By on December 23, 2019

2019 BMW M2 Competition interior

As the calendar flips into 2020, various and sundry beancounters have begun bleating that we’re all spending way too much money on cars. The folks at AAA remarked earlier this year that the average annual cost of vehicle ownership amounts to $9,282, or $773.50 a month. That’s the highest cost associated with such since they began tracking expenses in 1950.

Santa is just around the corner (no, really — go look) so TTAC is here with a fictional present: assuming there is a monthly bank error in your favor of $773.50, what would you go out and buy today?

Flights of fancy like this are rarely rational, so we’ll dispense with strict ground rules for today’s QOTD. While the AAA figure of $773.50 does include the likes of fuel and insurance, assume that Santa is taking care of those, too. Depreciation and interest charges don’t exist in our fantasy world, either.

How long of a term will the jolly old elf deposit this money into your account? Let’s say 72 months, since that seems to be the terrifying new trend in most American dealerships. This is to say nothing of the stupefying 84 month terms or the psychotic 96 month loans your author sees tabulating in ads for FCA dealers around here.

Injecting a bit of realism here: AAA estimates that over $300 of that $773.50 figure is consumed by interest and depreciation. Assuming one spends about a hundred bucks in fuel and maybe half that in insurance, it leaves only about $330 for the actual payment on the note’s principal. Terrifying.

But you don’t have to worry about that. Given our fictional parameters, what would land in your driveway?

[Image: Chris Tonn/TTAC]

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61 Comments on “QOTD: Bank Error in Your Favor?...”


  • avatar
    FreedMike

    Bullitt Mustang.

  • avatar
    statikboy

    I would save it up for about a year and then pick up a circa ~1986 21′ or 22′ Toyota motorhome with the 22RE from one of the dry states. The remaining income would fuel it and go towards solar and winterfication and other modifications to make it more livable year-round.

    • 0 avatar
      Steve S.

      Like this one?

      https://www.thetruthaboutcars.com/2017/06/junkyard-find-1978-toyota-dolphin-mini-motorhome/

      • 0 avatar
        DenverMike

        I’d seriously look for the later ones with the duals and the Full Floating Axle. I’m sure there was a Class Action, recall, update and or ban concerning the motor homes (and flatbed/stake beds) with non floaters.

        Toyota abandoned the Cab/Chassis segment after that mess, early ’90s. It’s basically the difference between an F-150 “rear axle” and the Super Duty rear-end with the axle (actual shaft) bolted in with 8 bolts at the hub (independent of the duals) clearly recognizable from the exterior, and 2 massive bearings at each hub, vs one tiny bearing prone to early failure and axles held in by clips that can fail and an axle (shaft) leave the vehicle (at speed), taking the duals with it.

        Also back then, aftermarket builders (Dolphin, Flair, Winnebago, etc) could build using near 100% of the truck’s GVWR/Payload, leaving owners “overloaded” with a full gas tank, passengers, gear equipment, fluids/liquids, etc, even with the full floater axle.

  • avatar
    EGSE

    “we’ll dispense with strict ground rules for today’s QOTD.”

    First two months….

    Kimber 84L in .270 Winchester.

    The rest….

    Goes to new windows for the house.

    That was easy.

  • avatar
    FormerFF

    That’s not enough for a Cayman, so a BRZ. That leaves a good bit of money for another set of wheels and tires, and an oil cooler, all of which will be needed for track days.

  • avatar
    eggsalad

    I’m not here to answer the question, just to state that this article makes me feel a whole lot better about the ~$140/month that my paid-for 2008 Prius costs me in gas, insurance, and maintenance.

  • avatar
    MrIcky

    1320 edition Challenger. If there are any left.

  • avatar
    cicero1

    Toyota Runner TRD. And b/c the lack of depreciation on these I’d still have most of the value after 5 years.

  • avatar
    Art Vandelay

    https://bringatrailer.com/listing/1993-mazda-rx-7-78/

    I tried to base it on completed auction numbers in recent auctions as you never said it had to be new.

    I like to think for 50 grand I could also ship a B13 SE-R off to Japan for one of those “Ferrari Red Book” style resto’s, but the RX-7 was actually there so I won’t need to learn Japanese.

    It is a 93 RX-7 Twin Turbo manual, Silver on a red interior, 2800 miles. Should be right there number wise pending a favorable rate. I am told my credit union would actually do this loan.

  • avatar
    ToolGuy

    I used to walk around with a quick and ready answer to this question, and most recently it was “S-Class” – but that was a while back. Now I don’t have a ready answer, and the fact that the answer is *not* “S-Class” and will probably never be “S-Class” makes me slightly sad.

  • avatar
    brettc

    I’d get a 2019 Sportwagen S/4Motion with a manual, before they’re gone. Or maybe an Alltrack since it’s $700/month extra.

    Some dealers have manual 4M Sportwagen S units listed for just over $21000, but there aren’t a lot of manual units out there.

  • avatar
    Jon

    Start with 55… (72 months* 773)
    Sell 2017 Tahoe (+30)
    Buy 2020 6.2 Suburban (-65)
    Make 81 K30 run and drive again (-5)
    Paint and minor repairs for 2003 GMC (-5)
    Use remainder to pay for gas for suburban.

  • avatar
    jack4x

    To save everyone else the calculator time:

    $773.50 X 72 = $55,692 (no interest charge)

    Looks like a no options extended cab Raptor starts at $55,100 so that’s just about perfect.

  • avatar
    Arthur Dailey

    Just over 55K?

    That should allow me to get a Caravan and a RAV4, FWD. Not high end but enough for what I/we need.

    There all my Christmas shopping is finished. And both of the vehicles purchased are manufactured right here in Ontario.

  • avatar
    jkross22

    773.50/mo? Irrational choices abound – Used Panamera, Cayman, GS F.

    Here’s the real challenge you alluded to…. $330/month.

    Quite a bit if you assume a 5 year note. $20k on the used market can get you all sorts of interesting choices.

    Want warranty? You should be able to pick up an ’18 Passat GT in 2020 for that price with warranty and not a lot of miles.

    Regal Sportback? check. Lots of warranty here as well.

    Mazda6 (’18 and ’19) and ’17 Miata.

    E-class from 2014.

    Touraeg from 2016.

    For 2018 vehicles:
    Avg. new car price – 36k – according to KBB
    Avg used car price – 20k – according to USA Today

  • avatar
    Flipper35

    I would really pay a programmer to fix the comments section here.

  • avatar
    Land Ark

    $330 is just over the current lease rate for an IS300, so I’m probably going to get another one. I’m paying more, so hopefully there’s an allowance to turn mine back in with no penalty and get another one.

    It’s a really good car. Though there were a lot of things I liked about my Regal GS that I miss at the same price per month.

    If I had access to all $700+ for the note, I’d be in a used Jag XF S wagon pretty quickly.

  • avatar
    ajla

    Assuming a “new” car is a requirement, I’d probably spend my free money on a Model 3.

  • avatar
    APaGttH

    Dividend-yielding stocks with reasonable marketing caps that can support annualized growth of 7% to 14% a year.

    Hey, you asked.

  • avatar
    sportyaccordy

    C6 Grand Sport + 3 cylinder naked motorcycle + insurance. Keep TLX for daycare/family duties.

  • avatar
    jmo

    “Injecting a bit of realism here: AAA estimates that over $300 of that $773.50 figure is consumed by interest and depreciation. Assuming one spends about a hundred bucks in fuel and maybe half that in insurance, it leaves only about $330 for the actual payment on the note’s principal. Terrifying.”

    Can you please explain your depreciation theory? It doesn’t line up with any accounting I’ve ever been taught.

    • 0 avatar
      krhodes1

      Not sure where the confusion would be – supposedly the average new car price is right around $35K, and average depreciation is ~50% in 4years from MSRP (though I don’t know the exact assumptions that AAA used). That would be $35K x .5 for a value at 4 years old of $17,500. That’s $364.58/mo just in depreciation, without finance costs, gas, registration, maintenance, insurance, etc. Properly accounted for, $770/mo doesn’t buy you much of a car. But of course you don’t write a check for depreciation, so very few people really think about it.

      The key with depreciation is time (and smart/lucky choice of car helps a pile too). My BMW cost me ~$39K new after $6K in discounts (not counting taxes and fees), it’s still worth ~$23K at 8 years old (unicorn RWD 6spd wagon for the win). $166/mo and dropping, because it isn’t depreciating very fast at ~2K miles of use a year. My dieselgate discount GTI is doing just fine too, as is my crazily discounted leftover Fiata. Helps when you can buy a new car for the 2yo used car price.

      If you were doing GAAP accounting for a business it would be calculated differently (you get some choices), but for this straight-line is perfectly fine. Technically it would be higher in the beginning and less towards the end, but on average, $364.58/mo just from the declining value of the vehicle.

      • 0 avatar
        Scoutdude

        But his point is that you don’t write a separate check for depreciation the payment covers the depreciation so that you don’t deduct that $364.58 from the total to get the amount for the payment that is part of the payment.

        • 0 avatar
          krhodes1

          I made the same point.

          But my point is that AAA is saying that the average total cost, not the average payment, is ~$770. So to properly figure out what you can afford, you *should* be taking depreciation into account. This silly little exercise of using that entire amount as the payment is fun and all, but it doesn’t really make sense.

          Ultimately, I have always thought depreciation is a fairly meaningless concept in regards to cars being used for personal transportation. Depletion is probably a better way of thinking about it – you are using up the value of the car in return for getting transportation from it, and the rate can vary widely. Just like digging ore out of the ground. In accounting, depreciation is a largely artificial concept and rarely has any relation to how quickly value diminishes – I get to depreciate my rental property even though it’s value goes UP every year. I get to fully depreciate furniture over 5 years regardless of how long it lasts.

    • 0 avatar
      Scoutdude

      Yeah the payment is covering the depreciation, so using their numbers you have $630 for the payment. Now if you are lucky there is still some value once you are done with the payments, so the payment actually covered more than the depreciation and the interest.

  • avatar
    Carrera

    I would get a 2019 brand new Ram 1500 Laramie Limited and just haul air all day long while being coddled by the best truck interior in the business.

  • avatar
    dal20402

    I’d use it to pay off the rump balance of my student loans. But if it has to be a car… I miss my luxury sedan, although it’s not practical for me to have one in a fleet of our current size. I’d go out and buy one of the 3 or so low-mile used 2013-2017 Lexus LS600hLs in the country.

  • avatar
    Dan

    My F-150 is only just broken in, and even if it weren’t a new truck would be a tough choice right now. I’ve read enough bad things about the 10 speed and the 18+ V8 that I wouldn’t touch either for a couple more years. I’m lukewarm on the new Rams. The Tundra is ancient and the new one isn’t quite here. The only GM that I’d look twice at would be getting one of the last real Suburbans and 55K there won’t get you the good motor.

    It would get a loaded 392 Challenger though.

  • avatar
    Vulpine

    One word: Tesla.

  • avatar
    Mike-NB2

    Wait! This sounds really irresponsible. So hypothetically AA is giving me $700+ USD per month? I’m a fan of drinking but I probably couldn’t sustain this for more than a few months before I’d die of alcohol abuse.

    Can I at least use some of it for hookers?

    Seriously though, the average expenditure for a car is now $773 per month??? Wow!!!

    • 0 avatar
      krhodes1

      Accounted for accurately, $773/mo doesn’t buy much of a car, because they include depreciation in that figure. By FAR the biggest expense of a new(er) car, even if you don’t write a check for it every month.

      But I do find all of these “cost to own” articles make some assumptions that tend not to apply to me. I tend to only buy new cars DEEPLY discounted, which reduces the depreciation a good bit. I usually get a better deal on financing than their assumptions, and certainly for a far shorter term. And I won’t pay dealer prices for maintenance. I also tend to have low insurance costs due to where I live, driving record, and credit rating. But for the average person they probably ARE pretty accurate.

  • avatar
    krhodes1

    There is only one new car on the market I have any interest in buying that I don’t already own, and $770/mo won’t do it – the Porsche Cayman or Boxster.

    So I would have the same two new cars I already have, a GTI, and a Fiata. On 72mo loans, you could about buy both for that nut a month, assuming a decent discount level – the Fiata would be a leftover ’18 (which is fine, they didn’t change a thing for ’19). But since I won’t owe money on cars out of warranty, my monthly is actually about $1K for the two of them. The GTI is about to turn three and will be paid off shortly, about a year early.

  • avatar
    ToolGuy

    Here are the AAA figures for the five vehicle types currently represented in my household:

    New Vehicle Category / Annual Cost
    Small SUV (wife) / $8,394
    Medium Sedan (son) / $8,643
    Medium SUV (daughter) / $10,265
    Large Sedan (me) / $10,403
    Pickup (me) / $10,839

    My daughter thinks I should buy new vehicles. The “average” new car really ain’t that nice, so I’m adding 20% to get to more-desirable trim and equipment levels. I get ~$58K for the list. That’s net after-tax, so we need to gross-up if we’re paying the bill with a paycheck. Looks like someone needs to get headed to work. Just for slightly better-than-average wheels (still won’t wow anyone).

    For those of you who do it, knock yourselves out. But I can’t get too excited about living this way.

    • 0 avatar
      ToolGuy

      From the AAA link:
      “Average maintenance and repair costs climbed marginally to 8.94 cents per mile, up 8.9% over last year. ***The increase was fueled by the growing complexity of vehicle systems*** and an updated methodology for calculating repair costs.”

      Hmmm – so it’s not just my imagination? :-)

  • avatar
    SCE to AUX

    This thread brings up an interesting question… Just who is actually buying brand new cars these days?

    EVs are commonly reported to be purchased by people making over $100k, but with the ATP of pickups being in the mid 40s, that’s not exactly chump change.

    Being overextended is the ruin of many, and was a major cause of the 2009 recession. I work with many fellow engineers who are younger than me, people in their 30s and 40s, and none of them are buying new cars.

    I’m beginning to think that the car market is dividing into two parts – those at the top who can afford a wide variety of new cars, and those at the bottom who can barely keep a used car on the road. And maybe that’s a reflection of the entire economy.

    As for the car, maybe a Kia Telluride, Tesla Model Y, or a Polestar 2.

    • 0 avatar
      ToddAtlasF1

      The working class has it better than they’ve had it in more than a decade. Even the WSJ has had to admit that wage growth at the bottom has outstripped that of the crony fascists who won under the previous three administrations.

      That being said, the people who buy ‘mass market’ cars and trucks are government employees. Federal and state employees have job stability and benefits that the people paying for them can only dream of. A marine officer friend of mine bought two new pickups, two new cars, and a new minivan in about a six year period. Civil servants I know have more new cars and trucks than family members. There are reasons that the globalists have no problem finding eager conspirators in the bureaucracy, reasons that will bankrupt the country soon enough.

  • avatar
    geozinger

    Given that amount of money, I think I’d go for one of the end of the line (Ace of Base) Chevy Impalas. With the V6 and the other stuff, that car should be fine for me for a long time.

    There’s little new that I really like and anything beyond a R/T Challenger will exceed the hypothetical amount…

  • avatar
    -Nate

    For a retired bottom rung Blue Collar guy this is serious money .

    I’d put about half of it in my grand daughter’s acount and the rest into my index funds, she’s supposed to inherit them anyway….

    I’m lucky (by choice and diligence) that I live in the South West where I can run an old jalopy cheaply until I can’t get parts for it anymore….

    -Nate

  • avatar
    DenverMike

    ’78 King Cobra Mustang. Yeah I said it. So? There’s enough left over for an MKI MR2 and an LX 5.0. Plus an IROCz.

    Insurance and fuel should be low to nothing since I wouldn’t be commuting in any of them.

    And depreciation has about bottomed out on many like classics. There’s hundreds of “classic car” specializing dealers that stock the finest examples and no hack job rebuilds.

    Or maybe a couple supercharged ’04 Mustang SVT Cobras. Their prices have about bottomed out too. Or an E30 M3 adjusted with mileage or condition for budget. Or an NSX. The mind boggles. C7 ZO6? Grand National (not GNX)? Mclaren Mustangs? Early four-eyed Saleens?

    Yeah like $14K for an excellent condition/minty ’78 King Cobra with 50K miles. Their prices will only skyrocket from there! Or actual “Cobra” kit cars. Same thing. Do they still make them? What about Porsche Speedster kit cars?

    What’s the cheapest air cooled 911s?

  • avatar
    JEFFSHADOW

    2019 or 2020 Chrysler Pacifica Touring L with the “S” Package!

  • avatar
    HotPotato

    Tesla Model 3. Ideally the Performance model (dual motors, AWD, big battery, heavy-duty inverter for track duty, etc.).

    I suppose I could go for a luxury SUV, but I don’t feel like I’d be welcome in that club… I’m not a football star with a dog-fighting kennel, a foreign-born mobster running gold & guns & girls, or a retired Wall Street exec who combines the wardrobe of Mr. Rogers with the personality of Adolf Hitler. (Sorry if I’m a bit cranky about that vehicle segment — clearly I have spent far too much time driving in Los Angeles lately.)

    • 0 avatar
      -Nate

      RE: Driving in Los Angeles ;

      How right you are .

      I used to do a lot of late night pleasure driving but now I’m old and

      A. fall asleep early

      B. don’t trust my night vision

      So that’s out .

      No wonder so many are leaving .

      -Nate

  • avatar
    ToddAtlasF1

    For the purposes of the game, I’ll say TRD Avalon. It would be sublime to drive most of the time and infuriate deranged people.

    If anyone wonders why car ownership was higher sixty years ago, it was due to post-war economic impacts and because cars only lasted a few years. New car customers traded in every three years and received as good as no residual values. Expenses went down as cars got better and then progressive destruction of our educational institutions elected Obama, who made the newest cars the worst on average.

    • 0 avatar
      -Nate

      I see ;

      So now it’s President Obama’s fault that our public education system was gutted by the gop long before he was born ? .

      I wonder if you ever even think before spouting your paranoid “I’m *so* scared of Black people !” missives .

      -Nate

      • 0 avatar
        ToddAtlasF1

        One of your problems is that you don’t understand causality. How did Obama create the imbeciles who elected him? He didn’t. Our corrupted educational institutions did by making people with your grasp of and appreciation for our founding principles the norm. Have a dumb old time and an ignorant new year.

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