Like the majority of Americans, I enjoy getting a new automobile every three to five years with greater features. I’ll demonstrate how to acquire and profit from a new car while operating an old vehicle in this article. I’m not requesting something we aren’t aware of; instead, I’m writing to share how I managed to save money while satisfying my desires.
Facts:
According to bts (Bureau of Transportation Statistics), the average new vehicle will cost $0.72 per mile to drive .The per mile cost of owning an automobile is $0.44 per mile, plus insurance, title fee, tax and maintenance . Average person drive roughly 12000 – 15000 miles a year (based on leasing policies by car companies).
Any new car, once it come out of showroom, we can consider its value depreciated by 10% the next day. considering typical depreciation rates your vehicle will have lost 57% in 5 years. Based on caredge.com analytics, average depreciation value of well-known car brands. Until otherwise a car is in an accident, the cars running condition and depreciation value would stay as mentioned below.
| Manufacturer | AVG New Car Value | Depreciation in 5 years | Value after 5 years | Saving in buying old car |
| chevy | 35000 | 28% | 25200 | 9800 |
| Honda | 38000 | 26% | 28120 | 9880 |
| toyota | 40000 | 27% | 29200 | 10800 |
| hyundai | 35000 | 32% | 23800 | 11200 |
| subaru | 40000 | 28% | 28680 | 11320 |
| GMC | 45000 | 30% | 31680 | 13320 |
| mercedes | 50000 | 51.90% | 24050 | 25950 |
| infinit | 50000 | 53.00% | 23500 | 26500 |
| lincoln | 50000 | 53% | 23500 | 26500 |
| audi | 50000 | 54.50% | 22750 | 27250 |
| bmw | 50000 | 55% | 22500 | 27500 |
Simple Car loan Calculator for $50000 car:
According to Kelley Blue Book the average new vehicle price in US is $50,000. If you were to put say $5000 down to buy a car at that price, then finance the remaining $48800(including all fee in loan) for five years @6% interest, your payment would be about $940 per month. considering typical depreciation rates, your vehicle will have lost 57% of its value by the time you’ve repaid the loan that means that at the end of five years you would have spent nearly $61,000 on a vehicle that is now worth $22,500. That’s $38,500 vanished into thin air and that doesn’t even include other costs associated with ownership.
How Invest Timely on Yourself to get a NEW CAR:
For every hard work we do, we deserve a reward to please our mind. Continuously saving money doesn’t mean we don’t enjoy better products. For same example above how, I did invested in myself and enjoyed multiple cars over 10 years.
6 Steps To New Car:
1. Rather than put $10000/$5000 down on a new car use that money to buy a quality used car.
2. Then instead of paying $900 each month to a finance company tuck that money into a savings account exclusively for your next vehicle.
3. At the end of the two years your car will have lost about 15% – 20% of its value making it close to $8000.
4. Sell it and combine this $8000 in cash with the 21600 you’ve banked in savings; you now have 29600 to spend on a better used car.
5. This time I reapplied the same steps but bought better used car than before and used 25000 from the balance. And I kept contributing to savings account.
6. At end of 4/8 years, I had $45000 to spend on a New/Used car. But As I know that buying a new car is wasting 10% of its value next day, I kept buying 1 – 3-year-old cars, where we even can find some vehicles with manufacturer warranty.
See below my example on how savings accumulate overtime while closing to buy a car without help of loan:
| Year | Car | Buy Price | Sale Price | Banked | Savings Sale price+banked |
Remaining |
| 2012 | 10 year old Honda | 10000 | 8000 | 21600 | 29600 | 0 |
| 2014 | 5 year old chevy | 25000 | 20000 | 21600 | 41600 | 4600 |
| 2016 | 5 year old bmw | 22500 | 18000 | 21600 | 39600 | 19100 |
| 2018 | 5 year old mercedes | 25000 | 20000 | 21600 | 41600 | 14600 |
| 2020 | 3 year old lexus suv | 32000 | 25600 | 21600 | 47200 | 9600 |
Conclusion:
At end of 10 years, I am driving a Brand-New Tesla with additional savings of $10000 in my account, instead of owning a used car that bought in showroom which will be more than 60% depreciated in value.
The above chart can be followed with 1 year intent as well. But we might not have the savings as mentioned below.
This process had more hassle than buying a new hassle-free car in first place, but its less hassle when we think of “NOT RUNNING OUT OF MONEY” and achieving it lately.
We can Think of earning money from the Bank savings rate, rather than paying 5% or 6% interest on buying a Brand-New car.
When we can think of – A car is just another transportation expense, ultimately, we proved we can earn it rather than buy it.