Some Buy New Vehicles To Save $. Some Buy "Pre-Owned" Vehicles To Save $. How?

Whitey · April 7, 2018, 2:10pm

There is a “one size fits all” answer to the question “which is the least costly alternative?”:

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.