It's Just $575 A Month
The average new car loan payment as of January 2021 was $575 a month. It gets worse, lenders are willing to give 96 month (yes, 8 years!) loans now. Raise your hand if you think an 8 year old car is still "new"? Yeah, thought so. What is it really worth? A plain jane 2013 Ford Taurus originally sold for $27,000, in 2021 it is worth about $7100, a 74% drop in value. Yet, you would still be making payments on your "new car".
We have a couple of things to say about this situation, but the first one is... REALLY?!?!
Wheeee!
Last week on the way to work Ron's car decided to turn into a thrill ride. Instead of stopping at the stop sign at the end of the street, the brake pedal slowly mushed to the floor and he slowed (just a bit) and went right on through. Thankfully the handbrake still worked so he was able to stop it a little further down the street. Luckily, that day Meg was right behind so she was able to stop and we moved everything to the van and starting sharing a car.
Ron took Meg to work, then went to work, and then picked her up at the end of the day. So things worked out. A hassle, but doable.
We Need A Car
After having it towed to the shop a couple of days later the mechanic called, you know your day just got worse when the first words out of their mouth are, "Have you thought about buying a different car?" We've got a great mechanic his professionalism and honesty are what makes us keep going to him. He went on to fully describe the situation which we'll give you the highlights. $1600 in repairs MINIMUM, brakes lines rusted out, fuel lines rusted out, around 16 hours of labor, OH MY GOD! The poor old 2001 Oldsmobile Alero was only worth $1200.
Wasn't Planned, But We Had A Plan
We had been planning on replacing a vehicle. Our target date was the end of 2019 or sometime in 2020. So, we weren't ready to buy a car, however, every month we pay ourselves a car payment (not $575, but still a few hundred bucks) and have done so for years. We had enough to buy a decent car, it was just an inconvenience and we were a little disappointed our plan to replace the minivan in two years may be pushed to three now.
We haven't had a car payment since 2012, don't plan to ever have one again. Are we concerned about driving "unreliable used cars"? No, we used to buy new cars. They still needed maintenance and they occasionally broke down. Cars are mechanical beasts and a warranty does not cover everything.
Have A Plan, Work Your Plan
What was a car emergency could have been compounded by also becoming a stress inducing financial emergency. As it was, we had a week's worth of inconvenience. Our specific car plan didn't work, but our overarching plan protected us. Be intentional with your money. Make a plan. Work your plan. Be financially successful.
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