As I type this, I’m sitting in a car dealership for an oil change. Dealerships are notoriously expensive for service. However, this one has the cheapest oil changes in my area. This tactic is to get you in the door and upsell service (they always try) or get you looking at new cars.
I am guilty of walking around to look at the new vehicles while here. It’s a time killer, and window shopping doesn’t translate into debt. My car is paid off, and I’ll happily keep it for as long as it will keep me.
When I look at a window sticker, one thing is clear; new cars are insanely expensive! A small wagon-type SUV thing caught my eye. I like small hatchbacks for their utility and good fuel economy. However, this one was $37,000 (Not the car in the picture above. That one was a cool 50k).
Yikes! Adding sales tax bumps it up to $39,000, and that’s not counting dealer fees.
Most people are not buying this car with cash—more specifically, 85% finance their new vehicle (I expected this to be higher).
-The average interest rate for excellent credit is 6% (2023).
-The average new car loan length is a whopping six years, and used car loans are almost as long.
-Tack on $7500 in interest at $645 a month. That’s with a $1000 down payment.
– As a result, you’re now paying around $47,000.
Here’s a nifty tool that you can use to calculate the total cost of a car over the period you own it. You can even enter two scenarios at once to compare two different possibilities.
In short, It was an excellent car with that new car smell. However, a quick calculation makes me appreciate my $0 payment on my current vehicle.
What do you think about buying new cars? Let me know in the comments below.