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Don’t Buy An Old Car

It’s classic personal finance advice: Buy used and let some other sucker pay the new car premium. So if buying a two year old car, used/certified preowned/whatever, will save you money then buying a four year old car should save you more, right? True. Then, buying an eight year old car will save you even more right? Umm… true. Then why not buy a sixteen year old car? My advice is to never purchase a car that’s long been out of its manufacturer’s warranty period (usually 36k, 3 years or 60k, 5 years) unless it’s from someone you know – say a friend or member of the family. Here’s why…

Diminishing Returns:
It’s common fact that a large percentage of a car’s value is lost when the car drives off the lot (it’s not 50% like the old adage goes, but it’s significant), that’s why they suggest you buy a used car. As the car drives along and experiences the wear and tear of driving, the car loses more and more value according to actuarial tables regardless of how badly or how nicely you operate it. There comes a point where the savings you reap from buying used are outweighed by the age of the car and the investment you’ll need to make to keep the vehicle on the road. I believe that trade off period is somewhere in the 3-5 year range. (remember that a 2003 Civic was definitely manufactured and likely sold in 2002)

The first few mileage milestone checkups just have you tugging on hoses and flushing out a few fluids, it’s when you get up in mileage do things need to be replaced. Do you really want to be spending all this maintenance money so quickly after buying a car? Just past 60k, did the original owner do all the recommended work and replace all the recommended parts or did he/she skimp on it because they knew they were selling it? What about the maintenance throughout the life of the vehicle? At 15k you only need to be concerned about a handful of oil changes, at 60k you’re talking a whole different story.

They say 12k to 15k a year is a safe range to be in terms of mileage on a car but I would tighten that range significantly the farther out you go. How much would you pay for a five year old car with 75k miles? That’s a lot of miles. At 15k/yr, that’s less than seven years to 100,000 miles. All those miles do start to add up… do you really want to be buying a car that has all that wear and tear on it?

It’s Old:
Owning a jalopy when you have no financial choice is one thing, that’s just reality. But if you have a steady job and can afford it, why go the direction of buying another beater? Why risk the chance that you go out in the morning and your car doesn’t start? As your car ages, things break. Rubber hardens and cracks, little dings and dents on your car start to rust, the car gets a little rattle when you turn left, all things that are minor inconveniences that you can’t really spend money on to fix. Don’t fall into the trap of buying a car that’s old just to save a few bucks.

What do you all think? What’s the oldest car you’ve bought and do you have any advice for someone looking to purchase a jalopy instead of something a little less old?