Sticker Shock

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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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33 COMMENTS

  1. Where’s the money?

    If you are lucky enough to buy a new vehicle, there will be other costs to endure.

    Insuring a new vehicle will be a monthly expense plus the monthly payment to the finance corporation.

    After 5.5 years of payments, add in the insurance, you have satisfied the purchase amount, all payments are complete, it is yours. You have payed and it is enough, through the nose, in fact.

    630 dollars per month for 5.5 years totals 34,150 dollars. Seven more years later of insuring the vehicle, you will add another 15,000 dollars of expense.

    Add in licensing, repair costs, gas expense, another 12,000 dollars there.

    Something like 62 grand to drive a vehicle for more than 10 years.

    After 10 years, an income of 50,000 dollars equals 500,000 dollars.

    12 percent is invested in vehicles to keep you going, no other reason.

    Sell it for 5,000 dollars to recoup some of the investment.

    You need to save 50,000 dollars to be able to buy another vehicle not ready for the junkyard yet.

    150 million autos with 10 gallons of fuel in each tank is 1.5 billion gallons of fuels.

    1 500 000 000/42=3 571 428 571

    Almost 3.6 billion barrels of fuel in those vehicles.

    You will have to refine 7,000,000,000 barrels of crude oil every day just so 300,000,000 cars and trucks can move.

    There in lies the rub, too much crude oil is being wasted on cars and trucks just so people can make as much money as they can.

    No fuel, it all comes to a screeching halt.

    Thinking you can own a car and be able to go anywhere you want is thought crime.

    You can’t think like that, it is a problem.

    You are then an incorrigible recidivist, no cure for that.

    Your fault the planet is in ruins.

    You will have nothing and Klaus will be happy. Not you, that’s for sure.

    • Made an error of multiplication, then of division.

      By a factor of 100. So sotty.

      Just correcting the mistake, have to, makes sense then.

      The number of barrels of oil amounts to 35,714,285 barrel of oil, which is still too many.

      You are wasting oil by the millions of barrels each and every day, stop it.

  2. You can buy a bunch of parts for the tax/ license/ general extortion levied on a new rig.

    If the existing vehicle is of “sound mind and body” (electronics function, rust minimal/manageable) why not spring for a new transmission, fix that AC, recover those seats, new suspension?

    Here in the Peoples Soviet of Washington the vig is around 10 to 12 percent for the State, so that 60k truck will need another 6k plus for the “man”. I can buy many things for that 6k for my 1991 Silverado that still gets compliments for its shiny paint and clean interior. Going on 10 years for the rebuilt transmission, 5 years for the new AC, last year did the radio conversion for a DIN standard Sony (the one and only) radio unit.

    My nearby buddy bought a very used but excellent condition 1999 Jeep Grand Cherokee from another friend – drove it several years here in WA now in Wyoming service with his kids. I’m a big fan of vintage rolling stock!

  3. Eric – “This means it’s not fully their car. It has a lien on it.”

    It’s never fully their car – even when paid in full. The “owner” receives a certificate of title,
    not a title. We’re “partners” with the state – an offer you can’t refuse.

      • Eric,

        What will authoritarian governors do if some unelected bureaucrat in such states decrees that ALL gas powered vehicles are to be banned because of a declared “Climate Emergency”? Will they seek to confiscate ICE cars? Some states have already decreed that sales of new gas powered vehicles will be banned by 2035. They would LOVE to BAN ALL existing ICE vehicles as well. What will the masses do should these tyrants actually go that far?

  4. The greed of GovCo and its corporate lampreys is boundless. They will, however, kill the economic goose that lays the golden eggs. At that point they will blame the goose for the failure.

  5. From the artist formerly known as “EM”… 🤣 I’m changing my handle from “EM” to “XM” for reasons that amount to an inside joke. The handle “EM” was the product of an inside joke in the first place and came from other sites where I anticipated a high degree of shitty arguments — which never happened here — so it’s played out.

    ANYWAY… I am holding my breath on my upcoming purchase of the GV-70 that I ordered. They take a deposit but they do not secure price or any other loan agreement. You just order and hold your breath — which is what I’m doing.

    If things go badly, I can walk away from the deposit — it’s pretty small TBH. But, with Genesis, there won’t be a lot of upselling like the case of Subaru. They throw in a whole lot of the things that other dealers (like Audi) charge serious money for.

    On the other hand, I thank my lucky stars that I opted for the extended warranty on the used Audi A8 4.0T that I purchased back in 2018. When the turbos went out, it paid for itself. I also used the other upsell — road hazard covering tires AND wheels — which also paid for itself when they discovered that one of the wheels were bent. They got super pissy about it but that one freaking rim was like $1800 or more. I forget.

    I didn’t get any of that shit when I bought my A4 Allroad which I hope to be selling soon. The A4 has been very solid but with around 50K miles, I am expecting that to change. I never had go wrong with it so far. Hopefully the next owner will be as lucky but I doubt it!

  6. Here in Taxachusetts there’s also the so-called excise tax, which is a personal property tax based on the value of your vehicle. I think it’s 2-1/2% of the book value, and though it decreases every year along with the value of the car it never goes away.
    So if you started with a $50k vehicle you would pay several thousand dollars over the years that you owned it.

  7. One of my sisters was a total dipshit, but the one thing I’ll give her, is that she never spent a lot a money on cars. She’d spend less on a car than she would on a year’s worth of cigarettes- always driving junkers that never cost more than $300….and some of them were pretty cool, like the ’61 Mercury Comet and the c. ’70 Olds Vista Cruiser. I’d sooner have one of those cars than any new car.

    I have to laugh though- $9K worth of worthless extras…for a NEW car, no less (Isn’t the point of buying a new car supposed to be to get something that will last a while without extra expense?)- For $9K, one could buy a quite nice used vehicle as a spare! Even two! I’ve never even paid $9K for any personal vehicle….much less for just ‘add ons’ 😮 !!

    Sad thing is, that there are enough people who buy such crap that they keep offering it, and making good money off of it!

  8. I think car prices are extremely high, especially when you consider the quality of construction. When you see a car wreck on the freeway, it is like the new car exploded, as there are thousands of sharp plastic parts scattered everywhere.

    Blow molded parts are cheap to produce, for instance, a plastic Toyota bumper is only around a hundred bucks, and the manufacturer only pays a small fraction of that price. To cut weight, the frame is replaced with unibody, two sheets of sheet metal stamped out and welded together. A modern car has far less steel scrap compared to a truck with a frame.

    When I look at iron prices, like a long term historical chart, I wonder why a car made of steel is so expensive, as the base metal has not gone up that much. Same for oil prices, as plastic is made from oil:

    https://www.macrotrends.net/1369/crude-oil-price-history-chart

    https://fred.stlouisfed.org/series/WPU101707

    If you scrap an F-150, the value of the iron is about 2 tons, and they pay you next to nothing for it. $142 a ton.

    https://scrapmetalmonster.com/scrap-metal-prices/scrap-iron

    So why is an F-150 so damn expensive, as they have been making them forever and commodity prices are flat?

  9. You can’t escape taxes of any kind, nor can you cheat death. Death and taxes keep you bit and bridled, death by taxes, even.

    Insurances and taxes prevent you from accumulating too much. If you are a money hoarder, the authorities will knock on your door to help remove the money you’ve been hoarding. It’ll be for your own good.

    If your 50 million dollar mansion burns to the ground for one reason or another, you will file a claim. Probably the Tesla started the fire, so you will file a claim there too.

    One good thing about January 1st, It’s National Bloody Mary Day.

    Really, it is. Always something good even if and when everything the Thing does causes the misery index to rise to unacceptable levels.

    Forcing people to drink is not a problem. Today’s suggestion is a Bloody Mary.

    A Caesar is the Canadian version of a Bloody Mary, so that is a good substitute.

  10. Don’t forget the “dealership fee” that is pretty much universal for every dealer , especially in Virginia. I’m guessing that covers title, registration, etc., which should be nominal ( see DMV fees), but is another way to hose the buyer. That mandatory fee ranges from $399 up to $899 in most cases. Sometimes the more shady establishments tack on an additional transportation fee on top of the one already on the sticker! I guess street muggings is just one qualification to be in the car sale business.

  11. Meguires makes a New Car Smell protectorant that works great on most plastics. It’s around $8. My 2018 with 92k miles still Atlas looks and smells new.
    Buying a new car is admittedly a fetish for me, but most people do not take proper care of their cars and you never really know what you are getting when you buy used.
    My old ’02 Tahoe got sold to a high schooler with 250k miles on the clock. I’m pretty sure he is still driving it.
    I buy new but since I keep them a long time the math works in my favor.

    • Alex,
      “you never really know what you are getting when you buy used.”
      Far too often, you don’t know what you are getting when you buy new either. There is new junk out there aplenty.

      • I have a son in law who believes routine oil changes aren’t necessary. He trades every 2 years. Russia Roulette.
        Your point is well taken about new cars, but so far 220,000 was the car with the least mileage I ever sold.

      • I plan to never find out. I think it doesn’t matter, a flooded Tesla probably wouldn’t be in sellable condition after having its battery flooded.

  12. The last part about depreciation reminded me of a seething gripe I have about tax (non) deductions.

    Business can deduct such depreciation, along with other expenses it takes to make money, but Joe Citizen can’t.

    Shouldn’t the cost of obtaining an income be factored against that same income?

    • ‘Shouldn’t the cost of obtaining an income be factored against that same income?’ — Dan

      If you’re an independent contractor, it is.

      But ever since Frank Roosevelt imposed the unconstitutional Fair Labor Standards Act of 1938, Big Gov is heavily biased toward forcing most people into employment status, whether either party wants it that way or not.

      Commiefornia even forced independent truckers into employee status with its notorious AB-5 bill, which the fedgov’s rubber-stamp hacks in black refused to review.

      It’s enough to make one shun respectable employment, and instead make a true independent contractor living by pimping, selling drugs, trafficking arms or smuggling immigrants. Tax freeeeee, all the live-long day … and not a penny for the effing Ukies. 🙂

      • Well of course they did. Easier to collect taxes when you only have to go to the payroll department. Those 87,000 new IRS auditors aren’t there for the wage slaves, they exist to track down the self-employed Uber driver or Etsy artist scofflaw.

        Remember kids, ignorance of the tax law is no excuse.

    • Dan, what is stopping you from setting up a sole proprietorship business, possibly something you do anyway and enjoy, and taking your business deductions? The game is rigged and dirty, learn to defend yourself from it!

  13. Eric, you will be happy to learn that in my red state, the more I get involved and trusted by the locals the more I learn. Such as, that a lot of them never register a vehicle, mostly to avoid the sales tax. They keep one vehicle on the books, but no others.

    And there’s this, that will keep adding to all of our burdens. I laugh at the idiots who say “get them”, but they or we all pay.
    https://www.zerohedge.com/political/heres-list-biden-tax-hikes-which-take-effect-jan-1

    • Chris,

      When the price of heating and gas goes up as a result of all these taxes, I can already see brain dead people out there blaming it on “Corporate greed” and citing some post from Robert Reich as PROOF of it, and possibly ask the Biden Thing to impose even MORE taxes on the “greedy oil companies”. They tend to be the same people who think that oil DESTROYS the planet and should be BANNED.

      If there’s one thing that has become obvious the past few years, it’s that the modern day Democratic Party is the REAL party of billionaires and NOT the party of the “working class”. Given the way that many DEMOCRAT politicians acted since 2020, I wonder if the Democrat party itself subscribed to the agenda of the WEF.

  14. Flo doesn’t exert as much control over various levels of government like The Gecko, and the little green demon is very involved with advancing the EeeVee agenda beyond just providing the insurance coverage, including restricting the flow of oil within the us, power generation/distribution, and, recently, acquisition of control of Pilot/Flying-J onto his balance sheet. Take a *very* close look at what he’s up to and read the annual reports — it is all there.

  15. “the person who bought the brand-new car who pays $1,000 annually to cover it has been shorn of $5,000”
    Unless you have an accident for which you are liable, and make a claim. Or a serious “law” violation. Then the $1,000 dollars can easily become $2.000 dollars, and a net $10,000 over five years. Or more. Which would easily buy a decent used car. So far anyway. As is always the case, insurance companies want you to cover the cost of your claim over the next few years.

    • Speaking of car insurance, if you ever suggest that car insurance should not be required, you’ll inevitably have the pearl clutchers exclaim: “How will crash victims cover their losses?” The pseudo economists in the room will also cry: “Why, that would be a negative externality unacceptably foisted upon the public!”

      The whole compulsory insurance regime is bassackward. Rather than having, not only every driver “covered” with insurance for damages to others, but every vehicle itself (in order to maximize the amount of insurance policies out there, of course), the better way would be to have optional insurance policies to cover damages that may be caused to you by others. Driving inherently carries risk (which includes the risk of recovering your damages from a negligent driver). If you’re not comfortable taking on that risk, you should buy such a policy. Requiring those willing to accept the risks or those who are excellent drivers to pay into this system is the actual negative externality unacceptably foisted upon the public. It also adds an element of moral hazard, thereby encouraging negligent driving (because they’re “covered”).

      Of course, the whole point of the current insurance regime is to maximize the premiums for the insurance companies, as well as getting trial lawyers paid (the insurance companies and trial lawyers have a parasitic and symbiotic relationship). The whole system is a rent-seeking racket.

      • Mister,
        Since I was a young man, I have NEVER understood why liability insurance is anchored to the vehicle, instead of the driver. Every vehicle the driver owns. As if their second or third car might go on an excursion all by itself, and kill somebody. It would be easy to anchor it to the driver, and his one vehicle that poses the greatest risk. His truck for example, and let his Camry be.
        Well, I guess I do understand it, there’s more money in it.

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