Don't Over-Buy on Your Next Vehicle

Here's a comment left on my post titled Nine Ways to Save on Gas This Summer:

There is a very interesting article in today's NY Times about the cost of driving. An excerpt:

While the F-250 costs $100,000 and a fully loaded F-150 — the better-known, smaller Ford pickup — costs about $70,000, a Ford Focus still costs less than $40,000 over five years. A Honda Civic Hybrid does, too. A Toyota Prius costs only a little more. A Subaru Outback station wagon runs $50,000 or so.

To put this in perspective, the difference between a Focus and an F-250 over five years is $60,000. The annual pretax income of a typical family in this country is also about $60,000. So choosing a F-250 over a Focus is like volunteering for a 20 percent pay cut. The relative resale values might cushion the blow a little, but not much.

That’s why more people are deciding that towing capacity and the other benefits of pickup trucks and S.U.V.’s are not worth the costs. The F-250 may still make sense for some business owners. But, as Mr. Fisher says, on those few occasions when the rest of us need to move some horses, we can rent a truck. “The new economics of car buying is, ‘Don’t overbuy,’ ” he told me. “Buy something you’re going to need most of the time.”

This is an excellent suggestion in my book. Most people I know do the opposite -- they buy for their highest-level of need (room, options, speed, etc.) and end up with more vehicle than they need most of the time. Instead, they should buy low and make alternative arrangements (like renting a car) when exceptional needs occur.

Comments

[Greg]

I agree that many people overbuy with cars. But for some people, a pickup really is necessary for their lifestyles. When I was growing up we did a lot of camping, boating and horseback riding. We used our pickup much more often than would have been practical to rent. But here's the thing: we didn't use the pickup for daily driving. Some people accused us of being wasteful because we had an extra vehicle, but when a pickup gets 9 miles to the gallon, you don't want it to be your daily driver. Plus, when you only drive it on weekends (and not even every weekend), pickups seem to last forever. My dad still has his Ford F-250 that he bought used in 1995 and it's a 1988 model. It's not as shiny and pretty as full of features as a new one, but it still runs great when he needs it.

I'm amazed by people who use full-sized pickups and SUV's as daily commute vehicles--what a waste.

[Ryan S]

Man, those numbers are high, I'm only spending $1000 per year on purchase price of my vehicle (maybe $1500 adjusted for inflation - a rough future value calculation), $1800/year on gas, maybe $600 on maintenance, $400 insurance. So using very conservative figures, aroung $21000 over 5 years, and yes, I'm driving a truck. A little 4 cylinder Chevy S-10 though.

[Eric G]

I live in suburban NJ, about 14 miles from NYC. I see a bewildering number of shiny pickups and land yacht-sized SUVs at the park and ride every day.

I don't think most people in SUVs and pickups are buying for their "highest-level of need." They're buying status symbols, plain and simple. Would something as pathetically funny as an H3 even exist if people weren't trying to keep up with the Jones'?

[guinness416]

I agree with the comment above - I don't think it has anything to do with needs (although the moving horses line is very funny and lampoons those who "do a lot of home maintenance" very well), a lot of people with those godawful trucks are thinking "if I'm going to spend tens of thousands of dollars, I may as well get something REALLY COOL".

Eric, the H3 is known as the "midlife crisis car" in our household. Pathetically funny about sums it up.

[Kevin]

I for one am glad to have had a Jeep Cherokee for the past 6 years. Numerous times I have needed the space to haul my dogs around, help someone move furniture, or bring supplies home from the hardware store. But we redid almost our entire home, so maybe we are different. I agree though that most buy for their "worst-case scenario" which barely ever happens. Could I have saved money by buying a compact car and renting a truck whenever I really needed it? Maybe, but I doubt it's anywhere in the tens of thousands.

When we replace the Jeep though, we are considering another compact car along the lines of my wife's Protege. Since we do less home improvement now and our dogs usually get walked around the neighborhood, the only time we really need to take them anywhere is to the vet once or twice a year.

I have to agree with the above that most of the SUVs and big trucks you see are status symbols and nothing more. I guarantee you nobody in a Hummer or Escalade are offroading or hauling that much stuff on a regular basis.

[justin]

Random car related question...what is the "oldest/most worn" used car that you think would be worth purchasing? At what point would a car be too used to consider purchasing? For instance, would it be worth getting a high mileage (80k+) Honda/Toyota for a couple of thousand dollars less than, say a Ford Focus with fewer miles but less of a history of longevity?

[IT Pilgrim]

When its not practical to rent a big truck, like for example, you use it more than once a month, you can always buy used. I use an F-250 to haul horses two or three times a month, so to balance out the cost I bought used. I bought a used one for less than 10k and it hangs out in my driveway most of the time. Then we bought a 16 yr old Honda Accord to drive around, both of them together for significantly less than a shiny new truck. Longevity really seems to be a matter of maintenance and quality. I got 400k miles out of my last truck. Just my two cents.

[Michael Blackburn]

My wife & I are currently locking horns over whether to rent or buy. We live in Chicago, and have a $150/month contract with ZipCar, a car-sharing company. For that $150/month we get two 24-hr days or about 20 hours of use of whatever vehicle we want: truck, hatchback, SUV. We can get a car with minimal notice, in fact we sometimes reserve it by phone standing outside the car. That price includes all our gas and full collision insurance, but not a dime of maintenance or depreciation (at least, it does, but it's shared among everyone who uses it). Even if we used it four times as much as we do now, we haven't covered the total cost of a modest sedan.

Still, she wants to buy a used car. WHY!?!?!