What Does That "New Car Smell" Really Cost?

What Does That New Car Smell Really Cost?

As an Investment Advisor/Financial Planner, I often hear, “I know I should be saving/investing more, but I am doing all I can!” While that may be true, sometimes a few lifestyle changes can make all the difference.

Take buying a new truck versus a used truck for example:

Looking at the Ford website, a 2023 Ford F-150 XLT goes for $65,910. If you finance it over 6 years, or 72 months, you are looking at a $915^XX per month payment – assuming you pay zero interest. In turn, looking at Carfax^®, I found a 2019 Ford F-150 XLT with only 24,000 miles on it for $39,498. If you finance it over 6 years or 72 months, you’re looking at a $548xx per month payment (again assuming you pay zero interest).

The difference in a new truck versus a used truck is approximately $367^xx per month. Let’s set aside $67^xx for interest and repairs (it is a used truck); and only save/invest $300^xx per month, or $3,600^xx for 6 years. Using the calculators on my website: www.frontlinefinancialsvc.com, Calculators/Savings Accumulation; and assuming an 8% rate of return:

$300 per month or $3,600 per year at 8% for 6 years = $26,409

Now let’s assume you repeat this process every 6 years, purchasing a newer, used truck at 6-year intervals, allowing you to continue to save/invest at $300 per month, or $3,600 per year: