Dave Ramsey would be proud! One thing that you left out as an advantage of paying cash that you sleep better. If you’re not worried about making your car payment you actually are healthier and could save money in medical bills.
you wont' sleep better if you are dead because your old car has bad safety features. A hospital bill can easily be hundreds of thousands of dollars, might want to add that into the equation. I did love this video, but safety is really important.
Great video! To be honest the majority of people buy new cars with loans because they don’t take care or know how to take care of cars, they love the smell and feel and comfortability , reliability of new cars regardless of financial holes they are in. They only drive till it break down and roll over into new cars new loans. There are no free stuff, new cars = $$$$, used cheaper cars = repair costs $. Totally agreed with this video, but people don’t think this way, majority of them, especially inexperienced young people.
I bought a 2007 Lexues es (luxury version of the Camry) with 187,000 on it for $4,000 for my first car. No problems what so ever, absolutely wonderful vehicle with so many good features. You can’t go wrong with Toyota
Yeah I bought a five-year-old Lexus GS 350 last year and I’m planning on keeping it for at least 10 years I’m not interested in wasting all kinds of money for a new car this is a fantastic car and it’s got plenty of years left of life in it no need to waste all that money
Some of the best financial advise I’ve heard yet. I wish i could of came across this video or known how to explain it in this detail before my brother bought his new car. I’m still gonna try passing the word on this to everyone! Keep up the good work and helping us stay out of debt!
2011 Camry 13K on it now, running perfect, had it 4yrs. Great commuter, has all I need and nothing I don't. A safe reliable and stable car. Smooth ride. Big trunk,
Great video! I personally live this strategy: for many years, my daily driver has been a 94 Ranger (4 cylinder) and my wife drives an 02 Chevy Venture. Then we put our money into assets/investments that grow! Spread the wisdom of this knowledge!
I’m getting up there so a few months ago I rewarded myself with a 2010 Lexus ES paid for with ca$h. Why would I spend $40K on a new ride when a 10 year old luxury ride (plenty of tech) worth less than 1/3 of its original value still runs like it just came off the assembly line? No regrets here, I’ll never lease or buy new again!
I want to do exactly that but make sure I know exactly the diagnostics on it and know what I’m getting for safety and longevity sake. I like your vids!
Very logical analysis and good advice. I am 65 yo and have owned many cars in my life both new and used. I have never taken out a car loan. I saved for my first car (used), paid for it cash and immediately started making car payments to myself. So, about the time I needed a another car, I had a nest egg built up and could buy again using cash. Making payments to someone else is a money loser. Making payments to yourself is a money maker.
Enjoyed your video. Found it interesting, if you dont count depreciation since it not an actual out of pocket expense, the cost of ownership is same for both vehicles in your example. That being said, a new car typically cost more to own due the higher upfront price plus finance cost. I agree that buying used is a better value. Personally have never bought new vehicle as my daily driver. I have bought new vehicles for my wife to drive, so i can speak about both. The caveat is we keep vehicle 15-20 years (whether bought new or used). Thanks again for the thought provoking video.
I only buy used, nowdays one can buy a well maintained 5 years old car for a fraction of the price of a new one and with low miles. I look at people who buy a new car with a loan at the bank and i ask myself why they would do such a stupid thing?
Great topic. My wife and I bought new Honda’s in 2002 and 2004. We paid cash. We paid off our home in 2007 that we bought in 2001. We were able to do that because we had dependable paid off cars. From then till now we have funded retirement Roth’s fully and contributed to 401k with our jobs. My oldest will drive soon and will get my wife’s car and she will get a new one with cash.
i know the WRX is known for having super high insurance, but i just sold my 2015 wrx and got a 2007 4 runner. i went from paying $220 A MONTH insurance on the wrx to about $75 a month on the runner such a HUGE difference.
Got my family a lot of Accords and a Camry this year: 1998 Accord 175k $800 plus $500 repairs over the last year 2000 Accord 200k $1000 (leather seats EX) 2003 Accord 200k $1000 (sold for same price 6 months later) 2003 Accord 78k $5200 (running well at 166k) 2003 Camry 133k $1900
Bought my 07 Sport Trac just 2 months ago, only thing I worry for is basic maintenance, no car payments means I can invest more and save more every pay check and still have enough for bills and fun trips.
Great video, my wife and I throw nickels like manhole covers, and we never forgot how we lived when starting out. We have only purchased used, last week she said that if I wanted a newer car that is fine, well, I ended up with a mint 2007 TSX manual transmission for 6800, negotiated in the bank parking lot and drove home. Meanwhile, my neighbor springs for 103K on a new Navigator. Another money saver is if you can, wrench on your own stuff, fortunately I was a mechanic while in college so I only pay for parts.
so you're saying that the difference is negligible if you don't factor in depreciation, which you can do if you plan on driving the car into the ground over a period of say, 20 years?
Nice idea for your channel. I definitely have a thing for old cars, and have a couple, but also own a 2018 Subaru. Trouble is, older cars are significantly less safe in a crash, one of the leading causes of death behind the usual stuff like heart disease. It's a risk I accept when I drive my old cars, but for my daily commute, it's the 2018.
toyoscio yeah agree with that, a big factor when buying the Suby was they make outward visibility a priority. Most manufacturers thicken up the vision-blocking pillars to improve rollover safety but Subaru manages it without that. My "old" (2006) S2000 either has absolutely amazing visibility or terrible visibility if the top is up. :) The S2K hasn't depreciated a penny since I got it years ago. My 97 Outback I paid $1200 for and have gotten 8 years out of - so far. It's probably still worth what I paid for it.
6mtzhp That's right. Not being able to see outwardly can lead to some of these accidents. Good that Subaru was able to compensate for this:} No doubt about the s2000, with regards to visibility and resale. Lol
I have bought my last 2 vehicles (Toyota 4-Runners) new however I keep a vehicle for at least 10 years. I still have my 2008 4-Runner and it has no mechanical issues and looks great. I don't drive much so it only has 55k miles. The only issues I have is that my bluetooth is no longer compatible with today's devices so I can't synch anything to the entertainment system and the built-in Tom-Tom won't upload updated maps (I believe it is an O/S incompatibility). Not sure this would be a good segment but I certainly can't justify getting rid of this great vehicle. Thanks for the great videos. I enjoy seeing the recommendations and tips and really like the tie-in to good financial practices. Both passionate topics for me!
Very good financial advice. Cars can be a huge waste of money. My state has a personal property tax you pay every yr for vehicles. If I buy a new Tacoma valued at $32K I will get a tax bill of $928. and since the Toyota holds it's value the tax bill will drop very slowly over the yrs. Now my 2004 Elantra with 42K miles loses it's value pretty quick and is now valued by the state worth only $850 and I'm billed for about $20 per yr for a huge savings......lol Liability ins is $300 per yr. So going this route saves me a ton of money when it comes to car ownership.
Also consider dependability like going on long trip. No thanks on a 2005 car with original ball joints, wheel hubs and rocker arms. Seen many cars with high mileage fall apart on interstate causing fatal accidents.
Nice video but a couple of issues: Insurance: $600/yr full coverage? Not in Texas. It would easily be double that and likely a lot more in CA. $750/yr maintenance sounds unrealistic for a 2006 car, even a Toyota. Maybe if you do your own work this might be feasible but it is hard to leave a shop for less than $500 for even minor repairs on a single visit, at least where I live. What are you going to drive to work while your 2006 is in the shop for days at a time? I would have to rent a car so that's more money and lost productivity hassling with all those extra breakdowns. Your risk of a "total loss" is a lot higher on the 2006 car for 2 reasons. 1) You are more likely to have a catastrophic repair bill(s) that might cause you to walk away from your $4k investment plus whatever repairs you did up to that point. 2) If your 2006 car is stolen or wrecked with liability insurance only then you will lose most of your 4k investment plus whatever repairs you did up to that point. On the newer 2017 car with 20k you will still have a full factory warranty until 36k miles and probably a powertrain warranty till 60k miles. Even though full coverage insurance is more expensive at least you won't experience a $4k loss if disaster strikes, it will likely be closer to a $500 for deductible. I think the underlying money principles here are sound but you put forth a best case scenario for the older vehicle which has a good chance of not panning out and that is my main disagreement.
09 Civic for 4,500 bucks, 81k miles and I paid cash. My car may not be the best looking car compared to my friends cars, but my car is fully paid off and has liability insurance. They have car notes, and their insurance has to be full coverage and they are always broke. Who is smarter?
I'd keep my prius which gets me 45 avg mpg, maintenance is cheap, insurance is cheap, and it's good for about 5-10 more years. I got it for 4k last year.
@Mark Barangan when I bought it last year it has about 191,000 miles. Bought it from the original owner with all the service records and the hybrid battery had been replaced under warranty at around 115k miles, proof of paperwork was provided. It's a clean title and I keep changing the oil (at around 5k or less) and air filter (every other oil change) myself, I also put a bottle of clean injector about every 3k miles.
Awesome Video, you could not have explained it better than that!!! Let the other people be Mr and Mrs Rockefeller, we all know what happened to them in 2008!!
Check the crash testing on older vehicles as well your life depends on it I own an older Chevy Blazer there's a reason they got that name,I don't drive it over 40 mph,only good for a trip to home Depot and back,think about everything when purchasing even an older vehicle not just price,don't put a price tag on your life.
Safety for sure. Mid 2000 cars aren't that safe compared new cars side airbag etc....Plus cars in mid 2000s many even camry still require expensive repairs and that costs have sky rocketed over past few years. So drive older which isn't as safe your call but got a family then not going 2nd guess.
Remember the 2017 comes with toyota car care for first 2 years or 36,000 miles or 5 routine maintenance visits. The 2006 is good only if the previous owner(s) maintained it. My 2016 toyota camry got it for 20k and some change for 5 and half years at @2.90% , paying $280 month and insurance $186 a month full coverage
This is why if you're not mechanically inclined you pay $100 to have any used car you're about to buy thoroughly checked by a mechanic before buying. I see people use that logic to go into debt to buy new cars then stress over car payment and live paycheck to paycheck. I drive a 2010 car that I purchased cash from a reputable dealership as a certified used car two and half yrs ago. It's at 134000 miles with no issue.
Today, a 2017 Camry with under 200k miles is STILL worth $20k. If you took out a car loan at ANY rate under the average market return in the past 5 years (17%), you would have MADE way more money than you would have "lost" by financing.
The sad truth of all this is that the “market “ cost of vehicles is dictated by the marketing companies working for auto industry...I buy used and treat my used vehicles reasonably good. but to have one car u need 2 used..and don’t let them be both at the shop...wen it gets bad get rid of them
I correct you on the title a cheap car is a Yugo or something known to have issues Toyota has value and proven record. I beg you to call it a more affordable car. Both are good value one is more affordable.
Good points. You SHOULD note that (a) there are many more safety features in the newer car, that is worth something. (b) no way you can make 6% in a "safe investment" on such a small amount over such a short period of time. Since you should use a guaranteed rate; I suggest you use the CD rate from the bank you are borrowing from (2%?).
Thank you for your feedback. And yes, you are correct that the newer cars have more safety features. Older cars are not for everyone. And you are right, there is no way to get 6% in a safe investment. It was my attempt at trying to help people realize there are other ways to save/invest other than bank CD's.
If you look around the Internet, you will find that financing a car (in my opinion a big waste of money) is not just "The American Way"; it's pretty much a universal practice nowadays. This is why and how the world has become one huge parking lot.:)
It took a long time for me to buy used versus new, even though it's such a huge savings, and it's so obvious. You need a bit of knowledge to manage the old car problems, e.g. finding good tow truck service, reliable mechanics, etc... Plus the grim irony is for many people, a $2000 repair bill is totally impossible to manage--while a 7 year $300 per month loan is. One oddball exception to this has been the new truck market, which is so wildly distorted lately. I did a similar calculation on a Toyota Tacoma and came to the conclusion that there was no savings buying used. I don't know how long the truck market can stay so inflated though. I get the sense it's starting to crack now.
Great feedback Kevin Kimmich. For some people the reality is that the $2000 repair bill is difficult. The unfortunate side of that is staying in car payments for a long time. Even worse if the car that gets purchased is not reliable. And I agree with you about the truck market and Tacoma. It's nearly impossible to find a Tacoma at a reasonable price in the used market. Even a 12 year old Tacoma with 200k miles can be $15,000.
It is ridiculous that in today’s society we think it’s unaffordable to pay $2000 for a car bill but can pay $300 a month for a car that will also eventually break down. I have a lot of young guys that work for me and when they inevitability ask me for a loan or to co-sign (which I always say no to) I sit them down and do the math with them. I tell them to use their down payment and pay cash for an older car. Then, since they said they could afford $300 per month , that after a year of paying that to themselves they can then upgrade to a $3600+the value of the car they paid cash for car. Some of them do it and some don’t. I have one long term employee that recently paid $20K cash for a beautiful slightly used car by using this method of saving and rolling over into something better . Always buy Toyota or Lexus and you won’t have much repair cost either.
A $2, 000 repair bill means you get rid of the car while if if you have a new car you're stuck paying that $2, 000 repair bill and you can't get out of those payments for expensive insurance
Were the hell do you live!? Full Coverage can go up to 250 dollars a month in Nebraska and 80 dollars a month for liability and my Driving Record is clean!
I think it's also important to consider the better fuel economy you will get from newer cars. That being said I still thing buying used is the way to go.
Really like the content here. Just as a devil's advocate 😈... 1. You only point out the possibility that the older vehicle guy can invest. The guy with the loan could also do this and pay out the 3% loan from his 6% returns. Not as good, but it's not nothing. It's kind of strange that the loan guy had no choice but to get a loan and the other guy had $16,000 to invest. 2. After 5 years you either have a considerably older car with 225,000 miles or a 2017 model with just 95,000 miles. Just a missing positive point on the other side. All said, my choice would still align with yours.
Nobody will invest that money , and rate will be impossible to get so high. Average American is spending 125 % of his income and only a few invest in anything. Also look at that used car after 5 years will be worthless and very expensive to own . I would rather buy new car and keep it for at least 15 years , that is most cost effective when you calculate everything.
Hello Love Suzuki, you might be right that no one will invest, and that the average American spends more than they should. Also, the rate is based on a rough historical estimate of stock market returns. See: www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp The purpose of this video is to attempt to provide financial education in hopes that it may change someone's thinking to consider that there is another alternative besides spending more than they earn. The strategy of buying a new car and owning it for 15 years isn't a bad one. I struggle with that since my needs and interests change over time and end up selling the car long before 15 years (or whenever). Based on my experience, it has been far more cost effective for me by buying a reliable used car. I appreciate your comments and viewpoint, and thank you for watching.
Hi Moe Anthony, thank you for bringing this to my attention. It is true that newer cars can offer a lot more safety features. I will be sure to consider that going forward.
CarsThatLast Hey thanks for the reply and I really enjoy your videos. Yes for sure safety and even the steel they use today vs yesteryear.Those who live in cold weather climate areas generally will find used cars with rust or beginning to rust vehicles which reduces ownership time. However I would consider leasing new because cars today are appliances with too much tech that will cost even more to repair down the road. Base model the way to go if planning to keep long term.
Dave Ramsey would be proud! One thing that you left out as an advantage of paying cash that you sleep better. If you’re not worried about making your car payment you actually are healthier and could save money in medical bills.
Thanks! lol Good point. I also save stress with an older car and where I park. Don't need to worry about door dings.
True. Depreciation and car payments are the one-two punch that make it a terrible idea to buy a car that way.
CarsThatLast exactly!!
Browningate don’t forget insurance lol
you wont' sleep better if you are dead because your old car has bad safety features. A hospital bill can easily be hundreds of thousands of dollars, might want to add that into the equation. I did love this video, but safety is really important.
Great video! To be honest the majority of people buy new cars with loans because they don’t take care or know how to take care of cars, they love the smell and feel and comfortability , reliability of new cars regardless of financial holes they are in. They only drive till it break down and roll over into new cars new loans. There are no free stuff, new cars = $$$$, used cheaper cars = repair costs $. Totally agreed with this video, but people don’t think this way, majority of them, especially inexperienced young people.
Scotty Kilmer would approve
Bought my '03 Tacoma in 2007, had a loan, paid off in 3 years. Still driving it. No major repairs. So nice not having a car payment!
Compare the used Camry to the idiots that spend $45k on a brand new pickup, $3k on lift, rims, and tires, and then use it as a commuter at 14mpg.
I bought a 2007 Lexues es (luxury version of the Camry) with 187,000 on it for $4,000 for my first car. No problems what so ever, absolutely wonderful vehicle with so many good features. You can’t go wrong with Toyota
The Lexus ES series is a great car!
12 skits
Lexus & Acura & Infiniti you can't go wrong if you can maintain them they will give you years of pleasure of driving.
I forgot stay away from Mercedes, BMW, Audi they are 💰 Pitts unless you buy them new with factory warranty.
Someone at Consumer Report's said that BMW stands for BreakMyWallet.
Yeah I bought a five-year-old Lexus GS 350 last year and I’m planning on keeping it for at least 10 years I’m not interested in wasting all kinds of money for a new car this is a fantastic car and it’s got plenty of years left of life in it no need to waste all that money
Thank you for making this video . I try to explain this to young families that I know and it just doesn't sink in .
Some of the best financial advise I’ve heard yet. I wish i could of came across this video or known how to explain it in this detail before my brother bought his new car. I’m still gonna try passing the word on this to everyone! Keep up the good work and helping us stay out of debt!
2011 Camry 13K on it now, running perfect, had it 4yrs. Great commuter, has all I need and nothing I don't. A safe reliable and stable car. Smooth ride. Big trunk,
Your car has 13k in 4 years? Pretty sure you don't need one at that rate lol
Very sensible to buy used, Thanks for putting it in perspective!!!
Still driving my 04 camry. Not for sale.
1999 camry here
05 camry le 3.0 v6, you should come see the 40 foot long fwd burnouts this car does.
One thing you left out is that older used cars are easier to work on and if your mechanically inclined you can do at least some of your own repairs.
On older cars , once you replaced struts & replace timing kit , you good for a couple yrs
Wishing I watched this video 30 years ago...thanks for a great video!
Great video! I personally live this strategy: for many years, my daily driver has been a 94 Ranger (4 cylinder) and my wife drives an 02 Chevy Venture. Then we put our money into assets/investments that grow! Spread the wisdom of this knowledge!
Fantastic video on my two favorite subjects!
I’m getting up there so a few months ago I rewarded myself with a 2010 Lexus ES paid for with ca$h. Why would I spend $40K on a new ride when a 10 year old luxury ride (plenty of tech) worth less than 1/3 of its original value still runs like it just came off the assembly line? No regrets here, I’ll never lease or buy new again!
I want to do exactly that but make sure I know exactly the diagnostics on it and know what I’m getting for safety and longevity sake. I like your vids!
Just buy a 2001 Toyota Camry so you can save $1200 right off the bat compared to a 2006 Toyota Camry
Wayne Buffin that's the way to do it
I just bought one for 300$ just needed new headlights lol
Remember the 2006 does not need a time belt change, but the 2006 does have the oil problem. 2002-2005 FTW!
You are ABSOLUTELY correct!!
Very logical analysis and good advice. I am 65 yo and have owned many cars in my life both new and used. I have never taken out a car loan. I saved for my first car (used), paid for it cash and immediately started making car payments to myself. So, about the time I needed a another car, I had a nest egg built up and could buy again using cash. Making payments to someone else is a money loser. Making payments to yourself is a money maker.
Excellent video. Very needed .
It would be cool having this kind of information in anything we need and can be bought use... people would live an easier life
Enjoyed your video. Found it interesting, if you dont count depreciation since it not an actual out of pocket expense, the cost of ownership is same for both vehicles in your example. That being said, a new car typically cost more to own due the higher upfront price plus finance cost. I agree that buying used is a better value. Personally have never bought new vehicle as my daily driver. I have bought new vehicles for my wife to drive, so i can speak about both. The caveat is we keep vehicle 15-20 years (whether bought new or used). Thanks again for the thought provoking video.
This is great info!
I only buy used, nowdays one can buy a well maintained 5 years old car for a fraction of the price of a new one and with low miles. I look at people who buy a new car with a loan at the bank and i ask myself why they would do such a stupid thing?
They do such a stupud thing so that , you can get a used car when they are done using it....😂
Barath... EXACTLY!
And they always be getting a new car about every two to three years and starting the cycle all over again. Pure insanity.
Great topic. My wife and I bought new Honda’s in 2002 and 2004. We paid cash. We paid off our home in 2007 that we bought in 2001. We were able to do that because we had dependable paid off cars. From then till now we have funded retirement Roth’s fully and contributed to 401k with our jobs. My oldest will drive soon and will get my wife’s car and she will get a new one with cash.
I like Bill's video because I can improve my English, and Bill's video is very interesting, which also can improve my listening.
Opportunity cost. Investments. An Econ professor! Wish this could be shown to all the folks in my office.
i know the WRX is known for having super high insurance, but i just sold my 2015 wrx and got a 2007 4 runner. i went from paying $220 A MONTH insurance on the wrx to about $75 a month on the runner such a HUGE difference.
Got my family a lot of Accords and a Camry this year:
1998 Accord 175k $800 plus $500 repairs over the last year
2000 Accord 200k $1000 (leather seats EX)
2003 Accord 200k $1000 (sold for same price 6 months later)
2003 Accord 78k $5200 (running well at 166k)
2003 Camry 133k $1900
You are doing a great service for your family, man!!!
What do u think of Nissan rouge and the Ford escape which is better.
Bought my 07 Sport Trac just 2 months ago, only thing I worry for is basic maintenance, no car payments means I can invest more and save more every pay check and still have enough for bills and fun trips.
Great video, my wife and I throw nickels like manhole covers, and we never forgot how we lived when starting out. We have only purchased used, last week she said that if I wanted a newer car that is fine, well, I ended up with a mint 2007 TSX manual transmission for 6800, negotiated in the bank parking lot and drove home. Meanwhile, my neighbor springs for 103K on a new Navigator. Another money saver is if you can, wrench on your own stuff, fortunately I was a mechanic while in college so I only pay for parts.
Thanks! Wow a tsx with a manual transmission, sounds great to me. Enjoy. 😁
Cars and finance ! I like that.
Here in California, full insurance for a new car would be around 1k , no way 600.
Excellent wisdom
Thank you. ;-)
so you're saying that the difference is negligible if you don't factor in depreciation, which you can do if you plan on driving the car into the ground over a period of say, 20 years?
Excellent
Nice idea for your channel. I definitely have a thing for old cars, and have a couple, but also own a 2018 Subaru.
Trouble is, older cars are significantly less safe in a crash, one of the leading causes of death behind the usual stuff like heart disease. It's a risk I accept when I drive my old cars, but for my daily commute, it's the 2018.
That may be so, though many new cars have big blind spots.
toyoscio yeah agree with that, a big factor when buying the Suby was they make outward visibility a priority. Most manufacturers thicken up the vision-blocking pillars to improve rollover safety but Subaru manages it without that.
My "old" (2006) S2000 either has absolutely amazing visibility or terrible visibility if the top is up. :) The S2K hasn't depreciated a penny since I got it years ago. My 97 Outback I paid $1200 for and have gotten 8 years out of - so far. It's probably still worth what I paid for it.
6mtzhp
That's right. Not being able to see outwardly can lead to some of these accidents.
Good that Subaru was able to compensate for this:}
No doubt about the s2000, with regards to visibility and resale. Lol
On the news, most of the fatal accidents involved newer vehicle compared to older.
I highly recommend a Mazda Protege5, those little cars are tanks and low mile ones sill go for $1000 average.
I have bought my last 2 vehicles (Toyota 4-Runners) new however I keep a vehicle for at least 10 years. I still have my 2008 4-Runner and it has no mechanical issues and looks great. I don't drive much so it only has 55k miles. The only issues I have is that my bluetooth is no longer compatible with today's devices so I can't synch anything to the entertainment system and the built-in Tom-Tom won't upload updated maps (I believe it is an O/S incompatibility). Not sure this would be a good segment but I certainly can't justify getting rid of this great vehicle. Thanks for the great videos. I enjoy seeing the recommendations and tips and really like the tie-in to good financial practices. Both passionate topics for me!
I daily a 1995 saturn wagon with 120,000 miles, transmission is shifting hard but will last another 20-40,000 miles
Very good financial advice. Cars can be a huge waste of money. My state has a personal property tax you pay every yr for vehicles. If I buy a new Tacoma valued at $32K I will get a tax bill of $928. and since the Toyota holds it's value the tax bill will drop very slowly over the yrs.
Now my 2004 Elantra with 42K miles loses it's value pretty quick and is now valued by the state worth only $850 and I'm billed for about $20 per yr for a huge savings......lol Liability ins is $300 per yr. So going this route saves me a ton of money when it comes to car ownership.
Also consider dependability like going on long trip. No thanks on a 2005 car with original ball joints, wheel hubs and rocker arms. Seen many cars with high mileage fall apart on interstate causing fatal accidents.
I agree
Nice video but a couple of issues:
Insurance: $600/yr full coverage? Not in Texas. It would easily be double that and likely a lot more in CA.
$750/yr maintenance sounds unrealistic for a 2006 car, even a Toyota. Maybe if you do your own work this might be feasible but it is hard to leave a shop for less than $500 for even minor repairs on a single visit, at least where I live. What are you going to drive to work while your 2006 is in the shop for days at a time? I would have to rent a car so that's more money and lost productivity hassling with all those extra breakdowns.
Your risk of a "total loss" is a lot higher on the 2006 car for 2 reasons. 1) You are more likely to have a catastrophic repair bill(s) that might cause you to walk away from your $4k investment plus whatever repairs you did up to that point.
2) If your 2006 car is stolen or wrecked with liability insurance only then you will lose most of your 4k investment plus whatever repairs you did up to that point.
On the newer 2017 car with 20k you will still have a full factory warranty until 36k miles and probably a powertrain warranty till 60k miles. Even though full coverage insurance is more expensive at least you won't experience a $4k loss if disaster strikes, it will likely be closer to a $500 for deductible.
I think the underlying money principles here are sound but you put forth a best case scenario for the older vehicle which has a good chance of not panning out and that is my main disagreement.
09 Civic for 4,500 bucks, 81k miles and I paid cash. My car may not be the best looking car compared to my friends cars, but my car is fully paid off and has liability insurance. They have car notes, and their insurance has to be full coverage and they are always broke. Who is smarter?
06-09 civics have a engine block recall (or did have one through last year). Blocks were cracking.
I'd keep my prius which gets me 45 avg mpg, maintenance is cheap, insurance is cheap, and it's good for about 5-10 more years. I got it for 4k last year.
@Mark Barangan 05
Curenty it has about 216, 000
@Mark Barangan when I bought it last year it has about 191,000 miles. Bought it from the original owner with all the service records and the hybrid battery had been replaced under warranty at around 115k miles, proof of paperwork was provided. It's a clean title and I keep changing the oil (at around 5k or less) and air filter (every other oil change) myself, I also put a bottle of clean injector about every 3k miles.
Awesome Video, you could not have explained it better than that!!! Let the other people be Mr and Mrs Rockefeller, we all know what happened to them in 2008!!
Check the crash testing on older vehicles as well your life depends on it I own an older Chevy Blazer there's a reason they got that name,I don't drive it over 40 mph,only good for a trip to home Depot and back,think about everything when purchasing even an older vehicle not just price,don't put a price tag on your life.
Safety for sure. Mid 2000 cars aren't that safe compared new cars side airbag etc....Plus cars in mid 2000s many even camry still require expensive repairs and that costs have sky rocketed over past few years. So drive older which isn't as safe your call but got a family then not going 2nd guess.
Remember the 2017 comes with toyota car care for first 2 years or 36,000 miles or 5 routine maintenance visits. The 2006 is good only if the previous owner(s) maintained it. My 2016 toyota camry got it for 20k and some change for 5 and half years at @2.90% , paying $280 month and insurance $186 a month full coverage
This is why if you're not mechanically inclined you pay $100 to have any used car you're about to buy thoroughly checked by a mechanic before buying.
I see people use that logic to go into debt to buy new cars then stress over car payment and live paycheck to paycheck.
I drive a 2010 car that I purchased cash from a reputable dealership as a certified used car two and half yrs ago. It's at 134000 miles with no issue.
works onlt if you psy cash, if not interest eats you up.
Camrys are good just don’t get one with that 2.4l 4 cyl 2AZ-FE motor, class action lawsuit on those for oil consumption issues.
only for the 2007-2009 models.
Wait... this is maybe a sun belt video. Few cars make it that long in the rust belt.
Today, a 2017 Camry with under 200k miles is STILL worth $20k. If you took out a car loan at ANY rate under the average market return in the past 5 years (17%), you would have MADE way more money than you would have "lost" by financing.
Only paid $500-1100 for vehicles being a mechanic. Every single one appreciated in value from intial purchase + parts. Find one to do on a house.
I miss my 500k Camry
The sad truth of all this is that the “market “ cost of vehicles is dictated by the marketing companies working for auto industry...I buy used and treat my used vehicles reasonably good. but to have one car u need 2 used..and don’t let them be both at the shop...wen it gets bad get rid of them
I correct you on the title a cheap car is a Yugo or something known to have issues Toyota has value and proven record. I beg you to call it a more affordable car. Both are good value one is more affordable.
Good points. You SHOULD note that (a) there are many more safety features in the newer car, that is worth something. (b) no way you can make 6% in a "safe investment" on such a small amount over such a short period of time. Since you should use a guaranteed rate; I suggest you use the CD rate from the bank you are borrowing from (2%?).
Thank you for your feedback. And yes, you are correct that the newer cars have more safety features. Older cars are not for everyone. And you are right, there is no way to get 6% in a safe investment. It was my attempt at trying to help people realize there are other ways to save/invest other than bank CD's.
If you look around the Internet, you will find that financing a car (in my opinion a big waste of money) is not just "The American Way"; it's pretty much a universal practice nowadays. This is why and how the world has become one huge parking lot.:)
I would definitely buy the 2017 Camry because I would have money to pay for it and keep it for 20 years
that is what i did
and paid cash for it
It took a long time for me to buy used versus new, even though it's such a huge savings, and it's so obvious. You need a bit of knowledge to manage the old car problems, e.g. finding good tow truck service, reliable mechanics, etc... Plus the grim irony is for many people, a $2000 repair bill is totally impossible to manage--while a 7 year $300 per month loan is.
One oddball exception to this has been the new truck market, which is so wildly distorted lately. I did a similar calculation on a Toyota Tacoma and came to the conclusion that there was no savings buying used. I don't know how long the truck market can stay so inflated though. I get the sense it's starting to crack now.
Great feedback Kevin Kimmich. For some people the reality is that the $2000 repair bill is difficult. The unfortunate side of that is staying in car payments for a long time. Even worse if the car that gets purchased is not reliable. And I agree with you about the truck market and Tacoma. It's nearly impossible to find a Tacoma at a reasonable price in the used market. Even a 12 year old Tacoma with 200k miles can be $15,000.
It is ridiculous that in today’s society we think it’s unaffordable to pay $2000 for a car bill but can pay $300 a month for a car that will also eventually break down. I have a lot of young guys that work for me and when they inevitability ask me for a loan or to co-sign (which I always say no to) I sit them down and do the math with them. I tell them to use their down payment and pay cash for an older car. Then, since they said they could afford $300 per month , that after a year of paying that to themselves they can then upgrade to a $3600+the value of the car they paid cash for car. Some of them do it and some don’t. I have one long term employee that recently paid $20K cash for a beautiful slightly used car by using this method of saving and rolling over into something better . Always buy Toyota or Lexus and you won’t have much repair cost either.
A $2, 000 repair bill means you get rid of the car while if if you have a new car you're stuck paying that $2, 000 repair bill and you can't get out of those payments for expensive insurance
You always want to buy a car that's reliable and has a good history. Here's a tip. Never buy a Chrysler/dodge with a 2.7.
I'll sell you my '03 Tacoma Double Cab, 3.5L w/216,000 miles, good condition, full history records, for $6,000...
Were the hell do you live!? Full Coverage can go up to 250 dollars a month in Nebraska and 80 dollars a month for liability and my Driving Record is clean!
Toyota ECHO
YES! I have a Scion xA...same drivetrain...LOVE IT!!
Can you do a video on Volvo cars ?
Will do. :-)
CarsThatLast… I got a 1973 164e you could use.
This is only a good idea if you're buying a good car like a Toyota, most other brands will have problems at that age with that many miles
I drive a crown Vic. Cost me 1k. When it breaks down im just gonna buy another one. Think about it. My car once cost 30k.
I think it's also important to consider the better fuel economy you will get from newer cars. That being said I still thing buying used is the way to go.
Bill you said the truth about a lots of car but Ford Expedition is garbage
New vehicles are too expensive for the average Joe.
Really like the content here. Just as a devil's advocate 😈...
1. You only point out the possibility that the older vehicle guy can invest. The guy with the loan could also do this and pay out the 3% loan from his 6% returns. Not as good, but it's not nothing. It's kind of strange that the loan guy had no choice but to get a loan and the other guy had $16,000 to invest.
2. After 5 years you either have a considerably older car with 225,000 miles or a 2017 model with just 95,000 miles. Just a missing positive point on the other side.
All said, my choice would still align with yours.
Nobody will invest that money , and rate will be impossible to get so high. Average American is spending 125 % of his income and only a few invest in anything. Also look at that used car after 5 years will be worthless and very expensive to own . I would rather buy new car and keep it for at least 15 years , that is most cost effective when you calculate everything.
Hello Love Suzuki, you might be right that no one will invest, and that the average American spends more than they should. Also, the rate is based on a rough historical estimate of stock market returns. See: www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp
The purpose of this video is to attempt to provide financial education in hopes that it may change someone's thinking to consider that there is another alternative besides spending more than they earn. The strategy of buying a new car and owning it for 15 years isn't a bad one. I struggle with that since my needs and interests change over time and end up selling the car long before 15 years (or whenever). Based on my experience, it has been far more cost effective for me by buying a reliable used car. I appreciate your comments and viewpoint, and thank you for watching.
He fails to mention safety on early 2000s cars compared to 2017.
Hi Moe Anthony, thank you for bringing this to my attention. It is true that newer cars can offer a lot more safety features. I will be sure to consider that going forward.
CarsThatLast Hey thanks for the reply and I really enjoy your videos. Yes for sure safety and even the steel they use today vs yesteryear.Those who live in cold weather climate areas generally will find used cars with rust or beginning to rust vehicles which reduces ownership time. However I would consider leasing new because cars today are appliances with too much tech that will cost even more to repair down the road. Base model the way to go if planning to keep long term.
Thanks! Rust is also a concern and can reduce safety. I like your method, keep it simple. ;-)
CarsThatLast exactly. The real question is, do we really need all of this. What happened to just enjoying the car too. More so infotainment screens.
CarsThatLast Regardless thanks for your breakdown.