but usually I see a mechanical problem that determines where the window stops. GM has been fond of stopping the window high for decades though.
“removing the fixed pane of glass over the arch the part count drops and it saves some money.”
Saves money for who?
Leasing? Seems super expensive, esp. since I understand you have to pay the tax on the entire retail price of vehicle on signing which would be $2,000 alone in Texas. I respectfully believe that it is cheaper to do this for a safe, reliable vehicle:
Go to Florida and drive back a vehicle like 2011-ish Accord, Ford Edge, Camry, etc. Since a bit older, should have less technology overload which might make maintenance more basic. Anyway, to figure out 5 yr cost to own: Cost $10,800, with good title and 33k miles or so. (Yes, I have a list in my hand now of these. And, not salvage! those are a dime a dozen). Add modest interest expense, $600 sales tax, $700 year in insurance (expensive here in Texas), zero excise tax, $800 year in maintenance, $80/yr in tags and inspection. Residual at tend of 5 years: estimate $4000.
(Another way to sometimes find a good lower mileage car is on Craigslist/classifieds. Most people overprice their car but ocasionally someone, esp. an older person, just wants to “get it sold.”)
I thought the catch with leases is most of them have problematically low mileage allowances. If you drive too many miles in a year you get hit with high fees. It only works out OK if you exclusively use the car for a local commute and other highly predictable runs. Correct me if I’m wrong.
I decided a couple years ago that I won’t buy any vehicle made after about 2006. After 2006 things just became far too complicated and the home mechanic ( like myself) just isn’t able to maintain a new car.
Despite being able to afford a much newer truck I finally found the perfect balance. for me. Just outside Salem, VA I found a cream puff 1998 Dodge Ram 2500 4×4 with the 5.9 L MECHANICAL 12v Cummins and a 5 speed transmission. The truck had 72,000 miles on it and cost me around $15k. It is a quad cab and has the space and capability I want and need. I will be able to keep that truck on the road for at least another 10-15 years. It is just stupid to buy a new diesel truck; the DPF and emissions systems kill the fuel economy and reliability.
Ditto, Shemp!
And, hey – we are almost neighbors!
I am up in Floyd, about 13 miles from the top of Bent Mountain, just off 221. Give a holler if you’re ever up in my neck!
I certainly will! I go up there a couple times a year to visit the folks and get away from the insanity that is Atlanta…Aside from that ridiculous “Safety Corridor” it’s rather nice up there.
I keep getting papers stuck on the windshield or side window of my 1996 For Ranger, with a phone number and a note stating to call the number if I want to sell.
The Ranger was essentially legislated out of existence. It wasn’t killed off for lack of demand at the right price. It no longer could be built cheap enough to justify it’s position in the line up. If people were going to spend what they would have to sell for most people would buy the F150. So bye-bye Ranger.
This is probably giving them waaaay to much credit (no pun intended) but perhaps GM is on to something with they’re scheme as autos are becoming more and more expensive.
http://ericpetersautos.com/2016/02/25/gm-commits-seppuku/
in this context, don’t overlook lease-takeovers / swaps.
A good alternative to leading a new car
at very low interest rates, leading v. financing is virtually the same cost, so why not lease?
true for buying v. leading: if the cost of financing is minimal, why part with all the cash up front?
this assumes the residual was pegged accurately, that amount then is the same whether leased or bought after lease ends.
My A3’s value has dropped about $10,000 since the beginning of the TDI “scandal.” I live in western Colorado. People out here put straight pipes on their Cummins-equipped Ram trucks without anyone saying a word. But because of California’s brain-damaged bureaucracy, I’m basically stuck with an unsellable (but otherwise fantastic) car.
If this doesn’t end well, I’m going to convert it to a coal-roller, drive to Sacramento and rev the engine in front of the governor’s mansion for a few hours.
Hi Eric,
See this: http://ericpetersautos.com/2016/03/06/no-diesels-for-you/
I will be purchasing a truck sometime this year and have been researching new trucks for the last 3 months. I have come to the same conclusion as yourself Eric. A decently equipped Silverado or F150 crew cab with cloth interior, upgraded radio and larger engine push the average truck prices to $40k+.
A good shopper can easily negotiate 10k off of the sticker price for a new truck but you have to add $4-5k for taxes, registration and dealer fees. I am starting to lean towards used 3/4 ton diesel trucks. Most new 1/2 ton trucks are the same dimensions as 10 year old Heavy Duty diesel trucks. Sub 100k mileage mid 2000’s diesel trucks can be found from $10k and up on Autotrader. Even if the truck requires a few grand in repairs, you still save tens of thousands for a truck that will hardly depreciate, run half a million miles and have a towing capacity much greater than a new 1/2 ton while getting better gas mileage to boot.
Hi Pedro,
Yup … it’s crazy… unsupportable. Blue collar/working people used to be the main buyer demographic for trucks. How many of them can afford to spend a minimum of $30k-ish to buy a useful work truck?
Herein is an opportunity for the mechanically inclined and business savvy: Pickup reconditioning and sales.
You’d buy 10-20 year old trucks and do cab-and-bed-off reconditioning. It’s fairly easy to do, as pickups are basically that — a cab and bed attached to a ladder frame with a RWD/4WD drivetrain and a V6/I6/V8 engine. The basic designs haven’t changed since about 1955 or so.
You’d then sell these trucks or offer reconditioning to people who own older trucks.
Could this make sense?
Bryce, one summer after my sophomore year in college a buddy and I did just that. We didn’t go so far as to frame-off them but got them running right, spiffed them up(amazing what carpet will do for resale), took them to Austin and sold them to people with more money than sense. This was around 1970 and hippies were turning to trucks.
In a nearby town I’ve hauled by a used car dealer several times every day and he’s been stock-piling 90’s vintage GM pickups left and right. I’ve got to stop and see if there’s a decent one I could rebuild. ’92 and ’93 GM Turbo Diesels had no computer on them……anywhere and disabling the ABS is a simple affair of unplugging the unit…..and you’d better since they caused a lot of wrecks. And older GM diesels back to ’90 had the old 6.2 diesel that can easily be changed to the turbo diesel or left just as it is but probably most are worn out. Those pickups were great vehicles all the way to the 99 1/2 when the body style changed and so did the running gear.
My first change if the engine/transmission combo were decent, would be to go through the front end and replace it all and get aftermarket ball joints(their weak point), a primo shock such as the Edelbrock IAS Performer, new door gaskets as well as pins and bushings and you’d be riding in smooth, quiet with a good a/c. From at least ’94 back they had R-12 a/c’s too. Install an electric air compressor and a couple Legacy air ride captain’s chairs and black the windows.
A friend of mine has done this in the past. He’s prolly reconned a dozen trucks but only one that I know of required a full frame-off treatment. Typically they need cab corners/bed and some detail work but it depends on what you start with.
Ever seen an ’84 F150 with a 455 pontiac and th400? It had the alloy wheels and bed from an ’89 and looked like it was new. Ran 14.30s on street tires and would pull a car trailer with ease. He sold it around 2003 for $6k, seemed like a deal to me.
I might have to check this one out….
https://rockford.craigslist.org/cto/5454305474.html
You’ve got to wonder about parts availability, though. I’m already having some difficulty getting parts for my ’89 Dodge W250. Granted, Ford and Chevy trucks are more common and thus parts should be more plentiful, but the supply isn’t endless.
Ain’t gonna happen Bubba, I mean: Bryce. Solid older trucks are expensive to purchase these days, and with the cost of doing a resto, the resultant product would have to sell for more than brand new trucks. It’d be a boutique business, with just a handful of rich people who have a fondness for older trucks would buy.
Anything over 2000 in Dodge Cummins and there’s not a lot of interchangeable parts. We have plenty of various ages, often within a year or two and some cannot be changed for another without the entire wiring harness and god knows only what else from the donor truck and this is within 2 years of each other. Same engine, well, not exactly, camshaft is different and the way the wiring harness works, there are parts it attaches to on one pickup that don’t exist on the other. As we recently said on changing the engine between two of them, there goes that. It was an idea till we got the lowdown.
Be carefull Pedro. Pretty much all of the diesels newer than 2003 are garbage; cost a fortune to maintain and even more to repair; are inefficient and unreliable. If you’re not doing heavy-duty towing, go for a gas job, it’ll be way cheaper to purchase, and also to live with. With all of the emission controls; oil-fired direct injection; computer-controlled everything, these diesels have essentially negated all the positives that diesels once had. Even a lot of the big fleets which use pick-ups/pick-up chassis trucks, are going back to gas.
When I was shopping for my current truck, I had really wanted a 7.3 Powerstroke, but they were going for more than twice the price of similar gas jobs, and there was just no way I could jutify paying over 10-grand for 10+ year-old well over 100K mile vehicle. So I bought a gas job for less than half the price of a decent diesel, and I’ve been very happy with it. No problems, an d cheap to maintain, and the few MPGs less that it gets is fine, because it’ll take many years before I use the thousands of dollars in gas that I saved on the purchase price.
Think about it. Diesels are dead. (And as more and more people wake up to this fact, the value of diesel trucks will nose-dive…)
This just in for the Travis county(TX.)Republican party’s new chairman, Rob Morrow. His page on the Bushes and Clinton’s had me ROTFLMAO. http://thedailysheeple.us3.list-manage.com/track/click?u=a6edb87a10f99f60acd7f8c96&id=b291bfb25c&e=db827f489e
HuffPo had this to say: https://t.co/fWa3QCb1xE and Jared Taylor Swift: https://t.co/yzs9ekj58n
There’s too much here to enjoy. I’d recommend Thumbnail Zoom+ add-on in Firefox to view his page on the Bushes. If this is the beginning of what the Reps have lined up, I can’t wait. He takes on the Clinton’s too. Maybe we’ll get a chair head in the Dems to start their own dismemberment.
Eight!
This is gold… I’ve gotta find a way to contact this guy. I have a bro crush!
Thanks 8. I just looked at that site again today, and a commenter posted a link to a (for once) fantastic Fox news commentary by Judge Jeanine entitled: Mitt Romney Awoke a Sleeping Giant, where she tells us that an insurrection is under way!
https://www.youtube.com/watch?v=srGlyFyghRk
I am not a Trump fan, but I like him better than the rest of the GOP Presidential candidates. I do not trust him even slightly, but perhaps if he wins and turns out to be a bad President many people will lose their Statist religion.
Big problem with a low mileage lease if you’re a high mileage driver. I’ve known more than 1 guy who ended up way upside down at termination time, those ‘low,low’ monthly payments didn’t help then.
This is true, Phillip… my opinion, they’ll adjust the mileage allowances. Or maybe just charge people more…. we’re all renters now, right?
I know people who lease their cars and rationalize the perpetual payment as being just another utility bill – that’s how they see their transportation needs. I guess there’s a certain amount of logic to that; you get something new every few years and probably never even have to buy new tires let alone a fuel pump, ball joints, or an alternator. And as you have pointed out, new cars have such crazy technology overload that the idea of owning one out of warranty is pretty scary. Just turn it in and keep paying “X” number of dollars per month for a new one, and hope you don’t fall on hard times.
Certainly all that dealers seem to be advertising any more is the payment (which is usually based on a low-miles lease). It’s very rare that ads mention the actual price of the car. Very different from the ads I remember where most would be more like this, where the price figures prominently:
http://assets.blog.hemmings.com/wp-content/uploads/2007/12/moreamcdealerships_06_resized.jpg
(I don’t know how to embed a photo here, thus the above link. Is there an FAQ here that explains how to do such things?)
Selling payments rather than price seems to be a pretty shady practice, but they’re all doing it now. I guess people would be scared off if the $30K typical price of a new vehicle were initially waved in their faces.
I personally have a severe allergic reaction to the idea of paying month after month, year after year for a car and in general consider debt to be toxic. (A lease is just a loan where you’re paying for part of the car rather than the whole thing.)
Any item bought on credit is sold that way and has been for years. I know every car purchase I’ve done through dealers has always been about the monthly payment, not the actual price or trade value. Mortgages are sold the same way. Salespeople will always try to steer the conversation back to monthly payments instead of price.
You really have to admire the marketing prowess of the banking industry.
Yes, a lease is a loan that pays the dealer for depreciation of the car, taxes, some profit, etc. After the lease is done, the dealer sells the car for a profit.
I’ve leased cars, bought new cars and used cars, but will never again lease or buy a new car. Now I look for a car at least two years old, with low mileage, good record of reliability, and rapid depreciation. And I pay cash.
Last time I did this, I got a loaded car w/ 24,000 miles at half the sticker price.
A good candidate for purchase is one that was leased in large numbers and/or used by car rental companies in large numbers — The used car market is eventually flooded with them, thus causing rapid depreciation.
Make car payments to yourself by constantly setting aside money for the next purchase. My last used car purchase has served me well for 10 years at a cost of $125 per month (purchase price divided by 120 months) and will soon be sold for $2,500.
I don’t buy collision insurance because I am self-insured with my car fund. My car property taxes are low because the car has already depreciated a great deal.
I getting ready to buy my next used car, which consists of identifying at least 3 worthy candidates (low mileage, largely depreciated, reliable) so that I am not locked into one make/model.