In 2004 I bought my first new car, a 2004 Subaru Impreza RS. Each of my previous vehicles had been extremely well used and most had cost less than $1000. But in 2004 my wife needed a reliable car and we didn’t have the money to buy a decent used model so our only option was to finance. The banks would only let us purchase a new car.
Every month for the next five years came the bill for $382. It was a good car and really only cost us about $2000 in non wear repairs such as a new master pully and a rusted through catalytic converter. Tires and breaks probably cost another $3000 on top of that. We sold it at the rather fair rate of $8000. In the end, we spent about $226 a month for having owned that car. If we had kept the car beyond 7 years, we may have made out a little better although it was nearing 100,000 miles and would have suddenly needed a lot more money in repairs. The 100,000 area seems to be an expensive time for most cars.
There are plenty of cars in the used market that used to cost $20-$30K new and can be had for $2000-$4000 used. You can usually find them at around 70-100K miles which is about when new cars are sold to purchase more new cars. If you buy one of these cars for $3000, you will likely dump another $3000 in to it right away for breaks, tires, mufflers, accessory belts, a timing belt, and a tune up. A manual car may need $1000 in a clutch as well. This seems to scare many people off since you’re in $7000 on a car that’s still only worth $3000. They see the repairs as a nuisance and opt instead for a new car which they see as costing less in repairs and being more reliable.
But this car with that work is likely going to last you at least another 50,000 miles. You can get 4-5 years out of one of these things easily. At $7000 over 48 months, the cost of this car is $145/mo but you can do better. This doesn’t account for selling the car when you are done with it, although your best bet is to drive it in to the ground.
It can save you well over $1000 a year to buy a used car. So I wonder what puts people off the most about it. Obviously the bigger savings can be had by purchasing from a private party which people may find an intimidating experience. This is especially true if they don’t know what to look for in a car. With Google and a printer you can find all sorts of tips on how to buy a used car. Also there is savings by not involving the bank. People may not have $3000-$4000 up front to buy a car through a private seller. Also, if you spend $3000 on a car, expect to spend another $1000 right away for brakes or tires. They always seem to need something right out of the gate and people may not realize this.
Buying used is the best thing you can do for your environment. A lot of green conscious people don’t realize that the energy and pollution caused by creating a new vehicle often outweighs any gasoline savings. How many people have traded in perfectly decent Civics or Camrys for a Prius only to do more harm than good?
Just some other random thoughts:
* Roadside assistance is cheap and although used cars are slightly less reliable, with cell phones and cheap assistance, breaking down is rarely more than a minor inconvenience. And even new cars can break down.
* If you have a new car, every scratch or ding is going to make you cringe. If you live in a city or do a lot of highway driving this is especially true. Looks mean a lot to some people. But it’s always easier to swallow a dent if it’s on a $2,000 car than a $20,000 car.
* Put $100/mo away for repairs. You will probably spend about $1000/year on repairing an old car so it’s good to plan for that and earn a little interest to boot.
* Test drive that car hard and get it real warm. If something smells or sounds off about the car, skip it. Even a layman can usually tell if something sounds wrong even if he or she doesn’t realize what might be causing it. Avoid cars with any signs of present or previous leaks as fixing them can be more money than you need to spend. Accelerate hard in the car to see how the engine compression is doing. Don’t worry about the tires or brakes, or clutch, just assume they’ll need to be done.
* If you don’t get service records for the car, change fluids like the transmission or differential fluid. This is usually required for 45-60K service and is often ignored. Change timing belts on an interference engine if you don’t have records as well. Never believe anyone if they claim to have had service done.
* Use the dealer’s mechanic sparingly. They’re very over priced. They may be your best hope for more complicated jobs such as faulty ABS or a timing belt. Otherwise, find a local mechanic who is ASE certified. Don’t be afraid to try a few different mechanics before settling on one who does the best job. If you can find a mechanic who will install parts you purchase yourself, even better. Mechanics often add write up to part costs.
* Most mechanics don’t want to spend your money. I don’t know if they are naturally frugal or used to customers who are extremely cheap. It’s usually a fight to get them to order higher quality parts or fix things that may only be slightly broken. If a single hose or belt breaks, have the mechanic change them all. It can help the reliability situation and keep your down time to a minimum. But like I said, very few mechanics like fixing things that aren’t broken. But do you really care if a $3 hose can go 200,000 miles or not?
* Always get a stainless steel muffler system. Yours will fall off. And they will keep falling off until you go stainless. It costs a little more up front but a stainless unit will probably last the rest of the car’s life. If you do a lot of short drives, you may join the ‘new muffler every 2 years’ club otherwise.
* The little things are going to stop working. Cruise control seems to be fragile. Plastic latches and switches will often be very brittle after 10 years. An older car isn’t going to be perfect so don’t put money in to fixing the little things like mirror controls, seat heaters, etc.
* Buy the best brakes and tires you can afford. The cost of one accident far outweighs the cost of good tires and brakes. And tires especially can make a huge difference in your safety. And do put snow tires on any car you intend to drive on the snow. Good all-seasons do quite well on the snow, but not nearly as good as snow tires do. They really are worth the expense if you can’t stay at home when there’s snow on the roads.
* You can get a much ‘nicer’ car used than you can new. For example, some luxury cars are surprisingly affordable used. You can get a Subaru, Audi, Honda, for less than it costs to get a Kia, Suzuki, or Hyundai. Or, get a BMW, Mercedes, Porsche for a little more and still spend less than a Kia costs new. Or get 4 Hondas or 2 Porsches for the cost of a new Kia. But beware, parts can be expensive on less common cars. Japanese and American car parts are very affordable in the US but many European car parts are still expensive. You have the option of getting an exotic or rare model, but it comes at a price.
* These days a used car is a late 90s or early 00s car and these cars are likely to all have air conditioning, ABS, air bags and many of the features you’ve come to expect. Avoid cars that are much older even if they have low mileage because you will miss some of the features and the cars are less safe. The differences between an early 90s and a late 90s car can be dramatic.
* Consider 150,000 miles to be end of life for any car. Many car engines will gladly do 200,000 miles but don’t buy a car with 160,000 miles expecting to get five years of commuting out of it. A car at 80-90K miles has a lot of life left but will need that 100K work done. A car at 120K miles that has already had timing belt, clutch, air conditioning, etc replaced and has quality service records is also a contender. It has a bit less life but has already had a lot of the major mid-life crisis work done on it so may save you some money.