Buy Newer or OLD

Buying/Selling
24

I hate to break it to you, but whether your car is new or old, it still needs maintenance at regular intervals. Mechanical failures that require repairs increase with age, but not maintenance. Maintenance should be routine no matter how new your car is.

From Should I Buy, Lease, or Steal My Next Car? by Tom and Ray Magliozzi:

  • If you really need or want a relatively new car (less than three-years-old): Buy it, don’t lease it ($10,466/yr).
  • If you’re willing to drive a car that’s six-years-old: Buy a new car, keep it for six years ($8,209/yr).
  • If you’re willing to drive a car until it’s nine years old: Buy a three-year-old car and keep it for six years ($7,177/yr) or buy a new car and keep it for nine years ($7,483/yr).
  • And, if your a cheapskate, or you don’t use a car much: Buy a heap, fix it up, and drive it into the ground ($5,312 or less/yr).

Here is a summary of the breakdown of the savings of each strategy over a 20 year period:

  • If you choose the six year strategy (in the second bullet) over the three year strategy (in the first bullet), you save $45,140 over the course of 20 years. If you choose the nine year strategy over the three year strategy, you save $65,780 over the same 20 years. If you choose the “heap” strategy, you save $103,080.

  • Likewise, if you choose the nine year strategy over the six year strategy, you save $20,640 over 20 years. If you choose the heap strategy over the six year strategy, you save $57,940.

  • If you choose the heap strategy over the nine year strategy, you save $37,300 over 20 years.

…so buying a new car is a pretty costly proposition. With the high cost of depreciation on a new car, you’re better off buying a three year old car and keeping it for six years than buying a new car and keeping it for nine years. According to the book, buying a new car and keeping it for nine years will cost you $7,483, but buying a three year old car and keeping it for six years actually saves you $306.

Keep in mind this book I cited was printed at least 20 years ago (I can’t find a copyright date), so these numbers should be adjusted for inflation if you want the current scenario.

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