I just came across your blog, in particular this post, for the first time and I am impressed. And I am totally on board with driving beater vehicles, because that’s all I have driven ever since I graduated from college 13 years ago.
I own three Volvos – two 1989 740 sedans (the old-school rear-wheel-drive cars) and a 2000 V70 wagon (newer front-drive). In fact, I’ve only owned and driven Volvos my entire life. This is what helps me keep running costs to a minimum on the three cars: I do all my own maintenance and repairs. Not only are they my daily drivers, they are my hobby and I love wrenching on them during the weekends. This saves me some good money I could have spent at an expensive auto repair shop, or God forbid the dealership.

I love it David! You’re 100% right – buy 4 years or older and let someone else take the beating in the depreciation.

Thanks for the comment!

Interesting article, obviously nothing new in regards to vehicles being a terrible purchase, but it is strange how historically vehicle loans relative to income have never been so high. Goes to show the fuel of low rates/dealer incentives/keeping up with the Jones’ etc.

I drove a “piece of crap” that was 20 years old and over almost 3 years spent $2-$3K a year on repairs because…surprise…it was a piece of crap. When I got a decent job out of school, I bought a new ish car and the payments totalled $2.5K a year. It just made sense to me. So for the same money I can drive a reliable nice car. That “wash” is worth it to me. Most importantly the TDSR is low and is in line with my income. Frankly I couldn’t give a crap about the depreciation. I drive lots, need it for work and that $2.5K over 4 years is the cost of doing business for not being later every month because of my shit car. Furthermore MPG increased from 18 to 29, so that again reduces the figure to actually making me “net” money.

That being said I did buy 4.5 years old – car had depreciated 60% and I actually put money down so the TDSR wasn’t through the roof. Paid off early over 2 years and bam happy ending.

Most importantly people need to evaluate relative to income, keep debt servicing strong, buy at least 4+ years old and buy private. F*ck paying some sales idiot taxes on top!

Hi Dyann!

I love to tell people your car will run better, drive better, and will last longer (than you think) when it’s not dragging around a hefty car payment each month. Thanks for sharing!

Hi Mark,

You won’t ever hear me encourage anyone to get a car payment if you don’t currently have one. If you can make a $150 car payment now, then make $150 car payment to yourself for 10 months. Take the $1,500 + $3k you could get for your crappy car now and buy a $5,500 car. 10 months later you could buy a $7k car. So, in only 20 months from now, you would have a paid for $7k car without having a car payment. Sound good?

It can be tough to have to swallow the fact that someone may be driving “awesome” and we are driving “crap”. But, what you don’t see when they are driving “awesome” is the $500 car payment dragging behind it. You don’t see the higher insurance costs and higher registration costs. Also, they don’t see you being car payment free and saving and investing. It may not seem like a lot right now, but imagine the separation in wealth from this one principle alone over the course of 30 years. If you need help, go out and buy the The Millionaire Next Door: The Surprising Secrets of America’s Wealthy. One of my all-time favorite books.