this post was submitted on 06 Oct 2023
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This is bad financial advice I hear all the time. People don't buy cars as an investment, they buy them as a consumable item or a form of entertainment.
Nobody says you shouldn't go to the movies because it doesn't generate a return.
It's not really bad financial advice, and people will absolutely tell you to skip some of the frivolity in the idea of generating a return. I don't think most people think of a car as an investment, but I do think that it's entirely common to spend way, way too much on a car for basic transportation. Giant trucks and SUVs that start at 40k are like the most popular cars in America. Most people probably really do need to be told that they're over-spending on cars. Like, the last time we bought a car, I had to talk my wife out of a monster SUV because she was like "well what if our kids want to take friends [on the two trips we take a year]?" Like, the other 50 weeks of the year, she's solo commuting 10 miles... I'm not making fun of her, this is sort of the default mentality in this country. In the end we settled on a smaller crossover for half the price ( < $20k) and the agreement if we wanted we'll use the money we save to rent an escalade or whatever if we want to take a big trip.
I have seen entire families with kids going to school on a moped. Mom dad and three little ones. You don't have to take it to that extreme but you are right. For all but the biggest families a regular sits 5 car is enough.
I think you're missing the point. Purchasing a utility item for its utility is fine, just don't splurge on a car when that money is far better put into housing, healthier foods, education, etc.
I also don't understand the whole "it depreciates in value" angle. Yes, everything I buy new depreciates in value once it is no longer new. I'm not buying a car to immediately sell it. So who cares?
Are there people out there flipping cars like they do with houses? Maybe tell those people.
I bought my car new and people told me the same thing. I'm still driving it 13yrs later and have had no major maintenance issues; only regular maintenance like oil, tire rotation, lube etc. The most expensive thing I've put into it are new tires.
I'll buy my next car new again and do the same thing.
“Are there people flipping cars like they do with houses?”
Yes. Dealerships. Used car lots. People who offer you $3,000 on trade in and turn around to sell the vehicle for $9-11,000 after a detail and oil change.
People should never trade in or sell their car to a lot/dealer, because they are almost always settling for about a quarter of its value. But the convenience of not having to find a buyer is awfully tempting.
I don't disagree with anything you're saying, but I'm talking about new cars. Outside of profiting off of EV rebates as someone else mentioned, I don't know of anyone buying new cars to flip. Which is why talking to people about immediate depreciation seems silly to me.
I've read if people buying new Teslas (with some kind of credit for buying an EV), driving it for a year or so, selling it for more than they paid and then repeating the process. Not sure if this is a viable strategy anymore (don't know if Tesla has that much demand anymore).
The movies don't cost as much as a car (hopefully). If you want to save money stop dropping it on useless things. You may need to cut back and actually budget. I'm still surprised at the number of people who don't even track there spending
Good. Now tell everyone who owns a house that. Do you have a house that you live in? Congrats! You own an asset. One day you might get very lucky and get slightly more than what you paid for it, after inflation, but don't count on it.