Thursday, February 26, 2009

So...



Maintaining a high performance car is expensive. Brake pads, rotors, etc are all at least 30% more expensive. And, when a car gets over 100k miles, maintenance skyrockets. You haveto think about those one time repairs and maintenance items that crop up. I've got 97k on the odo for the WRX right now. At 105k, I've got my timing belt I need to do($400-800 depending on what pulleys/tensioners need to be replaced). Within the next 10k miles I will probably haveto do my clutch ($700-900). New tires in the next 15k ($600-800) and brakes ($400 just for the fronts) Within 40k my tranny will go. It could go tomorrow, it could go at 140k. I don't know. That will be something around 3k for some new gears installed, and hopefully strengthened a little bit. That's something like 5000-5900 worth of repairs in the next year or so, not counting unplanned breakages, oil changes, and the like.



Is it worth it ? Yes. Driving a 6 year old car that is paid off and repairing it is wayyyy cheaper than paying payments of $250 a month on a car. Those payments come to about 3000 a year or so, but that also doesn't factor in the idea that you owe money on the car, it also requires maintenance (30k and 60k maint is around 800 bucks, brakes, etc) and you're pouring 30% of every payment away in interest.



If you drive a car into the ground and throw it away once the repairs exceed the value of the car, you will save an average of 20k per car (between insurance, depreciation, interest payments, compounded over five years). The way around this is to get a somewhat used car and pay cash, and start putting away $250 a month towards your next car- theoretically the money you are saving by not having a car payment. Once your current car is run into the ground, probably somewhere at 175k miles or more, you'll have enough to buy a new car cash. Maintenance costs drop dramatically, and you have absolutely no payments and no loss on interest. If you financed a $30,000 car, you'd end up paying something like $45,000 for that car over the five years you pay it off. You just saved yourself fifteen grand, if you assume you buy a new car every five years with the cash you saved. If you keep the car even longer, the savings keeps adding up. So you keep paying yourself $250 a month for that theoretical car payment over the life of your brand new car. When it reaches 175k and you've run it into the ground, you now have something like $39,000 in cash for your next car (assuming your brand new car lasts you around 13 years, which is really easy and conservative). Repeat, and save... over your lifetime, you will have saved over $200,000 on cars, interest, insurance, maintenance, and depreciation.

So is it worth it for me to be spending 6k to keep my car maintained for the next few years? Absolutely. That doesn't even factor in the fact that it's a high performance car that I will be using for the track. You gotta pay to play baby.

Moral of the story: Buy cash only, avoid making rich CEOs of banks richer by loaning money and paying interest, and don't be so high maintenance about needing a "new" car. You'll save hundreds of thousands. No joke.

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