Self insuring... a continuation of "an observation" (long)

[wetstuff]

If you bought a $60k car for $30k (used vs. new) - you are already ahead $30k. IF you could have afforded a $60k car - then you can easily afford to fix the $30k, no?!

If you stretched to make the $30k - then you're upsidedown already. I'd reach a little more and bury the extended warranty in the payments, and hope you keep your job.

If the thing that makes Boxster owners quake is a $900. RMS replacement - then it seems $900 in a jar should calm your nerves...

...Then there are handwringers who will never feel safe in their skin - or the new breed of schmuck who thinks the rest of the World OWES him a problem-free life.

Maybe we can modify the old saw; "If you have to ask...." into; "If you cannot afford to fix it....."


Jim

[Brucelee]

ALL autos (save collectables) represent a sinking, depeciable asset with the added downside of future mechanical costs. When one buys a new car, MOST of the mechanical costs issue is dealt with for a limited period of time. In this case, the biggest cost of the car by far is the interest and depreciation that one incurs to procure the car. This cost is often overlooked but is very real indeed.

When you buy used, you diminish the interest and depreciation costs over time but are normally subjected to the risk of larger mechanical costs. One can "lay off that risk" to a warranty provider or retain it. This is the self insurance option that is mentioned above although it is not technically self insurance as the insurance industry terms it, but simply retaining the risk entirely for yourself.

Whether you "put away" money for a future repair is not a cost or risk issue but simply a funding issue. If you have the dough, it matters not if you segregate the funds or not. If you don't have the dough, well that is what loans are for.

From my perspective, this issue of warranty is always tied to one's own risk profile. If you hate to have unexpected bills, you can reduce, but not eliminate, this psychic pain by paying upfront, knowing that you MAY NOT receive any of this money back. Then again, you may receive more of it back and the peace of mind of having the protection.

So, while we may want to think there is a correct answer here, the only real answer is, it depends on your cirucumstances and your feelings.

Hey, let the good times roll!

[Perfectlap]

Actually not all cars depreciate. ANd I'm not referring to collectibles.
A friend and his family buy exclusively Mercedez and have been doing so for over 30 years. One member purchased a very high end model which was very hard
to get in this area (or maybe everywhere else). Some how people found out that he got this Merc and were calling him wanting to buy the car. Some offers were as high as $20,000 above what he paid, he's very wealthy and very crazy about Mercs. So he kept it. He also has a 1990 SL 500 that has about 6,000 miles! THis past year he had a bad experience at the dealer and retalliated by buying a BMW 7 series. and driving onto the Merc lot.
(He took it back after six months because he couldn't stand the I drive)

I guess its about Supply and Demmand sometimes with cars.

[Brucelee]

I will stand by my statement that in the long run, all cars depreciate. Yes, you can find rare examples, such as when the original zr-1 came out and guys were paying premiums. However, for the kind of cars we are talking about here. A Box S, when you buy new and keep for say, three years, you have higher depreciation and interest than when you buy a three year old model and keep that for three years.

Then you factor in mechanical costs and do your comparison. My point simply is that as investments go, cars are not! There have been dozens of studies to support this simple fact.

Not to rain on anyone's parade but if you buy a Boxster as an "financial investment" you will be very unhappy with your return!

Originally Posted by Perfectlap

Actually not all cars depreciate. ANd I'm not referring to collectibles.
A friend and his family buy exclusively Mercedez and have been doing so for over 30 years. One member purchased a very high end model which was very hard
to get in this area (or maybe everywhere else). Some how people found out that he got this Merc and were calling him wanting to buy the car. Some offers were as high as $20,000 above what he paid, he's very wealthy and very crazy about Mercs. So he kept it. He also has a 1990 SL 500 that has about 6,000 miles! THis past year he had a bad experience at the dealer and retalliated by buying a BMW 7 series. and driving onto the Merc lot.
(He took it back after six months because he couldn't stand the I drive)

I guess its about Supply and Demmand sometimes with cars.

[IceBox]

I whole-heartedly agree with you, Mr. Lee, and not only because you're one of the worlds' most renowned martial artists, though I admit that getting my ass whooped by 'the Dragon' olds little appeal on it's own. There are always isolated abberations, like the one Perfect Lap speaks of, exceptions that prove the rule. A friend of mine bought a '91 Miata in one of the myriad blues it was available in (though officially Mariner Blue was the only colour that year...Mazda, you tricksy hobbits, you...), drove it for a year, and sold it for $1000 more than he paid. This is not the case for 99.9% of Miatas though. Nor 308 Ferraris, for that matter. Or just about any other car in the market. Just check out that 550 Boxster being sold at a 'bargain price'. 10K of MSRP. And it's a special edition. We're all enthusiast here, so what I'm about to say may seem like a form of blasephemy but "All cars are essentially tools, a mode of transport from A to B ." Would you pay 20% more for a used hammer than a new one? If so, PM me, I got what you're lookin' for!

[Brucelee]

I have been trying to keep my Martial Arts background a secret. What gave it away?

[Onad]

I totally agree with most of your comments. Cars depreciate and breakdowns occur. The goal is to minimize your exposure to both while having the best time.