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Car Cost per Year - New vs Used
- flyinglizard 9y agoOnly if you're not concerned about safety, otherwise buy new to three years old and replace three years later.
- mattmaroon 9y agoAre cars considerably more safe now than they are ten years ago? And will they be considerably more safe in another ten?
- jaimex2 9y agoYeah, absolutely. 5th Gear covered this extremely well using Volvo, who are world famous for their safety emphasis. https://www.youtube.com/watch?v=emtLLvXrrFs https://www.youtube.com/watch?v=emtLLvXrrFs 10 years from now all new car's will probably self driving.
- jzwinck 9y agoI will bet against you here and now. In July 2027, I bet at least 5% of new cars sold in the US will not have full self-driving capability. Meaning they will be unable to drive between two arbitrary street addresses in the US without a licensed human operator.
- legolas2412 9y agoIf you're betting against driving between two arbitrary street addresses, I'll bet that there won't be a single capable car.
- gefh 9y agoUsing towns in northern Alaska not connected to the main graph is cheating! :)
- sdenton4 9y agoSo your being that we'll have at most 95% self driving cars in ten years? That seems uncontroversial... Unless there's a law banning human driven cars by then, I would expect to see that level of ownership just from the people who like the act of driving cars.
- petepete 9y agoWell, I'd have put money on the Volvo coming out better. Thanks for the link.
- jnwatson 9y agoThat video is from 2009. I'd argue that mechanical safety innovation has slowed quite a bit in the last eight years. The real question is whether the recent electronic safety features: backup cameras, lane departure, blind spot warnings are worth the new car premium.
- F2 9y agoNot sure what you mean by "mechanical safety" but in addition to advances in energy dissipating crash structures, the use of advanced and high strength steels has risen dramatically in the past couple years.
- Retric 9y agoThat's an 22+ year old Volvo without airbags. "Volvo was the first to introduce side airbags and installed them as standard equipment in all models from 1995." First 940 was produced in 1990 so it could be 27 years old. PS: That Moderate overlap / frontal offset test configuration is relatively recent in crash testing. http://www.iihs.org/iihs/ratings/ratings-info/frontal-crash-tests http://www.iihs.org/iihs/ratings/ratings-info/frontal-crash-...
- saiya-jin 9y agoyou are wrong - this is a video of a car manufactured in +-1990 - that is 27 years ago. I agree in last 30 years we've made quite a progress on safety, but 10 year old car these days means something like BMW E90 (or any equivalent) and safety progress from there is minimal. considering release cycles of car manufacturers, in 10 years at least 80-90% of the cars on the roads will be usual cars, not much change there. no politician will ever have the balls to force majority of their voters into buying new expensive cars. it will come, but it will take longer than you expect, that's all
- tbihl 9y agoBut that's a 30-year old Volvo, no? In 2017, buying a 10 year old car would mean getting that Renault.
- DenisM 9y agoYes. Stability control is now mandatory (it was rare 11 years ago), antilock breaks are also mandatory, lane deaparture warning and blind spot warning are ubiquitous, phone interface(hands free) is a lot more prevalent, tire pressure monitors were a novelty in 1999, the number of airbags has increased, automatic emergency breaking is now a thing. Huge number of improvements in the last 10 to 20 years.
- mattmaroon 9y agoAntilock brakes and stability control are mandatory now, but they've been common for a long time. Most cars probably still don't have blind spot and lane departure warnings standard, and I'm not sure how much safety they add. My sense is that if cars are safer now, compared apples to apples (i.e. a base model mid size sedan) to ten years ago, it's marginal. And the same will be true (driverless cars potentially excepted) in five years.
- keltex 9y agoThe new technologies have really contributed to making cars safer. Consumer Reports says that automatic emergency braking (AEB) and forward-collision warning (FCW) should be standard equipment. http://www.consumerreports.org/car-safety/positive-impact-of-advanced-safety-systems-for-cars/ http://www.consumerreports.org/car-safety/positive-impact-of...
- vermontdevil 9y agoOr buy formerly leased car and keep till it's 10 then sell to the purveyors of this data.
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- jjnoakes 9y agoI prefer to buy rented cars over previously leased cars. I think (no data to back this up) that a majority of leasers don't care to do routine maintenance (oil changes, etc) while the rental companies do. I also think that folks who rent aren't any more rough on a car than folks who lease, but again, that's just my feeling.
- vermontdevil 9y agoYeah or that. Hertz, Enterprise etc. Always can find good deals there.
- cyanbane 9y agoShould note this seems to be for an F-150 (truck) and the data tied to it. In my experience, F-150s are very reliable although extrapolating that out to all "cars" may be a bit of a stretch and renders this graph really only useful for that model.
- jschwartzi 9y agoYou can probably extrapolate this to any work truck made between 1995 and 1997. You'd be lucky to find a tape deck, power windows, or A/C in any truck from that period. They're also very simple to work on. My old C1500 from that period had an engine bay that I could lay down in. This sort of implies that they wouldn't generate a lot of repairs. Crate transmissions for m that truck ran about $2000 for a remanufactured one. For my current truck it's more like $4000.
- ssharp 9y agoI have a 98 C2500 and it has all three. I recently replaced the tape deck and AC. AC compressor replacement took less than an hour to replace on that truck vs. my 2010 sedan that took several hours for the same job.
- jjguy 9y agoYou're giving "the data" too much credit. There are only a few variables: - new cost - depreciation per year - increasing maintenance costs per year The "F-150" assumption was used to estimate new cost and depreciation over time. You should not discount the data based on a single model, but it is wise to recognize those three variables can diverge significantly between models - enough to change the outcome.
- juskrey 9y agoNow adjust for frustration of sudden issues of an old car. Adjust for the fact that your car is not an average - pretty high probability of getting a piece of shit repaired by electric tape and bubble gum.
- blackguardx 9y agoOr just but a Honda. The main problem with used Hondas is that their reliability is priced in so they cost more than other brands' used cars. Though this helps you a bit when you try to sell, balancing it out somewhat.
- ldargin 9y agoMake sure the airbags have been replaced through the Takata recall first before buying a used Honda!!
- jacobkg 9y agoOr pretty much any used car for that matter. My Lexus and my mom's Audi both needed the Takata recall performed (circa 2007). There were supposedly 60 million cars affected
- jnwatson 9y agoAccording to Consumer Reports, Honda quality has dropped off to middle-of-the pack recently.
- csours 9y agoAlternately, the rest of the pack has risen in quality. Just look at the history of Kia's quality numbers.
- jptman 9y agoThe CR reliability score I saw recently lumped together the power train reliability with the entertainment system jankiness. I think this makes it not as useful The JD powers rating still rates Honda highly.
- w8rbt 9y agoThis is really cool to see visually. I buy 15 to 20 year old Toyotas and keep them for 10 years or until they really break-down. If you can find one that's been serviced regularly (engine oil, coolant and lub), it'll last a good bit. I've only had one real lemon using this approach. The previous owner told me it had over-heated once, but I took a chance anyway. Part of the engine was warped due to the over-heating. I had to replace the engine after it kept breaking timing chains. Otherwise, I've been fortunate.
- thenobsta 9y ago+1 This is the way to do it. This method is generally safe with other reliable brands like honda and some nissan's.
- maroonblazer 9y agoI've been doing the same with BMWs. They tend to be single-owner and well-maintained. For the last 10 years I've been driving a 2003 5 Series that now has 125K miles. I plan on driving it into the ground.
- js2 9y agoStuff that breaks on cars this old regardless of brand (speaking as a Honda owner): - timing chain should be replaced at 100K. Should do the water pump at the same time. $800-$1000. - starter motor (typically the brushes wear out). $300. - engine mounts. - CV joints. - suspension bushings, possibly shock absorbers, wheel bearings too. - pneumatic door lifts. Then you just start to run into random problems: dashboard lights go out and are too expensive to replace, electric windows or door locks start to fail, steering develops a strange wobble that comes and goes and 3 different mechanics can't figure out. Etc. I just sold my 2003 Odyssey (that I had bought new and maintained it well) with 230K on it. I'm glad to not be dealing with it anymore. I still own a 98 Cherokee XJ which is built like a tank but still has its weaknesses. An electric door lock is failing but a replacement part is no longer made, so I have to find a used replacement or adapt a part from a newer vehicle. That sort of stuff. If you're willing to deal with it great, but there's definitely a large tradeoff there. There's also safety issues. My new cars have collision detection, lane keep assist, air bags all the way around, etc. I'm happier having my family in vehicles with these options.
- tjoff 9y ago"Ignoring identical costs (GAS/TIRES)" Well, gas consumption surely are not identical between a 10 year old and a new car. Depending on your usage buying a newer and more expensive car might be justifiable due to savings in gas prices (you folks in the US might not agree since gas is so cheap for you).
- DocG 9y agoDepends. Newer cars are heavier, engines tend to be smaller and have to be more environment friendlier. An older exampl of ~40mpg for Golf III Diesel combined is not bad even in todays standards.
- ensiferum 9y agoThere are no environmentally friendly cars. Only some models are less bad for the environment than some other models. The only environmentally friendly car is the one that isn't built.
- ams6110 9y ago> The only environment friendly car is the one that isn't built. That's why buying used is the environmentally best choice.
- ensiferum 9y agoBuying no car is the best choice. From environmental perspective.
- IncRnd 9y agoBy extension, that also means that the best choice from an environmental perspective is not to have a cell phone, not to turn on the lights or A/C, not to use a computer or the Internet, and not to purchase pre-packaged food.
- brryant 9y agoData says: Buy no car, keep nothing - repeat.
- dmgawel 9y agoSurprisingly it's really worth doing (if possible in your case): https://medium.com/personal-finance-series-by-richard-reis/the-ultimate-money-saving-device-a-bike-eee98ab09ca3 https://medium.com/personal-finance-series-by-richard-reis/t...
- woodpanel 9y agoSounds like an absolute reasonable approach. I would have thought driving them into the ground would be most effective. In My experience though, a lot of the car selling business is focused on producing unreasonable buying decisions. Cars keep getting more expensive despite most other inflation-basket goods aren't. One way of achieving this is by adhering to emotions. See Tesla fans doing basically "anti-leasing" for the newest model, or the whole genre of SUVs or better yet even more erratic: SAVs. My favorite in this is the new Range Rover evoque mini-SUV/convertible: 2 cars in one, each deminishing the usefulness of the other one. Yet already a success.
- SeeDave 9y agoOut of curiosity, would it be possible to explain what a Tesla "anti-lease" is?
- woodpanel 9y agoOf course: IMO Tesla making you pay a deposit in order to being able to pre order a unreleased car. This is AFAIK the exact opposite of what the car industry is doing. At least in the high price range. There, the newest models most of the time are being sold via lease.
- SeeDave 9y agoInteresting perspective on unconventional financing. Thanks for sharing!
- brianwawok 9y agoI did this math when I was buying my last car. The things I did different I kept the end point constant at 10 years. So it was: * Option 1: Buy a new car, keep 10, and sell * Option 2: Buy a 3 year old car, keep 7, and sell * Option 3: Buy a 5 year old car, keep 5, and sell * Option 4: Buy a 7 year old car, keep 3, and sell At the time I was shopping, the car I wanted had really high resale. So option 1 was coming out CHEAPER per year than option 2. (new price / 10 compared to used_price / 7). Options 3 and 4 were cheaper, but not by a ton. But then the thing I thought about was: * With option 1, the car I am driving is an average of 5 years old * with option 3, the car I am driving is an average of 7.5 years old * With option 4, the car I am driving is an average of 8.5 years old So that pushed me to go for option 1. No regrets so far, my car just passed his 7th birthday. Not 100% sure I will sell at 10, but a strong possibility. I think the simple math of "new car = always bad unless you are rich" is wrong. "new car every 3 years trading in = always bad", sure. But throw in dealer incentives and financing, and the new vs used debate can be less black and white.
- Consultant32452 9y agoI bet it's a different story if you calculated opportunity cost and risk. Are you paying cash for the car in all cases? Or are you getting a loan? Increased positive cash flow has a real economic value. A loan has real economic risk. Are you investing the cost difference between option 3 and option 1 to get a return on that money?
- brianwawok 9y agoThe funny thing is, options 1 I got 0 APR loan. Option 2 was 5% APR loan. Options 3 and 4 were cash. So cash in my pocket, option 1 was the "best". I had no initial outlay, the car dealer loaned me the money for free. So yes that is even 1 more reason why option 1 worked out best for MY case. But who knows when I next get a car what will be true.
- Consultant32452 9y agoCar dealers do not loan you money for free. Interest rates are low, but it costs them money to service that loan. What they did, since the dealership owns the bank, is they shoved their profit into the principle instead of getting it back in interest. In other words, they simply charged you more for the car. And even a 0% loan is a risk from a personal finance standpoint. Options 3 and 4 carried no risk, lower cash in hand, but higher positive monthly cash flow (because no monthly bill). This freed up your additional monthly cash flow which would have been spent on a car payment to be invested and earn a return.,
- dorfsmay 9y agoWe have 4 kids and only one vehicle, so a potential breakdown is a huge inconvenience. Also my wife is the one doing over 90% of the driving. So here what has been our strategy: Buy a brand that is fully guaranteed for 5 years. We sell them at 4 to 5 years old. This completely kills the repair budget. Buy vehicles 6 months to 1 year old. That one brand we buy (like most but not all brands) doesn't depreciate linearly, and depreciate the most the first year. So this reduce the depreciation budget significantly. The only difference in the consumable budget, compared to a 10 year old car is that we pay a lot for insurance (full vs 3rd party only). The plus of our strategy is that an accident does not change our budgets, which it would in OP's case, as they might have to increase repair (assuming 3rd p ins) or force them to buy their next vehicle early, throwing out some of their calculations.
- MistahKoala 9y agoI understand there's something of a bell-curve effect on insurance (in the UK, at least), whereby the cost of insuring cars of 10+ years of age increases. I'm curious to know how much of a difference that would make to the total cost of ownership.
- ams6110 9y agoIn the USA, in my experience, older cars are always cheaper to insure. Also you can often reasonably drop the collision coverage.
- BeetleB 9y ago>whereby the cost of insuring cars of 10+ years of age increases. Have not seen this. Keep in mind that insurers only care about the cost to replace the car. If the car's value is so low (which it will be after 10+ years), the cost to insure would be low too.
- MistahKoala 9y agoInsurers also care about passenger risk. I assumed it was related to the safety and reliability profile of the car, as well as the profile of claims involving older cars (i.e., older cars possibly being involved in more claims).
- csours 9y agoAuthor notes that depreciation has the greatest impact, in which case the F-150 is in a whole different ballpark than most luxury cars; trucks have a much gentler depreciation curve than luxury cars. A truck may retain 80% value after 3 years, where a luxury car may retain 50% or less. Edit: I should also note that variation between depreciation curves on luxury cars is also much greater.
- cpncrunch 9y agoThis doesn't really fit with my own experience. I've bought 2 brand new Fords and kept them for about 6 years each. In sum total I had about $100 of unscheduled maintenance for both. However older cars always have expensive maintenance: timing belt, suspension, brakes, and other things all start to wear out somewhere around the 7-10 year mark (timing belt will depend on distance). It also doesn't factor in the 0% financing that Ford has offered for the last 10 years, which is a significant benefit...Ford is essentially paying you about 5% of the value of the car each year (as you can avoid getting a 5% loan, or if you have the cash you can invest it in the stock market for a 5%+ return).
- BeetleB 9y ago>This doesn't really fit with my own experience. I've bought 2 brand new Fords and kept them for about 6 years each. In sum total I had about $100 of unscheduled maintenance for both. However older cars always have expensive maintenance: timing belt, suspension, brakes, and other things all start to wear out somewhere around the 7-10 year mark (timing belt will depend on distance). So, which option is cheaper? Isn't that the ultimate question? In another comment, I showed how a good 8 year old car had depreciated in 6 years (including repairs) as much as a new Forester did in 2 years (no repairs). Even for the 8 year old car, most of the loss was in depreciation, not in repairs. Yes, this included: 1. Change in timing belt + water pump (most expensive) 2. Changing brakes. 3. Changing tires. Everyone seems to want to avoid $200-500 repairs on their car, but few seem to be concerned about avoiding $10K on the price of the car to begin with.
- cpncrunch 9y agoI agree an older car is still cheaper than a new one overall.
- dawhizkid 9y agoLeasing?
- Consultant32452 9y agohttps://www.youtube.com/watch?v=t1NaDucAXIg https://www.youtube.com/watch?v=t1NaDucAXIg Leasing is generally the most expensive option. You're basically getting a loan for the depreciation + profit. Since it's not technically a loan you don't get the interest rate disclosed to you. And market research shows the interest rate you are paying is 14%.
- bshep 9y agoI've gotten several leases over the past 10 years, usually at rates 0.9% to 1.9%, maybe I'm lucky?
- Consultant32452 9y agoIt's a fantasy that you're going to pull one over on the ginormous mega-bank that does this for a living. I recall a time when many manufacturers were offering 0% interest on car loans. Obviously they just shoved all their profit into the principle.
- qzw 9y agoDealers don't usually volunteer it, but you can just ask your salesperson for the money factor. Take the number and multiply by 2400 to get the interest rate. My current lease rate is 0.75%, while the interest rate on a loan would've been 1.9%. The lease worked out to be cheaper than buying. Some car companies also have a multiple security deposit discount that lets you further reduce the money factor by a significant amount.
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- timbit42 9y agoIs it just me or are some of the formulas in the spreadsheet used to generate this wrong? I don't see the cost of purchasing / financing the used vehicle in there. Also, in the leasing cost column, the re-lease is not 3 years every time. Additionally, in the my area, the registration would be much lower but wouldn't decrease along with the vehicle age.
- matrix 9y agoInteresting idea,and I'd love to see this work, but this particular chart isn't helpful in practice due to huge differences in vehicle depreciation, repair and insurance costs (e.g. S Class vs Land Cruiser) Another thing that this chart neglects and which I feel is a very important consideration, is safety. The difference in safety of a current vehicle with one from even just 10 years ago is striking (never mind 15 years).
- ricardobeat 9y agoSo you pay a little more than 2x as much to have a car that is 5 years old at most, vs forever having a 15 years old car. Sounds alright if you have the income for that.
- bane 9y agoI grew up in a family that did the "buy used cars keep until the repairs got too expensive" thing. We spent a tremendous amount of time at mechanics, paying lots of money for repairs that may not have even been needed, and then selling or trading in the piles of junk to repeat. I remember many times waiting for tow trucks by the side of a highway or out in the middle of nowhere to come tow one of our cars. I made a list one time and I believe my family has owned at least 20 different vehicles this way. Thus conditioned, the idea to me of buying a used anything and keeping it for 10 years sounds like a recipe for answering the Ship of Theseus thought experiment. When I first struck out on my own, I had a used, but good condition Toyota that a year later had $3500 worth of engine trouble that ended up costing me a job. I finally swore never again. After that Toyota, I bought a brand new, small, car for $12k with the highest reliability I could find and kept it for over a decade. It required exactly one repair to an O2 sensor after 10 years. Being small and commodity, maintenance was cheap (a set of four new tires ran under $350). One day, 12 years in, the engine conked out and the repair was estimated at $500. The car was still worth $5k. I made a deal with the mechanic and he bought it for $4k. Considering that the cost to "buy" the car was about $8k, maintenance was cheap, and fuel efficiency was high, the car cost pennies per mile to drive over its life with me. I've since bought another reasonably priced new car that I fully expect to drive for another 10-12 years. And my family, after seeing my experience with proper cars has also cried uncle and now only buys new, reliable, cars. My father can't believe that he doesn't even know a mechanic anymore, whereas he used to spend significant time cultivating relationships with "good" mechanics to deal with repairs. Hundreds of dollars a year used to go into towing fees, and thousands were lost to lost work or other opportunities when a vehicle was down and being worked on or to rental fees so we could still get around. I know that its possible to get a highly reliable used vehicle, but honestly, its impossible to know what a used car has gone through before it ends up in your hands.
- intellix 9y agoHow about purchasing a car that's only say 1 or 2 years old? I read that cars drop massively in value as soon as you drive out of the showroom because it's no longer "brand new". Googled it and found this quote: "On average, a new car will lose as much as 19 percent of its value in its first year of ownership. That means that your $20,000 new car will be worth about $16,200 after just one year."
- johngalt 9y agoThe biggest difference is how much car you buy rather than new vs used. Commonly I see people buying used to 'save money'. But the car they buy to commute to work is a three row luxury SUV. Much higher cost than a new hatchback. Still signing 60 month paper at much worse interest rates than new. Constantly eating up gas, tires and brakes. 'Buying used to save money' in this case is like getting the diet soda to go with your big mac and fries.
- unstatusthequo 9y agoI lease high end German cars. Zero maintenance and zero of my time dealing with repairs or random "won't start" surprise. What's value or your time and frustration? Whether this analysis makes sense depends on your perspective. Also assumes you are not a car lover. And even in this, the three year lease is not substantially more than the other options. It has never made sense to me to keep cars until I can't trust them anymore.
- jnwatson 9y agoI'd buy your argument twenty years ago. These days, almost any American or Japanese car can be reliable for over 10 years
- sunstone 9y agoIf you're going to drive a lot, buying a new prius and driving it for 15 years is something you should look at. With really low maintenance and gas costs combined with really long service life (>500k is possible) the cost per driven mile can be really low.
- everdayimhustln 9y agoThe used cars section in Consumer Reports is invaluable to avoid white elephants. Also, take a candidate vehicle to your mechanic before finalizing a deal.
- mnm1 9y agoWhy do the 5/10 year new car graphs start at 6 and 11 years respectively? Why does the new 20 year new car graph start at year 1 but with a cost of less than $10k (for a $35k car)? I'm not sure how to read this graph or what it says. Are the dots overlapping and hiding one another? Even if so, how am I not paying at least $35k the first year for a brand new $35k car?
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