Ok, so I'm sure everyone saw the beater post that made it to the front page. I wanted to respond then, but I was too busy and would've been buried at the bottom anyway. So just in case you missed it, a guy talked about his dad being a mechanic for 30+ years and made the argument that you are better off just spending your money on a certified pre-owned vehicle(12-15k) as opposed to buying a cheap car (under 5k).
As a used car dealer I simply couldn't disagree with this line of thinking more. Before I begin my argument, let me make two important points. One, if a car is more than a car to you(a show piece, a way to get girls, work equipment, etc.) then yeah, a car is more important to you than the average person and you likely should end up spending more on it since it's more important to you. Two, I live in South Carolina. I see 20-25 years old cars with plenty of miles on them that have a ton of life left in them all the time. I understand the south has much less rust on cars, but at least one or two people a month from NY or New Jersey see my ads on Craigslist and drive down here to get a car. You may have to bite the bullet and drive a ways to get a good car if you live up north.
Okay, down to the points and math of everything I'm claiming. Let's start with the financials of it all since that's the most important part. Most folks don't have the 12-15k available to just go buy that nice car when they need one so they end up financing. When you finance a car you lose three times. First, you pay a higher initial price. If a car dealer is financing a car for you they aren't going to work with you on the price much at all, definitely not the way they would if you were paying cash. Second, you have to pay interest on the money you borrowed... so you don't pay back 12-15k, you pay back 18-20k. So it's not even really a 12-15k car... its a car worth 12-15k that you are paying 18-20k for. Third, when you're financing a car they make you have full coverage insurance. For most of my customers full coverage is about $220 a month vs the $80 a month it is for just liability. Let's say you pay this car off and drive it for 5 years. It has costed you 18k for the car and about 12k in insurance. When you go to sell it you may get $4000 for it at this point if you have kept it in pretty good condition. So, 18+12=30 and 30-4=26, so it costed you about $26k to drive that car for 5 years.
On the other hand, I'll use 3 cars I have on my lot right now as examples of cars that I would say are MUCH better deals. I have a 2000 GMC Yukon with 198k miles that I would sell for about $3500, I have a 2000 Lexus ES300 with 220k miles that I would sell for about $3000, and I have a 2005 Honda Odyssey van with 150k miles I would sell for about $3800. You have to know a bit about these cars, and cars in general, to understand why these cars would be better deals. First, you need to understand the engine in the car you are going to buy. The Yukon has the 5.3 Vortec, the Lexus has the Toyota 3.0 VVTI V6, and the Honda has the VTEC 3.0 V6 engine. All three of these engines get 300-400k miles regularly(at least in the south). The argument from people who disagree with me is "well what about all the repair work you're gonna need on these engines to keep them going that long?!?". Well, the truth is, you change your oil and your fluids... but other than that... you shouldn't pay for ANY engine repairs on a $3500 car. I had a customer call me and complain about spending 300 on O2 sensors on a 3000 car they bought two months earlier. I said "sir, do you realize you just spent 10 percent of the price of your car on an 02 sensor repair?". My last car had a check engine light on due to O2 sensors for 3 years. It affects very little. If you run out and fix every insignificant problem or every sensor that goes out then yeah... you're gonna end up spending a lot of money. When you buy a car at these prices you basically ride them until the engine blows or the transmission goes out, that's the plan. Like I mentioned before, you keep the fluids clean, you keep decent tires on it, and maybe fix the AC/Heat if it goes out... but other than that you don't put any money into a beater. I have been in business for 5 years now... it seems like most of my customer get about 2-3 years of use out of my cars before they resell them and come back for another. So let's do the math buying a car my way. Lets even say you get unlucky and one car blows up on you so you have to get 2 "beaters" to make it the 5 years. Folks can pay cash for cars this cheap so there is no financing. That means 3500+3500=7000 for your two cars. You do still have to pay your 80/month insurance so that's 4800. But don't forget, you should still be able to sell that beater for about 2000 when you're done with it as long as its still running. So, 7000+4800 =11,800 and 11,800-2000=9,800, so it costed you about 9,800 to drive those cars for 5 years(and that is assuming one blows up on you and you lose it completely).
So long story short, in the view of this used car dealer, you are MUCH better off buying cheap cars. So many people just accept that $500-$600 a month to drive a car is normal. Its crazy, and $500-$600 a month is life changing money for a lot of people. Of course everyone should do what they want, and I even advocate buying any damn car you want if you have the cash money to pay for it. But at the end of the day, in my opinion at least, its bananas to pay $26k for transportation for 5 years when you can pay under $10,000 and still get everywhere you need to go!
Submitted May 03, 2019 at 01:06PM by GreatestThatNeverWas http://bit.ly/2vBJb4F
