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$31,000 To Drive Your Beater Into The Ground

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200,000+ miles Junker CarsConsumer 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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23 Responses to “$31,000 To Drive Your Beater Into The Ground”

  1. Personally have a new car over an old beater is worth it to me…

  2. Kimberly says:

    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.

  3. jim says:

    Good call, I have no idea why I put those apostrophes in there… thanks for the tip on Lexus.

  4. Kimberly says:

    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.

  5. MoneyNing says:

    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.

    • scott says:

      I know a landlord who rents his houses out to people partly based on how old their car is. He says people with “newer cars” are more likely to take care of things better. Probably a common perception.

    • LMHtfd says:

      Just because a car is older does not mean one can’t keep it washed and waxed, detailed regularly, freed of interior junk piles, and possibly get a new paint job when required. Even taking into account several instances of dent or collision repair it still would be cheaper to keep a vehicle as long as this article recommends. “Older car” does not mean beater or junker. I’ve seen older cars maintained better than newer ones. And typically the landlords who qualify potential renters by the condition of their car are more evaluating the inside (piles of junk food wrappers and old newspapers in the car means the same in the home) not the fact that the car is not a late model.

  6. Foobarista says:

    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.

  7. Foobarista says:

    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.

  8. saladdin says:

    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

  9. liz1 says:

    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.

  10. thomas says:

    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

  11. jim says:

    Hey Thomas, how’s this article?

  12. Scott says:

    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.

  13. I just got off the phone with a car repair shop who said the same thing — keep it up with maintenance and it’ll drive forever. It’s also useful to view cars as things that can get you from point A to point B and not as things that measure your awesomeness.

  14. benm says:

    I heard your new car dropped in value 60-70% within 4 years of owning it. I though it was some sorta news hyped. so, i checked out KBB.com and yup it was true. My 2007 Honda Accord VP (new $20,600) is now worth $5,500!

    So, I’m gonna drive it as long as possible. thanks for reminding me with this great article.

  15. Mike says:

    I always say you can have a car payment or you can have a car repair payment. As Foobarista said, you need to keep your car maintained, and that starts with the day you drive it off the lot. If you continue to pay your savings account after you’ve paid off your car, you should be able to maintain the car and still have some left to grow for that next down payment. When the car repairs start being too much to pay for, that’s when you start car shopping. Just don’t wait til it’s dead in a ditch to start looking.

    BTW, I’m driving a 2000 VW Passat (188K) and a 2003 Chevy Silverado (140K). It feels good not making that car payment, and it makes it really hard to look at sinking $20,000 into another car.

  16. Kelly says:

    The classic book The Millionaire Next door has a whole chapter titled “You are not what you drive.”

    I have a 91 Toyota Camry with just over 100k and purrs like a kitten. Looks ugly after being parked on the street in NYC, but what do I care? Now if it was a new car I was paying $500 monthly payments on and equally obnoxious insurance…then I would get upset every time someone scratched it on top of being broke.

    Then again, my former boss (a well known value investor) once had a talk with me about not being cheap with your car because of new and improved safety features…that your life is worth the extra cost. That point is hard to argue with.

  17. Bruce says:

    Ok, so I’m in a similar dilemma as some: I have a 2000 Accord, that is known to have transmission problems, and is starting to show signs of the transmission going. Cheapest estimate I’ve gotten so far is $3000. Plus it needs new shocks/tires. Don’t really see the point in putting in that kind of money, when 1) there’s no guarantee the transmission won’t have problems again, and 2) there’s no guarantee there won’t be OTHER repairs needed down the road considering the car is 12 years old now.

  18. Tim says:

    One thing that I have not seen mentioned is the importance of a good, reliable mechanic. The difference between an older car and a beater is how well the car has been maintained.

    Cars, in general, do not fail randomly. All of the components in your car have a known expected lifespan. A competent mechanic that is familiar with your car will know what to look for, and when. They will be able to recommend the cheap repair that will head off the costly repair.

    The key word here is “familiar”. If you are fortunate enough to find a good mechanic, go to him for EVERYTHING. Do not go to quicky-lube for an oil-change, just because you have a coupon. The more your mechanic sees your car on a regular basis, the better he can maintain it for you.

  19. Terry says:

    My ’96 Ford Thunderbird has 260,000 miles on it and it’s still quite dependable and useful. I purchased it in March, 2007 with 13,000 miles on it as a Ford program (Hertz lease return) car for $12,900. The plates cost $20 / year and it does a great job of making that 20 mile morning and evening commute every day. Right now and until it literally dies, I see no reason to spend $30K for a daily driver. Right on!

  20. Vurtigo says:

    Love my 96 BMW 3, had it for 10 years and still going strong at 255,000Km – it has saved me way more than 30K. I concur!


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