Repair-It

I don't necessarily disagree with your points individually but in my specific case, there was nothing that a 42k mile 2007 CTS-V did that my then-97k mile 2005 CTS-V did not do. It is literally the same car. You can make a big deal about the supposed differential changes in 2006 but in reality it doesn't amount to anything, and I haven't had any issues.

I think the argument you are making is, there is no car that does what you really want that you can afford to pay cash for.

Random math:
$35k car, $10k down, 2.5% interest rate. Fairly realistic numbers.

Payment would be $443.68/month for 5 years. The cost of having that loan was $1,600 over 5 years, which I admit isn't particularly significant. So the effective cost of the car was $36,600. After 10 years you sell it for $10k. It cost you $2,660/yr on top of the usual things which would apply to any car. Essentially that's a payment of $221.67 averaged over 10 years just to have the car in your driveway. I think that's too much, and I will clarify that paying cash is no less stupid than the loan, since paying cash would have changed that "payment" from $221.67 to $208.33.

The reason I think loans are stupid is that they imply an inability to otherwise afford something. If you NEED a loan to afford a $35k car, you shouldn't be buying a $35k car regardless of the financial vehicle used to do so. It's not the loan itself that is stupid, when we are talking about rates in the 2.5% range. This is all my opinion. And I agree life is short. But having $35k tied up in a car, regardless of whether the title sits in my house, or at a lienholder, is too much in my opinion. I'd rather have a $15k car and invest the rest, or whatever the right balance is. You can argue that with a car loan at 2.5%, you'd have more cash left to invest. I'd say even better would be to spend less on the car in the first place and skip the loan entirely.

On the other hand, if I had a combined household income of $200k or more, and my debt stayed low, then all of these numbers would probably rise. I think it comes down to proportion of discretionary spending on vehicles, and needing* to use a loan to buy a car points to falling on the wrong side of that ratio. After all those words, I think that has been all I have been trying to say.

*needing means you don't want to or cannot pay in cash, since you would be left with too small a buffer.

I think everyone should run out and buy a new car. It can be a sensible new car based on the state of their finances or something a little too expensive for what they can reasonably afford. I think they should do this every 3-5 years. I think some people should also do this with multiple cars, a sensible family car and a "weekend toy" car. I think those people should consider the Charger R/T Scat Pack or equivalent causing the automotive industry to sell those type of cars in record numbers.

This way, in ~15 years the market will be saturated with 2016 Charger R/T Scat Packs or equivalent, driving down their value in the used market. That way, I can have a fleet of them for cheap.

Thinking rationally will cause cars like the Charger R/T Scat Pack to not be sold in large numbers, artificially inflating their value in the used car market (Pontiac G8, Chevy SS, etc...), which is bad news for me.

I agree with the sentiment that it is not necessary to pay more for essentially the same car. Now if you were talking about financing a $35k V2 versus paying cash for a V1, that's a whole other story.

In my life, I tend to buy the first available model year of cars because that's where you get the biggest bang for the buck and get to drive the same car for less. Many examples: 2001 Z06, 2005 Elise, 2002 Civic Si, 94 Integra LS, 2007 Kia Rondo (lol). I don't think I have ever bought the final model year of any generation of car simply because it doesn't usually make financial sense.

I'm not totally down with the "last year of the previous gen is worth no more than the first year" thing. I think general age and mileage has the most bearing and only in cases where the demographic for a particular model is keenly aware of generational differences does it really change anything. Notice I didn't say "when differences are large." Perception is reality and if the masses decide a previous gen is wholly inferior to the new model (or poor value or whatever), then the resale will reflect that.

An obvious example would be a 2007 CTS-V vs a 2009 CTS-V. But a 2008 SRX vs a 2010 SRX, even though the platform is completely different, I'm not sure buyers are as savvy and the 08 will be worth less insofar as it is 2 years older and probably has more miles than the 2010. I can look this up to verify but it's too boring. Honda Accord is probably one where generational differences are fairly meaningless to most buyers and I don't think you have any particular advantage buying the first year of a gen in that case.

I never said I don't want people to continue to buy new cars. I am picking up on an ongoing "debate" with Bill, since he's more inclined to buy something new if the car is good enough. And some of the debate settled around the $46k Chevy SS, and how it would be way better if GM made a decontented version for cheaper. Or perhaps one with a V8 but not quite as much power (like a G8 GT). My argument is that buying a $35k car new vs a $47k car isn't any more attractive to me. But maybe it is to someone else, and I'll never agree, which is fine. Because opinions.

kevm14 wrote:I never said I don't want people to continue to buy new cars. I am picking up on an ongoing "debate" with Bill, since he's more inclined to buy something new if the car is good enough. And some of the debate settled around the $46k Chevy SS, and how it would be way better if GM made a discontented version for cheaper. Or perhaps one with a V8 but not quite as much power (like a G8 GT). My argument is that buying a $35k car new vs a $47k car isn't any more attractive to me. But maybe it is to someone else, and I'll never agree, which is fine. Because opinions.

Ah, context.

I still don't think it's ever justifiable financially. I should say almost never. Exceptions will exist.

Just to clarify, I probably wouldn't buy new, but something like 2 or 3 years old. Here is an example:

If I am planning on buying a car I plan to keep "forever" Why not buy very new or even new if the deal is right? If there was a situation where you totally loved a car, and were going to keep it 20 years plus and not drive it in the winter to preserve it, I think you should buy it new. Then you could customize it exactly how you want.

An example for me would be the Gen 5 Camaro. I have always wanted a Camaro, and when I finally get one, I plan to keep it "forever". I plan to drive it slightly modified initially (exhaust, maybe intake) and down the road I would pull the ls3 and do a truck ls turbo (I would want to save the matching numbers motor for when I was done with this insanity). I am never going to let it see road salt, and it will be garaged.


Over 30 years of having this, that is a little more than 1K per year. Why should I wait 30 years saving 1K, when I can finance it for almost nothing and have it in a year or 2?

I am fine with getting a used 2013 for 25K over a new one (unfortunately I really want a 1LE, which are still around 30K). I don't want to wait 15 to 20 years for them to be worth 2K (the Gen 4 are still getting more than that).

I am just saying I can see the argument if it is something you plan to keep. You also know what was done in maintenance and how it was taken care of. I will never understand buying a new car every 3 years as an appliance to get around though. That is where I agree with Kevin. I personally will also never buy a new car as a daily driver. There is really no reason to not save on the huge depreciation if you aren't "in love with the car".

This would be a good time for Bob to chime in. Certain cars are actually a better deal new because of their good resale value on lightly used examples.