Tag: used cars

The Used Car Sweet Spot

Guest Post by Eric Peters

Buying a new car is always a bad decision – financially. It doesn’t matter which brand or make or model. You will always lose money.

It’s just a question of how much.

All new cars bleed value like the Titanic took on water after it hit the iceberg. Even the least-“leaky” ones, from brands with high resale value – Toyotas and Hondas, for instance.

Both make great cars – reliable, well-built, etc. But that’s not the issue.

Depreciation is.

Even the cars which depreciate less horribly than others – those Toyotas and Hondas – still lose about 20 percent of their value during the first 12 months you own them. If you buy a new car for $35,000 – which is the average price paid for a new car – you can expect to take a $7,000 haircut on the car during that first year.

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Stucky QOTD: My Next Used Car

Hope this is just a fun post … a distraction from doomy gloomy shit. So, here’s the deal.

Basically, we’re fucken idiots. We leased our current vehicle, a 2014 Hyundai Sonata 2.0T.  (It made sense at the time for tax reasons.) Whatever. That money is a sunk cost, it’s gone. The car has only 26k miles. The payoff balance is $16k … not counting taxes, registration, and other fucken fees.

We’re not going to do it. The car is due to be returned,no exceptions, one week from today.

This time were going to buy a USED car. We’ll be paying cash. I’m fucken sick and tired of car payments. Our Max budget is $12,000. That’s where you come in.

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Buy Steel (Not Gold)

Guest Post by Eric Peters

Gold may not have the high rate of return that the casino called Wall Street offers … to insiders. But it is one way to store value – and that accounts for its popularity among people who may not get rich quick but manage to avoid becoming poor.buy-gold-lead

Used cars are another great way to transmute depreciating paper money into a durable asset that – like gold – is portable and fungible (i.e., easily converted into other things of value).

The government has inadvertently created a bull market for them, too.

First, it decreased supply via the infamous “Cash For Clunkers” program (a “clunker” being defined not by mechanical condition, incidentally, but by the car’s gas mileage numbers). The government paid people inflated sums of other people’s money (an estimated $3 billion) to turn in perfectly roadworthy used cars in for unwarranted, early destruction … in order to “stimulate” demand for new cars.

This was like burning down every third house in a neighborhood to create a “need” for new housing.

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Don’t Buy New

Guest Post by Eric Peters

Whatever you do, don’t buy new. It no longer makes sense – and can be very bad for your wallet. I advise this as an automotive journalist, a guy who writes about new cars for a living. This is probably not a good idea. I am not supposed to advise people against buying the new cars I write about. But I do – and here’s why:buying lead

In the first place, new cars have become disproportionately expensive.

Meaning, relative to what most people – most families – earn. Last year, the average price paid for a new car (this is called the “transaction price” within the industry) was in excess of $30,000. A record high. But the average family income in the United States is only in the neighborhood of $54,000 – and has not increased significantly in more than a decade.

The purchase of a $30,000 car is disproportionate relative to the average family’s ability to pay for it. This is why the length of the average new car loan has been extended to six years – and is headed toward seven (and then probably eight). Stringing out the payments over a longer period makes the car seem more affordable, but it’s not. You are still paying an amount that’s disproportionate relative to income.

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LIES, DAMNED LIES & STATISTICS

The government released their monthly CPI report this week. Even though it came in at an annualized rate of 3.6%, they and their mouthpieces in the corporate mainstream media dutifully downplayed the uptrend. They can’t let the plebs know the truth. That might upend their economic recovery storyline and put a crimp into their artificial free money, zero interest rate, stock market rally. If they were to admit inflation is rising, the Fed would be forced to raise rates. That is unacceptable in our rigged .01% economy. There are banker bonuses, CEO stock options, corporate stock buyback earnings per share goals and captured politician elections at stake.

The corporate MSM immediately shifted the focus to the annual CPI figure of 0.1%. That’s right. Your government keepers expect you to believe the prices you pay to live your everyday life have been essentially flat in the last year. Anyone who lives in the real world, not the BLS Bizarro world of models, seasonal adjustments, hedonic adjustments, and substitution adjustments, knows this is a lie. The original concept of CPI was to measure the true cost of maintaining a constant standard of living. It should reflect your true inflation of out of pocket costs to live a daily existence in this country.

Instead, it has become a manipulated statistic using academic theories as a cover to systematically under-report the true level of inflation. The purpose has been to cut annual cost of living adjustments to Social Security and other government benefits, while over-estimating the true level of GDP. Artificially low inflation figures allow the mega-corporations who control the country to keep wage increases to workers low. Under-reporting the true level of inflation also allows the Federal Reserve to keep their discount rate far lower than it would be in an honest free market. The Wall Street banks, who own and control the Federal Reserve, are free to charge 18% on credit card balances while paying .25% to savers. The manipulation of the CPI benefits the vested interests, impoverishes the masses, and slowly but surely contributes to the destruction of our economic system.

A deep dive into Table 2 from the BLS reveals some truth and uncovers more lies. Their weighting of everyday living expenditures is warped and purposefully misleading. Let’s look at the annual increases in some food items we might consume in the course of a month, living in this empire of lies:

  • Ground Beef – 10.1%
  • Roast Beef – 11.8%
  • Steak – 11.1%
  • Eggs – 21.8%
  • Chicken – 3.7%
  • Coffee – 3.4%
  • Sugar – 4.2%
  • Candy – 4.6%
  • Snacks – 3.5%
  • Salt & Seasonings – 5.3%
  • Food Away From Home – 3.0%

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