I like that chart. It's one I'll not soon forget. That chart makes it much easier to keep driving when I pass by the new car dealership lots, or to keep clicking while surfing the internet. Because, "Assuming you have the money, buying a new car has never been easier – or less stressful. If, that is, you aren’t still buying cars the way people did back in the ’90s [...] all – without ever having to deal in-person with salesmen." ... http://ericpetersautos.com/2014/03/18/easy-buy-new-car/
"Deprecation" is a bullshit value to have in there. It's hardly an annual cost. You don't have to come up with that money each year to pay for some nebulous valuation on a steadily deteriorating asset.
Including 'deprecation' means there's some assumption that the car will be sold or traded later for some money; but that hardly is a cost ownership. If you decide to never sell the car, and just stick it in the back yard as a flower pot, then this 'deprecation' cost is never actualized.
Anyone who buys a car and expects it as an investment or thinks they can recoup its cost later is not living in reality.
This is why you should stay out of finance. You are either paying for it each year you own the car or upfront. If you finance, you are paying for it each year you make payments and then upfront at the end of the loan. If you buy the car outright, you've essentially paid it up front. Regardless, it is a cost of ownership and its sad that our education system does not teach people this simple but realistic concept. Maybe people would stop going so deeply into debt.
"If you buy an old muscle car in decent shape and drive it on weekends you can get out for more than you put into it very easily"
Very restrictive driving in perfect weather while keeping the car well maintained and properly stored. Anything less and it decays. Odds are it evicts a daily driver out of the garage so the daily driver gets more wear and tear. And that's if you are getting the benefit of someone else putting the money, time, and effort in and taking a net loss selling it to you. Also the market for these cars ebs and flows like any other. The muscle car market has a lot of boomer money in it. When that money drains out, when heirs sell off the cars, it will be difficult if not impossible to get the money back out.
Try to use a car like that as a daily driver and it will decay rapidly unless it has been modernized in many ways. A very expensive endeavor of total restoration and using modern paints, coatings, interior materials, etc. Someone has to take a loss for that or the car decays rapidly just like they did in the 60s and 70s.
The reason someone or some shop can flip an ordinary car* at a profit is because that someone values his labor at zero or a shop is not charging full retail for the labor against the selling price of the car. They are just charging the cost of the labor along with parts and the buying the car itself. If a customer brought the same car to them to do the same work they would probably charge at least 50% more for the labor if not double.
*yes, it will always be profitable to restore cars where a 100 were made and 100,000 people want them, but those cars get kept in plastic bubbles more times than not.
I'm not sure you if you are disagreeing with me or not Jimmy Joe.
I specified the weekend driving and never suggested "daily driving". You are correct, muscle cars are a market... and just like lots of other people who play other markets some people win and some people lose.
That's why I specified, "It's all about context.".
I've turned multiple vehicles of this nature and made money every time. On the other hand, I see suckers get taken all the time too.
I doubt you'll find a market with no suckers. Also, I wouldn't be so quick to declare the muscle car market to be a bubble. Maybe it is, maybe it isn't. Long term the number of well maintained muscle cars is always going down. (unlike housing for example)
What utterly amazes me is that unlike computers where you get more for less as time moves on, with cars you get more for more. I'm an accountant and I do this kind of analysis all of the time and it amazes me what things cost to use. For instance I have a nice powerboat that I love taking out. But when I divide the number of hours actually used (you can get the hours from the engine) by the costs of ownership, I think it costs me close to $500/hr of use. I do the same analysis when I get the crazy idea to buy a vacation home in a spot we like and that usually yields a result that it would be far cheaper to forgo the home and stay in a five star hotel. What amazes me most however is seeing $70k trucks on a car lot and middle class people buying them. Its pretty clear that we have a society that totally embraces taking on large amounts of debt for really stupid stuff.
The used Honda I bought 12 years ago for $6K had 60K miles, now it has 230K and runs great.
Soon I'll want another car but the new ones are so expensive that I'll be buying used once again.
I always buy strippy models with no power-anything and no air conditioning. I do spend money to maintain them.
Around these parts there are a lot of Mercedes, Beamers, Lexus, Acura's, Audi's, and all manner of expensive SUV's and monster trucks. Stock market has apparently been very good to a lot of people.
This chart makes looking at the facts much more interactive and easier to comprehend the figures relating to car finance. Simply reading static texts alone might get taxing and readers might not fully grasp the concept behind the explanation.
There are actually a lot of other costs that are associated with buying a new or used car. That's why you really need to work out your figures besides the car loan so that you aren't caught unaware about the costs to maintain it once you drive it home!
I like that chart. It's one I'll not soon forget. That chart makes it much easier to keep driving when I pass by the new car dealership lots, or to keep clicking while surfing the internet. Because, "Assuming you have the money, buying a new car has never been easier – or less stressful. If, that is, you aren’t still buying cars the way people did back in the ’90s [...] all – without ever having to deal in-person with salesmen." ... http://ericpetersautos.com/2014/03/18/easy-buy-new-car/
ReplyDeleteGreat chart, it's why I drove old shitty cars that I pay cash for in daily use:
ReplyDeleteNo depreciation
Lower taxes
Lower insurance(liability only)
No interest
My "fun" vehicles are old too, just old sports cars & motorcycles...which still reduces cost and if I do it right can actually appreciate in value.
I assume the last part is gas and other consumables?
ReplyDelete"Deprecation" is a bullshit value to have in there. It's hardly an annual cost. You don't have to come up with that money each year to pay for some nebulous valuation on a steadily deteriorating asset.
ReplyDeleteIncluding 'deprecation' means there's some assumption that the car will be sold or traded later for some money; but that hardly is a cost ownership. If you decide to never sell the car, and just stick it in the back yard as a flower pot, then this 'deprecation' cost is never actualized.
Anyone who buys a car and expects it as an investment or thinks they can recoup its cost later is not living in reality.
"Anyone who buys a car and expects it as an investment or thinks they can recoup its cost later is not living in reality."
DeleteYou're off base here. If you buy an old muscle car in decent shape and drive it on weekends you can get out for more than you put into it very easily.
It all depends on the context. If you buy a newer car and drive the shit out of it, you are correct.
This is why you should stay out of finance. You are either paying for it each year you own the car or upfront. If you finance, you are paying for it each year you make payments and then upfront at the end of the loan. If you buy the car outright, you've essentially paid it up front. Regardless, it is a cost of ownership and its sad that our education system does not teach people this simple but realistic concept. Maybe people would stop going so deeply into debt.
Delete"If you buy an old muscle car in decent shape and drive it on weekends you can get out for more than you put into it very easily"
DeleteVery restrictive driving in perfect weather while keeping the car well maintained and properly stored. Anything less and it decays. Odds are it evicts a daily driver out of the garage so the daily driver gets more wear and tear. And that's if you are getting the benefit of someone else putting the money, time, and effort in and taking a net loss selling it to you. Also the market for these cars ebs and flows like any other. The muscle car market has a lot of boomer money in it. When that money drains out, when heirs sell off the cars, it will be difficult if not impossible to get the money back out.
Try to use a car like that as a daily driver and it will decay rapidly unless it has been modernized in many ways. A very expensive endeavor of total restoration and using modern paints, coatings, interior materials, etc. Someone has to take a loss for that or the car decays rapidly just like they did in the 60s and 70s.
The reason someone or some shop can flip an ordinary car* at a profit is because that someone values his labor at zero or a shop is not charging full retail for the labor against the selling price of the car. They are just charging the cost of the labor along with parts and the buying the car itself. If a customer brought the same car to them to do the same work they would probably charge at least 50% more for the labor if not double.
*yes, it will always be profitable to restore cars where a 100 were made and 100,000 people want them, but those cars get kept in plastic bubbles more times than not.
This is anon @ 10:13
DeleteI'm not sure you if you are disagreeing with me or not Jimmy Joe.
I specified the weekend driving and never suggested "daily driving". You are correct, muscle cars are a market... and just like lots of other people who play other markets some people win and some people lose.
That's why I specified, "It's all about context.".
I've turned multiple vehicles of this nature and made money every time. On the other hand, I see suckers get taken all the time too.
I doubt you'll find a market with no suckers. Also, I wouldn't be so quick to declare the muscle car market to be a bubble. Maybe it is, maybe it isn't. Long term the number of well maintained muscle cars is always going down. (unlike housing for example)
http://www.hagerty.com/valuationtools/market-trends
What utterly amazes me is that unlike computers where you get more for less as time moves on, with cars you get more for more. I'm an accountant and I do this kind of analysis all of the time and it amazes me what things cost to use. For instance I have a nice powerboat that I love taking out. But when I divide the number of hours actually used (you can get the hours from the engine) by the costs of ownership, I think it costs me close to $500/hr of use. I do the same analysis when I get the crazy idea to buy a vacation home in a spot we like and that usually yields a result that it would be far cheaper to forgo the home and stay in a five star hotel. What amazes me most however is seeing $70k trucks on a car lot and middle class people buying them. Its pretty clear that we have a society that totally embraces taking on large amounts of debt for really stupid stuff.
ReplyDeleteIm 28 and all of my trucks (currently on my 3rd) have been used and I have no regrets buying used.
ReplyDeleteThe used Honda I bought 12 years ago for $6K had 60K miles, now it has 230K and runs great.
ReplyDeleteSoon I'll want another car but the new ones are so expensive that I'll be buying used once again.
I always buy strippy models with no power-anything and no air conditioning. I do spend money to maintain them.
Around these parts there are a lot of Mercedes, Beamers, Lexus, Acura's, Audi's, and all manner of expensive SUV's and monster trucks. Stock market has apparently been very good to a lot of people.
Good luck finding a used honda with 60k miles for $6000 anymore.
DeleteThank you for sharing this information.good luck for me.car transport shipping
ReplyDeleteThis chart makes looking at the facts much more interactive and easier to comprehend the figures relating to car finance. Simply reading static texts alone might get taxing and readers might not fully grasp the concept behind the explanation.
ReplyDeleteThere are actually a lot of other costs that are associated with buying a new or used car. That's why you really need to work out your figures besides the car loan so that you aren't caught unaware about the costs to maintain it once you drive it home!
ReplyDelete