Is your car payment eating your paycheck?
Let's face it, that $750 (national average) monthly car payment feels like a punch in the gut. When you add up the interest, the rapid depreciation (cars lose a significant portion of their value the moment you drive them off the lot), and the higher insurance premiums, you're looking at a massive drain on your finances.
We're going to break down why those shiny new cars are costing you way more than you think, and how you can save thousands by opting for a reliable used vehicle. This isn't just about saving money; it's about freeing up your financial future, especially when you're thinking about big steps like buying a house.
What car manufactures are actually selling you
Think about the last car commercial you saw. Did they spend a lot of time talking about miles per gallon or the durability of the engine? Probably not. Instead, they showed you winding roads, breathtaking scenery, and happy, successful people behind the wheel. They're selling you a lifestyle, a feeling of freedom, and a boost to your social status.
Auto manufacturers are masters of emotional marketing. They understand that people buy based on feelings, not just facts. They create ads that tap into your desires for:
- Status and Prestige: They show you how owning their car will make you look successful and admired.
- Freedom and Adventure: They portray their vehicles as tools for exploration and escape. Think of the truck commercials you see. They show people off roading or camping. Reality most people don't do that with there shiny new truck.
- Happiness and Fulfillment: They suggest that their car will bring you joy and enhance your life.
They'll show you people laughing, having fun and enjoying life to the fullest. The car/truck is simply the vehicle to get you to this emotional state. The feeling of belonging, or the feeling of being an adventurer.
They know that if they can make you feel good about their car, you're more likely to buy it, even if it's not the most practical or affordable option. That's why they focus on the sizzle, not the steak.
The problem is, these feelings don't last. The initial excitement of a new car wears off, but the high monthly payments and rapid depreciation remain. By understanding these marketing tactics, you can protect yourself from impulse buys and make smarter financial decisions.
Instead of asking yourself, 'How will this car make me feel?' ask yourself, 'How will this car impact my finances?' Focus on practical considerations like reliability, fuel efficiency, and maintenance costs. Remember, a car is a tool, not a status symbol."
You never see someone frowning while driving a new car!
I can hear this right now from people defending their high car payments. And to some degree....I agree! It is exciting to have a new car and generally while your driving it, you are happy. But let me ask you this, the vast majority of the time when you are not driving it are you happy? Or are you stressed about your finances? Are you arguring about money with your partner? Are you miserable in a job you hate to pay for the car?
Ask yourself, is all of that worth this car/truck?
How High Car Payments Affect Personal Finances:
- Strained Budgets: A large portion of your monthly income going toward a car payment can leave less money for other essential expenses, such as housing, food, and utilities.
- Reduced Savings: High car payments can make it difficult to save for emergencies, retirement, or other financial goals.
- Financial Stress: Worrying about making car payments can lead to significant financial stress and anxiety.
- Limited Financial Flexibility: Having a large portion of your income tied to a car payment limits your ability to adapt to unexpected financial changes.
A recent survey conducted by the American Psychological Association indicates that as many as 8 out of 10 Americans are stressed because of money concerns.*
True cost to own a new car
A great website you can go to in order to get an estimate on the cost to own a new car is Edmunds. They have a true cost to own calculator that will break down all the costs for a vehicle so you have an idea of the money you are spending. Pay attention to the depreciation line when doing your research. An example is shown below:
If you would like to do use this tool you can go to: https://www.edmunds.com/tco.html
But if I buy a used car it will be nothing but repairs and headaches
It's common to hear concerns about the reliability and safety of used cars, but those concerns don't automatically justify overspending on a brand-new vehicle. Let's review these concerns in more detail.
Addressing Reliability:
- Modern Used Cars Are More Reliable Than Ever:
- Car manufacturing has significantly improved, and modern vehicles are built to last. Many used cars, have plenty of life left.
- Reliability ratings are readily available. You can research specific makes and models to find used cars with excellent track records.
- Certified Pre-Owned (CPO) Programs:
- Many dealerships offer CPO vehicles, which undergo rigorous inspections and come with extended warranties. This provides added peace of mind.
- Pre-Purchase Inspections:
- Before buying any used car, have it inspected by a trusted independent mechanic. This can reveal potential issues and give you a clear picture of the car's condition.
- Maintenance History:
- Always ask for the vehicle's maintenance records. A well-maintained used car is often more reliable than a poorly maintained new car.
Addressing Safety:
- Safety Technology in Used Cars:
- Even relatively recent used cars often come equipped with advanced safety features, such as anti-lock brakes, airbags, and stability control.
- Safety ratings from organizations like the Insurance Institute for Highway Safety (IIHS) and the National Highway Traffic Safety Administration (NHTSA) are available for many used car models.
- Safety Standards Improve:
- While it is true that new cars may have the absolute latest safety technology, safety standards overall improve year by year. That means that a used car likely has very good safety ratings.
- New cars also have risks:
- It is important to remember, that even new cars can have recalls, and mechanical issues leading to safety concerns.
Busting the myth that repairs on a used car or more than a new car would be.
Let's break down some math to put this myth to rest once and for all.
New Car Payment - $750/mo (average new car payment)
Yearly payment Total - $9,000
Now, I am sure there are few examples out there where somebody had a really bad experience that would have cost them a lot of money in repairs.
I am also sure that the vast majority of used car buyers pay nowhere near $9,000 a year in repairs. And by repairs I don't mean standard maintenance items like tires, brakes, etc... Those are items a new car will eventually need as well during ownership.
Do your research and have patience.
When you are not in a hurry to buy a vehicle you will be amazed at the options that come available over a month or two.
The Road Ahead: Financial Peace of Mind
In the end, your car should serve your life, not the other way around. By understanding the marketing tricks, knowing the real costs, and embracing the value of a reliable used vehicle, you can reclaim your financial power and drive towards a brighter future.
References:
- https://pas.duke.edu/concerns/emotional/stress/money-related-stress/#:~:text=A%20recent%20survey%20conducted%20by,about%20job%20stability%20and%20workload
- https://www.edmunds.com/tco.html
