The Mistake Of Buying An Expensive Car Comments139 Comments

ford-mustang

Over the years I’ve made my share of financial mistakes. There were minor splurges here and there, but I see my biggest financial mistake every time I leave my apartment. Sitting outside my rundown apartment is my Ford Mustang, the most expensive car in the parking lot.

While I do take pride in driving it and love getting the back-end to slide around corners, in the back of my mind I know I shouldn’t have spent so much on a car. What was I thinking?!

Deciding To Splurge On My Car

When I first bought my car about 6 years ago, my affiliate websites were going through their first peak. I was getting my biggest commission checks and I was on top of the world. After years of working at en entry level position, I was the definition of ‘new money’. I wanted to blow my money and show off my success.

So after wrecking my old Acura, I thought I deserved an upgrade. And why not get the car I’ve been wanting since it came out? I figured I was making enough money to have it paid off within 2 or 3 years.

My problem was that I was too set on a specific car and was paying for a rental until I bought something. The car salesman’s eyes must light up when they see someone pull up in a rental car. They know someone in that situation may be in a rush to make a purchase.

Because I had worked for several years marketing an online tire & wheel retailer, I felt a bit of pressure to get a car that would impress my coworkers. My old roommate had also just purchased a big new truck. So I ended up giving into peer pressure and tried keeping up with the Joneses.

Why Buying An Expensive Car Was A Mistake

Later that year I was hit with a big income tax bill after doing so well with my affiliate websites. Somehow I had not been anticipating this and had blown most of my money on things like nice restaurants and renting a decent apartment across from the beach. This was my first financial wake up call. I didn’t get the hint though.

I paid off that big tax bill, but lost motivation with my websites. Things started to decline as I spent less time doing work on them. By the time I renewed my efforts, it was too late to stop the slide. Before I knew it, it was time to get a job. Yes, just like my current situation.

Even if I had been able to pay off my car within a few years, it still would’ve been a horrible financial decision. As soon as I drove my Mustang off the lot, it lost a large percentage of its resale value. Obviously it’s not the most fuel efficient vehicle either and insurance is pricey. Since I’ve been unwilling to take the hit and sell it, I’m essentially tied to it.

Instead of wasting money on buying an expensive car, I would’ve been much better off settling for a used Honda or some other cheap car. If I had been smart enough to do that, I would have plenty of money in savings and would probably have committed to a mortgage by now. Basically this unnecessary purchase set me back at least a few years with my financial goals.

So what should I do now? I know some experts would say to sell my car even if I only get back half of what I originally paid. That would mean fully accepting my mistake, but it would lower my monthly vehicle expenses considerably.

Have any of you wasted money on a vehicle that you really couldn’t afford?

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By : Jeremy Biberdorf | 7 Mar 2012
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139 thoughts on “The Mistake Of Buying An Expensive Car

  1. Gerry

    Good article …When i was 27 i had just paid off my jeep wrangler i was itching for a used corvette since i knew i had the credit and could afford to buy a early 90’s model. The 93 corvette had 49000 miles and cost me around 16k. Well turns out the vette was high maintenance and i needed so many repairs i had to take out lines of credit to be able to keep it on the road. The computer died on it about two years later with no hope for replacement. Waited over 1yr for a backordered gm part that never came. sold it to a retired engineer and had wished i never sold my jeep. lesson learned.

    Reply
    1. Jeremy Biberdorf

      Thanks for sharing that story Gerry. It does go to show that it’s not just brand new cars that can be way too big a vehicle expense. Certain cars can be quite expensive to maintain, especially if it has enough mileage to need anything big done.

      Reply
  2. BimmerSupply

    Buying a “New” car is just a tremendous waste of money. As soon as you drive off the lot your throwing your money down the drain. I’m a big fan of buying certified used vehicles or at the very least a reliable late model car from any of the top brands, BMW, Toyota, Honda or Ford.

    Reply
  3. Joe

    Hi there! This is an old thread but a very interesting one.

    You know I recently bought a Honda Civic 2010 and is is such a nice car.
    Did I absolutely needed?
    No, of course not!
    Before this Civic I had a Chevy Cavalier 2000
    Was the Cavalier giving me any troubles?
    No, not at all! It was a nice car, working well as Im a careful owner.
    So Im so ashamed to acknowledge that this recent purchase was much more a “want” than a “need”
    The Cavalier was doing its job.
    I don’t use much the car
    However, I wanted something really reliable, something I could trust in.
    When going out driving on highways, I always felt insecure with the Cavalier. I didn’t trust it in spite it never failed me. However, I never demanded much of it. I barely drive on highways, maybe once a year or a bit more.
    But for some reason, I started to feel insecure, kind of lost the trust on my Cav.
    Why? I don’t now!
    And the feeling was growing stronger.
    Also, I wanted something nice, something more good looking though I still like the Cav.
    I don’t know, probably Im crazy

    Reply
  4. JS

    I find it impossible to be entirely frugal with my car. I am a motorhead. A pretty serious one, at that. I can’t drive a so-called “normal” car. I spend a lot of time in my car, too, commuting and visiting clients. But I am also the sole breadwinner in a young family of four, so I have had to come up with a livable compromise.

    Interestingly, my car of choice is a Mustang GT. Why? Well, for starters, as far as performance cars go, it’s still fairly modest and a true enthusiast’s bargain. For around the average price of a new car, my 2013 5.0 will not only keep up with the Joneses, but will handily and securely plant them in my rear view mirror. Permanently. Also, my prior Mustang (a 2000 GT) was closing in on 180,000 miles when I traded it in, and had been very reliable and cheap to maintain over my 12 years of ownership. I am hoping for a similar experience with the new one. And thirdly, by buying a car I really want, I am not tempted to trade it in within a few years, which is where you take that huge depreciation hit. Drive it a decade or more, and resale value becomes less of a concern. And it’s a Mustang, so even a somewhat tired 180,000 mile ride that needs paint and some mechanical work is worth something to someone. I know from experience.

    The used car scenario is less of a slam-dunk when shopping for sporty cars. By buying new this time, I didn’t have the unknown of wondering if my high-performance stick-shift car was previously owned by a ham-fisted maniac. It helped that Ford was handing out fistfuls of cash incentives this past summer.

    So I say enjoy that Mustang and if you truly love it, give it a few more years and it may not be such a bad deal after all. It should run for a good, long time and if something breaks, it should be relatively cheap to fix.

    Reply
  5. Jonny

    Wow, I did the exact same thing once I got my big pay bump a year ago. I’m in finance, so you would have thought I would have known better! It’s so tempting to buy something nice and flashy to show for your hard work, but I found the sexiness of the car wore off in about a month – I would have been better off just renting a snazzy car for a month!
    For me it was a worthwhile early mistake as I know down the road I won’t be making the same decision….oh, but I still enjoy riding my car!

    Reply
  6. Tim Seidler

    My wife and I both have relatively snazzy looking cars that cost us in total about $1,000/mo. Although I’m not a fan of paying that much money to be mobile I know that if we just had mediocre cars we’d still be paying around $600/mo. For me the $400 extra is well spent to maintain a feeling of success.

    Reply
  7. Armando

    never sell the car you like unless there is a extremely emergency, many people first suggestion is to get rid off the car but not getting your money back is pointless selling the car. If you can paid off the car and purchase an honda as your basic daily drive vehicle that will be essential if you can not continue making payments that is another story. If you do not make payments on the car try to conserve because you not having another sport car probably in this life time.

    Reply
  8. Jake Farley

    I bought a ’97 VW Jetta in 2004 that my father, the owner of a VW dealership, had found for me – used, but in such good condition that it looked brand new and ran even better. After paying $5000 for it, there were no payments, and maintenance over the years was at times expensive, but always necessary and not unexpected. Timing belt, struts & shocks, wheel bearings, muffler, batteries, a couple of tune-ups, etc. As the vehicle aged, more costly stuff started happening more often and the a/c had finally died a few years earlier, so I started thinking about selling and upgrading, but the problem, as usual, was lack of funds and a low resale value. I had great credit despite a lot of debt and a good job, and I wanted something nice that I’d have for several years until I could really do a proper upgrade. There was a lot of interest in the Jetta, but never when a replacement was even close to being a reality, so I went to a dealer (Dad had since sold his business and retired) only to find that their best deal wasn’t close to what was practical. Then they offered $500 for the trade-in, which was actually standard compensation, but an insult nonetheless.

    I kept on fixing things and the car kept running and riding great, so I kept on driving it, even as the paint was starting to fade and the car looked horrible. Still people continued to offer even more money for it! Then the big problem: the automatic transmission started slipping, getting worse every week. No way to hang on to it now, I realized, until I talked to a VW “fanatic” who said changing the fluid should take care of it. It was costly, $350, but his mechanic fixed it, thereby saving me the much greater expense of replacing it.

    Fast forward a couple of years to 2014 and I desperately wanted to get a better vehicle, but realized that although all the ones I could afford might look much better, they didn’t run as good as mine. So I decided to suck it up and just wait till it died on me, trying to ignore the fact that I was embarrassed to drive it or park it in my complex. I’ve never had a fast car or a luxury car or a sporty car, but the ones I did have were always reliable, practical and clean and shiny. Like almost everyone else, I’ve always wanted a “really nice” car that turned heads and made me swell with pride – could never make that happen, and I’m still driving that Jetta!

    Recently I came into a bit of money, and in years past I would’ve said “extra” money, because I didn’t know then that there’s no such thing. A new car was what I thought of first, of course, reinforced by all my friends and family asking when that was going to happen. I had just spent a bunch to get the car tuned up and some other stuff fixed since I was going to keep it, so I figured new tires would make it even better and then I could take more time to find the perfect new one. It was now such a pleasure to drive and I really didn’t want to spend the money since I was also almost rid of my debt. So I did the opposite of what I wanted and got the darn thing painted! Looks awesome and drives better – once again! Would I rather have a Mustang like yours? You bet. Which is the point of your article; cars are status symbols much more than they’re a way to move from point A to point B. A friend once told me that he wouldn’t care if something he really wanted cost a million dollars as long as he could afford the monthly payment! And that’s the mentality of new car buying, made even more appealing when you can plop the money down up front and not even have that monthly payment. No thought given to the cost of maintaining the vehicle until something breaks or just needs attention. I still remember one of my dad’s mechanics telling me that the manual allowed 15 min. just to locate each of the spark plugs on a Porsche, and the hourly rate back then was a whopping $70! It’s still hard to overcome the emotions involved, the constant struggle of wants vs. needs, and we usually miss the sacrifices involved as well.

    You’ll never recoup the money spent on that car, but so what? Here’s a quote from a car repair ad: “Sometimes the best used car on the road is the one you’re still using.” You’ve enjoyed yours for years and it fulfilled a longing to own something you could afford and prove that you earned it. A mistake? No way! It just looks like that only because you know more now than you did then. You have lots of memories, and I’m sure a ton of pictures, and that’s way more than most people. Plus, you’ll never have to look at one and say “I wish I had one of those when I was younger.”

    You wrote this a few years ago, but I hope you’re enjoying the next step you took, whatever it was. I know I’ll enjoy mine…

    Reply
    1. jes yeager

      thanks for great commentary. exactly how i feel about my 1998 jeep cherokee limited. perfect ride for twin cities . and it still looks great.

      I know exactly how it will perform and when it needs service/repair it gets done right away.

      Reply
  9. Allan

    Jeremy,

    we all did the same mistake once in our life. I too overspent on a car… Everytime I was driving it I was feeling stupid and the worse thing is that it wasn’t cool anymore after a year or two… I was just another used car and people around me were getting hot new cars. When I finaly paid it off, it got stolen 3 days after… and found back in a parking lot something like 50 days after. The “guy” or “girl” who stole it trashed it and spilled engine oil on the floor. I ended up selling it for pennies… I bought a more reasonable car after that but still. A car is really a waste of money and I’d like to get rid of the necessity to have a car. Unfortunately, part of my job for now is on the road and my employer does not provide the car.

    This post dates… I just felt on it. What did you do in the end?

    Cheers,

    Reply
  10. Ellisisascrub

    Great article. I wish charities like Vehicles for Change would really take off so I could get a decent car while earning 30k a year.

    Reply
  11. Deborah

    Hello a year ago I had been talked into a car purchase against my better judgement I relented and bought a car that was like the monthly payments I couldn’t. Afford even now I am running short on cash and just not earning enough for a 269.96 monthly. Payments including. The maintenance and upkeep of this car I’ve tried refinance. Nobody would talk to me actually I am on the verge of letting this car go volunteerly surrender the car any suggestions anyone?

    Reply
  12. Mike

    At 18 I financed my first used car a 2006 Scion XA with 60k miles. The car ran great without issues but one day Toyota unleashed the newly designed 2014 Toyota Corolla. I loved the car and wanted to be one of the first to own it in 2013. After weeks of research and shopping online I stepped into the dealership and bought a brand new Corolla for $20 000. Did I need it ? No but I surely could’ve afforded it. I regretted this for 2 weeks . I suffered buyer’s remorse and started pumping more into my savings account for rainy days. I asked myself why I didn’t but a used older model but that would have defeated the purpose of getting the car. I loved the newly designed 2014. Today I am happily in love with the car and have no regrets and have a better paying job at 21. I am thinking about leasing an Infinity q50 or Mercedes CLA sedan and that’s why I am here. I Feel like I am highly responsible for my age financially and wanted to show it but now I’m having second thoughts. I can afford the car but I love my Corolla. One side of me is saying to have both cars.

    Reply
    1. john

      Don’t sell your Corolla. Infinity and Mercedes cars take a ton more maintenance in addition to their high price. New ones depreciate 50% in 3-4 years.

      Reply
  13. Kris

    I purchased a Honda Fit in 2013
    A base model . Loved it . Except for the road noise . I was very happy with it . I heard about the 2015 Honda Fit how much they upgraded it
    & made it safer & cut down on the road noise in the cabin etc . Plus it has a back up camera etc .
    One day I went to my regular Honda dealership to get my car serviced & to kill time I was looking at the new Honda Fits & a salesmen asked me if I wanted to take one for a test drive , it was pretty different than the 2013 model & after the test drive the salesman said he could get a real good interest rate for me & I had my 2013 paid way down & of course didn’t get much for a trade in .
    I regret it so much now & miss my other car & regret it now that Zi have my new car with fancy wheels , a sunroof etc . I just wish I had my other car back now Im basically starting over & the other car would have lasted me years & still had low miles . I contacted the salesman the second day after the purchase & he said no “All sales final” so here I sit with a car I really don’t want I think Ill just sell it as a loss & get something else without all the fancy stuff that doesn’t even make me happy .
    I feel like I just burned thousands of dollars and worked for nothing now to start all over again .
    If you have a good car & you don’t have a ton of $ just keep your trusty car & be happy with it a brand new car won’t make you happier in most cases it’ll make you have regrets especially turning a perfectly good car on before u have it paid off .
    Please think carefully before taking the car buying plunge .
    Wish I did …….

    Reply
  14. Jennifer

    Hello! At least I am not the only one to admit I made a mistake! I traded in my perfectly fine 2010 Hyandai Elantra which I was paying $320/mth for a 2014 Jeep Compass for $600/mth. I was upside down in the Elantra because my interest was high but now I am drowning in my Jeep payment. Does anyone have any advise on how I can fix this. I could trade in the vehicle for a super cheap car but I am already so upside down in the Jeep that my payments will probably be so high in a crappy car! Any advise would be MUCH appreciated.

    Reply
  15. santanu

    Buying a car is a necessity for every family until they buy it. But gradually that turns into a passion and people started thinking to upgrade cars as per their financial condition.

    Reply
  16. Jeff

    A couple things here… If you love your car, don’t sell it unless you are desperate for quick cash. I bought a BMW M5 last spring and my car payment is ludicrously high ($900/mo) and most people think I am crazy. However, similar to one of the posters above, I am a massive gearhead and searched for this specific M5 for almost 18 months, so I am completely happy with my purchase. With the car being paid off in a couple months, I will have significant equity and resale value of M cars has always been good. If you know what to buy and take your time looking around the market, you don’t have to lose your ass on expensive luxury or sports cars.

    Lastly, if whatever you drive, whether it’s a Camry or a Ferrari, puts a giant smile on your face every time you drive it, you have done something right. I don’t really see this as a fiscal responsibility question, but more as a prioritization question. What is more important to you? Car people spend our money on what makes us happy.

    Just my $0.02

    Reply

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