One of the things that shies many people away from buying a new car is the serial taxes and fees applied to the purchase of a new car. These can amount to a sum sufficient to buy – or mostly buy – a decent used car.
I wrote the other day about my sister’s experience buying her 2023 Subaru Crosstrek – last chance to get a new one with a manual transmission – and the dealership’s efforts to hard-sell her into more than $9,000-not-worth-it supplementary warranty coverage, paint and fabric protection, etc cetera. The key word here being “sell.” As in, she wasn’t forced to buy any of that – and didn’t.
But the taxes and fees applied by the state were another matter. There’s no haggling over these line-items, which included (in my sister’s case) $1,923.32 in sales tax another $300-plus for title/registration/tags and another $20 for “smog abatement” (my sister lives in California).
So, pushing $2,500 after having paid $23,000 for the car, itself. Her Crosstrek is a modestly priced car, too. You can imagine what the taxes would have been on a $50k EeeeeeVeeee, say.
Even so, $2,500 is a lot to anyone who isn’t rich – and you don’t get rich by getting into debt. (Well, not unless you can finagle a way to get someone else to pay your debts, as the government does.) $2,500 is enough, almost, to buy a used car without financing it. It is enough – probably – to keep whatever you’re driving going.
Also without going into debt.
How much is that new car smell really worth? And will it still smell as good next year?
The other cost is the one many do not consider before they buy a new car. It is one they’re also required to pay – once again, by the state – but this time, the money must be handed over to the insurance mafia, which uses the state to force you to hand over your money just the same as Luca Brasi did the Godfather’s muscle work.
It is typically a lot of money because – typically – most people are obliged to finance the purchase of their new car, no doubt in part because of all those taxes and fees they had to pay, in addition to paying for the car. This means it’s not fully their car. It has a lien on it. And the lienholder requires full coverage on what remains (effectively) their property until the thing is full paid-for.
This now typically takes six years – during which time the person making the payments will also be making additional payments to the insurance mafia. These are typically much higher than the bare-minimum payments available to those who have paid-off their cars and so can (for now) still choose to only pay for “liability” coverage that covers damages they might cause others. They can run the risk of not having any “coverage” for damage to their own vehicle, which they would then have to pay for out of pocket – if such damage ever occurs.
If it does not occur, they still have their money – a charming prospect to those who’d rather not pay for what they haven’t damaged. This savings can be considerable. The person who pays $500 annually to minimally cover a paid-for older car “only” (in air fingers quotes to emphasize the Luca Brasi nature of the thing) pays $2,500 to the insurance mafia over five years – which might have bought him another used car, or paid to fix the one he is driving.
But as bad as that is, the person who bought the brand-new car who pays $1,000 annually to cover it has been shorn of $5,000 – on top of the $2,500 (or more) they paid for the privilege of buying the new car with money they’d already paid federal and state income taxes on.
That’s $7,500 – in our hypothetical case study – a sum equivalent to about a third of the cost of the brand-new Subaru my sister just bought. Add it all up and the “$23,000” Crosstrek she just bought actually cost her more than $30,000 – not counting the opportunity cost of having spent $30,000-plus on a depreciating appliance that will be worth half what she paid for it by the time she pays it off.
By which time, of course, her Subaru will be a used car – one she could have bought for half what she paid (and paid a lot less in taxes to the government and “coverage” to the mafia that has a controlling interest in the government).
But, ah – that new car smell.
. . .
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