Wednesday, March 23, 2011

Why a New Car Might Be a Bad Idea

Let's face facts...a new car is the single worst investment one can make.  Name one other thing that you purchase in your life that can cost tens of thousands of dollars and will literally lose thousands of dollars in its value minutes after you drive it away.  You can't...because there isn't one. Despite how great a deal you get on financing, your payments for that car will, since the day you buy it, be more than what the car is worth.  For every year that you own it and make those payments the gap between your monthly payment and the car's resale value grows.  Sure, you get a warranty, but you are essentially paying monthly installments for that peace of mind.  Let's look at the car above, it's a 1973 BMW 3.0 CS, which is a beautiful piece of design and the predecessor to the BMW M3.  Depending on the condition, a good one will run you between $12,000 and $18,000....which you will find is a steal of a deal as 4 years later, guess what?  You can sell it for between $12,000 and $18,000, meaning that it really cost you nothing, and you had transportation for 4 years.  That's because the depreciation is done.  Some other schmuck ate that cost for you.  Even taking into account a catastrophic mechanical failure like an engine rebuild which would run you about $3000, you average that over the 4 years you own the car and that's only $62.50 a month...which is far, far cheaper than any car payment.  The best part, you get to drive a car that you might actually love.  We're coveting the above care right now, but have reliable transportation that is paid for, and we're going to drive that until she dies. Follow the jump for a pic of another great classic that's an affordable, reliable and a stunner.

The car below is a Porsche 912.  Physically identical to the legendary 911, the 912 was manufactured by Porsche between 1965 and 1969 as their entry-level model. The 912 is a nimble-handling compact performance four-seat vehicle, delivering 90 SAE horsepower, and is capable of up to 30 miles per gallon fuel economy. This combination is possible because of a high-efficiency petrol engine, low weight, and low drag. A variant of the Type 911, the 912 is one of the most famous and successful sports cars of all time. The Type 912 initially outsold the 911, boosting the manufacturer's total production until success of the 911 was assured.  A good used one will run about $12000 to $20000.

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