Sunday, January 29, 2012

Why I will NEVER buy a new car again

As part of our bankruptcy, we let our 2008 Hyundai Entourage van go.  We could have chosen to keep it and continue to make our monthly payments, but let me tell you that I am super excited about actually OWNING the vehicle that we're driving rather than OWING on it.  It far outweighs the pros of having a newer vehicle for me, and I wonder how I could have ever thought it was a good idea to buy a brand new car.

Here's a little calculation to prove my point.
The original purchase price of our previous van was $43,478.60.  We financed it at 0% interest, with $0 down.
Over the four years that we owned the vehicle we made a total $25,362.40 in payments which left a remaining balance of $18,116.20.  We also put in a total of $2,356.87 in repairs.  So over the course of the 49 months we owned our van we paid about $566 per month to drive it.  And the kicker - with its condition and mileage, it's only worth about $12,000-$14,000.  So factoring in the depreciation, the REAL cost of ownership was approximately $650 per month.  Now remember this is not a luxury vehicle, this is a people-hauling utilitarian mini van.

Our current vehicle is a 1993 Toyota Previa with 288,000km on it.  We paid $1200 for it, and had to put $2600 worth of repairs into it.  So the current cost to us is $3800.  If we have to put an average of $100 worth of repairs into it monthly, and we drive it for 24 months, it will cost us $258 per month, and that's not even factoring in what we could potentially sell it for at the end of those 24 months.  It also doesn't take into account that the cost of insuring it is HALF of what our newer van cost.  A savings of $400 per MONTH.  $4800 per year!

Now what would I rather do with $4800?  Save it towards retirement, save it for my children's education, save it towards my dream home, go on a dream vacation - LIVE DEBT FREE BELOW MY MEANS.  It can be done, it WILL be done.

1 comment:

  1. Sam, I love THAT math! Whenever DH and I have to do a repair on our 2000 and 2003 cars, we always figure how much it would have cost us per month and it is NEVER much! What a great way to look at the car situation!