Ashley Lipman

Don’t Enter A New Car Lot And Expect A Deal

New vehicles are expensive. They’re going to cost between $10k and $100k, reasonably; depending on the kind of vehicle you’re getting, and where. Certainly they’ll come with warranties and maintenance packages for the first 100k miles, but if you don’t have to cash in on such warranties/maintenance packages, what’s the point?
Even if you change your oil every 3k miles, that’s 33.3 times over 100k miles. At $50 (on average) per change, that’s only $1,665.00 you’re saving. Meanwhile, you’ve either paid for the car at its total price, or you’ve been steadily paying it off in monthly installments at interest. The interest alone will likely overcome what you save in maintenance.
And if you’re paying all these costs as a first-time driver, you’re really doing yourself a disservice. You’re probably going to park wrong, back into posts, check curbs, take the vehicle on bad roads, hit potholes, get it scratched by other drivers who park too close to you, get rear-ended, incidentally rear-end somebody yourself, and the list goes on. The point is, as a first-time car buyer, you’ve got some incidentals that are going to steadily devalue whatever you purchase.

If you’ve purchased something of higher expense, then you’re essentially undermining yourself. Unless you are an experienced driver, and can afford to buy a new car wholesale, you should go the used or “pre-owned” (as the dealerships put it) route. Additionally, don’t limit yourself to dealerships. Granted, they come with guarantees; but Craigslist.com gives you negotiating power and wide options. Plus, those who are selling won’t always know the value of the vehicle they’re looking to move, increasing the possibility of you getting a prime deal.

Striking The Right Balance

Ideally, here’s what you’re looking for as either an experienced or inexperienced first-time car buyer: you’re looking for a vehicle that will pay for itself before it fails on you—because eventually, all vehicles will fail. Ideally, you’re looking to pay around $5k, and you should pay in cash.
You should expect a car to cost you about $3k a year—that’s if you’re savvy, and own the vehicle. If you’re paying monthly installments on new vehicles, you’re looking at $8.4k+. If you’re savvy you can cut that in half—for starters, going the used route will save you $500 a month, which is itself $6k a year. If you own a car, you’re looking at about $3k a year.
The $3k figure factors in maintenance, it factors in repairs, taxes, tickets, insurance, prospective driver’s ed classes, and even gasoline. If you’re spending $150 a month on gas and get three oil changes a year, that’s $1,950, leaving $1,050 for maintenance, insurance, tickets, and incidentals.
If you spend $5k on a pre-owned vehicle which lasts you three years at approximately 15k miles a year, that’s 45k miles. In that time your total cost comes to $14k. Meanwhile, if you buy a $30k car and pay it off in monthly installments of $200 (excluding interest), in three years you’ve paid $7,200 for the vehicle alone without the costs of yearly ownership factored in, which brings total cost over three years to $16,200—and you still don’t own the car.
In fact, you’ve got $22,800 left to pay before you factor in the interest involved. Still excluding the interest, if $7,200 constituted $200 a month for 3 years, then $22,800 would come to nine years and six months, for a total of 12.5 years. You’re looking at $67,500 by the end of 12.5 years, and at 15,0000 miles a year you’ve put 180,000 on that vehicle by then, voiding the warranty and making it unlikely to sell; even if you let it go for $2k or $3k.

What You Can Save If You’re Wise

Four used cars at $5k a piece over the same time period, including $3k a year in operating expenses, will run you up $33.33k in 12.5 years. Now this assumes a vehicle that costs you $5k only lasts you three years. Basically, buy right, and you cut your overall costs in half while still retaining the same vehicular utility.
At drivingguide.com you can find a plethora of pertinent information like this; from what kind of insurance (and prospective legal assistance for claims) you can expect as a new driver, to what sort of vehicles will best serve you on the road.
You need to take all these factors into account if you’re going to be the most safe on the road, and maximize your assets. Driving is a luxury that can increase your opportunities, but it does have a cost involved. Be clever about projecting that cost, and you can do as much as well-to-do people for half the expense.