How to Save Money on a Car: Wait
How can you save a ton of money when buying a new car? By not buying one: Hang on to your old car for at least 15 years and 200,000 miles before disposing of it, according to Consumer Reports.
Yup. CR found 6,769 readers who own vehicles with 200,000 to 488,000 miles on them who are saving money by not parting with their wheels, despite the odometer rolling over two to four times.
Considering the auto industry sells 15 million to 17 million new vehicles each year, as well as an estimated 30 million used ones, finding only 6,769 people who’ve continued to cling to their vehicles doesn't suggest CR has found an enticing new way for the masses to save dough.
Yet when comparing the costs of buying and keeping a car for 200,000 miles over 15 years with buying and financing an identical model every five years, the savings could be more than the original purchase price of the vehicle — and even greater if the savings were invested, CR says.
CR cites a Honda Civic EX with a $19,000 purchase price as an example, versus what it would cost to purchase that same car new every five years, which would run $66,400 when you factor in inflation, not to mention price increases.
The big expense in keeping it 15 years or 200,000 miles would be in service and repairs, estimated at $18,300, versus only $6,200 with a new one every five years.
But the big savings comes in depreciation (only $14,900 over 15 years versus $35,500 with a new car every five years), insurance ($18,500 versus $22,500), as well as financing ($3,100 versus $8,500).
CR says it estimates total expenses on the Civic EX at $57,000 over 15 years and $77,500 when you buy a new one every five years -- so $20,500 more.
So you save $20,500, plus earn another $10,300 because you invested every penny of your savings in stocks, bonds, gold or baseball trading cards -- whatever made you money. That means you saved a total of $30,800, or $11,800 more than you paid for the car.
To ensure your car lasts as long as possible, CR has some words of wisdom. Write these down.
1. When you buy new, buy a reliable car.
2. Service and maintain it religiously.
3. Inspect it continuously to spot minor problems before they become major.
CR warns, however, to watch for signs that neither 15 years nor 200,000 miles is in the cards for your vehicle, including:
1. The cost of repairs exceeds the value of the car.
2. You left it outside in a flood.
3. The floor has rusted out and your shoes are now dragging on the pavement.
What to do with the money saved? Buy a car, for heaven's sake. Yours is 15 years old.
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How much fun is that?
What about the joy one derives from driving a spanking new car instead of a 10-15 year old beater? Some things you cannot put a price on.
What about the joy one derives from driving a 10-15 year old beater instead of a spanking new car? Some things you cannot put a price on.
Buying a new car is never - ever - a good idea if saving money is a top priority. With the exception of a good factory warranty, new cars are complete rip-offs. Use depreciation to your benefit: get a new-er used car with 10k to 25k miles on it, save thousands, and in many cases retain the remaining warranty. Buying a used car does assume a considerable amount of risk, but a smart & cautious used car shopper will always be able to avoid those risks. New car purchases are for absolute suckers. USED, USED, USED is the only way to go.
for the most part i think buying a previously leased car (usually low-mileage and have to be well-maintained or the lessee will incur fees) is a great idea. certified pre-owned is a great way to go, too. It all depends on the CPO, program though. I was recently looking at CPO Jeep Grand Cherokees and the warranty was ridiculous: 3 months/3,000 or the remainder original warranty. That's the tradeoff - depreciation for a shorter warranty. In that case - especially with a more troubleprone brand like Chrysler - pre-owned wasn't the best way to go. I'm sure other automakers have suprerior pre-owned programs.
However, you can still save thousands (yes, thousands) buying new at the end of the year when they need to make way for the new year's models by clearing out the old. For example, Mazda CX-7s start right under 25K MSRP but there are ads for new ones at 19,995. with the advantages of a new car, you have more of a choice in color and what options you want and don't want. especially in terms of safety features.
Just bought a brand new Saturn Aura XE for $18,000 with rebates. Almost bought one just like it the day before for $17,995, 1 year old, 15,000 miles, and a steering issue. Which was the better choice(with or without issue)? Hum...
I tend to buy new GMs because with their end of the year rebates combined with credit card rebates and the ability to negotiate below invoice I cannot come in the ballpark with any other manufacturer. Resale value does not matter much because when all cars get old enough they are not worth that much and if I can save thousand upfront vs maybe seeing it in resale value I would rather have it now then 10+ years from now. I go with new because we hold on to them so long I want to know their full history, make sure there was no strange abuse to the car. We hold on to our GM cars till at least the 10 year mark and 130K miles, some longer if we do not see something we want. I don't agree with CR on most things but this is the way to save money. To save more we could drive them longer but at that point we have saved enough and feel like driving something different. Repairs are minimal, maintenance tends to be pretty simple and cheap where some I can do myself, no new car payments, in MA we have so many different taxes you are hit hard with purchasing a new car. It is tough when you see a friend or family member get a new car with new toys on it but in the end financially we can see the difference that we are much better off.
With how people drive and park around here in New England it is a crime to watch a new car get bumped and nicked.
I would like to know what percentage of the 15-17 million cars actually reach 200,000 miles. Yes, the people who got one of those "survivors" saved big money. What about those of us who bought a 2000 Windstar for instance and have to replace the A/C and transmission every 80,000 miles?
Also Dave, this does not take into account cars with over 100k miles on it that are "totaled" by insurance companies because the $2000 fender bender is more than the apprasied value of the car.
Everyone keeps talking about the warranties, but what happens when your car is only 4 years old, 45,000 miles and the dealership won't honor the warranty because you missed two oil changes out of 14 or don't have those receipts!?
My car only has collision insurance (less than 1/2 the cost of comprehensive on a new car), I dont have a monthly car payment like some friends who pay 400 to 500 dollars a month, and my maintenance is actually lower since I dont hae to worry about taking my car to a dealership where they charge you 40 dollars for an oil change. I figure if I repair the headgasket or tranny for 500 to 1500 a month, that is equivalent to only 1 to 4 monthts of new car and insurance payment.
Oops, I didnt mean to say 500 to 1500 a month on repairs...lol
Hello sympathetic people! I urgently need financial assistance to carry out a complex operation to my sister ($ 8000) Please help with any amount! My moneybookers account is pashtet1978@hotmail.com Thanks, Paul
LM said: "What about the joy one derives from driving a spanking new car instead of a 10-15 year old beater? Some things you cannot put a price on."
I get more joy out of driving my old car and spending that $350/mo PLUS on something else every month...