If you can’t buy it in full, you can’t afford it. That was the line I used constantly to barrage my little sister with when she was deciding on buying her first car. She had $5000 saved. But first, let’s go back a few years, ok more than a few years—back to the 90’s.
I love the 90’s! Gangsta’s Paradise, JNCO Jeans, and Super Nintendo — it doesn’t get any better than that. Anyways, it was 1990; my Mother was 28 years old and been in the states for about a year. She had a brand new job working for Louis Rich Company as an assembly line worker.
The job was too far to walk, so she decided it was time to buy a car. One week later, she had a brand new car parked in the driveway. Behold a shiny new 1990, white Toyota Celica GT. What a glorious car it was! It had automatic transmission, flip-up headlights, and cassette player for a cool $20,000.
I remember my mom sending pictures of herself in her brand new car. I was telling all my friends and showing my mom’s car off! It reminds me of the Eddie Murphy stand up story with the little boy dancing around with the ice cream cone teasing the kids that couldn’t afford to buy one…then dropping it. Thinking back now for 20k, why the manual windows and hub caps? For that kind of price today, you can get 18 inch wheels and push button start. How times have changed.
Within the facade of a shiny new car are lies hidden beneath it. You see, my mom doesn’t own the car since she financed it, the bank does. The proof is in writing. The magical paper called “title.” If your name is not on it, you don’t own it. She had to get full coverage insurance, which cost more and annual registration fee was astronomical. Let break the cost down by the numbers courtesy of bankrate.com.
Total = $20,000
Tax 7% = $1,475.00
Interest 5% = $2,840.58
Total = $24,315.58
Monthly Payment = $405.26
That is a lot of money, especially back in the 90’s. A new car is a bad investment losing 22% percent of its value within the first year. Interest also never sleeps. Interest has no mercy and interest doesn’t care what your money situation looks like. Interest keeps coming like my Pup Nico at the dog park…Relentless.
If you count inflation rates that would be $44,770 according to usinflationcalculator.com! Holy cow that’s a lot of cows you can buy. The crazy thing about it is that when I purchased a brand new Mazda 6 it cost me… Wait for it…. $20,090! My payments were similar to my mom’s car from 24 years ago.
I learned a couple of things along the way to “terminate” my payments within 2 years of owning the car and selling it right after for a cheaper vehicle. Fast forward to the present and re-focus back to my sister. Of all the advice I gave her, what did you think she had a serious eye on? A $20,000, white, Toyota Camry. My mom’s first car? A white Toyota Celica.
Will history repeat itself again? In the end my sister will be the one to make the decision to purchase what ever car she wants. It’s her money after all. The problem with that is that I know based on our families history where it leads to. Debt.
With debt comes burden, and with burden comes the struggle of being a slave to monthly payments. She is a part-time grocery cashier at a local supermarket and it really makes no sense to buy such an expensive vehicle. I reiterated the consequences of what buying a 20k car can do.
New cars are bad investments. Car insurance is higher. Registration cost more. You don’t own it. A new car smell and a fancy navigation system may be nice now but it fades fast. Look at how hot the cassette player was back in the day. What about big box TVs?
They’re practically free at Goodwill Thrift Stores nowadays. Technology fades fast. What doesn’t fade, are the payments you will suffer through while owning that new car. If you lose your job, and can’t pay for that car, that car can technically be sold by the bank since it’s technically not yours. If you can’t pay it in full, you can’t afford it. After months of flip-flopping, my sister ended up buying her Dad’s Toyota Corolla. Mission accomplished.
Leave a Reply