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Yes, that difference, as I pointed out, is one reason why sensible used cars are overpriced. (Another is the "market for lemons" effect) Now you're comparing

Yes, that difference, as I pointed out, is one reason why sensible used cars are overpriced. (Another is the "market for lemons" effect) Now you're comparing a $40K new car to a $8K used car, which is not a reasonable comparison. Yes, used cars will save you some money, but they will generally cost you more money than driving a new Corolla or Civic. Poke around on Edmunds' TCO calculator. The problem with your argument is that you can save more and more money by imagining buying an even more expensive car to compare to. I mean, you could have bought an $80K car with 10% down, right? Now you saved $72K!!!

sokoloff 5y ago
I took the average cost of a new car in 2020 or 2021. Make it a $28K new car instead of an $8K used car and you're still saving a ton of money even with a few repairs along the way. I know plenty of people who owe money other than a mortgage who are driving $50K+ cars/trucks and sometimes have more cars than drivers in the household (and both of those blow my mind for people with non-mortgage debt).
- buescher 5y ago
  Why not compare it to a car you scrounged for free? I mean, I'm not just arguing with you to win points. I was you. By the way. there are other problems with your math: you're double-booking the cost of the payment and the depreciation of the car. Really, play around with a total cost of ownership calculator like Edmunds'. It will be enlightening. Let's look at the F-150, the most popular vehicle in America. For the regular cab XL 4WD trim level, a 2020 model is $38K (close to your $40k) with a five-year TCO of about $44K. A 2015 model is $24K... with a five-year TCO of $41K. That's a difference in TCO of $50/month. Hey, if you can save $50/month, do it, but don't tell me you're saving thousands every year.
  - sokoloff 5y ago
    One problem with that calculator is that it "rings up" the depreciation after 5 years, in effect assuming you'd sell the car at that point. Much of the savings here are driven by keeping the functional car for 10+ years, not having to carry collision insurance on a car that's too expensive to write off, paying less in transaction costs and taxes, etc. It's not the calculator is "wrong" in answering the question it asks, but that it's asking the wrong thing. Very few people want to buy an 11 year old car, so buying a 6 year old car and selling it 5 years later and doing the same thing again is overly penalized vs buying a 6-year old and selling it 10-15 years later (for much less), but only doing that once instead of two or three times. > Why not compare it to a car you scrounged for free? Because I can't repeatably find a reliable car for free. I can repeatably find many reliable cars for $8K in any city in the US. We paid $7500 for our 2005 CR-V in 2011. It was in overall great condition with high miles (165K-ish). It now has 220K miles on it and rust will kill it long before miles do (New England road salt). Edit to add: I agree that my method above was double-counting depreciation. I should have stuck to cash items rather than including a non-cash item.
    - buescher 5y ago
      Yeah, if you want to take it out past 5 years, you can make your own estimates. You just won't have the benefit of Edmunds' data. You are right that you will save on transaction costs if you do not buy a newer car every five years. You're also a bit of a special case in that it seems you only put about 5,000 miles per year on a car. I'd estimate your TCO on that car to be about $2K/year, which is pretty frugal. It wouldn't make sense for you to buy a new car, because you'd be losing depreciation to age faster than you'd be wearing the car out. At 20 years, you'd have only 100,000 miles on a car that would be essentially fully depreciated. It is pretty tough, though, to get the cost of ownership on a car driven 15,000 miles/year below about $3,500/year. By comparison a new compact will be $5k to $6K per year in total cost of ownership. So if you are wondering why gold doubloons are not accumulating in the chests in your basement that much faster than they are for the guy who drives a new Honda Civic, that's why!
BeetleB 5y ago
> but they will generally cost you more money than driving a new Corolla or Civic OK. Sorry. Your comment annoyed me enough to look up my actual expenses which I've been logging since late 2007, as opposed to hypotheticals. Between then and now, I've spent $6247 on maintenance and repairs of my cars. Note this includes standard stuff like oil changes and tire replacements. That's about $480 a year. If I extrapolate and go back to when I bought the first car, the estimate would be $8649 since 2003. How much did I pay for those two cars? $11200 total. They were reliable. I did two cross country trips in them, without worrying a bit. I didn't rent cars for road trips. So a total cost in the last 18 years of $19849. Had I bought new, and included standard maintenance[1], I surely would have paid a lot more. A new Camry in those days would already be over $20K. A Civic around $14K. And of course, insurance on old cars is cheaper. You'd think it's the other way round, but it isn't. Obligatory disclaimer: Research your used car models before you buy. If you don't, it will cost a lot more. [1] As a reference, my wife's almost new car has cost $3500 in repairs/maintenance in only 4 years. Yes - even new cars can end up being costly to maintain in just a few years.
- buescher 5y ago
  Please don't apologize and please don't be annoyed. Like I told "sokoloff", I was you. I get it. "In this house we buy used cars for cash and drive them until the wheels come off." So of course I enjoy this topic. Let's look at your numbers. Say you bought two new Civics around 2003 for $28K total. Your maintenance & repairs should not be any higher for a new Civic than for any used car I can imagine. Let's assume gas is the same, and neglect transaction costs, finance costs, etc for now. So you have a difference over eighteen years for two cars of $16800 or $933/year. Per car, you saved $467/year or $39/month. Note we are also not considering that you could have kept the new cars on the road a few years longer. Also the insurance savings is minimal - figure you save $500/year for the first five years and then it's about the same when you go to liability only. That's another $139/year over 18 years or $12/month. Yeah, that's not nothing, but it's not the TONS OF MONEY that always gets mentioned in these discussions. Your wife's repair and maintenance costs look more in line with average than yours. Does she put a lot more miles on her car than you put on yours? I do agree that if you put a lot fewer miles per year on a car than average, a used car starts looking like a much better deal (see below).

sokoloff 5y ago

I took the average cost of a new car in 2020 or 2021. Make it a $28K new car instead of an $8K used car and you're still saving a ton of money even with a few repairs along the way. I know plenty of people who owe money other than a mortgage who are driving $50K+ cars/trucks and sometimes have more cars than drivers in the household (and both of those blow my mind for people with non-mortgage debt).

buescher 5y ago
Why not compare it to a car you scrounged for free? I mean, I'm not just arguing with you to win points. I was you. By the way. there are other problems with your math: you're double-booking the cost of the payment and the depreciation of the car. Really, play around with a total cost of ownership calculator like Edmunds'. It will be enlightening. Let's look at the F-150, the most popular vehicle in America. For the regular cab XL 4WD trim level, a 2020 model is $38K (close to your $40k) with a five-year TCO of about $44K. A 2015 model is $24K... with a five-year TCO of $41K. That's a difference in TCO of $50/month. Hey, if you can save $50/month, do it, but don't tell me you're saving thousands every year.
- sokoloff 5y ago
  One problem with that calculator is that it "rings up" the depreciation after 5 years, in effect assuming you'd sell the car at that point. Much of the savings here are driven by keeping the functional car for 10+ years, not having to carry collision insurance on a car that's too expensive to write off, paying less in transaction costs and taxes, etc. It's not the calculator is "wrong" in answering the question it asks, but that it's asking the wrong thing. Very few people want to buy an 11 year old car, so buying a 6 year old car and selling it 5 years later and doing the same thing again is overly penalized vs buying a 6-year old and selling it 10-15 years later (for much less), but only doing that once instead of two or three times. > Why not compare it to a car you scrounged for free? Because I can't repeatably find a reliable car for free. I can repeatably find many reliable cars for $8K in any city in the US. We paid $7500 for our 2005 CR-V in 2011. It was in overall great condition with high miles (165K-ish). It now has 220K miles on it and rust will kill it long before miles do (New England road salt). Edit to add: I agree that my method above was double-counting depreciation. I should have stuck to cash items rather than including a non-cash item.
  - buescher 5y ago
    Yeah, if you want to take it out past 5 years, you can make your own estimates. You just won't have the benefit of Edmunds' data. You are right that you will save on transaction costs if you do not buy a newer car every five years. You're also a bit of a special case in that it seems you only put about 5,000 miles per year on a car. I'd estimate your TCO on that car to be about $2K/year, which is pretty frugal. It wouldn't make sense for you to buy a new car, because you'd be losing depreciation to age faster than you'd be wearing the car out. At 20 years, you'd have only 100,000 miles on a car that would be essentially fully depreciated. It is pretty tough, though, to get the cost of ownership on a car driven 15,000 miles/year below about $3,500/year. By comparison a new compact will be $5k to $6K per year in total cost of ownership. So if you are wondering why gold doubloons are not accumulating in the chests in your basement that much faster than they are for the guy who drives a new Honda Civic, that's why!

BeetleB 5y ago

> but they will generally cost you more money than driving a new Corolla or Civic OK. Sorry. Your comment annoyed me enough to look up my actual expenses which I've been logging since late 2007, as opposed to hypotheticals. Between then and now, I've spent $6247 on maintenance and repairs of my cars. Note this includes standard stuff like oil changes and tire replacements. That's about $480 a year. If I extrapolate and go back to when I bought the first car, the estimate would be $8649 since 2003. How much did I pay for those two cars? $11200 total. They were reliable. I did two cross country trips in them, without worrying a bit. I didn't rent cars for road trips. So a total cost in the last 18 years of $19849. Had I bought new, and included standard maintenance[1], I surely would have paid a lot more. A new Camry in those days would already be over $20K. A Civic around $14K. And of course, insurance on old cars is cheaper. You'd think it's the other way round, but it isn't. Obligatory disclaimer: Research your used car models before you buy. If you don't, it will cost a lot more. [1] As a reference, my wife's almost new car has cost $3500 in repairs/maintenance in only 4 years. Yes - even new cars can end up being costly to maintain in just a few years.

buescher 5y ago
Please don't apologize and please don't be annoyed. Like I told "sokoloff", I was you. I get it. "In this house we buy used cars for cash and drive them until the wheels come off." So of course I enjoy this topic. Let's look at your numbers. Say you bought two new Civics around 2003 for $28K total. Your maintenance & repairs should not be any higher for a new Civic than for any used car I can imagine. Let's assume gas is the same, and neglect transaction costs, finance costs, etc for now. So you have a difference over eighteen years for two cars of $16800 or $933/year. Per car, you saved $467/year or $39/month. Note we are also not considering that you could have kept the new cars on the road a few years longer. Also the insurance savings is minimal - figure you save $500/year for the first five years and then it's about the same when you go to liability only. That's another $139/year over 18 years or $12/month. Yeah, that's not nothing, but it's not the TONS OF MONEY that always gets mentioned in these discussions. Your wife's repair and maintenance costs look more in line with average than yours. Does she put a lot more miles on her car than you put on yours? I do agree that if you put a lot fewer miles per year on a car than average, a used car starts looking like a much better deal (see below).