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Tim Frazier

Old vehicles as a "value"

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Dogwood
10 hours ago, caleb said:

 

I saw an article recently that said the average cost of owning and operating a passenger vehicle in the US is about $9k/year.  That seems incredible to me, but might not be far off when you consider the price of new vehicles and the number of miles people put on them.

 

I don't doubt that at all.  And that's after taxes.  So you gotta earn approx. $13k to pay that 9?   Sobering.

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E.Young
On 5/7/2020 at 7:59 PM, caleb said:

 

I saw an article recently that said the average cost of owning and operating a passenger vehicle in the US is about $9k/year.  That seems incredible to me, but might not be far off when you consider the price of new vehicles and the number of miles people put on them.

 

To @Kansas Big Dog point, this number must be factoring in depreciation in addition to car payments, insurance payments, gas, and maintenance. 

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caleb
1 hour ago, E.Young said:

 

To @Kansas Big Dog point, this number must be factoring in depreciation in addition to car payments, insurance payments, gas, and maintenance. 

 

Yup, that's the average all-in cost.  But as @Dogwood mentions above, that's representative of net rather than gross income.  Gross is likely more like 13k.

 

I would guess this is a situation where there's a gap between the mean and the median, so that your typical driver pays less than the average, with the average being skewed upward by a subset of high spenders.

 

But all caveats aside, how many houses do you drive by where there are two or more new vehicles sitting outside?  In a country where the median household income is $63k, it's pretty easy to infer that transportation costs are a significant burden for lots of households.

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E.Young
3 hours ago, caleb said:

 

Yup, that's the average all-in cost.  But as @Dogwood mentions above, that's representative of net rather than gross income.  Gross is likely more like 13k.

 

I would guess this is a situation where there's a gap between the mean and the median, so that your typical driver pays less than the average, with the average being skewed upward by a subset of high spenders.

 

But all caveats aside, how many houses do you drive by where there are two or more new vehicles sitting outside?  In a country where the median household income is $63k, it's pretty easy to infer that transportation costs are a significant burden for lots of households.

 

Probably most skewed by people taking the biggest hit on depreciation. I wonder if that stat assumes all cars are purchased new, or excludes leased vehicles. 

 

I've always been flabbergasted by some of my peers' (I'm in my early 30's) car choices. An anecdote: I had a roommate when I was in my early 20's, we both worked at the same Big 4 firm, we made more or less the same money. I have always been fairly cheap with vehicles, and that time in my life was maybe the pinnacle - I had an early Prius with 260k on the ticker, cost me $5,000 cash when I bought it at 120k and I never did a thing but oil changes and tires. My roommate had a $780/mo payment on a USED Lexus sedan. Our rent was $720/ea. I make between 4x and 5x more than what I made then, and I still can't fathom that car payment...

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Kansas Big Dog
5 hours ago, E.Young said:

 

To @Kansas Big Dog point, this number must be factoring in depreciation in addition to car payments, insurance payments, gas, and maintenance. 

 

Car payments should not be included. If you buy a $10K car, that is your cost. Whether you make payments, or pay cash the cost is still $10K. The $10K is the basis of what you depreciate. So if you estimate the useful life is 5 years, your straight line depreciation would be $2K per year. There are different depreciation methods (sum of the years digits, double declining balance etc). But, there will most likely be 2 types of taxes. Sales tax when you purchase the vehicle which would be added to the cost of the vehicle, and personal property taxes which would be an annual expense.

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E.Young
2 hours ago, Kansas Big Dog said:

 

Car payments should not be included. If you buy a $10K car, that is your cost. Whether you make payments, or pay cash the cost is still $10K. The $10K is the basis of what you depreciate. So if you estimate the useful life is 5 years, your straight line depreciation would be $2K per year. There are different depreciation methods (sum of the years digits, double declining balance etc). But, there will most likely be 2 types of taxes. Sales tax when you purchase the vehicle which would be added to the cost of the vehicle, and personal property taxes which would be an annual expense.

 

I can't speak to the methodology of The article, but I wouldn't necessarily make that assumption - didn't even specify new cars only. A new, financed car with interest, and loan servicing fees is a lot different than a straight cash deal used car. For all I know, they're also factoring in tolls, parking, and other peripheral, indirect costs. I also think a lot of folks sell their cars once they're paid off... whatever sense that makes... which would skew the numbers quite a lot. 

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kgb

I've bought "new" Dakotas, a 1999 then a 2004 with only 250 miles in 2008.  Figure on annual cost around $2000 as far as the original price of the vehicle, just as a baseline of what it takes to drive a vehicle.  Once paid off, anything less than 2k is a good deal compared to expectations.  A known flaw in the Sure-Grip of the 2004's axle reared up in 2015, cost over 1k to fix but other things have been low cost/effort like brakes, tires, fluid changes, heater fan, water pump, etc.  New trucks are huge, the Ranger and Colorado are about right sized, all are pretty pricey, the next vehicle should probably be a used Ram.  Everybody drives their own way, I'm a granny around town and on trips, but I have a cousin who has told me some of the things he's done with rental cars and I know there are people who drive their own stuff that way.  Always have that in mind when looking at used vehicles.

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erik meade

I have managed to drive a couple Miatas for a lot of miles and then sell them for a profit, and a couple of others for a very small "loss."  My per mile depreciation cost, driving 23,000 per year has been almost nothing.

I do my own repairs, but the Miata's are basically bomproof so those costs are minimal also.  I think I figured up once and I am well under a penny per mile. 

 

Also, though, I am cheap and do not fix things that many of you would fix.

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Jakeismydog2

My last truck was an 04 GMC Sierra Crew cab 4x4. It was very clean when I bought it with 180,000 miles for $8,000.  I sold it this year for $4,500 with 260,000 miles. I changed oil, put tires on it, alternator a bumper, and a new instrument cluster. So pretty much nothing on repairs. 

 

Even if I was rich I dont think I could ever stomach buying a new vehicle.

 

Its tough to get the Mennonite out of me.

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chilly460

I think I’m about to put this to the test.  Gentleman just gave me a ‘98 Grand Cherokee 5.2L, 142k on it and in decent shape but it starts and then immediately stalls, can’t be anything too bad to fix.  I have my beater ‘96 GMC with 363k on it, but it’s too beat to drive long distance without worry.  Wife needs a new ride so I’m thinking of trading my ‘17 F150 on a vehicle for her, I don’t want a car payment.  Figure I can alternatively run the GMC and Jeep for a year or so at least, save a pile of cash in the meantime

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Fishnfowler
On 5/5/2020 at 6:01 AM, gunsrus said:

I will always lose money on older trucks , Jeeps , cars , it's what I do . I'm a fanatic about doing things right , The current '99 Tahoe 2 door is a prime example . Bought it for $6100 and honestly needed nothing , ran like a top . Since then I have replaced almost everything and my mechanic does things the way I want . Most think I'm nuts , don't really care because it is the vehicle I want on the logging roads of Northern Maine . Currently at Body Shop , cleaning down the frame in excellent shape , no rot and painting it along with fixing any beginning rust on the rockers , (very little} sandblasting and replacing metal as necessary. 

Guy needs a reliable vehicle when road hunting Maine with vintage guns.

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gunsrus
9 hours ago, Fishnfowler said:

Guy needs a reliable vehicle when road hunting Maine with vintage guns.

Tried that with a New Tahoe LTZ . Gary (gaberdeen) with his new Ram and I followed "two track Tony" (Hayslope) down what started as a road , turned into a rugged two track and ended up on Lewis and Clark's trail . We found birds but Damn , that truck was cooked . Thank God for detail shops . Soon after came the dedicated "grouse mobile" . 

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stephen brown
On 5/7/2020 at 7:59 PM, caleb said:

 

I saw an article recently that said the average cost of owning and operating a passenger vehicle in the US is about $9k/year.  That seems incredible to me, but might not be far off when you consider the price of new vehicles and the number of miles people put on them.

 

Found the following (https://newsroom.aaa.com/tag/driving-cost-per-mile/)

 

In addition to analyzing the ownership costs for sedans, SUVs and minivans, AAA’s Your Driving Costs study added four new vehicle segments in 2017 – small SUVs, pickup trucks, hybrids and electric vehicles.

Vehicle Type Annual Cost*   Vehicle Type Annual Cost*
Small Sedan $6,354   Minivan $9,146
Small SUV $7,606   Large Sedan $9,399
Hybrid $7,687   Medium SUV $9,451
Medium Sedan $8,171   Pickup Truck $10,054
Electric Vehicle $8,439   Average $8,469

*Based on 15,000 miles driven annually

 

To estimate the overall cost to own and operate a new vehicle, AAA evaluated 45 2017 model-year vehicles across nine categories and focused on mid-range, top-selling vehicles. AAA’s annual driving cost is based on a sales-weighted average of the individual costs for all of the vehicle types. Key findings include:

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caleb

@stephen brown The chart you posted makes lots of sense.  The $9000-ish/year number I was remembering isn't/wasn't a total average of the population, it's for the first year of driving a new vehicle.  That number would then decline over time as depreciation declines.  So maybe an average brand new vehicle costs $8469 the first year of ownership, but by year five you're down to, say, $5,000/year.  That seems much more realistic to me than what I had been thinking earlier.

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Tim Frazier

Those number are depressing....maybe a...

 

 

 

 

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