I suspect over the course of a lifetime car ownership could easily be the most ruinous financial baggage that a lot of people incur.
This is of course an average. Where you live and what sort of car you choose matters a lot. Putting aside luxury, and new cars and focusing on just transportation… there is a tradeoff between average daily cost of ownership and reliability. If you can say "sorry, won't be to work on time, my car died" without jeopardizing your income then you can live the exciting life of the $500 car. My daughter's friends who do this get by on something like $4-5/day to pay for the car (excluding "mandatory" insurance, which is around $3/day, they pay that sometimes, or not depending on their work situation). Fix the small things, maybe with help from friends, sell it to the scrap yard and get another when the big repair comes.
On the other hand I pay a bit more in rent to live somewhere with easy bike and public transport options.
How then they go to work? I understand that in the USA public transportation is quite lacking except for a few big cities.
So, choose to live on an artery near a bus stop, and that entire artery becomes available to you for employment without owning a car.
It’s true, you can’t get to arbitrary residential addresses without long walks, but commerce is on the arteries. Try to avoid needing transfers to a different artery. That is a huge time sink.
Newer suburbs, 20+ miles from city center, are different. They only have commerce at the intersection of arteries or specialized areas and this does not work for bus riding.
This is all for fungible employees in fungible jobs. If you are a skilled professional in a suburban employment your pay will be high enough to have a car and live in the quieter areas off the arteries.
I won't pretend it's the greatest but I've lived in quite a few 2nd and 3rd tier US cities like Phoenix, Atlanta, Jacksonville Fl, Nashville, Knoxville TN and quite a few others and the buses are certainly capable of getting you to work and back. Everywhere I've lived the buses run 7 days a week from early in the AM to late at night and some run 24 hours a day in Atlanta. Pretty much any bus route will see a bus come along every 20 or 30 minutes with some stretching out to 45 minutes. Some routes though will see a bus every 5 or 10 minutes depending on the day and time.
Even in Jacksonville FL which has more land area I think any other US city, there is no urban part of the city that is more than a half mile from a bus stop. You can even take a bus from the north extreme end of the city to the extreme south, where a shuttle connects that will then take you to St. Augustine (a suburb of Jacksonville), a grand total of probably 60 miles, for less than $4 total. That doesn't seem too bad. Is it perfect? No. But I think the public transportation system problems may be a little overblown at least in the cities I've lived in.
I've always purchased fairly low cost used cars but I recently went to a dealership for the first with someone who was getting a new car (for themselves).
It boggles my mind how reluctant the salesman was to give the "real" price of the car. He also made it sound like it was a nearly impossible task just to get the actual amount the payments would be. He explained how it would take days, require making a charge and would have to get permission from his manager to even start the process. It was a total joke.
They also did everything in their power never to mention the real price of the car with interest applied on the payments, but it's such a non-ignorable amount. It could easily end up being 20-25% on top of what the listed price is from interest.
It really striked me as a situation where if you weren't detail oriented and let the salesman convince you into the purchase without running the numbers yourself you could easily get yourself in a lot of financial trouble.
It's ludicrously easy to determine what payments will be, how much interest you'll pay, or what a narrow range of market price is for the vehicles you're considering.
It's hard to imagine dropping tens of thousands of dollars without doing the slightest bit of common sense research as anything other than willful ignorance.
Totally.
But most people don't do that. Instead, they walk into the door and listen to the "expert" selling the car who is doing everything in their power to rip you off or give you a false sense of what you're really paying for that $25,000+ listed item.
It's insane to me that it's even legal. It's even worse than phone companies advertising something is $X per month but then there's 100 line items added in at the last second. Hotels do the same thing. It's no surprise so many people are in debt. So many companies (including medical facilities) do everything in their power to trick you or lie to you in order to make a sale.
The second type of dealer doesn’t have tons of deals advertised and is usually priced on par with the places around them. They are much more focused on providing a nice sales experience and service. They usually have big lots and repeat customers. Baby boomers love them. You can haggle but they won’t hit rock bottom prices unless you pit two dealers against each other. All numbers are given to you and it doesn’t have the monthly cost tables.
I don't think we were being condescending, but all of the posts were met with outrage that we dare suggest such things. People would say things like "I need a reliable car to get to work, and if it's not new, it's not reliable."
> I have been in the emergency services for a little over 20 years now. Back in the late 90's we were cutting people, out of cars almost daily, and they where almost all dead or very close to it. Fast forward 20 years, and at the same speed collisions, when we stop on scene, people are standing next to the cars swapping insurance info. It is truly amazing to see a car that has disintegrated, and the people are fine.
> It also smells different. Back in the day you could smell all the stuff that was in the car...batteries would rupture, fuel lines would leak, oil all over the road. Drinking and driving was also more common, so you could smell blood and booze. Those smells are all but gone -- only very high speed accidents smell like that now. --https://www.reddit.com/r/WTF/comments/brg6uy/cop_car_didnt_s...
The cheapest new car in the US by the same company is 13,255$ and does 31 city / 39 highway. That cheap SUV gets at best 15 city / 19 highway, so assuming nothing is wrong it’s using twice the fuel.
Assuming 15k annual miles and zero mechanical issues you save money with the new car in ~10 years. Though a more through analysis is likely going to make that time shorter as keeping an old car on the road gets more expensive.
Beyond that, this may be a good financial decision on a personal level but it doesn’t scale to society as a whole. Used cars are cheap because few people want them. If everybody tried your scheme, the prices would go way up.
We bought my wife’s 2005 CR-V in 2011 for $8500 cash. In 8 years, it’s needed less than $750 in parts and we farmed out only one job (a clutch job which involves a good half-day of labor with a lift or a strenuous weekend without one). Total maintenance expenses have been under $2000 over 8 years and if the clutch job hadn’t been needed would have been under $1000. (Was a bearing failure not clutch wear.)
We’re under $11K into this thing, excluding gas, so $110/mo or so and still totally reliable.
You’re right on the market; it’s great that not everyone wants them: makes them cheap for those who know how smoking a deal they tend to be.
That speaks of expertise and therefore is poor measure of TCO for the average person. That said, buying a 3-6 year old used car is frequent advice.
Where people fall down is not buying a used car. It's buying a used car they could not afford as a new car. If your buying a used vehicle that was 30+k new, your not actually getting a cheap vehicle, just an old one.
A $6500 Jaguar is probably not a good budget recommendation though... :)
PS: A friend owned a used car for 3 years then sold it for a net profit without doing any repairs. But, good luck retreating that without spending a lot of time looking for great deals.
People love buying new cars though... It’d be a lot more amusing if it weren’t so financially harmful. (I confess to buying a new electric LEAF but only because it came with $10K in government money in the trunk. Even with you guys buying 1/3rd of it for us and Nissan financing it at 0% interest, it’s noticeably more expensive than our other cars. Good car though. Has needed wiper blades and washer fluid in 55 months of ownership.)
That was part of the point of the blog, transferring that knowledge.
> it doesn’t scale to society as a whole.
I dislike this argument, something doesn't have to scale to society as a whole to be a good idea. Tons of people that are rich or unwise can keep buying new cars and thousands of my readers can start buying used cars without throwing the whole world market off.
I live in a city with excellent public transport, and still, purchase of a car really improved my quality of life. Instead of 45-60 minutes using public transport, I can get to my dad's house with 13 minutes of driving. A recent example where I picked up a PC monitor from Samsung's service center and returned it to the store I bought it from for a replacement took 1 hour total instead 3 hours lugging the 27" monitor through public transport or spending two days worth of income on taxi rides.
The monthly TCO of my car amounts to around 4 times the cost of the public transports' monthly pass, and that doesn't account the money spent on taxis or ride hailing apps. I consider it worthwhile for the immense benefits I'm getting.
Not everyone in America needs or wants a car (NYC, etc). But everyone needs a roof over their head, and so I would vouch that the most ruinous financial baggage is....rent.
In my area minimum rent starts around $700/mo, but I have friends in the Bay paying $2000+/mo. $2000 a month! You could buy 2 beaters every month with that! Your first car broke down because it cost $900? Don't worry, just buy another for $900 and still have $200 left over...
I recognize repairs are expensive for cars that are $30k or even $20k, but there is nothing mandating you to keep that car or to not trade it in for a sub-$5k beater. The only counterargument here would be safety, and if you have kids, I guess that justifies the price tag.
Kids or not, though, you still need to pay rent, and if you're lucky enough to own a house, you still need to pay a mortgage.
Had my commute been a little less (bringing me under 15K miles a year) the overall cost was remarkably similar to a lease on a modest car.
Public transit sometimes works, but it almost always increases how long it takes to get somewhere. If I was struggling to make ends meet by working two jobs and had kids, public transit would likely add so much time to my commute, that I'd have to choose between a second job, and having any time with the kids.
Frankly, I think car ownership is one of the most freeing things we have in modern life. It opens up doors that would be closed if you relied on other forms of transportation. Being able to go where you want, when you want, is very valuable.
This might be a bad example, but I am pretty sure that luxury German cars like Mercedes/BMW are cheaper to purchase/register in America than Netherlands/Denmark due to taxes.
You're not saving money buying a brand new BMW on finance in the US instead of Europe if you could have bought a perfectly good used car for 5000 USD in cash.
Example: base 2019 Prius MSRP Germany: 28,450 EUR ($31,920) - includes 19% VAT MSRP US: $23,770 - does not include local sales tax
That’s even more of a difference than I was expecting, as the exchange rate is currently on the low side ($1.12, compared to the long term $1.20-1.25 or eye-watering $1.50 it touched about 10 years ago)
[1] https://www.nationmaster.com/country-info/stats/Transport/Ro...
Considering job situation in general in this country people have to commute wherever they get job. I feel this is just fantasy that all of us can live near public transit.
There are all sorts of costs associated with car ownership beyond mere purchase cost and repairs...things like fines associated with cars that fall more heavily on poorer people...there is just A LOT of cost associated with cars.
I'm curious if there are empirical studies done on the overall benefits and costs of owning vs leasing vs ridesharing?
So far all you've given me is a few worst case scenarios, but what about the average scenario? What's the normal car ownership process like in your mind, and how does that average situation teeter so close to the edge of ruin, as you say?
The average American commutes 32 miles/day round-trip[2] (we're not counting other driving). So they're incurring ~$16/day in direct and indirect costs related to car ownership and driving. Over 1 year of workdays, that's approximately $4k in car-related costs.
The median household income in the United States is approximately $60k.[3]
This implies that the median household spends almost 7% of income just on one car. Most households have 2 vehicles so I'll wager it's more like 10-12% of income. This is also more than the amount households save annually (6%).[4]
1. http://www.mrmoneymustache.com/2011/10/06/the-true-cost-of-c...
2. https://itstillruns.com/far-americans-drive-work-average-744...
3. https://en.wikipedia.org/wiki/Household_income_in_the_United...
4. https://tradingeconomics.com/united-states/personal-savings
And after one has held a steady job for a few years, no one should need to finance a $15k car either.
That's where most of the costs of car ownership come from (apart from long commutes) - depreciation, interest payments, and insurance.
And yet, here we are...
Clothes aren't optional because of public indecency laws and also because most places don't have perfect weather year-round. A paper bag won't do because it'll rip in a couple of minutes, or not offer enough protection against the elements. Same deal with a plastic bag or anything else that's not real clothing. Being shirtless or barefoot restricts your entry to many establishments, but if you don't care about those places then yeah shirts and shoes are optional.
All the same, no one needs to wear expensive clothes. If they cover you up, keep you warm, and keep you employable, they're good enough. For a programmer that may mean free swag t-shirt and jeans, and for a rich banker, a $2k suit. But wearing suits every day would be a pointless indulgence for the programmer and wearing $20k suits every day would also be a waste of money for the banker. (I have no idea how much "high-powered finance" suits cost, numbers are estimates)
Also the fact that you spent so much time talking about the utility of a paper bag more or less outs you as a pedant, so I think I'm done here.
Examples?
If its a case of Ferraris don't need to pay to park, where other cars get ticketed, fair enough. If its just a case of poor people being more likely to speed, in which case that doesn't seem so reasonable to call out.
I'm not even sure if fines in general should be counted as a cost of ownership. You can just pay to park, you don't have to speed, in general it seems like a cost of rule breaking to me.
I'm not from the US, so the request for examples was genuine.
The real problem is that car ownership is more or less mandatory in America because of the lack of viable alternative in most cases.
Those fines I speak of? I have a lot experience with...in fact for most of my late teens and early 20s I spent thousands in fines for various infractions. Not everyone manages to climbed out of those holes.
Depending on the gravity of the offence, the law (or court) determines the amount to pay, and it is in units of money for the Bußgeld, but in units of Tagessätze (daily fine) for the Geldstrafe. Now, how much money a Tagessatz corresponds to is determined in a second step based on the income and wealth of the offender.
So, for example, a banker in Switzerland that went 114 km/h instead of the allowed 80 and overtook on the right several times was fined 450,000 CHF (around 450,000 USD - yes, half a million).
I find that quite sensible.
https://www.blick.ch/news/schweiz/zuerich/halsbrecherisches-...
I guess it depends what you think the purpose of a fine is. personally, I think a fine ought to be a rough estimate for the excess risk you exposed other people to. I don't think a speeding banker exposes society to any more risk than a speeding janitor.
Ok, but that's not actually what a fine is for. It's meant to be a deterrent against future offenses, both by the party it's levied against and for others.[1]
1. https://criminal.findlaw.com/criminal-procedure/fines.html
looks like the source you cited supports both perspectives.
tbh, I don't actually support speeding tickets in the first place, at least not on the highway. people speeding in a well-maintained vehicle (and obeying the other traffic laws) are not a huge threat. I'm much more worried about the people weaving between traffic, obstructing the fast lane, reading instagram, etc.
So there should only be penalties for DUI if you get into an accident?
It's impossible to predict in advance which specific incidences of risky behavior will cause harm. That's why the behavior itself is penalized. If there is actual harm, the penalties ramp up.
> if you actually hurt someone, you should pay the approximate cost plus a little extra
How does someone "pay the approximate cost" for risky driving that kills or seriously injures someone? If you use the various "value of life" calculations floating around, there are at least some people for whom it's not a lot of money on a probability adjusted basis (e.g. $2m * 0.1% chance of them causing a fatal accident). But accident victims, their family and friends, and society as a whole would prefer that an accident never happened at all than have someone write a check after the fact. This means no one can be allowed to buy a "risky driving pass" by virtue of their wealth.
> people speeding in a well-maintained vehicle (and obeying the other traffic laws) are not a huge threat
The numbers appear to disagree with you. [1] Speeding is a factor in a quarter of all traffic fatalities.
> I'm much more worried about the people weaving between traffic, obstructing the fast lane, reading instagram, etc.
I agree but I've also noticed that weaving between lanes goes hand-in-hand with speeding. It's hard to keep going faster than other traffic without constantly switching lanes to find space.
> NHTSA considers a crash to be speeding-related if any driver in the crash was charged with a speeding-related offense or if a police officer indicated that racing, driving too fast for conditions, or exceeding the posted speed limit was a contributing factor in the crash.
the entire definition of "speeding was a factor" boils down to either 1) an officer was there and gave you a speeding ticket, or 2) after showing up to the scene of an accident, it was the officer's opinion that speeding contributed to the crash in some way. the whole document rests on this tenuous connection. for the purposes of this document, speeding can "be a factor" even if the officer didn't think it was a contributing factor, but happened to write a speeding ticket!
the other major problem is that the document makes little effort to tease apart other risky behaviors that may correlate with speeding. it only breaks out age, gender, surface, and BAC for separate consideration. put another way, this document describes the entire population of people who speed (which is about half of drivers in the US [0]), but cannot answer the question: "how dangerous is it to exceed the speed limit in a well-maintained car if you do nothing else wrong?"
given your responses so far, I expect you will consider this paranoid/cynical, but I don't trust the state to set reasonable traffic laws. just as an example, in my city the government was caught deliberately reducing the length of yellow lights immediately after introducing red light cameras. the state sees traffic violations as a revenue stream. they see something easy to measure (eg, speeding), and make laws that most people will break. they're not interested in investigating whether the limits make sense, or whether they are even enforcing something meaningful. no one is willing to make speed limits their hill to die on, so they get away with it.
[0] https://one.nhtsa.gov/portal/site/NHTSA/menuitem.554fad9f184...
What I'm saying is that speeding doesn't happen in isolation. The only times it's "safe" to speed is:
1. To keep up with other traffic. You're unlikely to get a ticket in this scenario, and by following the speed limit you would be making the situation more dangerous.
2. On an open country road, with little other traffic. You're also unlikely to get a ticket here, because of how few patrols would be around - but be aware of deer.
Otherwise speeding will necessary involve weaving in and out of lanes, sudden braking, and following other cars too closely.
> I expect you will consider this paranoid/cynical, but I don't trust the state to set reasonable traffic laws
I don't consider it paranoid or cynical. I'm aware of the yellow light issue and it's a terribly shortsighted thing for cities to have done. But none of this has to do with where we originally started talking: should fines be based on ability to pay?
> they see something easy to measure (eg, speeding),
If it's easy to measure, it's also easy to follow. Do we want more ambiguous laws that can be even more selectively enforced?
> and make laws that most people will break
That's something to lobby against then. Having a law that no one follows reduces respect for other laws.
More "fair" scheme would be fines proportional to your income or vehicle cost, but I have heard of such things only in some European countries.
One could get a pilot's license for that amount and fly an hour per week.
Gas / insurance / registration are costs people just generally don't count into car ownership. Probably part of the reason people are so happy to buy SUVs that get terrible mileage.
Edit: apparently the edmunds.com calculator assumes 15000 miles per year which are 24000 km, 20 times your 1200km.
2. If you are able to pay cash but choose to take a low-interest loan and put the cash into investments that have a better return, you can come out ahead. But most people either don't have cash upfront, or are not sufficiently disciplined to do this.
3. If you own a car outright you can get by with liability-only insurance. If you owe money on it, the lender will require collision and comprehensive insurance, which costs a bundle.