I think the reason most people finance or lease new cars is they dont have the 30-40k cash to spare. That way they can drive new car and pay it over time even though the car price then comes to 45-50k total cost. Another reason is today most cars are traded in before the 5-6 year mark.
A lot of people want new cars with all the gadgets etc.
And your are absolutely right on depreciating part. My turbo 40k is now priced at 29k after 1year.
At the end thats a huge profit for the businesses. Add tax and fuel and it is expensive toy.
Smart people usually buy efficient and cheaper cars and spend their money on investments and once your investments bring cash you can pay with it for a more expensive car. even at finance. Another group always chase subsidies and rebates - like the EV mania lately with the government subsidy.
And lastly, past few years brainwashed lots of people too with all the "free" money and equity from housing etc. Same craziness happened with the real estate and houses.
The reason they don't have the cash to spare, is simply because they didn't save up the money. I know that eventually my cars will be worn out to the point they're ready for the crusher, and they will have to be replaced. That's why I save a little bit every month into an account specifically set aside for a new car.
When the time comes, I'll withdraw the money and go buy it. And no, I won't be buying a new car, it'll be a couple of years old, letting someone else take that huge financial hit of $10,000 or even more after just one year. Like you said, you've already lost $11,000. Personally, I can't afford that! That's a LOT of money! Generally I'll buy low mileage 3-6 year old cars. I've found that's right in the sweet spot where it's still practically new, but I'm not getting hit with that initial "drive it off the lot" depreciation. I bought my 2012 Mazda5 in 2018 with 36,000 miles for $9500. I bought my 2013 CX-5 in 2020 with 82,000 and a full service history down to the wiper blades for $9800. Paid cash for both of them. It's 2024 now, and I've built back up $11,000 in the bank for my next car, (which won't be for a good long while. Years probably).
Last time I made a car payment to a bank was in 1999 on my 1993 Protege that I bought 1 year old. And I don't miss them at all.
Right now I'm debt free, even my mortgage is paid off. There's *nothing* in the world like complete financial freedom. And ever since I paid my house off in November of 2021, I've been building my nest egg big time. It feels so damned good.
Am I saying that this is the only way to do it? Not at all. But this system works for me, and I went from being literally on food stamps 25 years ago (when I was still making car payments!) to being worth $1.2M today. And big picture? $1M ain't a lot of money anymore. It really isn't. It sure won't get you through retirement from age 65 to death. You need way more than that.
