11 September, 2012

Cash For Clunkers For Idiots

Assume you drive 12,000 miles in a year in an old car that gets 12 mpg.  In an average year you will purchase 1000 gallons of gasoline which at $3.50/gallon equates to $3,500 in fuel costs.  Assuming you are a responsible driver and get your oil changed by the "pros" at Jiffy Lube every 3,000 miles ($29,95) you spend another $120 per year on minimum maintenance.

Assume your "clunker" is valued at $4,000, of which you pay about $50 in personal property tax for the "privilege" of owning a car.

Now, you decide to trade in this "clunker" which you own, free and clear, towards a brand-new, higher-mileage car.  You get Kelly Blue Book top dollar for your trade-in, having kept it in immaculate, showroom condition all these years.  You negotiate a great price on a 2013 Ford Fusion SE - $23,000.  After taxes and tags you owe $24,380, minus your trade PLUS the extra grand you brought with you to sweeten the pot = $19,380 which you agree to finance on-site at a great rate of 2.9%.

Your new car payment is $594.59/mo for 36 months (three years).  Not to worry, though, this new car gets 25 mpg around town and a staggering 37 mpg on the highway.  Well, your commute is mostly highway miles and you never get caught in traffic, so you assume you average about 32 mpg per tank.  Your driving habits don't change all that much the first three years, so you purchase 375 gallons of fuel at $3.50/gallon, totalling $1,312.50 in total fuel costs.  Your new car has a smart oil feature and only requires oil changes every 6000 miles, and they're included at no charge with your new car service program.  LUCKY YOU!

So, let's add it up.  Your old car, over 36 months would have cost you $11,010 to own.  Your shiny new car?  Well it is taxed at almost $415 annually on top of your fuel and payment, $26,587.73 for a net savings... hey, wait a doggone minute!  It costs over $15,000 MORE to own that new car !  And discounting basic maintenance (tires, filters, etc) for most vehicles as even-up, it would take EIGHT YEARS for the new car to begin to put you on the positive side of that equation.

And let's face it, by then you'll be wanting a new car again anyway.  Sucker.

(Please, by all means, verify or refute my thought process.)

1 comment:

  1. Thankfully no such thing as personal property taxes in my county. I have to pay $24.00 for registration renewal annually and that's it.