Only The Rich (Or Fools) Can Afford To Buy New Cars Today

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.

Average price of a new car by Kelly Blue Book

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.

Average Monthly Payment For New Cars

It goes without saying that if the average new car price is hitting a record high, so is the average monthly car payment. The average monthly payment on new cars is roughly $730 in 2023.

Right before the pandemic began in March 2020, the average monthly car payment was around $570. Once more people shunned public transportation, the demand for cars went way up. Supply chain issues, specifically semiconductor shortages, also drove up prices.

Finally, when the Fed started aggressively raising interest rates in 2022, the average monthly car payment shot up even further. As an investor, you want to take advantage of higher interest rates and invest, not borrow!

Average monthly car payment

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!

Car Depreciation Chart For Cars Average
Depreciation Chart

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

Only The Rich (Or Fools) Can Afford To Buy New Cars Today
2023 Range Rover

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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About The Author

136 thoughts on “Only The Rich (Or Fools) Can Afford To Buy New Cars Today”

  1. Sir Farty Fartsalot

    It sounds like you need a better job if you seriously think the Tesla Model 3 is a car for the rich lol


    You’re abysmal when it comes to saving your money.

    1. Financial Samurai

      I’m unemployed, so you’re right. But based on my 1/10th rule for car buying, you need to earn at least $500,000 to afford a nicely equpped $50,000 Tesla Model 3.

      Although $500,000 is no longer a top 1% income, it is a top 3% income.

  2. I just bought a new 2023 Nissan Sentra in Phoenix, Arizona, July 30, 2023. I paid $23,900 out the door. The dealer had a special financing option at a very low percentage rate, 3.69% — of course — if you qualify. Luckily I did qualify, as my credit score was 800. I put down $10K, and took the loan for 36 months (old school). I also got $1,000 off MSRP, with no add-ons. The part I don’t like about buying a car is the hard sell when it comes to extended warranty contracts. It never fails the financial manager is very vague explaining what you get, the cost, and what will happen to your monthly payment if you finance. These contracts are too expensive for a decision to be made within 5 minutes. I always opt out no matter what.

  3. Still No Car

    Hi Sam,

    Thanks for the articles. I’ve spent a lot of time working through the variables that contribute to the cost of the car and comparing them to your strategy. I’m not sure if this is in the Comments of another article because some of the earlier posts where you introduce the 10% car buying rule have pages of comments. In my comparison of old vs new it seems repair costs really drive the relative amount you would pay for a new car vs used. Question that would help in assessing the relative value…it seems like Moose is potentially the best example of the 10% rule (although it seem like he was less than 10%). What were the total repair costs over that 8 year period? Appreciate any info you’d be willing to share.

    1. I don’t recall the total, which is the beauty of the 1/10th car buying rule. The repair costs are insignificant. I did spend $700 changing the fan and changed a tire with a nail in it. But that’s it over the past seven years.

      Stressing about car maintenance and ongoing costs is what I want people to avoid when buying a car.

      1. Still No Car

        Appreciate the reply. Sounds like though you’re also recommending buying not too used if repair costs should be inconsequential (ie find the 0-5 year old car that costs 1/10 of your gross income). I’ve spent (probably way too much) time on this including building a pretty elaborate spreadsheet that incorporates opportunity cost along with other car costs and I think people would be really hard pressed to find a better rule of thumb. IMHO it’s excellent advice.

  4. Just bought an BMW X-5 at roughly 33% of annual household compensation!

    4th X-5 in 20 years (First one used), (Last three new)

    Love them all!

    Not rich but doing ok!

    Why wait until you are old before enjoying the benefits you work for in the first place?

    I cannot imagine being proud of myself for having amassed enormous wealth while my wife drives a pauper’s sedan.

    Why play to win if nobody else is supposed to see and be inspired by your success?

    When I read the comments I get visions that are conjured up in the song “The Legend of Wooley Swamp” by The Charlie Daniels band.

    Hoarders whose families are barefoot and skeletal watching them grinning over their fortunes buried in mason jars in the backyard with a shotgun nearby for security against the imagined societal thieves.

    I say buy NEW always, and at least one level above your comfort zone.

    It keeps you hungry for more!

    1. Feel free to do what you want to do with your money. Spending 33% of your income on a car isn’t the worst thing. Financial samurai is focused on helping people achieve financial freedom sooner rather than later.

      So if you found a job that you enjoy doing for a long time, feel free to spend as much money as you want on a car.

      Personally, I knew I didn’t want to work in my finance job for more than 18 years. So instead of buying a $70,000 car, I invested the money so it can generate passive investment income.

      I value freedom, much more, especially the older I get.

      1. Sam

        Good Morning

        I wasn’t implying that people who purposely follow a plan to create enough wealth to retire early should spend extravagantly regardless.

        What I was trying to say is that at some point a persons spouse should be able to purchase the things they desire without having to feel guilty or ashamed for having those items.

        My wife’s parents both passed away at 55 seven years apart retirement is not guaranteed.

        I would vomit if I had not done the best I could to provide her with this life’s desires.

        To be honest my wife is my only net worth without her I could have a $billion and still be worthless.

        Growing up in poverty makes you invincible in every aspect of life but LOVE!

  5. 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.

  6. 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.

  7. 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.)

    1. 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.

      1. 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.

  8. 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.

      1. 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).

    1. Yes agreed this would be helpful to understand better, not only from a 1099 perspective but also those with K-1 income (in addition or instead).

      It is odd how little detail is available on the topic, especially for K-1 distributions.

  9. Simple Money Man

    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.

  10. 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

    1. 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.

      1. Uncle Norbert

        Sam, you could be correct about normalization but I think there are continued pressures on the used car market. Chips, parts supply, raw material costs and labor contracts offer headwinds. The UAW now has a recently elected president that is suggesting strikes on many brands not just a single selected manufacturer as before. Not much inventory out there…with the exception of Jeep (120 days).
        By the way, proudly….my youngest car is a 2010 with some primer. Been applying stealth wealth for decades.

  11. 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.

  12. Mat Bickley

    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.”

    1. 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.

      1. 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 :).

        1. 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.

          1. 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.

    2. 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.

  13. 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?

  14. Dunning freaking kruger


    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”

    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.

    1. 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.

  15. 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.

  16. 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.

    1. 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?

  17. 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

  18. 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?

  19. 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.

    1. 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.

  20. Beatriz Fernandez

    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!

    1. 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.

  21. 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:
    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!!

  22. 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).

  23. 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.

    1. 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?

      1. 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.

        1. 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.

  24. 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.

    1. Edward Starks

      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.

      1. 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?

  25. $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?

  26. 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

    1. 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.


  27. 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.

    1. 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.

  28. 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.

  29. 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.

  30. 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.

    1. 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.

  31. Its interesting, in my net worth analysis spreadsheet the only major items which are constantly losing value are our two cars. You buy it and drive it off the lot and instantly lose money. Now that being said used car prices spiked and hit a peak about 1 year ago… so people who sold recently maybe broke even or gained a few thousand.. but overall having a car is a necessary losing expense when living in most cities.

    Don’t buy a Range Rover. You will regret it and will likely be spending 1-5k on average per month in various repairs. A Range Rover is nothing but a rich status symbol, you never see them off road because they are too pretty and expensive! Buy a Lexus instead. The best cars are those you can pay off and then drive for 5-10 more years.. at that point its like a free lease and a major win.

    1. Love the feedback. Which Range Rover did you get that cost you $1-5K / month in repairs and for how long did you own it?

      I haven’t thought about driving as a status symbol in maybe 20 years. A better status symbol is not having to drive at all IMO.

      I’m not sure why Range Rovers get so much hate. Any ideas?

  32. Maybe all those people driving expensive new cars are leasing them rather than buying them? I heard a Tesla 3 leases for $300 a month?‍♀️ I was too lazy to verify this for myself, but might it be the case many people are leasing a snazzy fancy car rather than buying some mundane vehicle they could more readily afford to purchase?

  33. Holy crap! $777 per month for a car payment? I couldn’t fathom it. I hated my $250 car payment when I had it and couldn’t wait to pay it off!

  34. Post FI Doc

    We buy used cars, 2-3 years old, under 50,000 miles. We usually get them at 50-60% of new value. We’ve saved so much money over the years by doing this. That means more money to invest. That made a difference in our path to financial independence.

    -Post FI Doc

  35. 2003 E39 BMW M5 / 2003 E39 BMW 540i Sport (rare) …

    Both are 20 years old, in pristine condition, and people regularly ask me if I want to sell them. I always get notes on my windshield asking if I want to sell. I think the key is to make wise purchases of vehicles that will hold their value and that have the potential to become classics. I would say I have gotten my money’s worth and have no intention of selling either one.

    Even if I put a new engine or transmission in years down the road, I will still be $$$ ahead. I suppose it helps that I am a huge E39 fan, and driving both of these cars is a blast.

    To be fair, having a company car also helps keep the miles off of these two…

    1. Ah, love those older bummers too. I really liked my black on black 1997 BMW M3. It just started having transmission problems after a while. So sweet with aftermarket rims, tint, and a Momo steering wheel.

      1. E39 Fanatic

        That’s awesome! I love the E36 M3’s like you had as well as the older e30 M3’s. Amazing that 1980’s e30 M3’s fetch in the $100k range for the nice ones.

        Impressive that these models have held so much value and have such a strong cult following… evening 20-40 years later…

  36. Well, I never went by the 1/10 rule, but I have always purchased my cars in cash. Only my first car was with a loan. and I hold them for ten years or more. I have mostly purchased new cars, and my next car in about a year will be a new Honda Accord EX (possibly hybrid) with lane assist which I priced at around 40K.

  37. Timely post thanks! We are headed out today to test drive some new cars. My Grand Cherokee is 11 years old with 155,000 miles. My original plan was to aim for 200,000 miles but changed my mind this week as I want the safety peace of mind. We live in the midwest and have a 4M+ net worth, so I’m aiming to spend 2% or less of net worth. At 48 years old, I’m in a career transition to coaching and potentially less income than the past. #1 on my list is Grand Cherokee Summit, but I’m also considering Model 3 performance for the tax credit and less spend. If/when the market takes a leg down this year, I plan to do Roth conversions and it would be great to have the tax credit in my pocket. Long time reader and first time posting. Thanks for the great insight and thoughts you provide to all of us!

    1. I love the Grand Cherokees and considered getting one back when I bought my RR in December 2016.

      A lot of nostalgia as they the fanciest rides when I was in high school, along with the Ford Explorers.

    2. I own a 2016 JGC 4×4 with the 5.7L Hemi v8. I’ve owned BMW’s, Audi, Nissan, Honda, and Acura and my JGC is easily the best car I’ve ever owned. It currently had 84k miles on it and I haven’t even had a brake job! The only problem I ever had was 3 weeks after I bought it had a leak in the air suspension line that cause the suspension in the rear to bottom out. 1 week at the dealership, covered under warranty, haven’t had do do anything since but oil changes and new tires.

      Before I took a trip from SoCal to N Idaho I took it to a mechanic to inspect and see if I needed anything done. All we did was rotate the tires and he said the car is in great shape with the brake pads LESS THAN HALFWAY WORN!

      Unfortunately, I don’t like the new body style so I will keep my Jeep after 7 years of ownership. Eyeing a Porsche 911 GTS coupe or Targa GTS for my weekend fun car. Wonder how Sam feels about that, LOL.


  38. I’m not sure I get your concerns over safety in a 10 y.o. car. I had a 15 y.o. car that I drove and then gave to my sister. There were very few mechanical issues with it, and I never felt unsafe.

    Sure, things get safer, but it doesn’t mean your actual safety level goes down in the car you own. IMO, if it was safe 2 years ago, it’s still safe today. Only relative safety changes, and then it’s even a very personal thing in which your driving style plays a large part.

    I only buy new cars, then drive them forever. I don’t consider depreciation because I don’t plan to sell. When the previously mentioned car was 17 or so, my sister traded it in (used car being purchased) and was given $1K for the trade-in, which I thought was generous. I had considered selling it outright for $500 with full disclosure of the upcoming R&M needed since I thought it would give someone poorer a darn good car.

    I grew up poor, and we had crap cars, and I had bought crap cars when I was young. I will not go through that again. I know intellectually that used cars are much better now, but still have a strong aversion at the very thought.

    I’m a Toyota fan. The earlier car was a Solara, and the current is a Camry. The 2023 new prices on a Camry are 27-32K which I consider a good price for a great car. I cannot fathom spending 50K on a new car. The nice cars you list I consider too nice for me, and I have a very low 6 figure salary.

    Just thought you’d be interested in another perspective.

    1. Toyota Camry is a great car. Not bad for $30K.

      Your experience with 10+-year-old cars have been better than mine. Perhaps if I didn’t have kids, I wouldn’t be as focused on safety. But I don’t want to risk it now and am happy to get a new car every 8-10 years.

      Do you have kids?

  39. Sam, I bought my last car following your 1/10th rule and was pleased with the purchase.
    It was a Kia. You’re right about the average price of new cars increasing at ridiculous levels.
    There is a greater need to save and invest wisely for retirement as well as short and long term needs, including car purchases.

  40. I look at it 2 ways: if buying a new car to impress or invest, that’s silly because cars are not assets. They only depreciate. A new car ages the moment it’s driven out of the dealership. But if buying a new car because you enjoy the cool wind in your hair and warm smell of colitas raising up in the air, then go for it! It’s joie de vie. For some peeps, driving is like golfing or sailing.We’ve all got one life, so make the journey count. Just make sure other aspects in life are taken care of if splurging more than 10% of annual income for this pleasure. So know your reason.

    1. Nobody to impress anymore. Kinda sad actually. It was fun to drive a nice car in my 20s and feel like a big man. Now, I have tinted windows so nobody can see who I am.

  41. Timely post thanks! I have a Grand Cherokee Overland that is 11 years old 155,000 miles. My original plan was to try to get to 200,000, but just this week decided it’s not worth pushing it (and will test drive some today); safety for family is my priority. Living in the Midwest with a 4million+ net worth, I could use your 5% rule and justify a really nice mid-life auto, but I’m slightly more frugal with cars, don’t care too much about status, and would rather spend on experiences and family travel. At 48 years old, I’d love to get a BMW, Audi etc. but will probably lean towards Model 3 performance for tax credit. I’ve made a career transition and income is temporarily lower. If/when the market takes a leg down this year, I’ll most likely do some Roth conversions and have the EV tax credit in my pocket. Long time lurker here; thanks for what you do and the information that you share with all of us!

  42. I am one of those fools who bought a new car this year. Our beloved 2015 Honda Odyssey couldn’t make it out of our snowy rural road after relocating so it was an emergency need. We bought a 2022 Jeep Grand Cherokee plug in hybrid. My opinion only: It’s a high price tag without being seen as a pretentious vehicle. Plus our area has a lot of Jeeps and trucks because of it being wintry and farmland so it doesn’t stick out. As someone with anxiety, the peace of mind of being able to transport my kids safely to an ER in an emergency is priceless. Our plan is to pay it off within the year. We got $16k for our van during a separate sale. All in I’m embarrassed to say the Jeep was $64k and that is the basic trim package. Not reflective of our NW or income at all! I’m hoping our 2014 MB diesel lasts us forever. Jeep is for transporting family, MB is for whoever is traveling for work.

      1. Dealer let us put $6k on credit card which was paid immediately. Financed the remainder with our credit union at 5.5% for 60 months just to have flexibility. Put another $16k from the van sale towards. ‘Found’ another $18k available that was in an old investment account my spouse forgot about!!!! Higher payments will commence shortly as I’m returning to work after staying home with my kids during their youngest years. The monthly payment is $1,089 which is absolutely wild! We had paid cash for our last two vehicles so I didn’t have a great frame of reference. Haven’t had a car payment in a looong time. We lived in SF for 10 years and never owned a car. Rented out our garage space for $300/month in fact! So our lifetime vehicle costs are probably lower than the average bear.

        1. $1,089 a month for car payments is kinda wild! But at least you enjoy the car and feel safe.

          For me, it’s just after the first year of driving the car where the payments start to feel like a bummer. The payments still stay the same, but my appreciate for my car starts to decline.

          Safe driving!

  43. We broke your 1/10th rule, sort of. Just bought a $47k EV on roughly a $270k dual income. But, once you factor in the $7500 fed rebate and $2000 state rebate. That brought it down to $37.5k…. Then because the used car market was crazy inflated…. We got $15k for our old econobox trade in. So we put that as the down payment. So $22.5k is all we really spent. So I guess we were within your 1/10th rule technically.

    Actually I don’t know anyone who couldn’t sell their used car for at minimum $10k. So the price of new cars isn’t as high if you factor in a trade in.

    1. I guess so. But my 1/10th rule does not take into consideration trading in another vehicle. It’s a rule based on just income.

      But yes, your new car sounds affordable based on your income.

  44. I’m all over the board here. Family cars include:

    ‘21 Genesis GV70 – 5K miles (46K new)
    ‘12 Camaro – 24K miles (16K used)
    ‘08 Accord – kids car – 180K miles (28K new)
    ‘07 Accord – kids car – 105K miles (8.5K used)
    ‘01 Tundra – 155K miles (28K new)

      1. Hmm. Man, the GV70 is an awesome vehicle. One of the best interiors I’ve ever been in. Really nice materials for the price point. Love the exterior style as well. Not sure there is a better buy for a luxury SUV at 45K. The Koreans are really climbing the ladder. Hard to believe how far they’ve come in 20 years with vehicles like the Telluride and Genesis line.

        Camaro is just a good looking car that handles great. The ‘68 is probably my all-time favorite vehicle. Figured I would get the 5th generation reboot of the classic with all the modern features.

        What else can I say about Honda and Toyota. They are probably the ultimate in practical purchases. Run forever and then tremendous resale on the back-end regardless of how old or how many miles they have, as long as they’re clean.

        Update: ‘08 Accord was totaled! Son was t-boned in an intersection. Fortunately, side airbags deployed on the old vehicle and may have saved the lives of two of his buddies. All walked away with minimal injuries. So, Sam, in this instance, a 15 year old car did its job in the accident. Very thankful for that!

        Replacement: Found a loaded ‘16 Toyota Highlander AWD with 15K miles for $32,250. It was 46K new. Love finding older models with extremely low mileage! Had to replace practical with upgraded practical at what appeared to be solid value. Despite being a ‘16, it looks like something that could be sitting in the showroom in ‘23. The Limited even “ALMOST” borders on luxury feel on the interior, which is a nice surprise based on my old Tundra and Toyotas interiors in general.

  45. I do NOT understand why people even want to buy cars beyond just 1.

    After going through multiple car buying processes I can confidently confirm.

    I never ever want to step foot in a dealership ever again.

    I bought a used car last year but that’s only because I absolutely had to. Car accident.

    Otherwise, I’m only ever stepping foot in a dealership if my current car doesn’t work anymore.

    1. That’s one of my big issues with buying a car I do not want to deal with the stress and hassle of their business model.

      1. Have you tried the Costco Auto program? I used it fall of 2021 and was extremely happy. They connect you with a local dealership and they take most of the haggling out of it. I looked at 2 trim levels for a Mazda CX5: 2nd highest trim at MSRP, middle trim at $500 below MSRP. These were a steal at the time when most dealerships had mark ups.

  46. The part you’re missing is that car loans are being stretched to 60-72 months these days. Previously, 36-48 was the norm.

  47. Hi Sam. Thank you for this insightful article. The last time I bought a car, I got a certified pre-owned vehicle that I drove and loved for ten years. Now I’m in the market for a replacement and want to buy an EV. I’ve been debating whether to buy a used one or not because EVs are relatively new, and if I bought a 2-3 years old vehicle, I would miss the upgrade in technology and battery that makes EVs better and better every year. Also, I am considering the fact that a life of a battery lasts, on average, 8-10 years. If I buy a 2-3 old used EV, then I should expect to buy a new battery at a certain point if I am planning to drive it for ten years. Finally, the $7,500 is another case to prefer a new EV, because the credit on used cars is much less.
    I’m not looking for an expensive $50,000. My eyes are on an efficient and cheaper Chevron Bolt EUV (around 35,000 plus tax credit). Do you agree that the rationale of buying a used car is less valid given the still “prehistoric” market of EVs, the short life of batteries, and the incentive of the tax credit? Thank you!

      1. EVBatteryLife

        If you read the fine print. All car manufacturers have a warranty of EV batteries to be at least 70% capacity still after the 8 year mark. I think by law in California specifically it may be a 10 year warranty.

        So worst case scenario your 270 mile EV will lose 30% of it’s range at most by the 8 year mark. If it loses more than that, then the manufacturer will have to replace some battery cells to bring it up to that mark or replace the battery free of charge in an extreme case.

        So the risk to buying a new EV is very low. I purchased our EV for the sole purpose of it being a great safe commuter car, that i can quickly beat ICE cars off the line at stop lights and enjoy the instant torque. If I lost 30% of the range at the 8 year mark it wouldn’t really effect the day to day value of the car.

        It’s not like everyone needs to replace an EV after 8-10 years. The decline in battery curve eventually will fall to 1% a year maybe as the battery ages, the biggest drop I believe is the first few years. So these EVs potentially could still be excellent daily 100-150 mile commuter cars for 20 years.

        1. Good to know, thanks. It’s not the risk of buying a new EV, it’s the idea of buying a used EV and wondering how long the battery will last at full charge

          There’s a lot of anxiety from gas drivers on battery range that prevents them from making the switch.

  48. I bought my wife a 2022 Mustang Mach-E GT. It’s a fully loaded, all electric car. I never dreamed that I would love driving a car so much! My old truck sits in the driveway most of the time because we both prefer the electric vehicle. It’s lightning fast, sporty, and never have to stop at a nasty gas station. Best $60k I’ve ever spent. Hope it lasts 10+ years.

  49. Randy Petty

    Love our 2020 Honda CRV EXL Hybrid. Cost: $33,000. Could I buy a more expensive car? Yes. But why? Our Honda has been trouble free, we average 34-38 mpg and have received many compliments regarding the car’s attractiveness.

  50. Completely agree that new vehicle prices have gotten crazy high.

    Even in the Bay Area, which is less ostentatious about wealth than other areas, cheap cars are looked down on. I sold my 14-year old Porsche Boxster in 2018 after the third major repair left me stranded (fuel pump). I bought it used for $18,000, drove it for 9 years and made lots of fun memories, and got $6400 for it. I bought a 2018 Accord Sport new for $22,800 (cash), like Andrew I really enjoy it. I worked at Apple at the time, my colleague’s comments ranged from “Ew” to “Why would you go from a Porsche to a Honda??”. I didn’t fully realize until that point that the make I drove because it was fun, others were buying just for status.

    1. I LOVE the Honda Accord Sport. It looks great, smells great, and is reliable. I’ve been eyeing that car for a long time. I’ve just gotten used to riding high in an SUV.

      As we get older, we naturally care less about status and more about safety and reliability.

      1. Sam, Check out Kia Sportage hybrid. Under 40k Rated #1 in hybrid SUV. Kia makes great cars. I got a Kia K5 ex this past summer. Love it. Beautiful car. Averages 34mpg. Leather seats and everything. $31000. I trader my 2018 Toyota Avalon in and they gave me 24k for it. Not bad getting brand me car for 6 grand difference.

  51. You can be neither rich nor a fool and still rationalize the purchase of a new Model 3 when you figure in the tax rebate and cash savings you’ll see moving away from a gas powered vehicle. To wit : a no-frills standard range Model 3 starts at $43k and costs you $47.5k after taxes & fees. You get back $7.5k on the rebate (now you’re down to $40k), then calculate the savings on 10 years worth of gas savings. If you can turn a weekly $50 gas bill into a $10 electric bill, you’re saving $40 per week for 520 weeks. This is $20.8k in savings over ten years.

    Now, suddenly that irrational $47.5k electric car is the cost equivalent of a cheaper $19.2k gas-powered car. Suddenly not so foolish, right?

    1. Yes, we can rationalize anything!

      And I do think in the long-run, we all make rational decisions. So whoever spends the $50K minus rebate on the Model 3 believes its value is worth it. And that’s what matters in the end.

  52. Timely article, thank you Sam. I was particularly taken with your statement, “But one day, to help my mood, I changed my mindset.”
    As a 30-40 minute commuter in Northern Colorado, I’ve witnessed my work commute time more than double over the last 10 years. To say that I HATE this is an understatement, and I do not use the “H” word lightly. Especially, the out of state license plates, the folks escaping one place, only to turn their “new” home state into the thing they ran away from.

    Then I realized I was being a bit hypocritical. As a property casualty insurance business owner and real estate investor, it dawned on me that many of these folks have financed my forever home, 3 residential single family homes, an office building, college tuition for the kids, and a maxed out Simple IRA. Not to mention my Rolex Milgauss and a hot tub to meditate in- thanks for the inspiration on those items, Sam! I came to the realization, that the added commute time, from a cost/benefit analysis, was well worth the headache! And as for those new cars that most are making payments on each month and living beyond their means, well, higher insurance premiums! Increased traffic and accidents? You guessed it, higher insurance premiums! If you can’t beat ‘em, just tolerate em!

    1. “property casualty insurance business owner and real estate investor”

      That’s right! You should be loving the immense traffic!

      For me with an online website, I want more people to go back to working in the office so they can slack off and surf the web more. Work from home is not good for the blogging business! lol

  53. Here’s what I do. . .

    Every 10 years I go to car dealerships and “negotiate” buying a new car. After I am sure what I call “the Negotiation Kabuki” has reach its conclusion, I tell them I want to do a three year lease at the sale price with the option to buy at its conclusion. During that three year period, i get regular maintenance checkups by their mechanics at no cost to me on normal “wear and tear” and labor. I know they are going to take care of the car to the best of their ability in case I decide not to buy it at the end of the lease and they are able to then sell it as a “certified preowned.” After three years I know whether the car is a “lemon” or not. If I still like the car after the three years are up, I buy it. All of the 36 monthly payments including interest (which FWIW, was less than 1% last time I did it) are then included towards the payment for the car.

    1. Feline Citizenship

      That’s exactly what I’ve been doing and I feel like that really worked out well in rising prices market because the payoff amount at the end of the lease was significantly lower than the residual value of the vehicle. So even if I didn’t want to keep the car, I could have sold it at a profit. Leasing feels like low risk, high reward option.

      1. Yes, I bought my car at the end of my three year lease for way less than what the market price for a comparable three year old, certified model such as mine would have been if it was being sold on the open market.

  54. I’m a Honda Fit fan and couldn’t be happier with my purchase. I bought it used from someone local about 3 years after they bought it new. He was a great seller – single, no pets – and only used it to commute to and from work without many road trips. He would have kept it except he relocated to Texas and wanted to find something larger after he moved. So I feel like I got lucky and so far haven’t had any mechanical issues, just standard maintenance stuff.

    I’m rather shocked by that price chart, phew those are steep prices. I’m glad I didn’t have to buy new!

  55. I recently got a 2019 Audi A6 for my Wife’s birthday present; it’s always been her dream car. It was $35k with 21k miles and the Carfax report was fine. I thought it was a good deal.

    I agree I wouldn’t buy any new car off the lot; it depreciates way too much. Gently used a few years old is the way to go.

  56. Land Rovers and Mercedes are great if you have unlimited towing service.

    Just get a Lexus GX 640 – it is the height of auto quality as it’s been perfected over 15 years of production, it will be 5* safe and drive like new after 1 million miles.

    1. Haha! Totally agree, Shcio! I’d go Lexus over LR any day. Although I’m perfectly happy with my Toyota Highlander right now, too. (Same idea as the Lexus, just fewer floofy options.)

      1. Have to second the Lexus GX 460 Comment for sure. Amazing truck, tried and true. They do ride a little tough because they are true off road vehicles with body on frame construction which is rare nowadays. Checkout the GX blackline edition if you want better looks. The Lexus LX is also a beast.

  57. Certified pre-owned vehicles that are low mileage and 2-3 years old are the best value proposition. If you finance, you can get a subvented APR from the manufacturer. Many of these now are ex-loaner vehicles or dealer demos, so they probably have been maintained on schedule and not smoked in. More often than not, it will have a factory warranty better than the new ones.

  58. Paying an average $777 a month for a new car payment is a lot.

    Given many do, I do agree with you Americans are much much wealthier than the media or the public thinks.

    I make over $25,000 a month gross and wouldn’t feel comfortable paying $777 for a car alone.

    1. Why? You make $25k a month and are afraid of paying $777 a month for something as basic as a car? Perfect example of someone who will never get to enjoy his wealth and will leave it for others to fight over.

      1. $25k gross is $300k per year before taxes.

        On the Samurai 10% rule, that buys a $30k car.

        With no money down, $770 / mo might have the car paid off in about 4 years. Maybe I could justify it in that basis. Maybe. But I would not take on a $60k car that would take 8 years to pay off.

  59. Holy smokes those prices are crazy. I didn’t realize cars have gotten so expensive, wow. My family has one car and I also ride-share, use the bus, or walk. I can’t imagine being in an area without access to reliable public transit and having to pay those types of prices for a car. Used is definitely the way to go imo, especially if you can get a good deal on a car that’s less than 5 years old. Still feels fairly new at that age and has many years left to go before the safety issues really come into play.

  60. Hi Sam,
    Regarding the 10% rule, just a few months ago you said it is justified to raise it up to 30% to purchase the safest possible vehicle for a family. No mention of that in this article.

    You don’t enjoy driving. That says it all. A car purchase can be luxury and entertainment. It is an enjoyable experience day in and day out if you live in an area with better traffic. Some people rationally prioritize fun cars over other forms of wasteful spending. While a car depreciates, at least it holds some value unlike plane tickets, hotels, restaurants and all the other costs that go into exotic travel. In my opinion, the modern obsession with travel the absolute most foolish use of money!

    1. 30% is still $167,000 in gross income to buy a $50,000 car. That income doesn’t seem like enough given taxes and fees as well.

      But yes, if you enjoy cars, the propensity to spend more increases. And you make a good point on spending up for entertainment and fun.

      I find driving to just be a chore now, a necessity. I like my car, but I’d rather not drive. But give I do drive, I’d like to drive the safest and most luxurious car I can afford.

      Did you recently buy a new car?

      1. We are planning to replace my wife’s 9 year old x1 later this year to get something bigger and safer for our 2 kids.

        My car is a 19 accord with the stick shift and larger engine, neither of which is offered anymore. It’s worth more now than when I bought it new almost 4 years ago.

        Both cars were purchased new for cash, and so will the next one replacing my wife’s. My goal is to keep my accord 20 years. It’s a gem.

        The new Honda Pilot and the Kia Telluride just don’t cut it. At 55k they are very expensive boring appliances. I’d rather burn 90k on something special that brings joy than pay 50+ for a zero.

        Unfortunately the suv/van version of my accord – a bargain that punches above its weight – doesn’t exist. For something special, have to pay up.

        I made over 500k last year and will probably do at least 400k this year. I have a business so it varies.

      2. In 2019 I bought a brand new Audi A5 Sportback for a shade under $50k. Paid cash and have no regrets. A certified, low mileage one was only going to be $3k less. For a car I plan to drive 10 years, I wasn’t going to obsess over depreciation curves.

        1. Audi’s can seemingly be purchased used for on pennies on the dollar. It’s like everyone is afraid of the maintenance costs which kills the resale value for otherwise cool cars. Similar with a lot of European luxury vehicles but especially Audis!

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