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The "savings" from giving up your Tesla (under Loan) for a Cheap, old car, paid off
- Thread starter RonKorakas
- Start date
You wouldn't have rather bought your $76k car 13 years ago, with a loan and such?I drove my 07 Camry for 13 years….
So I could pay $76k cash for my current car.
SomeJoe7777
Marginally-Known Member
Just a follow-up on the original analysis. The analysis was fairly accurate for the situation, taking into account the expenses and savings up to the current present time. However, it should be pointed out that to fully analyze, you need to take into account future expenses and savings for each path.
You're comparing two possible paths here: Keep the Tesla, or sell the Tesla for a vehicle that is owned outright. Each path has expenses and savings. But future expenses, future savings, and future risks need to be taken into account.
As an example, keeping the Tesla incurs a future monthly expense that the outright-owned vehicle does not -- the loan payment. However, this loan payment is fixed and predictable. Indeed, because the Tesla has very low maintenance and low risk of unexpected repairs, the total future transportation cost is more stable and predictable. The stability and predictability has value on its own.
Owning another older vehicle outright eliminates the monthly loan payment, but incurs maintenance and repair risk due to the age of the vehicle. This impacts the total transportation cost predictability. Some months you may only pay for the operating cost (gas). Other months may incur an unexpected $1500 repair. The unpredictability is in itself an expense, because you have to hold reserve cash to pay for something unexpected. Further, the unexpected repair risk goes up with time as the already-aged vehicle gets even older.
There are other items to be considered for the future of each path -- desirability of a gasoline car as the EVs make inroads goes down, depreciating the vehicle. Tesla carries higher counterparty risk for future maintenance and repair since 3rd-party repair is nearly nonexistent. Future energy costs may affect the operating cost of each vehicle differently, with the gasoline car more tied to oil prices while the EV is tied to electricity prices which are highly varied by which region of the country you're in. That also affects desirability and future value.
Transportation has a cost no matter how you want to pay for it. But it isn't just the costs incurred so far -- future costs have as much (or maybe more) to do with the decision.
You're comparing two possible paths here: Keep the Tesla, or sell the Tesla for a vehicle that is owned outright. Each path has expenses and savings. But future expenses, future savings, and future risks need to be taken into account.
As an example, keeping the Tesla incurs a future monthly expense that the outright-owned vehicle does not -- the loan payment. However, this loan payment is fixed and predictable. Indeed, because the Tesla has very low maintenance and low risk of unexpected repairs, the total future transportation cost is more stable and predictable. The stability and predictability has value on its own.
Owning another older vehicle outright eliminates the monthly loan payment, but incurs maintenance and repair risk due to the age of the vehicle. This impacts the total transportation cost predictability. Some months you may only pay for the operating cost (gas). Other months may incur an unexpected $1500 repair. The unpredictability is in itself an expense, because you have to hold reserve cash to pay for something unexpected. Further, the unexpected repair risk goes up with time as the already-aged vehicle gets even older.
There are other items to be considered for the future of each path -- desirability of a gasoline car as the EVs make inroads goes down, depreciating the vehicle. Tesla carries higher counterparty risk for future maintenance and repair since 3rd-party repair is nearly nonexistent. Future energy costs may affect the operating cost of each vehicle differently, with the gasoline car more tied to oil prices while the EV is tied to electricity prices which are highly varied by which region of the country you're in. That also affects desirability and future value.
Transportation has a cost no matter how you want to pay for it. But it isn't just the costs incurred so far -- future costs have as much (or maybe more) to do with the decision.
It also depends on what kind of vehicle it is. A 2012 BMW 3-series from a "corner" dealership or a 2004 BMW 3-series (as described in the first post of this thread) would be a higher risk than a Toyota Corolla or Prius. And a Jaguar might make a BMW look reliable...
Why would I want to borrow money from someone? I earn my money and I spend my money. I like knowing that if I drop dead today, my family has nothing to worry about. I have a mortgage and that should be paid off soon. I’m a slave to no one and everything in my possession is mine.
I don’t like the bank owning my stuff. It’s called “delayed gratification” which seems to be a foreign subject to a lot of folks. But I tell you what, there’s no feeling like being debt free and building wealth and knowing that everything you have is truly yours and nobody can take it away from you. I started out with nothing - living paycheck to paycheck. I worried. A lot. I don’t miss that life at all. That’s just how I roll…
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Not to sound like a contrarian or be combative, but you say you don't want to owe an entity for a possession, but you have Mortage. That is literally what a mortgage is, so, what is the difference? Or is a Mortgage the only situation in which you'd make an exception. I have the opposite mindset as you, if you feel that way 100% - I would much rather owe everything, but enjoy it on a day to day basis, until it's paid off, than to live lacking the things that would make me happy, just so that I don't have debt. It worked for me. But to each his/her own. If it worked for you, kudos to you.
I was there too, living paycheck to paycheck, and owing a car payment. But I began being more aggressive. I made investments (like I said previously), instead of saving. I started buying the car of my dreams immediately, instead of going through crappy cars to get to the "good one". I bought properties, and turned them into profits, instead of buying one and hope I can pay the 30 years. As I said, it worked for me. This way of being is definitely not recommended. I came out on top, but I can see how someone could easily end up with the opposite outcome.
This is a very good example of a false economy....sometimes you have to stop and say that this search for a bargain is costing more in shoe leather than I am saving...but the hardest thing is to admit it first to ourselves and then to others...so, well done
a good story with a worthwhile lessonYes mortgage was my only exception. Financed over 15 years and will have it paid off early.
I think if you would have sold the Tesla for a profit and bought a new or CPO car that cost $20-40K you would have seen the savings and not had repair bills. Example Toyota has free maintenance for the first 2 years plus a 60K mile warranty on the warranty. Hyundai and Kia have 100K mile powertrain warranties. Because you don't drive much and many vehicles can achieve 30MPG+ I think the savings was there. For every $1K you finance it's roughly $20 a month in car payments. Going from a $50-60K car to a $20-40K car is big savings (usually insurance is cheaper too).
Ah ok. Well, good for you. I'm glad it worked out. And congrats on the mortgage. I remember that feeling, it's the best. I remember it was a very odd feeling, to know that the property is just...yours. No payment to any entity. And the refreshing feeling that you now own something that you could just as easily turn into cash, if you so chose to - instead of owing a bank for something you didn't even own (because of the lien). That feeling really was a life-changer for me.
Yes, that definitely crossed my mind. I did make a small profit with the Tesla sale. But when it came to buying a car like you say, I really didn't want to buy something that would feel like a "sad middle ground". I was going to either buy the Model 3 right back, and pay the $50k, or I would go the complete opposite route with an old BMW, so that I could "save" money by working on it myself. I did the latter, and that's what this post is about - and ironically, I did the former just 3 weeks ago, after the whole debacle of the BMW.
I do agree with you that the savings could have been there. But having owned 4 Teslas at different times, I also know that the Maintenance (or lack thereof), and the gas savings, do end up being better than a regular car after some years. At least that's been my experience.
With my first Model 3, I owned it for almost 2 years. I spent a total of $78 on electricity. I never had to change the Tires. I had no maintenance on it whatsoever. And I paid for the Premium Connectivity, but obviously that's not required. So aside, from the Insurance cost, I saved a ton of cash owning it for that time.
And now that I bought this brand new Model 3, and paid for it cash - my insurance just went down substantially (since I don't have to have Full Coverage), and of course, there's no Bank Car Loan Payment. So, I'll be back in 2 years to see how much I saved by making this purchase.
-R.
The savings were more likely to be there if you chose an old cheap car that was more reliable with less costly maintenance and repair and lower fuel consumption than an old BMW.
I had a paid off 2019 X3 which I sold b/c of the amount I was being offered. Main reason...upcoming maintenance and repairs as it was just under 4 years old and 50k miles. I voted for payment for no fuel cost, very little maintenance/repair will under warranty, in my state free PeachPass travel, HOV lane usage with one occupant.
When I asked my "trusted" BMW Service advisor he said be prepared for repairs which will include 2 gaskets (oil pan and another) approx. $2400 worth of repairs if I kept it another 40-50k. Not to mention I was going to need new 20" Michelin's soon and car still had original breaks...Also I like being able to travel without worrying about "break downs".
Everyone is different there is no one answer obviously.
When I asked my "trusted" BMW Service advisor he said be prepared for repairs which will include 2 gaskets (oil pan and another) approx. $2400 worth of repairs if I kept it another 40-50k. Not to mention I was going to need new 20" Michelin's soon and car still had original breaks...Also I like being able to travel without worrying about "break downs".
Everyone is different there is no one answer obviously.
This thread is triggering some BMW PTSD in me.
I was driving and maintaining older BMW X5 (kid carrier) and a MINI Cooper S before I got my model S. It was a rare week that both were running. I sat down and tallied all the expenses and I average $400/mo per car (!!) in maintenance before I wised up and sold them and got my MS.
Monthly costs are definitely lower. And using zero gas, newer, safer, and have an awesome electric car.
Sadly this is a sort of tax on people without money or credit. One of my first jobs was in a machine shop. One of the mid-career guys kept two beat up VW bugs running (the original air cooled cars). He felt this was a way to save money and couldn’t afford anything else. Needed two because one was always needing work. I asked him how much he spent in a year fixing them compared to getting something like a new Mazda. He didn’t know, but I think it made him curious so he added it up and it was costing him way more to keep the old beaters. He switched. Not everyone can.
I was driving and maintaining older BMW X5 (kid carrier) and a MINI Cooper S before I got my model S. It was a rare week that both were running. I sat down and tallied all the expenses and I average $400/mo per car (!!) in maintenance before I wised up and sold them and got my MS.
Monthly costs are definitely lower. And using zero gas, newer, safer, and have an awesome electric car.
Sadly this is a sort of tax on people without money or credit. One of my first jobs was in a machine shop. One of the mid-career guys kept two beat up VW bugs running (the original air cooled cars). He felt this was a way to save money and couldn’t afford anything else. Needed two because one was always needing work. I asked him how much he spent in a year fixing them compared to getting something like a new Mazda. He didn’t know, but I think it made him curious so he added it up and it was costing him way more to keep the old beaters. He switched. Not everyone can.
Mrbattery123
Member
I've contemplated this several times. I've owned a charger r/t a few years ago then a C43 AMG. I've always wondered how much money I would've saved by keeping the charger r/t since I owned it outright. Selling my Tesla right now would be great, Ive gotten offers 6-10k more than I bought the Tesla for, even after putting 20-25k miles on it. I think a Tesla is a great buy if you know you're going to keep the car for 4-8 years or so. I've put about 20-25k miles on the car and not a dime on maintenance. I live in LA and our gas prices are about $6-7 right now. In 4-8 years I'd be saving anywhere between 12-20k on fuel. The model 3 also holds incredible value. Also, An 8 year warranty on the battery is what really sold me. Again, I see your point in buying a 5-10k beater and not having payments. As a car enthusiast, I've also wanted to sell the Tesla to go back to an ICE since a Tesla is sort of "boring". It's a tough choice sometimes, but I think I'll be able to ride out the Tesla for a few more years before I get sick of it. It's quick, stealthy and pretty damn reliable to get rid of.
That is sort of my point. As maintenance becomes the primary profit center for classical dealers, it doesn’t make economic sense to pay inflated parts prices, and crazy labor rates.
There is steep competition for the sale of the new vehicle that disappears once you need service.
It is going to be a very small percentage of people that can really justify a Tesla purchase using proper math. Particularly as tesla prices continue to climb.
I do like the feeling of charging at home and not buying $5 gas. But it is a feeling that isn't justified by having spent over 60k on a Tesla and upgrades, only driving 6k miles a year, having increased insurance costs and a $225 a year ev registration penalty.
I really only purchased because I wanted a faster car than I was driving. It's a toy and financially it's a small percentage of my wealth
I do like the feeling of charging at home and not buying $5 gas. But it is a feeling that isn't justified by having spent over 60k on a Tesla and upgrades, only driving 6k miles a year, having increased insurance costs and a $225 a year ev registration penalty.
I really only purchased because I wanted a faster car than I was driving. It's a toy and financially it's a small percentage of my wealth
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