Financial Freedom Sloth

achieving financial freedom one lazy step at a time

Buying a new car

So back in December of last year I did mention that our car broke down. And with broke down, I really mean completely kaput! The radiator was leaking even after pouring 2 bottles of Wynn’s radiator stop-leak in it. On top of that it was leaking oil from 5 different places.

The old car

The car (an opel combo) was also around 13 years old and we had driven it for 230,000 km. Spending several thousand euro’s fixing it was definitely not worth it.

Although we did get somewhat attached to it over the years, it had served us well. We bought it second hand for 8,000 euro when it was 3 years old and only had 30,000 km so all in all we good good value for our money with that car. With the big storage capacity it offered we have really moved a lot of stuff with it over the years.

Needing a rental

The moment it broke down was less fortunate. It was just before the end of year holidays. Christmas and New year mean visiting our family all over the country which means driving a lot of km’s. So we rented a car for almost two weeks. In a way it was somewhat of a waste of money but we really needed a replacement car in short notice. We did chose the cheapest possible model. When we showed up at the car rental place that car was not available. Which got us a free upgrade to a brand new Opel Mokka: the fanciest car either us have ever driven!

The car rental got us over the end of year festivities but since our new car was not available in stock we had to wait till early March for the delivery. Lucky for us family had a not often used second car which we could borrow.

Buying a new car

Conventional wisdom among the FIRE community is to not buy a new car. The reason for this is that a new car loses immediately 20% of it s value the moment you drive it from the car lot. Depreciation for a car is the highest the first couple of years. Conventional wisdom is to have somebody else absord that depreciation, buy the car when it is around 4 years old and then drive it until it falls apart. We did this with the Opel Combo and a purchase price of 8 000 euro + 2 000 exceptional maintenance costs for 10 years of use came around 1,000 euro depreciation per year.

Which brings us to the Dacia brand. Dacia is the budget brand of Renault. The cars are build with older technology (the passenger windows are not electric for example, there is no touchscreen to be found anywhere in the car) and they offer only a handfull of options in colour scheme and extra’s. The upside of al of this is that their cars are cheap. On their site they even advertise a starting Logan model (which is what we got) of 7 590 euro!

Do not get suckerd in by this! They are sneaky little bastards at Renault and I honestely doubt they ever sell the basic load out. It doesn’t even have a radio or fog lichts for that price! So ignoring the very basic set-up which only exists for advertising purposes you could still get a brand new car for less than 10,000 euro.

Except if you want a somewhat stronger engine like we wanted. Our family lives 100+ km from us which means using the highways to visit them which means we preferred a somewhat stronger engine. But Renault, being the sneaky little bastards they are decided that if you want the stronger engine you also have to take the full option package. So yes, we bought a new car with all the bells and whistles which even includes airco (first ever car with airco!).

The price for all of this: 11 226 euro. It does include free paint because promo conditions and a 500 euro reduction for are old car (which we were glad to get rid off) but also a 500 euro extra cost to install a towbar to pull our remorque (having a big garden and animals does mean we us our remorque frequent enough to justifiy this expense).

Amortization cost, or revisiting conventional wisdom

If we have use the car for 10 years and 200,000 km’s the amortisation per year will be slightely higher than our old car: 1,200 euro/year instead of the previous 1,000 euro/year. If we can use it 12 years and 240,000 km like our previous car we will be right back at the 1000 euro/year amortizing cost.

Conventional wisdom still apllies, even to Dacia. If you have the time to look around you can find Dacia cars of only a few years old and not to much milage which would push that amortisation below the 1,000 euro/year. But then you need to find a good second hand car! And there isn’t all that much on offer because Dacia seems to attracted buyers like us who buy the car with the full intention of driving it until it falls apart. Because of the low starting price of the car new that bigger amortisation in the beginning doesn’t even matter all that much. If I would have to stick a number on it I would guess you can save around 2,000 euro over 10 years by buying a good secondhand Dacia Logan as opposed to a new one. The extra 2,000 euro negates the luck you need in finding a good second hand car + gets us at the very least 4 years of completely worry free driving a brand new car.

Now, 2,000 euro is still a decend amount. Especially if you take into account a person will at least buy 6 cars during his life. If we had more time we would have probably took our time and looked around for a decent second hand car. But we didn’t have all that much time. Our old car was not safe anymore to drive and we had so much breaking down in December that we just didn’t want to deal with the hassle of looking for a decent second hand car. Honestely, those 4 years of worry free driving without a need to even go to the annual car inspection was really appealing back in December. And also, 11 226 euro for a brand new car, with airco and pull bar really isn’t expensive! So I am going to file this under frugal habits, even if it goes against the conventional FIRE wisdom and might cost 200 euro/year more than going second hand.

9 Comments

  1. Buying new does work if you buy wisely and hunt out the best deal. Research, research, research and above all timing. New car sellers have targets to meet. Once you have that new car, keep it maintained and drive it until it goes bang. It’ll serve you for years and years.

  2. cars are great ways to spend lots of money!
    We were in a similar position to you 3 years back – I “needed”* to buy a new** car for work.
    It’s all the rage in the UK to get a new car on a lease/hire deal – you don’t own it and only really pay for the depreciation. As a result, car sales are booming and everyone seems to drive a new car.
    We opted instead for a cheap second hand Mazda 3. It was about £8,000 / €9,000 with only 40,000km on the clock and was about 21/2 years old.
    We still have it now and it’s done over 140,000km – the car allowance has more than paid it off and we own it outright.
    Cheapish overall cost of ownership.

    *Conditions of the job were that I needed a decent car in return for the £450 / €500 car allowance
    **New meaning less than 3 years old and no more than 5 – if you had an antique car you would be exmempt. my 9 year old Fiat Bravo wasn’t considered to be antque enough

    • finan112_wp

      November 11, 2019 at 1:55 pm

      That is a very nice car allowance! But yes, second hand would actually be my preference as well, just not this time lol.
      J collins just wrote a very interesting post about the cost of buying and owning a car: https://jlcollinsnh.com/2019/11/10/what-does-buying-a-new-car-really-cost-over-the-years/
      Cars are very expensive! And changing to a new car every 3 years or so as most people with lease seem to be doing is the most expensive way to ‘have’ a car.
      I have noticed an increase in advertising for ‘personal’ lease in Belgium as well. My rule of thumb for this is that if it is advertised a lot the person behind the advertising is probably making a lot of money from it.

  3. Interesting take! I’d be very curious though to see if a Dacia lasts for that long. I look around the roads when I’m driving and the only 10 year old cars I see are Ford, Toyota and Nissan. Could just be that majority of people trade in and buy new every few years but it’s very rare to see any other brand that old still knocking about. Can you find any Dacia’s with that mileage available to buy second hand? Or maybe they haven’t been around that long?

    • finan112_wp

      November 12, 2019 at 5:38 pm

      Marketshare of Dacia is only around 4% and 10 years ago it was even less. Most of the Dacia models you see are the somewhat more expensive Sandero and Duster models. Duster isn’t a that old model but I have already seen several pretty old Sandero models on the road. Secondhand market for Dacia doesn’t seem to be that big, one reason might be they do not do corporate fleet lease and a lot of secondhand cars are corporate lease which get sold after 4 years. But I also think Dacia attracts the kind of buyer that keeps his car till the end of life.

  4. If you buy a used car in my country (Czech Rep.) you get 99,5% scammed. Therefore after I trashed my old car I also bought a new Dacia Logan MCV (combi version). Been using it for over two years now. It is not fun riding but it does the job. Ideal car for people targeting FIRE.

    • finan112_wp

      November 15, 2019 at 9:01 pm

      The Logan MCV is a big car, really lots of car for your money but it probable handles with the grace of a tank …

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