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Why the Majority of Trinbagonians Shouldn't Buy A New Car

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Trinbagoviews
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Why the Majority of Trinbagonians Shouldn't Buy A New Car

Postby Trinbagoviews » December 5th, 2013, 11:03 am

Unless you're very wealthy with money to burn you should not be purchasing a new car especially when taking out a loan. The costs are just way too high for the average Trinbagonian to absorb. The new car smell and the big "sawatie" feeling just isn’t worth it.
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Here's why:

The High Loan Interest Expense.
Riding a wave of emotion and persuasive arguments buyers often neglect to see what they're signing up for in terms of the tremendous financial expense they will now by saddled with. Here's an example:

New Car Cost : $200,000
Down payment: $20,000
Loan Amount: $180,000
Annual Interest Rate: 12% (Could be much more)
Length of the loan: 5 Years
Number of Monthly Payments: 60
Loan Interest paid after 5 Years: $60,240
Total Payments to Bank: $240,240
Total Acquisition Cost: $260,240

In other words a car that cost $200,000 winds up costing you: $260,240 after 5 years when you finance it.

Here's where you lose even more:

Higher Insurance Cost
Insurance cost is much higher on new cars and especially so when cars are financed. Once the car purchase is financed the bank makes it mandatory for the purchaser to take out a full comprehensive insurance policy to safeguard the financier's collateral. This means that your yearly insurance cost is much higher than if a cheaper second hand car was bought. Had you bought a cheaper second hand car not only would your insurance cost be lower but you could opt for third part, fire and theft insurance which is substantially cheaper than full comprehensive coverage.

Higher Maintenance by Local Car Dealers
New cars purchased in Trinidad and Tobago are required to have their vehicles serviced by the new car dealer in the early life of the car. These services are required to maintain the warranty on the car purchased. Even after the mandatory services to maintain the car's warranty have passed many owners often feel inclined to continue to service their cars at the local car dealers at very exorbitant costs since they worry that having the car serviced elsewhere could have negative consequences. Its even worse if the car gets into an accident and needs to be repaired.

Significant Loss in Value Once New Cars Are Driven Out the Showroom

Reports indicate that as cars drive out the showroom they immediately decline 25 - 30% in value since the car can no longer be considered a "new car" or unused. This is a terrible personal business decision and should be avoided by the average car buyer who cannot afford such a hit against their personal finances. Moreover new cars lose 70% of their value in the first four years. When you buy used, the original owner has already taken that major depreciation hit. You, on the other hand, can get a great four-year-old car for a good price significantly lower than the cost of a brand new car. Accidental nicks and scratches in the early life of the car also have the effect of eroding the car's value much faster.

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Solution: Save Up and Buy A Used Car Of course buying your car without taking out a loan will be a challenge, but its certainly not impossible. With a strong work ethic and diligence in saving and minimizing spending can help get you there. Spend a lot of time looking and researching potential cars. Look through the newspaper classifieds, go online and search for used cars, and you’ll find plenty of good cars for $60,000 or less—Toyota Corollas, Honda Accords, Civics, Mitsubishi Lancers, Nissan Sunny's.

Patience is a virtue. Your Not Doomed to drive a relatively older car forever. Say that you are thinking about financing a new car with payments of $2500 a month. Your current car is worth around $40,000. If you take that $2500 and pay yourself, instead of the bank, you’ll have $25,000 in just 10 short months. Sell your old car and you'll have a total of $65,000 to use towards the purchase of a better car, while continuing to save $2500 a month in another 10 months you'll have another $25,000 to put towards an upgraded car purchase. Repeat this process again, and you could have a $100,000 car just 30 months after you started saving. This makes much better financial sense than buying a new car and incurring significant loss in value.

But I Need A Reliable Car... Older cars have high maintenance cost and headache When you buy a new car you are paying a high premium to have a warranty / or a feeling of reliability, with all that money you pay the bank and the car dealerships you could comprehensively maintain a gently used car, more than you would ever need.

Instead use that money that would be wasted buying a new car and budget it toward car maintenance and toward your next cash purchase of a car. With a thorough car search and proper counsel before making a used car purchase you'll have an excellent chance of finding an affordable roadworthy vehicle. Though this may not be what you want to hear; deferring instant gratification has tremendous benefits. Don't be impulsive with your financial decisions.
Last edited by Trinbagoviews on December 5th, 2013, 11:12 am, edited 1 time in total.

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby john_smith8076 » December 5th, 2013, 11:06 am

Trinidadians should learn to leave people with it cause if no one buys new cars the price will drop but anyways you gonna buy a roro and d man selling it for double what he paid all in all Trinidad and Tobago is the land of the greedy rich man and the dumb poor man who spends way more than he should for what he doesn't need

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby DFC » December 5th, 2013, 11:06 am

hoss people buying new vehicles everyday.

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby Rainman » December 5th, 2013, 11:10 am

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby S_2NR » December 5th, 2013, 11:13 am

umm.. just pay down more than 50% of the price.
obviously financing 180K over 5 yrs will cost.

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby cherrypopper » December 5th, 2013, 11:13 am

Demand and supply

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby cinco » December 5th, 2013, 11:14 am

Lol
So u suggest we pay 90k for 7yr old cars instead? Nicca pleeze

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby S_2NR » December 5th, 2013, 11:16 am

OP, biggest advantage of buying new is NO STRESS. Everything working and if not is under warranty so you have a problem free car for at least two years. five stress free years if you maintain it properly.
and that new car smell is hnnnnnghhh so udfr

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby Trinbagoviews » December 5th, 2013, 11:36 am

S_2NR wrote:OP, biggest advantage of buying new is NO STRESS. Everything working and if not is under warranty so you have a problem free car for at least two years. five stress free years if you maintain it properly.
and that new car smell is hnnnnnghhh so udfr

Common excuse.............
When you buy a new car you are paying a high premium to have a warranty / or a feeling of reliability, with all that money you pay the bank and the car dealerships you could comprehensively maintain a gently used car, more than you would ever need.

Instead use that money that would be wasted buying a new car and budget it toward car maintenance and toward your next cash purchase of a car. With a thorough car search and proper counsel before making a used car purchase you'll have an excellent chance of finding an affordable roadworthy vehicle. Though this may not be what you want to hear; deferring instant gratification has tremendous benefits. Don't be impulsive with your financial decisions or follow the advice of the loan officer they don't have your interest at heart :wink:

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby RBphoto » December 5th, 2013, 11:55 am

Buying new makes sense for companies. For individuals.. not so much.

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby Country_Bookie » December 5th, 2013, 11:59 am

Trinbagoviews wrote:
S_2NR wrote:OP, biggest advantage of buying new is NO STRESS. Everything working and if not is under warranty so you have a problem free car for at least two years. five stress free years if you maintain it properly.
and that new car smell is hnnnnnghhh so udfr

Common excuse.............
When you buy a new car you are paying a high premium to have a warranty / or a feeling of reliability, with all that money you pay the bank and the car dealerships you could comprehensively maintain a gently used car, more than you would ever need.

Instead use that money that would be wasted buying a new car and budget it toward car maintenance and toward your next cash purchase of a car. With a thorough car search and proper counsel before making a used car purchase you'll have an excellent chance of finding an affordable roadworthy vehicle. Though this may not be what you want to hear; deferring instant gratification has tremendous benefits. Don't be impulsive with your financial decisions or follow the advice of the loan officer they don't have your interest at heart :wink:


Good post.
I've never taken a loan to buy a vehicle. If you can afford 50% downpayment on a new vehicle then you can afford to purchase a 4-5 year old vehicle without a loan. U avoid paying interest on a loan, full comprehensive insurance, and stealerships inflated service fees.

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby Sky » December 5th, 2013, 12:06 pm

Did that graph say that after 7 years, a car bought for $200k will be worth $50k?

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby sliderz1 » December 5th, 2013, 12:07 pm

firetruck i didnt read

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby S_2NR » December 5th, 2013, 12:08 pm

Trinbagoviews wrote:
S_2NR wrote:OP, biggest advantage of buying new is NO STRESS. Everything working and if not is under warranty so you have a problem free car for at least two years. five stress free years if you maintain it properly.
and that new car smell is hnnnnnghhh so udfr

Common excuse.............
When you buy a new car you are paying a high premium to have a warranty / or a feeling of reliability, with all that money you pay the bank and the car dealerships you could comprehensively maintain a gently used car, more than you would ever need.

Instead use that money that would be wasted buying a new car and budget it toward car maintenance and toward your next cash purchase of a car. With a thorough car search and proper counsel before making a used car purchase you'll have an excellent chance of finding an affordable roadworthy vehicle. Though this may not be what you want to hear; deferring instant gratification has tremendous benefits. Don't be impulsive with your financial decisions or follow the advice of the loan officer they don't have your interest at heart :wink:


All that is true assuming you get a gently used car, which is highly unlikely unless u personally know the seller.

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby Rory Phoulorie » December 5th, 2013, 12:12 pm

For Sale - One Audi R8, 2 years old, slight bodywork damage, Lenny Sumadh Plates, only the finest panties in the passenger seat - $686,875.92 O.N.O.

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby AllTrac » December 5th, 2013, 12:19 pm

buying a used car is always a gamble and more than likely you always come out losing. Its either you buying someone else pride and joy or you buying someone else headache, 90% of the time its the latter. For someone who like to tinker and has a fair technical knowledge on cars also if your livelihood does not depend on having your own transport then I say go for it, save the extra dollars and buy it used. For a woman, first time owner, someone who doesnt have the time to run by mechanic and older people, save yourself the headache in the long run and buy new.

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby [X]~Outlaw » December 5th, 2013, 12:20 pm

What color?
Millage?
Pics?

PM me 8-)

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby xhex » December 5th, 2013, 12:24 pm

and then what is it all worth when this sheit happens?

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dont know much aboutthe accident last night on the avenue... but i do know, the bank and the insurance company smiling

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby Duane 3NE 2NR » December 5th, 2013, 12:46 pm

More than 1200 new vehicles were bought each month in T&T in 2012. This was an increase over 2011. More than likely there was a further increase in 2013.

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby Allergic2BunnyEars » December 5th, 2013, 12:50 pm

Op you have shares in RORO business? As long as people rolling back mileage and trying to hoodwink buyers I not buying used for daily driver. Project car yeah.

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby Rallyfignis » December 5th, 2013, 12:50 pm

Was told that in October N&M sold 600 cars

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby Sky » December 5th, 2013, 12:54 pm

AllTrac wrote:buying a used car is always a gamble and more than likely you always come out losing. Its either you buying someone else pride and joy or you buying someone else headache, 90% of the time its the latter. For someone who like to tinker and has a fair technical knowledge on cars also if your livelihood does not depend on having your own transport then I say go for it, save the extra dollars and buy it used. For a woman, first time owner, someone who doesnt have the time to run by mechanic and older people, save yourself the headache in the long run and buy new.


I think what OP isn't getting is the relative value of money.

If you ask most people if they would pay 2800/mo for a totally reliable vehicle with very little attention needed and very little chance of drama, they would ask what's the catch.
Some people can't afford to NOT have a vehicle available.
Also, the cost of time needed to tend to an older vehicle adds up.
I'll exclude the stress behind a broken down vehicle or not having one, because stress is also relative.
So in this country we fall into 3 categories when it comes to investing in a vehicle.
Absolutely need one, so it has to be new
Need one badly, but could handle a lil stress, so it could be RORO or local used under 15 years.
Just want a ride/too poor/ having a car isnt that big of a deal/praying to the B14 gods will have people buying old used cars.

Another thing.
While the RORO vehicle is cheaper, it's also older and the loan has to be paid off quicker.
This lands you into some higher installments.
If you have a lower paying, but very stable job, buying new will actually be more comfortable financially if you need to have a good vehicle.
When I was shopping I worked out the difference.
I had a choice between going RORO and pay $900 more every month, or go new and pay about 49k extra in interest. That 39k was a bit too hard to swallow, as it was more than the selling price of my previous car. I couldn't handle knowing that I was paying all that extra imaginary money so I went RORO.

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby desifemlove » December 5th, 2013, 12:55 pm

i get a car all i want.

so to please somebody else i eng know, i mus travel by maxi or taxi everywhere? haha...

Get UNC/Mrs. Kamla to build a train. So then I can take car AND train when it suit me. :D

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby dogg » December 5th, 2013, 12:56 pm

Source of
Trinbagoviews wrote:
Annual Interest Rate: 12% (Could be much more)
???

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby konartis » December 5th, 2013, 12:57 pm

people still selling older cars way too much....

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby desifemlove » December 5th, 2013, 12:58 pm

xhex wrote:and then what is it all worth when this sheit happens?

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dont know much aboutthe accident last night on the avenue... but i do know, the bank and the insurance company smiling


how de firetruck did that happen? :shock:

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby Crackpot » December 5th, 2013, 1:06 pm

I inside on this discussion....remember that if it was not for the foreign used industry the MAJORITY of Trinbagonians could not afford a new vehicle whether they are working or not :|

And to the person who said to pay down more than 10 % that is an elitist statement because where is the avg upwardly mobile young person going to get $100,000 or more in cash or savings to spend?

Also new cars do give trouble as with anything else there are faults.

We in Trinidad are just fooling ourselves tying up our money for years to get the latest licence plate number for what I don't know :| It is not logical in a financial or economic sense so OP is right.

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby desifemlove » December 5th, 2013, 1:08 pm

but then how do we get around? only use maxis?

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby cinco » December 5th, 2013, 1:14 pm

what else will trinis spend their savings on btw?
a new house in any "decent" area is upwards of 500k

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Re: Why the Majority of Trinbagonians Shouldn't Buy A New Ca

Postby Sky » December 5th, 2013, 1:17 pm

Crackpot wrote:I inside on this discussion....remember that if it was not for the foreign used industry the MAJORITY of Trinbagonians could not afford a new vehicle whether they are working or not :|

And to the person who said to pay down more than 10 % that is an elitist statement because where is the avg upwardly mobile young person going to get $100,000 or more in cash or savings to spend?

Also new cars do give trouble as with anything else there are faults.

We in Trinidad are just fooling ourselves tying up our money for years to get the latest licence plate number for what I don't know :| It is not logical in a financial or economic sense so OP is right.


Chck yuh maths dey :P

10% ?
100k and up?

avg upwardly mobile young people don't buy million dollar vehicles.

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