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$31,000 To Drive Your Beater Into The Ground
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Consumer Reports has put out a report that confirms what most people have known their entire lives, using something until you can’t use it anymore is cheaper than replacing it every five years. Everyone knows that a new car loses the most value right when you drive it off the lot and everyone knows that buying used it a better value proposition, so why did Consumer Reports even bother? Well, because until now, many of those maxims were merely rules of thumb with no hard numbers put to them and so CR puts some hard numbers. According to Consumer Reports, if you are willing to drive your car past 225,000 (15 years) instead of buying a new Honda Civic EX (their example car) every five years for that same span, you could save yourself $20,500 in costs plus earn yourself $10,300 in interest (5% interest rate, 3% inflation) on that saved money for a grand total of about $31,000.
$31,000 isn’t chump change and while you will have to drive your rickity ol’ beater for that likely to be rough last 25k, it’s saving you some serious cash on a serious depreciating asset. CR gave a list of good cars capable of even making it to 200k and they are all Toyotas, Hondas, or Lexus. The bad bets were a mix of generally high end cars such as Jaguars, Mercedes-Benz, BMWs, and even a few Nissans, VWs, and a Volvo SUV thrown in for good measure. If you’re driving a Jag, Benz, or BMW, you’re likely not all that concerned about making it to 200k and saving that $31k anyway, so it makes sense that those cars wouldn’t be designed to make it that far (that’s not to say they can’t or that all of their owners are spendthrifts who care more about image than money, but we’re speaking in generalities and probabilities).
Source: CNN Money
(Photo: jdmcfish)
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Personally have a new car over an old beater is worth it to me…
Great article. Does that mean it would be even better to buy a five-year-old used car and drive it for 10 years?
Also, please remove all those awful apostrophes. The apostrophe denotes the possessive, not the plural. Lexus is the plural of Lexus, according to Lexus.
Good call, I have no idea why I put those apostrophes in there… thanks for the tip on Lexus.
Actually, from further research, I couldn’t find where Lexus says they like just “Lexus” better, but some grammar nazi websites I found say it’s Lexuses. I also found that there was a joke on a BBC sitcom that said that the plural of Lexus is Lexi and now everyone takes it as truth.
That is a very interesting stat. I wonder though if driving a car that old is actually bad for you in the long term because image counts a good deal in our careers and someone who doesn’t have a good image (someone who has a 15 year old car definitely doesn’t give the greatest image) are less likely to get promotion that usually equal increased salary.
There’s no law that says an old car needs to look like a beater; paint it and keep it clean and it’ll look good for a long time. I had a 14 year old Saturn that I gave to charity last year after driving it for 210K miles; it looked quite good and was sold by the charity for over $2K. (I gave it away because it was stolen and was recovered by the police after I had bought a replacement car; I’d still be driving it if this hadn’t happened.)
The trick to maintaining old cars is to actually maintain them, and not falling into the “don’t invest money in an old car” trap. If the car needs paint, get it painted. If it needs some bodywork, find a cheap bodyshop, haggle some, and get it done. This is probably harder to do in places with unkind weather and salted roads, but there’s no excuse for an old car to not look good in a place with a moderate climate.
In what careers do people pay attention to someone’s car? People who actually use cars in their business such as RE agents I can understand, but if you work in a more traditional office or worksite environment, few people ever see your car.
About the only time I notice someone’s car at work is if they can’t come to work frequently because they have constant car trouble, but this is an argument for maintaining the car, not buying a new one.
There are two posts that seem to get people in a frenzy.
Used car vs new car and tipping…
I drive a 95 and 96 model trucks and have a guesstimate of what they save me a month vs new. That money I invest which I would not be able to do if I had a payment or used my savings to buy.
That being said I still think it is hard to use the number from that article without taking into account the extra maitenance needed for an older car.
For example, one of my trucks does not have an air conditioner and to replace it would cost 600-800 (roughly) so that would pull that 31K number down. Also, they use more oil then new ones and as Foobarista wrote you may need a paint job that a new car does not need, etc… But I also believe that the money in insurance savings should also be factored in somehow when comparing the cost of new vs old.
The idea that MoneyNing mentioned about image is foreign to me. What career you talking about? If I saw someone in the finance field driving an older car I would think more along the lines of “He gets it” then “Nice image.”
saladdin
We had a “beater.” My husband had received it as a gift, and kept driving it. When I came into the picture it was around 13 years old. He kept it well maintained. Then it started to have problems with the radiator and engine. Three times we were stranded in it. Once at the side of the highway in pouring rain. Once at a gas station in the desert. Once on a road with no shoulder at night that twists and turns through a canyon. We replaced the radiator, the engine, and then after the last time we got stuck, we replaced the engine again and sold the car. We estimated that in three months we spent $4K on all the repairs, not including the aging incurred by fear of death.
We bought a new used car, a 2004 model. We knew that we planned to move overseas and sell the car after a year and a half. I figure we will lose less than all the price of the repairs of the other car in the resale. It hasn’t needed any repairs, just routine maintenance. The time savings and stress reduction has been incredible.
The moral of this story–use your common sense.
I just put $700 into my 91 honda civic (176 000 miles) last month I put in $1000………. I had been considering getting a “newer” old car, but know I think I will have to drive that recent investment out of it! here’s to at least 225 k.
The people that would judge me by the car I drive are not worth an ounce of my attention, nor would I ever want to work for anyone that did, or date anyone that did, etc, etc.
I’m sure that somewhere in the blueprint for financial prosperity it says” don’t measure yourself by your possessions” as anyone I know who does this is invariably in bigger debt than those who view themselves a little more independently from material possessions.
just some food for thought
Hey Thomas, how’s this article?
liz1 got it right… CR didn’t really factor in the reliability aspect of having a new car over an old one. Sitting on the side of the road waiting for a tow truck and your boss to fire you for missing a key presentation to a major customer doesn’t save you a dime.