How long do I expect to drive this car?

This is probably a question that many car dealers don’t want their customers to ask (themselves). The reason for this is that impulsive sales improve the seller’s situation in a way that the buyer never gets to know, while the latter is mostly focused on satisfying their immediate pressing need. But buying a car is a long-term investment with long-term consequences. As a result, owning an expensive car is often more costly than we initially realize.

We know that printers can be cheap, but filling their toner cartridges is expensive. Many phones and tablets which look great are given for free in exchange for subscribing to a two-year binding contract with a mobile operator. In effect, these are strategies used to lure more clients to buy things which they may be unable to afford owning later. And if someone for some reason needs to break their contract, additional fees apply, which can be relentlessly summed and silently added until a written note mentioning a lawyer is received.

Unlike printers and mobile phones, cars are both initially expensive and subsequently maintenance-heavy. While many people own a car, their mobility is often financed by the degree of their indebtedness. This degree is increased by additional factors like driving courses, driving licenses, fines on the road, vignettes, technical inspections and fixes, maintenance after each pothole, car taxes, road taxes, parking place costs, car insurance, penalty for pollution-rich cars, driving restrictions in big cities etc. When a specific part needs replacement, the company delivering it might engage an entire chain of beneficients for which you need to pay. If you don’t understand much from cars, a technician can fix part A for you where part B needed fixing. If you then also fix part B, you’ve paid effectively twice. It’s easy to waste money on the wrong parts with such a complex object. This is well-known in the industry and also used as an advantage.

How long you expect to drive the new car is important because it likely won’t last forever. The statement that “this is a decision you do once” is far from the truth. If you expect to be driving your car for 10 years in the best case, then you would need at least a couple of cars during your lifetime. It may be a mistake to overspend now at the expense of your options later. But this is exactly what sellers want you to do. The better they are able to convince you that you truly need this car, the higher premium they can charge each time. This means that your car may become unsuitable for driving long before you have paid its full price. If it costs 50000$ and you can set aside 500$/month on average after paying everything else, then you could repay the investment in 100 months or 8.33 years. Even when the car is still operational after this period, technological advancement could have made this model obsolete only after 5 years. If innovations were introduced especially rapidly, maybe even after 3 years. The time difference between 5 (or 3) and 8.33 years is something that you chose to pay from your pocket from the start. If you expect to drive the car for 5 years, then paying for 8.33 doesn’t make sense. And if you buy the car in rates, it will get even more expensive.

Even when a car is not actively used, it is likely still losing its value. As new models, improvements, and engine types are introduced, it is unavoidable that the prices of the old cars decrease. This is how something which was initially very expensive can make you ask yourself where your mind has been to order this model. Additionally, in the previous example, we assumed that the entire spare resource has been dedicated towards the car ownership itself, where we have seen that the additional costs may outweigh the initial ones, depending on the driving patterns. We should not forget that a car can only fulfill its purpose when all these costs are met. If we assume 25000$ secondary costs during the entire 8.33-year period, we would need slightly over 4 additional years to repay this investment as well, making the car worth 12.5 years of getting regular salaries. You can judge for yourself how realistic this is to happen in a constantly changing world where entire economies can slow down. Again, the difference between 5 (or 3) and 12.5 years is something that you choose to pay from your pocket.

Pretending that we can afford to drive a nice new car in order to look good in the eyes of others is nothing else but foolish. The argument that cars help us go to work is a nice one, except that the need to be there for 12 hours/day just to cover the car’s initial cost seems more like an enslavement than a personal choice. Cars will always be overpriced; there is not much hope that the situation could change more in favor of the drivers. There is a lot of greed in this sector, so many car makers, suppliers, OPEC, exploitation at car factories and oil refineries. Entire countries engage in oil price wars. There is no known upper limit how much can be earned by selling a single product. So many interests and egos are in play. It is not clear which is more ugly—to watch this or to watch countless people being trapped under mountains of debt. Debt, which in many cases came on four wheels and offered comfortable seat and shock absorbers. You owe it to yourself to recognize when you are potentially making a costly mistake and if in doubt to stay away from it. Measure thrice, cut once.

You can use the following code as a starting point to help you in your choices:

year_months = 12 expected_driving_period = 5 avg_monthly_set_aside = 500 max_car_price_affordable = expected_driving_period * year_months * avg_monthly_set_aside # Initial cost car_price = 50000 # One-time costs driving_course_cost = 550 driving_license_cost = 150 driving_license_cost += driving_course_cost years_driving = (car_price / avg_monthly_set_aside) / float(year_months) # Yearly costs vignette_cost = 300 technical_inspection = 120 avg_maintenance_cost = 600 # includes fixing wrong parts parking_place_cost = 50 car_insurance = 25 total_yearly_cost = (vignette_cost + technical_inspection + avg_maintenance_cost + parking_place_cost + car_insurance) all_years_secondary_cost = total_yearly_cost * years_driving # Non-periodic road_fines = 80 # passing on red, driving too fast... distance_traveled = 30000; # km avg_fuel_consumption = 6; #l/100km oil_price_liter = 1.75; travel_cost = (distance_traveled / avg_fuel_consumption) * oil_price_liter # Taxes car_tax = 80 road_tax = 25 pollution_tax = 20 fines_taxes = road_fines + car_tax + road_tax + pollution_tax car_and_driving_price = car_price + driving_license_cost + all_years_secondary_cost + travel_cost + fines_taxes # Output related more_money_needed = car_and_driving_price - max_car_price_affordable car_affordable = more_money_needed <= 0 full_repayment_years = (car_and_driving_price / avg_monthly_set_aside) / float(year_months) print(''' The car price of {0}$ is affordable: {1}. How much more money is needed? {2}$ We expect to drive the car for {3} years, but repayment would take us {4} years. '''.format( str(car_price), car_affordable, 0 if car_affordable else more_money_needed, expected_driving_period, full_repayment_years ) ) # Output ''' The car price of 50000$ is affordable: False. How much more money is needed? 38780.0$ We expect to drive the car for 5 years, but repayment would take us 11.4633 years. '''