Is This A Normal Perspective When Buying A New Car?

So I am itching to buy my first ever new car. But here's something I am struggling with: the price tag.

I don't make a lot of money (about 30-35 k) per year, and I'm a single person so I don't have a lot of
financial obligations other than for myself. But I'm eyeing some cars that I really like and they are price
tagged at around 40-55k. Now, obviously, I know that I am shopping out of my range. I should probably be
aiming for cars that sell at around 20-30k. But is this a reasonable perspective to have: If I buy a car that
costs me 50K, I'm not really spending 50K because when I resell it later, I'll be expecting at least 50% of it
back in the resale value because I may not own it for longer than 3 or 4 years OR it will have very low mileage on it
(about 50,000 km or less). So in the end, I'm really only spending around 25k.

I don't know, but that's how I reason it to myself to make me feel better that I'm not actually going to spend 50k on a car because I'll get at least half it back when I resell it.

Is this correct in thinking like this? (of course there are other expenses like gas, insurance, maintenance, taxes)
but I mean just from the price tag cost to when I resell it, the difference should only be about 25k in actual money spent to buy this car. I am also aware that cars are not investments but liabilities and value of cars go down a lot. The cars in this
range that I am looking at however are not cheap cars and usually do maintain their value pretty well even after 3 or 4 years.

Please confirm or correct my way of thinking.

 

Seems to me buying a car that cost more than you make in a year is not wise.

Why not be the one that buys this car?

3 or 4 years old, a few thousand miles on it, and half price... New cars are a poor investment, as they lose value as soon as you drive them off the lot. Local parts store has a bumper sticker, "All Cars Run On Used Parts."

Lots of used cars out there.

 

thanks for the replies, good pointers.

 

My advice to you would be to (if you haven't already done so) check out used cars. It's the only way to get the type of vehicle you want at a price that's reasonable. Actual money is the price you actually agree to pay and the amount financed there's no way around that. Brand new vehicles depreciate the second you take possession. If you've never bought a new car before I highly recommend you don't enter the wolfs den alone. Actually I highly recommend you bite your time and buy used.

I typically start my car shopping by emailing dealers in order to get their "best out the door price" that includes taxes, title and any/all other fees. Otherwise expect to spend hours at a dealership while they give you the performance of how they'll make you a great deal. Check out True Car if you haven't already. If your going to buy go in preparied and don't ever accept the pressure tactics and yes expect to be "dehorsed" if you've a trade. Don't go in while the banks are shut some dealers will be more than happy to do a spot sale on you. Drop you into a new car then call up a few days later telling you sorry X Motor Company didn't actually agree to finance you.

 

Some other points...
Spendable cash counts more than annual income. If you have cheap or free housing/utilities you have more cash to spend than someone living paycheck to paycheck due to high rent and food pricing. Think about 80K a year in Florida vs 80K a year in downtown New York City. Buying a car that costs more than a year's pay may be OK.

All new cars drop a huge % when you drive them off the lot. A 3 year trade in cycle will drive you broke. Consider a 10 year or like my truck 30 year cycle. A quality car well taken care of will make 250K miles with regular service. Or maybe a lease?

Yes, what you are going through is normal. What would I do? Lease or get a cheapie used until the Tesla 3 comes out. Tesla 3 may be a game changer.

 

Late to the party but echoing everyone else. With your income, I wouldn't recommend a new car. Most financial advisers recommend the 20/4/10 rule. Put 20% down, don't finance for more than 4 years, and you shouldn't use more than 10% of your gross annual income towards the vehicle.

 

It's often said it's better to buy a car that holds its value well after four years but unfortunately you cant spend percentages. Spend 50k and lose 'just' 50% you lose 25k. Spend 30k and lose 70% you lose 21k. Without even considering running costs, likely to be substantially higher on the more expensive car, which is best? New cars are nice to have, but it's at a huge price however you do the math.

 

In 2014 I bought a 2012 model car. At 2 years old it had low mileage and it was in good shape. Also the price was half that of the 2014 model. The car continues to run well and it didn't break me financially. I'll never buy another new car.

 

I'd go with a used vehicle for a first purchase. Single owner, no accidents (CarFax is a good resource, and worth the money). Do internet research on the type of vehicle you need before you ever visit a car lot. Any motor vehicle manufactured after 2010 with less than 75K miles can be considered "low" mileage, if single owner and well maintained.

When going to a car lot, arrive early in the day, and plan on spending over an hour on every vehicle you consider buying. Wear clothes you don't mind getting dirty.

Really look over any vehicles you consider. Test drive . . . I don't mean drive it around the block, I mean drive it for at least 30 mins . . . highway and city use. Crawl under it and look for "wet spots" or obvious damage like scrapes on frame components or build ups of dirt in nooks and crannies (mainly for those looking for a truck or especially a 4WD vehicle). Check the fluid levels and colors of the fluids (research advice on this also). Put the vehicle through its paces. If the salesperson objects to this, drop it, him/her, and the car lot. Move on.

Try and get at least a basic warranty on a used vehicle . . . i.e. major drive train issues. It all depends on how much you are spending on it.

If you are determined to buy a new vehicle, research the heck out of the type of vehicle you need. Make sure the resale value after 3 or 4 years will make the investment worthwhile. Also, cost of ownership is a big consideration . . . no matter the hype, certain motor vehicles will cost more to operate and maintain than others in the same genre. The cost to retain the resale value of some vehicles can be prohibitive.

At any rate, good luck . . . have fun. My first car was a 1966 Chevrolet Chevelle Malibu I saw in a weedy lot next to a fairly nice house. It was on four flat tires and was so dirty you couldn't see through the windows. Best money I ever spent . . . car never failed me and I still, after decades, carry it's key on my key chain.

 

"Never say never" on that one. Some new technology can change your mind. Currently Tesla is taking kids to school locally. For now the car has to have a driver, although the driver is not doing anything. Soon the car will remind the kids on their cell phones, open the garage door, carefully back out, set its inside temperature, unlock when the kids come close, take them to school, return home and put itself away. The kids will be able to summon the car if they get sick at school. Self charging is on the horizon but not being pushed hard right now.
Would you buy a new car if it freed up many hours of your time? Doing the math is easy, how much per hour is your time worth vs the cost increase.
How about if it was twice as safe as your driving?
Ten times as safe?

 

That is amazing! However, as I understand it the cost of a Tesla is way out of the price range of middle class folks.