Wednesday, July 15, 2009

True Cost of a New Car (Revisited)

Last time I checked in on the financial aspects of our purchasing a new car (an '06 Accord back in late 2005), it was June of 2007, and I was fiddling with Excel and examining the true costs of buying a new car.

At that point in 2007, I calculated that the Accord had cost us something like $4,213 all together. We paid the car loan off in September, 2008, after 990 days.

I figured this past weekend was a nice time to check back in on the "true cost" of the Accord. As expected, now that we're over three years into ownership, the numbers are distinctly ugly.

With that in mind, I checked the Kelly Blue Book and NADA sites for a rough value of our Accord in today's market. The lower of two sites' values was $14,055 so I went with that. If we sold the Accord today for that amount, we'd have spent about $11,761 for the priviledge of driving the car for 3.5 years or so. (That's $272 per month for those of you with only ten fingers.)

By doing a bit more math, we see that our Accord has depreciated roughly 36 percent from its sales price in the past three-plus years. That $7,893 is a nasty hit to take — and that's on a car known for its above-average resale value.

So does it hurt me to look at these numbers? Yes, I suppose it does ... a little. But this is the price we pay for "buying new." We were aware of all this at the outset.

And oh yeah: Anyone who tells you your car is an "investment" is either (1) in the car business, (2) unable to do math, or (3) just plain daft!


— Posted by Michael @ 8:40 AM


Did you not occur any maintenance costs during this time? If you are going to include window tint, I would think oil changes and other routine maintenance should also be included in the cost analysis.

Anonymous Anonymous
, at 9:19 AM, July 15, 2009  

Our old Honda (1995) would've included similar maintenance costs as well (and possibly even repair costs), as would pretty much any car. Well, except the high-dollar variety with maintenance plans "included."

I didn't include maintenance costs here because they'd be a factor regardless of whether we'd bought new or otherwise. I'm trying to wrap my head around the costs of "buying new" versus the alternatives.


My first car I bought was used and a year old. I hope I can avoid buying a brand new car.

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Thoughts on my personal finances, goals, experiences, motivations, and accomplishments (or lack thereof).

My financial life began turning around when I took responsibility for it.
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