As someone who is planning to buy a new car by 2025, I’m having second thoughts. With the average new car price at almost $50,000, it seems like only the rich can buy new cars today!
Think about it. If you follow my 1/10th rule for car buying, you need to earn $500,000 to buy the average new car. However, a $500,000 household income is the start of a top 1% income!
Even if a new car buyer violates my 1/10th rule and spends 20% of their annual gross income on a car, that still means they earn $250,000 or more a year.
Below is the new vehicle average transaction price chart by Kelly Blue Book through January 2023. As you can see, the average transaction price is $49,388, up 5.9%, or $2,768 from a year ago.
In contrast, the average price of a used car is about $27,000. A $22,388 spread between the average new car price and average used car price is significant.
Owning A New Car Is An Indicator Of Wealth
Based on the average new car price in 2023, owning a new car is one indicator of wealth. If you want more status, then own an average new car! People might treat you with more respect.
However, if you believe in Stealth Wealth, then owning the average new car is never going to happen. You don’t want to attract unwanted attention in the land of envy and thieves. As a result, you rationally drive an older car that is less expensive.
Of course, you could also buy a cheaper-than-average new car, like a Honda Civic for $25,000 and not be considered wealthy. It all depends on your age when the new car is purchased.
If you’re buying a new Honda Civic for $25,000 at age 25, you’re considered rich. But if you’re buying a new Honda Civic at age 60, you’re considered relatively frugal. After all, the median income increases with age.
Hence, if you’re buying the average new car today, hopefully you’re over 50 years old and/or have your retirement savings squared away. Otherwise, you may be working for much longer than you like.
New Cars Everywhere Is A Bullish Indicator
Unfortunately, I drive between 40 – 100 minutes a day due to school and sports activities. I dislike driving, but there are no efficient transportation alternatives for kids.
I always notice new cars everywhere when I’m driving. And each time I see one, I multiply the estimated car price by 10 to arrive at the driver’s potential household income. I’m in awe of how there are so many high-income households.
Rush hour traffic is also bad in San Francisco. Even with the work-from-home movement gaining popularity in the Bay Area, traffic is still terrible.
But one day, to help my mood, I changed my mindset.
Instead of getting annoyed at the tremendous amount of city traffic, I started to get inspired. Heavy traffic means business is booming! And when business is good, that means I should be able to earn more passive investment income to stay free.
Go traffic jams! Drivers who double park on busy streets rock!
The media loves to focus on doom and gloom because negative stories get more attention. However, if you sit in traffic every day as I do, you’ll quickly realize the economy is doing just fine.
The average new car price of almost $50,000 isn’t sustainable if there isn’t demand. And demand isn’t sustainable if household incomes are not concurrently rising.
Maybe Fools Are Also Buying New Cars
Yes, the rich are likely the main people buying new cars. But maybe fools are buying new cars as well?
After all, the average monthly payment for a new car has risen to a record $777, nearly doubling from late 2019, according to Kelley Blue Book. Even used models have climbed to $544 a month in car payments on average.
However, call me naive, but I don’t think a rational American looking to achieve financial freedom would ever spend so much money on a new car. To think the average American is irrational is to also think the average American is a fool.
And we ain’t no fools!
We all know new cars have the steepest depreciation curve during the first three years. Further, saving and investing aggressively are musts to achieve financial freedom.
Given 70% of Americans are disengaged at work, it also means 70% of Americans don’t want to be slaves to their jobs forever.
If you hate your job, it makes no sense to use a large chunk of your savings or take on a $777 monthly payment to buy a new car.
New Cars Priced Around $50,000
Given only the rich can buy the average new car, here is a list of the highest-rated new cars priced around $50,000. This way, we can quickly identify who is rich and who is not!
- Lexus ES
- Audi A4, A5, S3, A6
- Volvo V60, XC60, S60
- Volvo XC60
- Volkswagen Arteon
- BMW 2, 3, 4 Series, I-4
- Acura TLX
- Tesla Model 3, Model Y
- Hyundai Genesis G80, GV80
- Mercedes Benz C-Class
- Kia Stinger
- Cadillac CT5-V
- Nissan Z
With taxes and fees, some of these cars are pushing $60,000. Here in San Francisco, many of these new car models are a dime a dozen, especially the Tesla Model 3 cars.
Even my softball acquaintance drives a Model 3. Even though he doesn’t make $500,000+ as an educator, he did amass an almost $1 million position in Tesla stock on margin. Hence, people buying the average new car have financial resources other than their incomes.
There is more wealth out there than we know.
Thoughts About Buying A New Car For My Family
The reason why I’m looking to buy a new car in 2025 is because my Range Rover Sport will be 10 years old by then. Mainly due to safety, I think the ideal length of time to own a car is when the car hits 10 years old.
Safety features are always improving every year. Car engineers aren’t just twiddling their thumbs each year collecting a paycheck. Given I have to transport children, I’m not willing to drive a car much older than 10 years old.
I’ve driven much older cars before. And just like with owning rental properties, something always comes up.
Here are some of my old car failure examples:
- Timing belt on my 15-year-old Toyota Corolla snapped one day.
- Brakes stopped working in my 18-year-old 1989 BMW CSI while pulling into a Best Buy parking lot
- Engine in my 12-year-old 1997 BMW M3 started lurching because the transmission was failing
The spare donut tire in your car should be replaced every 10 years given rubber hardens and cracks. Meanwhile, airbags might not work properly after 10-15 years.
If a car malfunction were to cause an accident and injure my passengers I would never forgive myself if I could have afforded a safer car. The best time to own the nicest car you can afford is when you have children.
I’m sure I could drive my car until it is 15 years old to save money given I only drive about 6,000 miles a year. However, it’s probably not worth the risk given I can afford to buy a new car sooner.
Will Probably Still Buy A Slightly Used Car
Owning a new car is nice. Who doesn’t love the new car smell?! But the depreciation on a new car is too dramatic to stomach. Instead, I’ll probably buy a two-or-three-year-old car to save money. Better mental health is one of the best reasons for driving an older car.
Personally, I like the new design of the latest Land Rover Range Rover. Too bad it costs about $150,000 moderately equipped! If I really want to ride in style, I best start writing more bestselling books.
It really seems like only the rich can afford to buy new cars today. Are you one of them? If you aren’t, how did you afford to buy a new car at today’s astronomical prices? Please reveal your financial secret!
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If no one buys new cars then there are no used cars. “Never buy new” has become conventional wisdom. I do agree that new cars are becoming very expensive but used cars are just flat our overpriced since the pandemic. It used to make a lot of sense to buy 2 or 3 year old cars coming off a lease. These are completely overpriced now compared to new, I wouldn’t touch them. One of the many reasons new cars are so expensive is because all of the features. If you are buying new seek one out that has only the features you want/need and nothing extra.
Anyway I just bought a new car the represents 40% of my income. Including this loan my debt to income ratio is 18% so its very easy for me to make payments. The deprecation metrics everyone uses on new cars are *usually* flawed. This is because they are based on MSRP and up until the pandemic no one ever purchased a car for MSRP. With many brands it was typical to pay 15% below MSRP. So any deprecation metric based on MSRP (which they all are) was just worthless. Below is my experience buying a brand new 2018 Jeep Grand Cherokee in 2018 and trading it in a month ago
MSRP : $44,580
Purchase price: $35,520
Tax+Title+doc: $ 3,247
Total Out the door Price: $38,767
Drove it for 54 months, relatively low miles (48k) and traded in for $25,500 + sales tax credit 7% = $27,825
In the end it costed me $10,942 to drive the Jeep for 54 months. Around $203 per month. I had absolutely no other costs whatsoever other than oil changes and tire rotations. I spent $0 on repairs, didn’t change the tires or brakes at all.
You could say that you can no longer do this because the costs of new cars has gone up so much. But I disagree because the resale value has increased at relatively the same rate. Now if resale values drop off the face of the earth in a few years it could be a problem. But in the inflationary environment were in I just don’t see that happening. I think by waiting until 2025 to buy a new car, your just going to pay about 15% more. I think the best way to be driving a very affordable car a few years from now is to buy a new car now (or whenever you need one) and let it become used.
As long as conventional wisdom is “never buy new”. I’ll just continue to do the opposite. I am no where near rich but I can easily afford it.
Excellent points.
Where are you buying a car for that far under MSRP
Sam – Don’t forget about the Section 179 Deduction! That’s the real reason you see so many high end new cars on the road right now.
I concluded a long time ago that I would never be able to afford a new car, unless I wanted to pay a ton of interest on a car loan and have a huge car payment that I couldn’t afford — all while watching the value of the car fall to less than what I still owed.
I’ve had great success with used cars, mostly Toyotas. My 2003 Toyota went over 290,000 miles before the transmission finally went bad and I decided it was time to upgrade. My current Toyota is a 2008 with 250,000 miles, and it’s doing great. However, I have the advantage of living in a smaller town in a state with a lower cost of living, so car maintenance and repairs cost less here than they would in many places.
My advice:
– Buy a used car that you can afford to pay cash for. For some people this might be a 3-year-old car with 40,000 miles. For others, it might be a 15-year-old car with 200,000 miles.
– Be willing to spend a bit more to get a brand with a good track record for longevity. (Toyota has worked well for me, but there are others.)
– Be willing to spend a bit more for a car that has been well cared for.
– Take the car to a mechanic that you trust and have them inspect it before you buy it. Expect them to find some problems, but watch out for anything that will be expensive to fix, or anything that indicates big problems down the road, or any signs that the car hasn’t been maintained properly. Be willing to have several cars inspected before you buy if necessary, even if the inspection costs add up a bit. It will likely be worth it in the long run.
– Keep up with all of the recommended maintenance. Probably you can push certain maintenance a bit past the recommended times/mileages, but don’t push too much. Change all the fluids on the recommended schedule, and so on.
– If you get an older car that has spent its life in a northern state that gets a lot of snow, watch out for rust! Ask your mechanic specifically about rust, when the mechanic inspects the car for you. (Cars in snowy climates tend to rust badly from the salt that is applied to roads to melt snow and ice.)
Great tips. And nice to hear your Toyotas have been proven to be so reliable. The demand for Toyotas right now is high, thereby keeping resale values at the highest amongst all the brands.
Yes, and if the cost of a used Toyota is too high, then it’s probably worth looking at other reliable brands. I think that getting a reliable brand is important, but getting a car that has been well-maintained and is in good condition is probably even more important.
Sam, an update to the business vehicle article covering vehicles as business write-offs when purchased vs leased, as well as how frequently and how many vehicles someone can write-off/justify based on revenue, etc., would be cool! Americans love cars. Always a fun and informative topic.
Sure, what are some updates you know about from my last update?
Since you asked..
“You can only write-off 100% if the vehicle is used 100% for business AND you buy it brand new from the dealer (no private party used vehicle). It has to be brand new”
It’s my understanding this is not the case. Just new to the buyer, regardless of the source for purchase (new, used, private or dealership).
Got it. Do you mind sending me a source? I’ll add it to the article. Thanks!
https://youtu.be/MHmUtgL-E00
8:33 mark
Also:
“Under the NEW LAW, the limits are dramatically increased, whether it’s new or used. In fact, you can convert a personal car to “business” and take the same depreciation amounts (you don’t have to buy a new or used car to start depreciation and actual expenses).”
https://markjkohler.com/the-best-auto-deduction-strategies-for-business-owners/
Your boy just got his wife a 2019 Audi A6, 21k miles clean Car Fax for 35k (great deal in my opinion). It’s always been her dream car and the expression on her face was priceless.
Yes I know Audi’s aren’t’ supposed to be the most reliable, but I’m being optimistic that it will last for many years.
I think this is the right time to buy a new car, as we have to consider multiple factors:
1. Old cars are depreciating much less than usual, almost 30-40% increase in price
2. The interest rates on older cars are much higher than new cars. I got a deal from Hyundai for 0% apr, as opposed to 6-9% on used cars
3. Resale value of new car will be higher in the coming future as well, since last 2-3 years there has been such low production (this is a bet)
All in all, i was getting tucson for 30k 0% apr, and 2018 models for 27k with 6% apr. It wasnt worth it for me
The price differentials and changes between used and new cars are certainly interesting now.
I suspect used car prices will eventually normalize (plummet) down to their pre-covid spreads.
I NEVER planned on buying a brand new vehicle; however, the upside markets in 2022 led me to my “car deal of a lifetime.” At the time, I’m 36 and wife is 35. We have 2 kids, 6 and 3. Combined make about $130k in a very low COL area. Had a 2017 Toyota Sienna with about 90k miles we had purchased in 2018 for ~$21k (former rental vehicle with 40k miles on it at purchase.
3.5 years later and 50k miles added on, the dealership offered us $21.5k as a trade in; more than our purchase price 3.5 years and 50k miles earlier! We purchased a brand new 2022 Toyota Sienna for MSRP, ~37k. Difference of only ~$15-16k. Too good of a deal to pass up!
Added bonus was our 2017 Sienna was standard gas engine, while the 2022 is a hybrid. We have added a solid 17-18mpg so also spend mus less on fuel.
I think most people that buy new cars are NOT rich. Nor do they make 10x the price of the car. I bet most people don’t make 2X the price of the new car they bought. It is one of the things that erodes wealth creation in the USA. I have had people that working for me that make 1/3 to 1/2 of what I make and they purchase cars that are 3x the price of the car I purchased that same year. Sadly I think vehicles destroy the American Dream for many. Poor vehicle choices make for underdeveloped financials in the future. My personal motto is, “if I can’t pay cash for it….. then I don’t have enough money to buy the car.”
If that’s the case, do you think most people love their jobs then? Because no rational person would go into debt to buy a depreciating asset if they dislike their jobs. The car would just force them to work longer at a job they dislike.
Love your content, Sam. Thanks for all that you do.
I work as a Palliative Care MD. I see many people of all ages at the end of life. I’ve had many great conversations with patients and families – usually months after a bad diagnosis but before they are acutely unwell.
I disagree that human behavior is always rationale. I see many irrational decisions every week. For example (composite example to protect patient confidentiality): mother loves her family and young children. Wishes to spend ++ time with them. But, delays seeking treatment for cancer which has obvious (to any – not just MDs) physical manifestations. Finances are no concern, good health literacy, intelligent, etc. Treatment delay results in premature death = less time with children + family. Sad mom and kids.
Completely irrational.
I believe that humans have a nearly infinite ability to rationalize their behaviour, but that human behavior is rarely always rationale.
Pure rationality requires insight. Gurus, philosophers, and psychiatrists may spend their entire careers seeking this for themselves and their clients.
So – this is a longwinded way of saying that I agree with the poster that new cars are a source of great wealth erosion, and also that many people purchase depreciating assets on credit despite subpar job satisfaction :).
Howdy Doc, isn’t delaying cancer treatment rational though, because the patient fears the pain of the treatment more than wanting to spend more time with her children? The patient I feel the quality of time she has left without pain or less pain is better than extending her life with more pain.
Good counterpoint, Sam. Still irrational I’d argue for this reason: a reasonable person would likely wish to learn about options to inform a rational decision rather than make an assumption that all treatment is painful and uniformly results in increased morbidity.
I agree that fear colors the decision but disagree that influence of fear on decision-making proves universal human rationality.
Another example: murder. Assuming not premeditated, the consequences (moral, ethical, and practical) likely outweigh the positives for most people.
I suppose it depends on your definition. I think of rationality as the suitable application of human reasoning to make a decision. I would argue that fear, while relevant in decision making actually counteracts rationality.
I think you’re correct, at least based on some things that I’ve seen. I mean, there are a lot of people who have financial sense, but there are also a lot of people who think they need a new car no matter what. And they’ll take out a loan or sign a lease agreement — whatever it takes, even if it’s a very bad financial decision.
I used to live in a small town (about 6,000 people) in a rural area, far from any big cities. I used to regularly drive down a particular street in this town, that was lined with dumpy, cheap houses. Each house at the time was probably worth $30k to $40k, or somewhere in that vicinity — certainly no more than $50k or $60k. But several of these houses had new or nearly new full-size pickup trucks parked in their driveways, that had to cost at least $40k new at that time. Now, I don’t know if these people bought or leased these trucks, and perhaps some of the trucks could have been 2 or 3 years old when purchased (maybe). But it’s not too much of a stretch to say that some of these people were driving a truck that cost more than their house was worth. I always thought that seemed like an indicator of really strange financial priorities.
Extended warranties when buying certified pre-owned from a dealer. I was offered 84mo/100K for $2,450 on a 7 year old vehicle, which seems to good to be true. Thoughts or experiences?
Sam,
I don’t if it’s hate for Range Rover as much as it is Range Rover’s documented unreliability and depreciation.
“Unfortunately, the Range Rover has a reputation for not being a very reliable luxury full-size SUV. RepairPal gave it a reliability rating of 2.0 out of 5.0, ranking it 15th out of 19 vehicles in its segment. J.D. Power gave the 2021 Range Rover a reliability score of 72/100 and the 2015-2020 model years an average score of just 73/100. The 2020 Range Rover was also given the lowest predicted reliability score of 1 out of 5 by Consumer Reports.” Per car edge
Also per car edge, ”Range Rover also has a steep five-year depreciation rate of 63%. This means that if you purchased a brand-new unit for $151,793, its resale value will go down to $56,437 in five years, according to CarEdge.com”
We buy Lexus GXs used and drive 12 years or more. In 2018 we bought a 2016 GX with cash. It is ideal for our 2 kids and 2
Labs. 86,000 miles. Probably keep to 250 or 300,000 miles. The GX is labeled as a LandCruiser Prado in other parts of the world.
2022 Consumer Reports proclaimed the GX the most reliable SUV. Wait there is more! CR labeled the GX the most reliable car.
KBB stated The GX maintains some of the best residual resale value. 5 yr depreciation has a range of 36% to 46% depending on source.
So used GXs are what we buy. About every 12 years. And I drive a Tacoma 4×4. Probably equal Reliability and better resale compared to the GX. Again, we keep minimum 12 years and pay cash.
We bought the Tacoma new. We intended on buying used. A used Tacoma with 30,000 miles was the same price if not more than new when we purchased. Don’t Know if that dynamic still holds true.
Low 7 figure NW family. We buy used cars. Wait I mean pre-owned! The exception was the Tacoma. These new car prices are
Nuts. But I’d be interested to see a comparison to new car prices in 1970s compared to average income for family of 4. Maybe I’ll Research that.
Buying used right now isn’t a great option. You say you bought a 2016 lexus GX in 2018 for cash? I just googled 2021 GX models… (2 years old like you bought in 2018). That would set me back $50K+ for a used car with 20k-30k. 2018 was a different era for car buying than 2023.
I think the USED market is gonna tank harder than the new car market over the next few years. If you can get a new car at MSRP, i think it’s the way to go.
Our car is 12 years old. I don’t want to replace it yet because we park in the street. All the cars are banged up. Why buy a new car just to put it through that? We only drive about 6,000 miles/year. Once we move, I want a Miata.
I work for honda stamping, cars have changed little in the last ten years in construction, your 10 year rule for safety is nonsense, since 2005 cars have peaked in safety your rule made sense in the 90s but not now. In fact the electric gizmos in new cars mean they will age poorly look at how CVT transmissions fail so early compared to a basic 4 speed auto made 10 years ago.
Interesting you don’t think there’s been any car Innovation in the past 10 years and you don’t think there will be any safety Innovation in the next 10 years.
What is a better interval of time to buy a car that balances safety and spending money.
In your neck of the woods, do things not get old either?
Just purchased a “new” car, 2016 Honda Pilot for 18,500 cash. The catch is that it’s R title (reconstructed title) after having my trusted mechanic look it over (my brother who owns his own mechanic shop) It was definitely worth buying. My previous car was a 2003 Honda CRV. We have never had a car payment. We never want brand new cars as my husband is a firefighter in a high crime neighborhood of Philadelphia where thefts and car jackings are the norm. I can never imagine ourselves buying a truly new car even though financially we can buy it outright… just seems like a rip off
Both of our cars are over 20 years old now and since the two of us drive maybe 5000 miles/ year total it just doesn’t make financial sense to buy a new or even newer car at this point. I’m really not sure I like all the electronics and screens in the newer cars either. And why do all the newer cars look angry and aggressive now?
I live in the Netherlands, and after paying off my mortgage my living expenses are so low, I can easily afford a new car.
Health insurance (all-in) – 300€ per month per family
Good school for kids – free
Property tax – 1100€ per year
We spend 4000€ per month as a family, and that includes good restaurants, weekend out, etc
I have an impression that costs of living went through the roof in the US in last 10 years.
I know someone who recently moved to the Netherlands, and he loves living there. It sounds like a nice place to live, and more affordable than I would have guessed.
I had to trade in my beloved 2008 Subaru when I bought my “new” car, a 2020 Nissan. Subarus all have AWD as a standard feature. I wish I could still afford one, but with the increase in prices I couldn’t. You might like them!
My second car is a 2003 Subaru, and it’s still going strong at 20 years old! It’s the only Subaru I’ve ever owned, but it has been a very reliable vehicle. But I had the advantage of getting it from a family member who I knew had kept up with all of the recommended maintenance.
The last car I purchased was a new ‘20 VW GTI. I purposely went shopping the week before Christmas and for a manual transmission car. Hardly anyone buys those anymore and in December they’re trying extra hard to clear the shelves for next year’s models. I was able to get it for nearly $7k off of msrp.
Fast forward to 2022 and what I’m seeing now is unethical car dealerships adding on accessory packages that the customer can’t opt out of that add between $1500-$6000 to msrp. If you say “no thanks” they say things like:
“my hands are tied.”
“it’s safety equipment and dealership policy to add it.”
“No one else has had a problem with these add ons.”
“We have a waiting list. If you don’t want this car with these add ons, someone else is waiting right behind you that will.”
I’ve reported these dealerships to the Attorney General and received responses essentially saying that there is no problem because people are still buying the cars.
A Lexus sales person told me that one of the “safety accessories” costs the dealer about $10 and they charge $399 for it. A VW dealership I found thru Costco charges $299 for the same accessory. It’s called “Pulse” and flashes the upper “third brake light” 3 times with each application of the brake pedal. (It’s very annoying to be behind cars in traffic equipped with this.) Looking up the product takes you to a site that appears to be a shell company that only sells to dealerships so they can control the price. Many other products that are sold this way reveal the same thing when you look deeper into them. Products with names like:
“StarGard”
“DashCam”
“Pulse”
If the “Pulse” feature sounds interesting, look it up on Ebay. They sell for about $10 and probably take 5-15 minutes to install.
An even bigger issue I have with this practice is that they aren’t all that transparent about it. Less experienced car buyers will not understand what they’re buying when they just see an “accessories package” that the finance person glosses over during signing. This indicates to me that our public servants (educators, military, etc.) that usually make less than average are getting swindled out of money they don’t have for products they don’t need and possibly at a time when they weren’t planning to buy a new car.
If you’re shopping for a new car I urge you to walk out of any dealership participating in this practice. Call around to other dealerships in your area/region/country and do business with the ones that are not doing this. Plan a vacation around the trip to avoid renting a car. Bonus!!
When I was 22 years old I spent more than my entire consulting salary of $35K to buy my dream car for $40,000. I still own and drive it.
28 years later I bought my second sports car (I have other family cars) which of course costs a lot more money. The new sports car is faster, safer, flashier, and even a sound investment as used models are still trading at MSRP due to strong demand.
Despite the “poor” financial decision, nothing can beat driving one’s dream car at 22. It symbolized that years of hard work in school paid off. The feeling that I get from the new car (no matter how awesome) cannot compare. I feel like I’m showing off my wealth or projecting a mid-life crisis. When I drive my old car I feel like a winner because at 22 I was on my way to bigger and better things (which mostly came true).
Replaced my 2001 Explorer Sport Trac (bought new in 2001) for a new 2022 Ford Ranger because I needed a vehicle to pull a livestock trailer in case of a CA wildfire evacuation. Our truck is only driven when a truck is needed (our cars get better mileage) so will only see about 3000 miles a year use. I will be keeping this truck likely 20 years again. Ordered and bought from a dealer 2000 miles away from CA to save 15% off MSRP (after all discounts and rebates) vs here in CA where 3K to 5K markups were all occurring last year. And the lower price saved CA sales tax as well as saves every year on car registration as it’s based on purchase price.
Private party sold the 2001 (with only 70K miles) for $6500.
Rather than pay cash for new truck, took the Ford financing offer (available at time of order) of 36 months at 0.9% interest, and have the purchase cash in a CD at 5% interest.
And finally, just for peace of mind and an effective low cost, from the same dealer purchased the Ford (not a third party) 10 year extended warranty $0 deductible plan (10 years / 48000 miles) for $1180. Basically, this plan all but wear and tear that the original 3 year / 36000 mile manufacture warranty covers – so the extra 7 years coverage equates to $169 per year for years 4 through 10. Even if never used, I’ll take this as “insurance” I’m willing to pay for.
How do you avoid the emissions problem w/buying a car outside of CA (w/o CA emission controls one presumes) and then moving it here?
One would need to double check on the specific car bought out of state, but all new Ford’s are 50 state emission qualified (ie meets CA standards). In fact, unless it’s some exotic car, I’m fairly certain all new vehicles will be 50 state emission compliant.
Once the new car crosses into CA, you have 10 days to register at the DMV – and even though the vehicle is “new”, you do have to go get a smog certificate before going into the DMV with your paperwork ($35 where I went).
The out of state dealer I purchased from is selling more cars over the internet (about 100 a month) than they do locally. They do not collect any sales tax, and it’s $35 for a 30 day temp tag that’s valid in all states to get the vehicle back to your state.
The CA DMV does collect sales tax (though it’s called use tax) on the purchase price, as well as your registration and license fees. But as I stated, the purchase price was 8 to 10K below what the CA dealers wanted, so I saved on sales tax and license fees as well.
My one way flight to dealer was $64 (nonstop budget airline), and my gas was about $400 driving home.
I also picked up a new horse trailer in Oklahoma (purchased before I left to get the truck) on the way back, again saving about 2 to 3K over CA prices.
Sounds like good arbitrage! I forget, after living in CA since 2001, we have different car rules here. I sold one of my old cars due to not wanting to pay $500 to fix it to pass smog. It was a 14-year old Land Lover.
Go with a used Lexus. Luxury, safety, affordable, reliable and you just cannot kill them. Last one I had we sold at 300,000 miles and I still see it driving around town. Current one is a LX we bought with 125,000 miles, we put another 50,000 miles on it and it screams down the road. Will never own a different brand. Wife bought a new Honda. Not impressed.
Exactly, the 2021 or below GX460 would be the best for his size family with the V8, bad in Californiafication but OK everywhere else; especially, down here in the free State of Texas and the Energy Capital of the World. LOL
GLTU folks that don’t have the energy infrastructure, capacity, or refinery facilities close to where you live. So, buy your overpriced TESLAs and fight over the SuperChargers, which will now be available to all you EV owners, so I can’t wait to see the lines on YouTube. Oh, and Energy is NOT in transition, we will need all forms of energy, oil, gas, nuclear, coal, wind, solar, geothermal and hydro that we can produce and NatGas/LNG is the future. The U.S. is building 24 LNG terminals to supply LNG to the World, no other country has the infrastructure or NatGas/LNG capacity to provide clean NatGas to power those electricity generating turbines.
“A combined-cycle generating plant primarily uses combustion turbines, heat-recovery steam generators (or boilers), and steam turbines to convert natural gas fuel to electricity. Natural gas is burned in the combustion turbines to produce mechanical power that is converted to electric power by the generators.”
Anyway, the best EVs are made in China by BYD and XPENG. I invest alongside Uncle Warren and Uncle Charlie on BYD and will take the geopolitical risks on both positions as part of my long-term IRA bucket. I have four buckets (three tax-deferred and one taxable for my RMDs). I have no regrets, love DIY investing and pay my taxes early.
These stream-of-consciousness rants are just exhausting.
1). You hate Cali
2). Energy will never change (good luck with that one)
3). Something, something, methane, etc.
4). EVs are better in China.
So are you a Russian or Chinese troll? Or just a clueless Texan being manipulated by such?
$160K in passive income on $810K in investments sounds like a 19%+ return. Is the entire $160K from Fundrise or the entirety of your real estate portfolio?
Entirety of my real estate portfolio. But this is off topic.
I have generally loved reading your articles but this one clearly seemed like written to advertise other brands and references to your other articles. Please refrain from doing so in the future if you do care about maintaining a good reader following. Please don’t take it as criticism just feedback. Tks
Sorry to disappoint you. Do you think it’s better I keep the type of car I drive private and not mention the other car brands since I don’t make money from them? That would be nice if I did.
What is it that you do for a living? I’m happy to provide you a refund for what it costs to read my site.
Thanks
In 2005 bought new Toyota Corolla, still drive it, no issues whatsoever. Small repairs, cheap prices. Current net wealth more than 2,3 mln but sill can’t make myself go for another, new one (around 37 000 Euros here in Europe). Maintenance, much higher prices for repairs, lot’s of sensors and software, insurance just make it stupid expenditure. Better invest it elsewhere and keep current way of stealth living. Just saying.
Not cheap in Europe! With a 2.3 million net worth and a 17-year-old car, I give you permission to get a new car if you want :)
It helps when you actually sell your old car or trade it in.
I currently use a salary sacrifice scheme (UK based) to hire a brand new car for 3 years. Maybe the new cars you see are not being bought outright, but are in use via a tax efficient method? This avoids costs for repairs associated with older cars and importantly saves on tax payments. I feel like its a good deal but interested in your opinion on this.
I pay 222 a month for my brand new 2022 Kia Forte I purchased last March. I traded in a 2017 Kia Rio that was worth 7500 on a trade in. I knew my car would never be worth more than what it was at the time last year. I got the LXS trim level, step above base, for not much more money. Sticker was 21,100 dollars.
$222/month sounds affordable. But I guess it depends what your income is.
Given that you would like an SUV, safety is a must and you want bang for buck without going broke test drive a Mitsubishi Pajero Sport VRX. It’s a real 4WD, has 12 air bags, radar and will go anywhere. Do they let you drive diesel in CA? That minor detail could be a deal killer.
I haven’t seen a Mitsubishi in a long time. Which means getting parts and people who know how to fix them might be tough.
I just need a 4-wheel drive vehicle to go to Tahoe. My RR works well enough.