From the book, PSST! Wanna Know a Secret? Here is some truth for young people about cars…
OK, you are out living on your own, or maybe with a roommate. Either way, you have to be able to “get around.” So, you have to have transportation.
This is where the “city kids” have a distinct advantage. In large, metropolitan areas, public transportation tends to be refined. There are buses, taxi cabs, subways, and other modes of public transportation. One aspect of getting around lately is Uber, available almost anywhere. If you don’t have access to other types of transportation, you might have to buy a car.
Do you know how much a car will cost in these modern times? Many high school students drive cars, and maybe even completed a drivers’ education course. However, most teenagers do not know how much a car will cost or what it takes to maintain one over time.
When it comes to cars, most of us want something jazzy, flashy, or “really cool.” Problem is, the more jazz, flash, and coolness you desire, the more expensive the car. Remember, cars really are very expensive. If you are one of the fortunate few who have parents who can help you with the purchase of your first car, eventually you will have to replace that car. Again, it is still going to be extremely expensive.
Go back and review Chapter 6 regarding keeping transportation within your budget. In the following two chapters, you can see what it will take to make the money to buy a car and how to save for the either the down payment or the full price of your car.
Our love affair with cars began near the turn of the last century. No, not 2000, but rather 1900. Although your grandparents and great-grandparents struggled through The Great Depression of the 1930s, many began acquiring their first cars. Cars and pickup trucks became an important part of American life because of the makeup of our land. Cars became a necessity rather than a luxury, especially in rural America. Unlike Europe, where communities are closer to one another, America was spread out with great expanses of fields and forests between small towns and cities.
If you are considering your first car, the first thing you need to think about are the pros and cons of buying new. The advantage of buying a new car is that they tend to be more “maintenance free.” The attraction of used cars is that they cost less, but may require more shop time. You have to take a look at the entire cost of ownership from purchase to maintenance. Many older and well-established adults actually refuse to buy a new car because a new car loses so much value after you take delivery and drive it off the lot.
When you drive a new car away from the dealer, it loses about 20 percent of its value immediately. Depreciation can reach as high as 50 percent within two-and-a-half years of buying a new car. Realize that you are paying an awful lot of money for the privilege of saying, “I bought a new car.”
Many of your friends will think your car is really cool and you will bask in the glow for a little while. Others will think you really don’t know how to handle your money. After a while, you may even find yourself wishing you had bought a more reasonable car—especially after the reality of writing a check for the monthly payment kicks in.
Buying a car is serious business that requires a lot of investigation and decision-making. You can’t go out and buy a car “just because you really like it.” Unfortunately, for many, that’s exactly what they do. They may buy a car based on emotion rather than good, solid research.
Take a look of the question of mileage. A car with a big engine that gets only 15 miles to the gallon will cost twice as much for gas as a smaller car with a rating of 30 mpg.
To illustrate, assume you drive 17,500 miles a year. This equates to just less than 1,500 miles a month. Now, let’s take two different vehicles. The first will be the Ford F150 pickup and the second, a Toyota Corolla. At the start of 2016, the price for a new F150 listed at about $29,800. The EPA rating for mileage on the F150 is 18 mpg in the city and 25 mpg on the highway with a combined average of 20 mpg.
A new Toyota Corolla costs about $17,500. The EPA mileage estimate is 29 mpg in the city and 38 mpg on the highway. Using the same city to highway ratio as for the F150 above, mileage is approximately 32 mpg for the Corolla.
OK, hold on to your socks because now we’re getting down to the nitty-gritty.
With today’s current gas prices averaging about $2 per gallon, the F150 will cost $1750 for the year, or about $145 a month. The Corolla’s fuel bill will only be $1094 annually or $91 each month. That is a big difference.
In the coming years, there is a possibility gas will again rise to $4 a gallon—or more. For the owner of a Ford F150, this means almost $300 monthly, just for gas to drive the big Ford. For the same distance in the Corolla, the price would be $182. Of course, with the higher the cost of gasoline, the larger the spread of operating costs become between the two types of vehicles.
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