How my Mazda 3 may end up costing me $79,000

[ZLoth]

From USA Today:
 
How my Mazda 3 may end up costing me $79,000

You may have heard that a car is among the worst investments you'll ever make. Although the value of car ownership is not strictly financial (think of the freedom it brings!), a car's value drops the second you drive it off the dealership lot, maintenance costs can pile up quickly, and some of us would find it cheaper to get around by bike or public transit.

That said, it's not easy to come by evidence supporting the widely held notion that a vehicle is a losing investment. I mean, who tracks every car-related expense throughout years of car ownership?

Well, I did, actually.

I've tracked every single car-related expense since I purchased my Mazda 3 hatchback in June 2013 – every purchase of gasoline, every mile driven per tank of gas, every oil change, every tune-up, and every insurance payment. This nerdy habit has given me some unexpected insights into car ownership that may shed some light on the true cost of car ownership.

FULL ARTICLE HERE

[Brandon]

And now let's compare the comparable cost in bus fare, train fare, and ticket (bus, train, airline) costs, as well as taxi (including Uber and Lyft) costs (taxis sure as hell aren't cheap).  That's the only way to accurately determine if you gain or lose by owning a car.  I'll bet you actually save money over the long term by owning a small, dependable fuel efficient vehicle that you keep a decade or more.  Also, remember that time=money as well.

[jeffandnicole]

...a car's value drops the second you drive it off the dealership's lot...

Ugh. Such an inaccurate statement.

Let's say you buy a car, take it home, and the next day you want to return it. The dealership agrees to buy it back for what you paid, less $1,000. The car still retains the same value, but the dealership has to pay to wash it, clean the interior, put it back on the lot, and advertise it.  All of that costs money. The dealership isn't going to take it back and give a full refund, putting money into it, then selling it for a thousand more than it was sold the previous day.

When you return a product to a store, technically they incur the same costs. This is why some stores charge restocking fees. The product didn't lose 15% of its value in a week; the store incurs expenses when a product is returned.

Most stores are willing to eat those costs in order to retain customers. But in reality, those expenses are already paid by us as part of the price of the products we buy.

[formulanone]

...a car's value drops the second you drive it off the dealership's lot...

Ugh. Such an inaccurate statement.

Let's say you buy a car, take it home, and the next day you want to return it. The dealership agrees to buy it back for what you paid, less $1,000. The car still retains the same value, but the dealership has to pay to wash it, clean the interior, put it back on the lot, and advertise it.  All of that costs money. The dealership isn't going to take it back and give a full refund, putting money into it, then selling it for a thousand more than it was sold the previous day.

If you get your tag and title there, that has to be corrected. The accounting department to has to back out a deal from the records and report it as well. If you up-sell yourself into the more expensive car, you might be able to do a full exchange in a few days. Unless your dealership is in a remote area or a small town, your old vehicle is pretty much gone in 2-5 days (unless it was a desirable model in great condition to re-sell). That said, pretty much all vehicle sales are essentially final unless they're bona fide lemons (this is actually extremely rare). That said, in most cases, it's about the only major purchase that people genuinely use the repair warranty and dealerships are typically glad to take care of, to retain loyalty.

I also detest the false concept of automobiles as investments; sure, as long as you think clothing, furniture, and cell phones are "investments". If you do, I will cease to take any advice from anyone with those kinds of thoughts. They're durable goods, but with questionable shelf lives.

With the exception of limited-production exotic cars, nobody in their right mind thinks of them as some sort of financial instrument, because there's nearly zero scarcity. Automotive production hasn't slowed to any serious amount in 70 years. Occasionally, some older vehicles rebound slightly in a certain group of collectors, or unusually low-mileage or well-kept examples of cars not normally found in mint condition...but only to the right buyer seeking nostalgia or desiring something rare.

When it's all said and done, a daily-driven vehicle is just a mobile suit of armor that lets you go 45 miles an hour without a bird striking you in the face. They all wear down and there's enough used examples out there for everyone and their pets to own one, if they could. The only thing you do is keep maintaining or repairing it until it's no longer a wise use of time and money...just like everyone else.

But these days, cars are actually much less expensive to maintain. Sure, the oil costs more than before, and tires get more expensive, and the cost of labor goes up, but factor that with the cost of living, and that vehicles are more reliable and trouble-free in their first 3-5 years than ever before means that maintenance costs are way down. Many fluids last longer and have longer service intervals, drive/accessory belts last longer, and many vehicles no longer have costly timing belt replacements. Gas is currently lower in price per gallon now than it was averaging 10 years ago (yes, early-2015 and early-2009 had lower per/gallon prices, but in shorter stints).

Most customers I'd take care of rarely spent more than $1500-2000 in maintenance the first five years of ownership; figure on one front brake service, 4 tires, a few filters and some wiper blades in that time. An even cheaper car might be less than that, and a performance car is likely to need more (those low-profile tires ain't cheap).

[vdeane]

Where did the idea of considering a car as an investment or financial asset come from?  A car isn't either of those things, and it's not a liability either... it's an appliance, just like a dishwasher or refrigerator.

[ZLoth]

To me, a car is freedom. A car means that it take me 20 minutes to get to work instead of 90. A car means that I can get home at night since public transportation stops running at 10 PM, but I get off at 2:30 AM.

And, at no point do I consider my car an "investment". I do the proper research to make sure I get good value and a good feature set so that my vehicle lasts and not found on road dead.

[Rothman]

To me, a car is freedom. A car means that it take me 20 minutes to get to work instead of 90. A car means that I can get home at night since public transportation stops running at 10 PM, but I get off at 2:30 AM.

And, at no point do I consider my car an "investment". I do the proper research to make sure I get good value and a good feature set so that my vehicle lasts and not found on road dead.

[SP Cook]

IMHO,

- It is certainly correct to say that a car is not an "investment".   For the vast majority of Americans it is simply an expense of life, like housing (which may or may not be an investment, but is rarely all that good of one), food, utilities, clothes, so on.    An investment, properly defined is money you defer into some financial instrument that will (hopefully) appreciate for spending at some point later in your life, or money or other valuable things (including time) you spend in an income generating endeavor. 

- It is also correct to say that a car represents freedom.  The lifestyles that the vast majority of people choose involves the ownership of a car.   A tiny fraction of society chooses a lifestyle where comunal transit is important. 

- As noted the author does not bother to say how much the (highly taxpayer subsidized, but that is another story) comunal transit alternative would be.  And she notes that over half of her total car use are "road trips".  Which, without car ownership, she would not have been able to enjoy, unless she rented a car or a least not without spending money on rental cars or inter city comunal transportation. 

[Brandon]

- As noted the author does not bother to say how much the (highly taxpayer subsidized, but that is another story) comunal transit alternative would be.  And she notes that over half of her total car use are "road trips".  Which, without car ownership, she would not have been able to enjoy, unless she rented a car or a least not without spending money on rental cars or inter city comunal transportation. 

And, without car insurance, she may not be able to rent a vehicle, or she may have to use the very expensive insurance offered by the rental company.  That's an additional cost when not owning a vehicle and having one's own insurance.

[Max Rockatansky]

To me, a car is freedom. A car means that it take me 20 minutes to get to work instead of 90. A car means that I can get home at night since public transportation stops running at 10 PM, but I get off at 2:30 AM.

And, at no point do I consider my car an "investment". I do the proper research to make sure I get good value and a good feature set so that my vehicle lasts and not found on road dead.

So I take it the OP isn't a Ford fan (found on road dead) or do I just know way too many car memes?

[DaBigE]

To me, a car is freedom. A car means that it take me 20 minutes to get to work instead of 90. A car means that I can get home at night since public transportation stops running at 10 PM, but I get off at 2:30 AM.

And, at no point do I consider my car an "investment". I do the proper research to make sure I get good value and a good feature set so that my vehicle lasts and not found on road dead.

...

So I take it the OP isn't a Ford fan (found on road dead) or do I just know way too many car memes?

The latter 

First On Race Day

[AlexandriaVA]

People have funny ideas about what is and isn't an investment. Many people learned the hard way in the late 2000s that maybe houses aren't as good an invesment as they were made out to be...

[Max Rockatansky]

To me, a car is freedom. A car means that it take me 20 minutes to get to work instead of 90. A car means that I can get home at night since public transportation stops running at 10 PM, but I get off at 2:30 AM.

And, at no point do I consider my car an "investment". I do the proper research to make sure I get good value and a good feature set so that my vehicle lasts and not found on road dead.

...

So I take it the OP isn't a Ford fan (found on road dead) or do I just know way too many car memes?

The latter 

First On Race Day

I prefer the negative car acronyms thank you very much. 

https://www.allacronyms.com/FORD
https://www.allacronyms.com/MOPAR
https://www.allacronyms.com/MOPAR
https://www.allacronyms.com/PONTIAC
https://www.allacronyms.com/CADILLAC
https://www.allacronyms.com/OLDSMOBILE
https://www.allacronyms.com/BUICK
https://www.allacronyms.com/SATURN
https://www.allacronyms.com/HUMMER
https://www.allacronyms.com/MERCURY
https://www.allacronyms.com/LINCOLN
https://www.allacronyms.com/DODGE
https://www.allacronyms.com/PLYMOUTH
https://www.allacronyms.com/CHRYSLER
https://www.allacronyms.com/HONDA
https://www.allacronyms.com/TOYOTA
https://www.allacronyms.com/NISSAN
https://www.allacronyms.com/BMW
https://www.allacronyms.com/MERCEDES
https://www.allacronyms.com/VOLKSWAGEN
https://www.allacronyms.com/FIAT

[nexus73]

Where did the idea of considering a car as an investment or financial asset come from?  A car isn't either of those things, and it's not a liability either... it's an appliance, just like a dishwasher or refrigerator.

When I look at a shopping center parking lot, most of what I see are appliancemobiles.  Who would have thought the 21st century would have such ugly vehicles?  Give me the year 1967 back please!

Rick

[1995hoo]

I think a car CAN be an investment, but I also think the cars that fall into that category are well beyond the financial means of most ordinary people. Think some Ferraris, for example. Of course it's a gamble whether any particular model will become desirable enough to warrant considering it as a potential "investment," and then you have the really ludicrous ones that are so expensive that it's hard to imagine them ever appreciating (the Bugatti Veyron being the prime example in my mind–hard to imagine a car that sold new for €2.7 million ever appreciating). It's a very fine line, I guess.

I don't consider a car an "appliance." If I did, I'd probably drive a Prius or a Camry–both perfectly serviceable and reliable vehicles that are about as exciting as a laundry machine or a refrigerator. But I also don't consider one an investment in the sense of something I expect to give me a serious financial return. If you use the term "investment" in the sense that it's worth "investing" the money and time to make sure you get a good, reliable car you enjoy driving and will keep for many years, then in that sense I would agree that there's an "investment" involved, and of course I think it's worth "investing" the money and effort to maintain a car correctly.

[kkt]

I've seen ads for very expensive cars that call them "investments"... in an attempt to convince rich people to pay crazy money for a vehicle.

[NE2]

Liar. This isn't your Mazda 3.

[Brandon]

Liar. This isn't your Mazda 3.

If the author paid for it with no loans taken out, it actually is his Mazda 3.

[NE2]

But the author didn't make this thread.

[jeffandnicole]

People have funny ideas about what is and isn't an investment. Many people learned the hard way in the late 2000s that maybe houses aren't as good an invesment as they were made out to be...

Like any investment, one needs to research when it's time to buy and the time to sell.  For many people in that era, they bought when the price was high. The value went down a few years later. Bad investment.

BUT...there were plenty of folks that wanted to sell during that era.  They had owned their houses for decades.  They sold very high. Awesome investment!

[Brandon]

But the author didn't make this thread.

[texaskdog]

...a car's value drops the second you drive it off the dealership's lot...

Ugh. Such an inaccurate statement.

Let's say you buy a car, take it home, and the next day you want to return it. The dealership agrees to buy it back for what you paid, less $1,000. The car still retains the same value, but the dealership has to pay to wash it, clean the interior, put it back on the lot, and advertise it.  All of that costs money. The dealership isn't going to take it back and give a full refund, putting money into it, then selling it for a thousand more than it was sold the previous day.

When you return a product to a store, technically they incur the same costs. This is why some stores charge restocking fees. The product didn't lose 15% of its value in a week; the store incurs expenses when a product is returned.

Most stores are willing to eat those costs in order to retain customers. But in reality, those expenses are already paid by us as part of the price of the products we buy.

LOL at Blockbuster we had the $1.25 restocking fee, which meant me walking the movie back to the shelf

[texaskdog]

People have funny ideas about what is and isn't an investment. Many people learned the hard way in the late 2000s that maybe houses aren't as good an invesment as they were made out to be...

like someone who once called a student loan "good debt"

[formulanone]

People have funny ideas about what is and isn't an investment. Many people learned the hard way in the late 2000s that maybe houses aren't as good an invesment as they were made out to be...

like someone who once called a student loan "good debt"

Until the late-2000s, student loan debt was considered less harmful to your credit score than than other debt. Then again, home and car loans were given to folks without a job nor wallet. Statistics have shown that most student loans were, in fact, repaid in full; they usually have lower rates of interest and more time to pay them off, and lenders gave greater latitude for forbearance. It's probably because if you default on it, there's nothing tangible to repossess (note to self: sell mind-control ray to credit-scoring agencies and rule world).

Real estate is still a far-greater investment than just about any car; while there's always risk and places in the middle of nowhere that won't appreciate for decades, or neighborhoods that fall into serious decline, most real estate has a good chance of increasing in value. The land itself is scarce; it's just that buying the home at the "right price - right time - right place" isn't going to work out for everyone.

[1995hoo]

Student loan interest is also deductible on your federal taxes, subject to certain limits, and you don't have to itemize to get the deduction. So there's that.