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Thread: What does your car say about your bank account?

  1. #1
    Vulture of The Western World Eric's Avatar
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    What does your car say about your bank account?

    You can tell a lot about someone by the car he drives - in particular, his finances.

    A luxury car is an obvious clue, but not in the way you might think. Yes, they are expensive. But the key thing is, they're apt to be leased. Turns out the most commonly leased brands are Mercedes, BMW, Audi, BMW, Land Rover, Jaguar, Cadillac, Saab, Volvo and Lincoln.

    Why is this significant?

    Leasing is (or can be) a way to get more for less - something people who have money tend to be good at doing. It is also a way to "hedge" against a depreciating asset - the car - which loses most of its value during its first few years on the road. By leasing, the affluent buyer avoids much of the depreciation hit that a buyer would get socked with by (in effect) renting the car for a period of time. Affluent people also typically have deductible business expenses that average people don't have access to - including things like company cars, which are frequently leased.

    Caveat: Just because affluent people often lease doesn't mean it's necessarily a good idea for you to lease. To know for sure, you have to run the numbers - and ideally, ask an accountant. But in general, if you don't itemize and are only making money enough to just pay your bills with maybe a little bit left over, leasing is probably not the way to go.

    Then there are "cash money" buyers - who neither lease nor finance. These buyers may sound rich, but mostly, they're just older and financially conservative. Among those in the 55-62 age group, cash is most often paid for Toyotas, Hondas, Buicks and Subarus. There are also likely a few uber-rich types in this category as well, because Porsches are also paid for in full by a goodly percentage of these older buyers. But mostly, the types of cars suggest people who don't like to borrow money or buy anything they can't just write a check for.

    Caveat: While it's laudable to live within one's means, it may not be a smart move, money-wise, to pay cash for such a large item as a new car or truck. Reason? You could put the bulk of your money into an appreciating asset such as a CD or 401k - which results in a net gain over time vs. the net loss over time that comes from sinking all your cash into a car that will almost axiomatically be worth less and less every year you own the thing.

    Moving down the economic pole, we discover that the brands of cars most likely to be financed are Kias, Suzukis and Isuzus - not coincidentally three of the most "value priced" makes on the market. Not one of these brands even offers a luxury model; most of the vehicles they sell are priced under $25,000.

    Caveat: Buying a low-cost car doesn't necessarily mean you're financially challenged. Maybe you are simply frugal and like a good deal. In today's economy, that's smart thinking - no matter what others may think your car says about you. They're probably in worse shape fianncially than you are, anyhow!

    Finally, there are downtrodden-looking older cars and trucks. It's easy to assume their owners are po' - but don't be so sure. First generation rich people - that is, the ones that earned the money - are not infrequently the kind who don't make an issue of their wealth, or spend their money flippantly. And few things are more flippant - and make less financial sense - than spending a large sum of money on a disposable consumer item almost guaranteed to be worth half or less what you paid for it after six or seven years on the road.

    The smart money - and smart people - will thus keep on driving a vehicle as long as the vehicle is reasonably functional (and not costing more in upkeep than it would cost to replace it with something newer).

    Hollywood celebrities, pro athletes and other "easy come, easy go" types who get huge sums of money early in life mainly because of their animal looks or animal abilities on an athletic field are the ones you'll see driving new Ferraris and Escalades on 22-inch rims.

    But the unassuming guy driving the older nondescript sedan with fading paint and door dings might be the one with more money in the bank - as well as more good sense up top.

    END

  2. #2
    Senior Member grouch's Avatar
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    Re: What does your car say about your bank account?



    I've got a 1982 Mercedes 380SL roadster. At a car show it was mentioned that I must HAVE a lot of money. Nope, it means I HAD a lot of money. As for reselling it, anything is for sale for enough money. However, whoever wants to buy it will need deep pockets. Generally, I pay less than $1000 for my vehicles and usually spend about $500-800 fixing them up. I bought one like that for $750 in 1999 and I still drive it with 356K on the clock.
    Honk if you love Jesus.

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  3. #3
    Vulture of The Western World Eric's Avatar
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    Re: What does your car say about your bank account?

    Quote Originally Posted by grouch


    I've got a 1982 Mercedes 380SL roadster. At a car show it was mentioned that I must HAVE a lot of money. Nope, it means I HAD a lot of money. As for reselling it, anything is for sale for enough money. However, whoever wants to buy it will need deep pockets. Generally, I pay less than $1000 for my vehicles and usually spend about $500-800 fixing them up. I bought one like that for $750 in 1999 and I still drive it with 356K on the clock.
    I have a similar policy. The idea of buying any new car makes me backfire!

  4. #4
    DonTom
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    Re: What does your car say about your bank account?

    "You can tell a lot about someone by the car he drives - in particular, his finances."

    IMAO, the car one drives shows their ego. It shows little else.

    Just about anybody around this area (even in today's poor housing market) can take out a home mortgage and buy a Ferrari. Others might pay cash to buy the exact same model. How do you tell the difference?

    I know if I were filthy rich I would not rush out to buy any new cars. I don't mind driving old junky cars at all, as long as they are reasonably reliable.

    One thing I would do if rich would be to buy a few more homes in various areas of this country as well as in a few other countries and move around a lot.

    Tom wants our next home to be a condo in Hong Kong where we won't even have a car. No need there.

    -Don-(South San Francisco)




  5. #5
    Vulture of The Western World Eric's Avatar
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    Re: What does your car say about your bank account?

    "Just about anybody around this area (even in today's poor housing market) can take out a home mortgage and buy a Ferrari. "

    You mean rent one.... not many an afford to actually buy such a car!

    "I know if I were filthy rich I would not rush out to buy any new cars. I don't mind driving old junky cars at all, as long as they are reasonably reliable."

    Same - though I would have my Trans-Am cosmetically restored to perfection and might buy something like a '70s-era Pantera or Jensen Interceptor.... ;D



  6. #6
    DonTom
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    Re: What does your car say about your bank account?

    "You mean rent one.... not many an afford to actually buy such a car!"

    Most of the people in this area (such as Tom & me) have been here for many years. Perhaps most of the houses in this area are paid off. They are all worth more than $600,000.00 even in today's housing market. This means just about anybody around here can take out about a half million dollars out on their home and[size=20pt] BUY
    a couple of brand new $200,000.00 Ferrari's.

    But when I had this house paid off, I bough the other home in NV. I cannot stand not owing some money as then there's too much of my federal income taxes going to Iraq or other such nonsense. Another home makes a lot more sense to us than a new Ferrari. We already have a half dozen decent cars as it is, all more practical than a Ferrari.

    -Don-
    [/size]



  7. #7
    Vulture of The Western World Eric's Avatar
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    Re: What does your car say about your bank account?

    "Most of the people in this area (such as Tom & me) have been here for many years. Perhaps most of the houses in this area are paid off. They are all worth more than $600,000.00 even in today's housing market. This means just about anybody around here can take out about a half million dollars out on their home and BUY a couple of brand new $200,000.00 Ferrari's."

    Er... if they are taking out a home equity loan to buy the car, they're still going into debt to do so. Maybe they don't owe on the car (if they used the money to buy it) but they most certainly do owe the money to the lender... so they're just shuffling the deck, so to speak. How many people can afford to actually buy such a car outright?

    And: You'd have to be an idiot to take six figures out of an appreciating/stable asset (your home) to buy a disposable, depreciating consumer bauble such as a car....


  8. #8
    DonTom
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    Re: What does your car say about your bank account?

    "Er... if they are taking out a home equity loan to buy the car, they're still going into debt to do so."

    That was my point. How do you tell those owners of Ferrari's from the ones who paid cash?

    It says more about their ego than their bank accounts.

    -Don-

  9. #9
    Vulture of The Western World Eric's Avatar
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    Re: What does your car say about your bank account?

    Quote Originally Posted by DonTom
    "Er... if they are taking out a home equity loan to buy the car, they're still going into debt to do so."

    That was my point. How do you tell those owners of Ferrari's from the ones who paid cash?

    It says more about their ego than their bank accounts.

    -Don-
    My opinion here:

    I think it's a safe assumption that most of the people you see driving cars that are ostentatiously flashy are living on credit. People who are smart with money (and who are liquid) usually don't throw it away on money-losers like flashy (and fast depreciating) new cars.


  10. #10
    DonTom
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    Re: What does your car say about your bank account?

    "I think it's a safe assumption that most of the people you see driving cars that are ostentatiously flashy are living on credit."

    I know I heard somewhere (in fact, wasn't it in this forum?) that it's usually the cheaper new cars that are bought on credit? Those who drive the very expensive cars usually pay cash. However, how can anybody really know? Like I said, many people can get a home mortgage to buy a fancy car and it will look like they paid cash to whoever sold the car.

    And BTW, those who did that two years ago just might have made a better investment in the car than in a home, at least in some areas.

    -Don-


  11. #11

    Re: What does your car say about your bank account?

    Most of my friends with Porsches/Lamborghinis/Ferraris/Lotus(es?) paid cash for theirs
    Of course, they're all osbscenely wealthy and could never hope to spend all their money even if they tried, so maybe they dont count
    '06 Lotus Elise, '07 Saturn Sky Redline

  12. #12
    Vulture of The Western World Eric's Avatar
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    Re: What does your car say about your bank account?

    "And BTW, those who did that two years ago just might have made a better investment in the car than in a home, at least in some areas."

    Can't argue with that!

  13. #13
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    Re: What does your car say about your bank account?

    usually don't throw it away on money-losers like flashy (and fast depreciating) new cars.
    The guy here at the office with the Aston Martin DB9 (and Jaguar XKR and Bentley and possibly several other high-end cars) is a finance guy that runs a hedge fund.

    So, if he's got the money (and he likely does), and if he likes cars (it sure seems that way), why not spend some of it on luxury cars?

    Chip H.

    Oh - I heard a story from a coworker at lunch -- it seems his sister bought a used Boxster (even though she makes less than he does). After buying it, it turns out that it had a number of problems caused by the previous owner(s). One of them had driven up over a curb, and dented the rear diff. Possibly the same accident ripped off the exhaust, and when making repairs, the mechanic welded the exhaust to the body, rather than use the correct rubber hangers. Result: an extra $5k in repairs that weren't anticipated.

    Former owner: 2012 Honda Civic LX, 2006 Honda Ridgeline RTL, 2000 Honda CR-V EX, 2003 MINI Cooper S, 1992 Honda Accord LX, 1999 Mercedes ML-320, 1995 VW Jetta GLX, 1991 Mercury Capri XR2, 1981 Mercury Zephyr, 1975 Chevrolet Impala

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