Why Buying A Low Mileage Used Car Is The Worst Of Both Worlds
Low-mileage, relatively young used cars are often a bad deal. Today we’ll explore why and what you can do to save yourself and your money.
The Frugalwoods Fleet-O-Vehicles
Let me start with a quick rundown of what my husband and I drive our two kids around in:
- 2010 Toyota Prius: purchased in April 2016 for $8,995 at 96,854 miles
- For comparison, had we instead bought a brand new 2016 Toyota Prius, we would’ve paid circa $24,880
- 2010 Toyota Tundra: purchased in April 2018 for $15,300 at 139,528 miles
- For comparison, had we instead bought a brand new 2018 Tundra, we would’ve paid circa $37,000
- Apparently we like to buy cars in April.
- We paid cash in full for both of these vehicles, which means we don’t have car loans and thus, aren’t paying interest.
- We saved 64% off the new sticker price on our Prius and 58.5% off on our Tundra.
- We easily fit two carseats in the backseat of the tiny Prius (there’s even room for a box of books and toys between them). Having kids does not necessarily mean you need a huge car.
Depreciation: Use It To Your Advantage
Why did we buy such old cars? New cars depreciate at an astronomical rate and when you buy one, you bear the burden for all of this depreciation. The minute you drive a new car off the lot, it’s worth a lot less money because it’s no longer brand new.
Conversely, when you buy a used car, you’re letting someone else assume the burden of depreciation and you’re capitalizing on the slower, more stable depreciation rates of an older car. I know I just said “depreciation” 89 times, so let’s pause for a dictionary refresher:
Depreciation: a reduction in the value of an asset with the passage of time, due in particular to wear and tear.
Ok so depreciation is when something loses value over time because it gets worn out. You can see why this is an issue with cars what with their tendency to age and add mileage. Carfax offers this metric:
The value of a new vehicle can drop by more than 20 percent after the first 12 months of ownership. Then, for the next four years, you can expect your car to lose 10 percent of its value annually.
The rate of depreciation is going to vary by make, model, and year of vehicle, so I’d say these percentages aren’t universally applicable, but they do serve as a guidepost.
Low Mileage Used Cars Are a Bad Deal
Wait, Mrs. Frugalwoods, I thought you just said to buy used cars!?! I did, but here’s the thing, don’t buy low-mileage, relatively young used cars. You’ll get hosed. Although cars experience an initial burst of depreciation, the key to getting a screaming deal is to wait for their depreciation to essentially flat line.
A low mileage, relatively new used car is still going to experience a lot of depreciation, which makes it a fairly bad deal for you, the savvy car purchaser. Fear not, I’ve got lots of graphs to help us understand this (and I do mean “us” because I had to spend quality time graphing it up in order to understand this depreciation curve and explain it today. You guys, I have a degree in creative writing, not math… ).
Since we’ve owned our 2010 Toyota Prius the longest, I’m going to use it as the example car today. Please enjoy the below graph showing four different years of Toyota Prius (2010, 2012, 2014 and 2016) and their corresponding depreciation rates from 2010 to 2019:
The red star indicates the year (2016) we bought our 2010 Toyota Prius. As you can see, the 2010 Prius had already experienced a great deal of depreciation when we bought it. For comparison, you can see that the other years of Prius graphed (2012, 2014, and 2016) appear on track to depreciate in similar fashion.
The best case scenario when buying a used car is to identify the sweet spot where depreciation flat lines (or close to it), but where the car still has lots of life left. One one hand, this is a crap shoot. On the other hand, this is not a crap shoot because you have the internet and the internet has open source data sets!
You can research the crap out of your next used car purchase and make an excellent, informed choice. All cars are not created equal and some makes and models are better than others and run longer than others. There, I said it. I’m car-ist. I’m sorry, but some cars simply perform better over time than other cars. Cold, hard fact. I made these graphs using the data on CarGurus.com, which is a great starting point for researching the price trends of any make, model, and year you’re interested in.
As these graphs show, there is indeed a steep initial depreciation with the Toyota Prius (and most cars), but the real sweet spot occurs years later. Here’s another graph to illustrate this sweet spot of depreciation over time:
As you can see from the above, we bought our Prius after it’d depreciated a whopping 47.8% (and since we only paid $9,000, the depreciation was even greater). So while yes, there’s a precipitous initial drop-off in price, the real depreciation happens later. By buying a car after most of the initial depreciation, we’re avoiding those costs and getting a great deal.
Here’s a graph illustrating why buying a newer, lower mileage used car isn’t a good idea:
Ok so what this graph shows is that had we purchased a used 2010 Prius in the year 2012, we would’ve paid a staggering $20,218 and only had a 10.8% rate of depreciation. Whoa, buddy! That’s barely a discount off of new and the car still has miles of depreciation ahead of it. This means that a newer used car hasn’t depreciated enough to deliver a deal on price. You gotta go older!
While it’s impossible to predict precisely when a particular make and model of vehicle will hit depreciation stasis, it is possible to use these historical trends to inform your next purchase.
What About Maintenance? What About Repairs!?!?!?!?!?
Now that we’ve established a higher milage, older used car delivers better value, let’s talk about caring for such a vehicle. I know a lot of you are averse to this idea. You want a car that’s reliable, safe, and won’t require tons of maintenance. Well, so do I!
This is the refrain I hear all the time from the chorus of used-car-doubters:
I like to buy brand new cars in order to avoid maintenance issues. Plus, I’ll drive this car forever, so it’ll be worth it.
Here’s the thing: you don’t avoid maintenance issues with a new car. Sure, there might be fewer issues early on and the maintenance might be more spread out, but there’s no such thing as a 100% maintenance-free vehicle. At the very least, you’ve got to pay for an annual inspection, insurance, and regular oil changes. Here’s the other thing: even if you drive it “forever,” you’re extremely unlikely to come out ahead of where you would’ve been had you purchased a used car to begin with (see depreciation graphs above).
Since maintenance is one of the most oft-cited reasons for buying new from the anti-used-car contingent (and the anti-old-used-car contingent), I’m going to share the maintenance log for our 2010 Prius.
Before we get to the log, I would like to take a moment to thank automatic spell check software because, based on the number of squiggly red lines in the above paragraph, I am a 35-year-old professional writer who does not know how to spell “maintenance.” Moving along…
You Have Car Maintenance Logs?!
I know, I know, we’re nerds to the core. The hard core, I like to think. My husband–Mr. Frugalwoods–and I use spreadsheets to quantify, compare, and record just about every aspect of our lives. What can I say, it makes stuff easier! Earlier this month, I mentioned that I maintain a spreadsheet tracking our household systems (septic system, boiler, propane tank, etc) and their maintenance/delivery needs and you all thought that was strange. You guys, I had no idea this wasn’t normal!
Back to the task at hand: Mr. FW is in charge of our vehicle maintence logs. He keeps records on our tractor, both cars, his chainsaw, and the lawn mower. It’s not super time consuming to maintain these logs because we input the data after each service event. For ease of sharing these documents with each other, we use Google docs and sheets. Given this record-keeping, it’s easy for me to share with you all exactly how much our Prius has cost over the years. TLDR: not much.
2010 Toyota Prius Maintenance Log
|6/5/2016||97,500||Replace Rear Brake Pads||Local Mechanic||$139.10|
|5/23/2017||106,248||Replace Left Front Wheel Bearing, Inspection, and Oil Change||Local Mechanic||$168.00|
|6/29/2017||108,011||AC Recharge||Local Mechanic||$90.13|
|7/3/2017||108,171||Curtain Airbag Recall||Toyota Dealership (free as covered by a recall)||$0.00|
|11/14/2017||112,828||Replace Rear Brake Pads and Rotors||Local Mechanic||$402.06|
|6/7/2018||118,543||New Summer Tires Mounted, Inspection, and Oil change||Local Mechanic||$166.00|
|7/19/2019||135,671||Oil Change and Inspection||Local Mechanic||$143.24|
As you can see, we’ve spent $1,108.53 maintaining the Prius since we bought it in April 2016. However, it’s important to note that many of these expenses would’ve been incurred by a new car too, including:
- Annual state inspections
- Regular oil changes
- New tire mounting
This log does not include the cost of the tires themselves, which is covered in our monthly expense reports (see last month for our most recent tire purchases).
A couple notes on how we keep maintenance costs low:
- We use a local mechanic, not the dealership
- We buy most of our parts ourselves online (our mechanic is in favor of doing this–in fact, he’s the one who suggested it)
- We perform regular, routine maintenance to try and prevent serious issues
So while $1,108.53 spent over the course of four years isn’t nothing, it’s nowhere near the $15,885* we would’ve spent on a brand new Prius in 2016.
If we’d bought a new car (or a low-mileage used car) in order to avoid maintenance costs, we would’ve spent $15,885 in order to save $1,108. Even I can tell that math doesn’t make sense.
*this is the cost of a new Prius in 2016 ($24,880) minus what we paid for our used Prius in 2016 ($8,995)
It’s hard to quantify all of this because different cars have different maintenance issues at different times. So no, this is not universally applicable. Yes, you could end up with a lemon of a used car. But what I hope to illustrate is that I think it’s worth the risk to buy an older used car because the margins are so tremendous.
We’re not talking about a couple thousand bucks saved, we’re talking about many tens of thousands of dollars saved. Plus, worst case scenario: you decide your older used car is not the car for you and so you re-sell it for close to what you paid for it. How is this possible? Because if you buy a car after most of its depreciation occurs, you can then re-sell the car for close to what you paid for it! This is not apocryphal. This is what we did. Read below.
Re-Selling An Older, Used, High Mileage Car: Totally Works, We’ve Done It Twice
Longtime readers might recall that in early 2016, we bought a 2010 Subaru Outback for $12,000.
After living on our 66-acre homestead for several years, we realized we wanted a truck as our second car, so we sold the 2010 Outback in July 2018 for $9,300. This is a pretty modest rate of depreciation and proof that you can buy used and re-sell used and not lose all that much money.
Prior to this, Mr. FW and I drove a 1996 Honda Odyssey minivan, which we sold for $1,000 in 2016. Prior to that, I only had one other car, which was the car I bought with my own money (for I think somewhere around $3,800) at age 16 in the year 2000: a 1990 Toyota Camry Station wagon.
Oh yeah, I was cool. Actually, since I was in marching band, my friends loved the ‘wagon because we could fit all of our instruments in the trunk. As I said, super cool.
Higher Mileage Used Cars For The Win
- Low-mileage, young used cars are usually a bad deal because they haven’t depreciated enough.
- Look for higher mileage, well-made used cars with excellent longevity ratings.
- Pay for them in cash (if at all possible) to avoid incurring interest payments on a loan.
- Research the make and model you’re interested in to determine (to the best of your ability) where the depreciation curve appears to flatline.
- Take good care of your elderly car and it’ll keep running. A car that’s reasonably well-maintained and well-built is just getting started at 100,000 miles. Plus, older cars are cheaper to insure.
- I’ve finally learned how to spell maintenance.
What do you drive?
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I drive a 2011 Prius that we bought with 138,000 km on it in 2018. Best car.
Totally agree with your thoughts here, though I came to the conclusion via slightly different maths when looking to replace my car recently! (Purchase price divided by number of years I hope car will last me…as you stated , there will be maintenance regardless.)
We recently retired my 2004 Subaru Outback with 250000kms on the clock ( purchased 13 years ago for $36K – that’s roughly $2770 a year plus maintenance.) with a 2004! Honda Accord Euro with a mere 136 000 Kms for $8500. At 15000 Kms a year, it should last me 8 years making it $1000 a year plus maintenance.
I do the same thing to compare used cars. In NE cars do not last as long as in other parts of the country (once they start really rusting, good luck getting them to pass inspection) so it really matters how many drive-able years are left. When researching to purchase a new tacoma to replace my husbands 15 year old one, I would dived the purchase price by how many years they had left to be in reasonably good shape. I found that 4 year old trucks were the sweet spot. The cheaper older trucks actually cost more per year then the newer ones. My theory on why that happens is that most people looking to buy used are trying to keep things to a certain price point (10k) and that creates greater demand for the older trucks and raises the price.
Id like somwthing new but can part with my 02 corolla bought new and babied.
Next ill get a 4yr old Lexus.
There’s a very long time period between when the depreciation flattens out before you run into high repair costs. Hitting that sweet spot can be difficult but if you can get it, it’s fantastic. On your Pruis, only the Replace Left Front Wheel Bearing would really qualify as a repair, the rest is just maintenance you’d expect on your schedule.
By the way, your mechanic is really affordable. It’s hard to find a good affordable mechanic these days, you have to hang onto those when you find them!
Yep – excellent points. Additionally, to maximize the absolute value of a car is difficult. If you can, just own the cheapest base version of a reliable manufacturer. It also depends on your needs of the vehicle too. If you have a long commute and need a reliable good MPG vehicle then you have to do a CBA.
I have inherited my car – now it is 20 years old, few kilometres/miles, passes its TÜV (state inspection) every 2 years without any problems. Because it is old and not very attractive for thieves and is mostly driven by families (low-risk drivers), it costs little insurance (also because I drive 30 years accident-free).
I will drive it until it has to be scrapped – because I drive very little. After that I will not buy a new car – because another good option, which is becoming more and more popular in Europe: Car sharing. In my city, the local public transport companies offer a subscription in combination with a monthly ticket. You automatically have the basic fee for car sharing included. Various cars for car sharing are available at fixed parking lots throughout the city. You book an available car using your onlineaccount, the customer card is equipped with an RFID chip that serves as a key. You only pay for the distance driven. Gas, maintenance service etc. are already included in the kilometre price.
A perfect solution for all those who live in a city, drive little and sometimes need a small and sometimes a big car – because they offer different types (including Smart, convertible, E-cars, small trucks). In my hometown (300.000 inhabitants) they offer more than 140 cars at 60 different drop off points.
I drive a 2005 Jeep Liberty, bought in 2009 with 41,000 miles and paid off long ago. I don’t drive much and today it STILL has less than 100,000 miles on it. Low insurance rates and no car payments are a plus. I knew instinctively that this was a good decision at the time (I had just retired in 2009), but it is great to see the numbers on your grafts, Mrs. Frugalwoods!
I’d be interested to see what these graphs look like for a larger number of vehicles. I agree with your points, but the scientist in me still has issues with your N of 1. 😉 I am thoroughly impressed (and appreciative) that you went to the trouble of making graphs for us though. 😀
More specifically, I don’t know that the Prius is the best example for this as I’m not sure how well the figures would generalize to a non-hybrid vehicle. I recall that it was very difficult back in 2013 when I last car shopped to even find a used Prius in my area. They are likely more popular now, but I suspect that because they have historically been more of a “niche” vehicle that they don’t depreciate as quickly as some vehicles. I may be way off base though.
Regardless, thanks for this post. I do wholeheartedly support purchasing used cars and now have some more good for thought for she considerations the next time I buy.
I agree! Had I more time, I would’ve run the data sets for every make and model! But, thankfully, anyone can do so on CarGurus.com. That’s why I encourage doing so much research before deciding on a make, model, and year of vehicle.
What I do think is generalizable to most vehicles is the steep initial depreciation, followed by the relative flat lining in the depreciation curve. What I surmise will vary is when that tipping point occurs and how much longer after that the vehicle is viable. This is where I think it’s so important to find makes and models that are reputed for longevity and have good maintence and repair records.
Funny enough, I tried in vain to find academic, peer-reviewed articles on this topic (that compared many different makes, models, and years) and couldn’t find a single one. So, hey, if anyone is looking for a research area for their PhD…. 😉
I drive a 2010 Kia Forte with 75,000 km. I bought her new for about $20k CAD. I’m planning to drive her for a few more years at least.
Great, informative read. I now understand why my instincts to buy a low mileage, used Subaru or Toyota were all wrong. You saved me a near future bundle. Thanks, Mrs. Frugalwoods.
The first car I ever drove was a 1994 Buick Roadmaster station wagon. That thing was a land yacht but sooooo comfortable. It fit 9 people! I kind of miss it, but then I easily parallel park my smaller car and the feeling vanishes.
Haha, that’s how I felt about our minivan!! I loved that thing, but I have to confess the Prius is the new queen of my heart what with her low gas mileage and small size!
I think you mean HIGH gas mileage. 😊
Thank you for pointing out that just because you have kids doesn’t mean you need a large vehicle! I’ve been on this soapbox for ages 🙂 We have two kiddos ages 6 and 8, and our family car has always been a Honda Fit (which we bought when it was 7 years old with about 75,000 miles on it – it’s like we’re totally on the same wavelength!). Yes, it’s a little tight sometimes. Yes, my kids do have to work through the sibling squabbles that come from them being in close proximity during long car rides. But when I think about the thousands of dollars we’ve saved over the years on gas, not to mention the savings of purchasing and maintaining a smaller vehicle instead of a minivan or SUV, it is well worth it to us.
Any suggestions for a smallish vehicle with good gas mileage that’ll fit two carseats AND two dogs (one 100 lbs?). We’ve been having a bear of time finding that sweet spot in our car research.
We currently only have one kid, but are hoping to add another to the mix in a few years, and the backseat of our Toyota Corolla (plus car seat) is already a tight fit for our larger dog. We looked at the Fit, but I can’t see us being able to squeeze two dogs in the back! We had a 2003 Subaru Outback that bit the dust a few months ago and the dogs fit perfectly in the back, but its gas mileage sucked and modern versions seem to be bigger without much gain on efficiency.
I suggest looking into the Honda CRV – it’s great on gas and has lots of room.
A Prius, I think, might work? I also have a 2010 Prius- The passenger room isn’t tiny, and the hatchback is pretty roomy. My 55 lb lab mix easily fits in less than half of it… depending on the size of your smaller dog, and how well they get along, it might be a good choice.
We tried squeezing our pups into my dad’s Prius to try it out–unfortunately, it was a no-go! Our larger dog just has a super rangy frame–she’s essentially a small pony. And our smaller dog is about 40 lbs. When back there, they couldn’t both lie down comfortably. However, after a bunch of research, it’s looking like the RAV-4 is probably the car for us! Decent fuel efficiency (especially if we can find a used hybrid version), and similar space to the Outback, but with a proven track record of reliability. We spent an arm and a leg on that Outback, so I’m leery about getting another one.
They don’t make them new anymore, but I have a 2015 Mazda5 (not a CX-5) and it’s the best. It’s bigger than a sedan but smaller than an SUV, and built like a minivan with the back passenger doors sliding open. It has a third row that can be for seating or easily folded down. Mazdas are very reliable and fun to drive.
We drive a Pontiac Vibe and have three kids. It’s tight, but we’re not buying another car for a long, long time (hopefully).
Cultural differences are funny. Here in the Netherlands a Prius is an above average large car! Then again, from one end of the country to the other is a 2-3 hour drive..
I drive a 2006 Fiat Punto now for 4 years. I did accidentally / on gut feeling hit the sweet spot 😊
I had a small vehicle for my two kids when they were young, however once the time came for using the vehicle to give other kids rides places – soccer, other outings. I reluctantly had to upgrade to something that had a third row. Kids can’t sit in the front until they are 12 or so (airbag and other issues), so if you end up doing a soccer or other carpool that has more than three kids, life gets hard. I am a single parent so I always had to have the younger one in the car once I started giving older kids friends and teammates rides. Of course if you just drive you own kids everywhere you won’t have this problem but please don’t do that because one of the true joys of parenting is having a bunch of kids in the car and listening to what they talk about!!!!.
Wondering how the cost of a battery replacement fits into calculations. Seems like one would want to buy an electric/hybrid old enough to get a good deal, buy young enough to not have to be the one to replace the battery, which I understand is relatively costly event. May be worth buying one a few years younger and paying a bit more for this reason…
I drive a 2013 Prius I bought new. I remember doing the math about new vs old when we bought it and if you base your calculations on the number of km driven, it doesn’t make that much of a difference, if you keep it until the very end (which we do). We keep our cars for more than 10 years and drive them for more than 300 000 km, so it make sense to buy new. And there is less risk of getting a bad car that has been beaten in it’s previous life.
Hi Ms. FW!
Older Prius owners here. We’ve gotten three car seats across safely in a pinch! I’m avoiding getting a larger car as long as possible/permanently. One question for you: how do you factor in the updated safety features of newer (used) cars? Do you and Mr. FW somehow calculate that as part of the mix?
So true, I only wish we had figured this out years ago. The whole “certified used car” is of questionable value as well, in our experience it has not been worth the extra expense for a variety of reasons.
After totaling my 2009 Hyundai sonata due to a deer, I took the check from my insurance plus $1,000 cash and bought my aunt’s 2006 Honda Accord EXL for $5,200. It had 124,000 miles on at the time, and now has 162,000 after me owning it one year. I have an appointment for brand new Goodyear weather ready assurance tires on Monday to get ready for winter. It does feel good to not only have payments, but my husband does all the other maintenance work like brakes, oil changes, and anything else.
Sorry, that should say “no” payments.
I think this makes a lot of sense. We try to find that sweet spot as well. Especially for the car my partner drives. She only commutes 2 miles per day (4days per week) and drives mostly around town. I, on the other hand, drive 65 miles per day. So we tend to get me a car that has lower mileage – just so we can get some additional the value out of it (peace of mind included in the value calculation). This post is convincing me I could probably get even higher mileage than I’ve been getting in the past. Thank you for thorough analysis.
We too live in Vermont, and the one serious issue we find with our aging cars here is body rust from winter road salt. We get our cars oil undercoated every year and nonetheless have had to retire them all before their mechanical failure when they failed inspection due to compromised body integrity (rusted out). I would be cautious about buying an older car in snow country.
That’s a big issue here in Maine too! My husband ferrets out “cream puffs”, usually owned by elderly people who don’t drive in the winter. We moved away to Oregon for a bit and in 2015 moved back with a 2008 Subaru and 1995 truck that had never seen salt or potassium chloride on the roads. Our Maine owned 2008 Jetta, which is our lowest mileage care at 137K, is starting to have some serious rust issues. My husband doesn’t believe in the undercoating, but I haven’t done enough research to dissuade him .
I would be interested in knowing what his reluctance is to undercoating. Thanks. And also, Mrs. FW, do you have an opinion on this?
I’d love to know his objections to oil undercoating. Thanks. Also, Mrs. Frugalwoods, do you have an opinion on this service?
I also would like to know about this, but I am going to have to do some research for actual data, instead of from the companies interested in staying in business on this service and product.
I have an old car (1998 Honda Civic) that was driven on dirt roads in Vermont, all within the first ten years. Since I bought it at ten years old, I avoided dirt roads. It has increased in rust, but nothing that is structural. So far I did need to replace the rusted gas tank, brake lines, and I’m not sure what else due to rust. No body work, though there is body rust. I think avoiding the dirt roads has been the best, but I am able to do this while driving in where I’m going in MA, NH, and VT.
If you will, lets look into this one, shall we?
Ha ha, unfortunately since I live seven miles down a dirt road that option won’t work for me. If anyone has opinions on the oil undercoating I’d love to hear them.
You can look at buying a car somewhere slightly further south and driving it back. Sometimes makes sense to get something without the rust, since you’re only going to purchasing every few years.
Per an Instagram poster, Dave Ramsey says…. “Know what a new car is after you’ve had it for a year? A used car”
I bought my low mileage station wagon on leap day 1992. I have now had it 27 years and 9 months. I got a great deal and haven’t regretted a day of it. I love my car.
Wow- that’s incredible! Details, please! Make, model, miles, etc.?
We really do prefer the newest model of cars, although I know price drops significantly when you buy the old model. We still make use of the warranties(we usually buy a used car that has a year or more left on the warranty) which is nice. I will say I shaved off $4k on the price of my minivan because we waited 4-6 weeks between test driving it and actually buying it. Every month dealers seem to drop the prices on their used inventory as they try to make room for newer trade-Ins. I’m thinking most of the cars we bought were 1-2 year leased cars. Then, we always pay cash and just drive them forever. I’m sure your math is correct, but as my husband would prefer a brand new car from the dealership this is “our” compromise. No one can tell our cars were preowned, all have custom upgrades like heated seats, and we have been very happy with our choices! We drive a 2009 BMW X5 bought in 2010, 2013 Lexus 350 bought in 2014, and a 2015 AWD Toyota Sienna bought in 2017. I have always driven Toyota’s and they will last forever especially if well maintained(they last regardless!).
I have a question about when to let your used car go, meaning when repairs aren’t worth it. We have a 2005 Honda Odyssey with 103,000 miles. This summer we had to replace a cracked fuel pump and now it’s in the shop fixing a leaking oil problem. All together this will be about $2300 in repairs. My husband and I both walk to work but this is our only car. We also have a cargo bike we use most days for activities. Our kids take a bus to school. So our car is for weekly grocery trips and rare trips to grandparents a few hours away. It seems like our repairs are approaching “putting good money after bad” but we don’t have enough cash saved to pay for another car in cash and I feel a Honda van has at least 200000 miles in it so we would have another 100,000 left of life in it. We use it so infrequently I don’t want to dump more money into cars. The comments here are always so thoughtful and helpful. Any advice!?!?
I am a current owner of a 2007 Odyssey! Although you have recently put a fair amount of money into your van, you will probably be good for a while before needing more repairs. I would calculate what your yearly car payments will cost, and decide if it is the same or more than your perceived maintenance cost for the next year. You rarely use it, so, to me, the added cost of the new purchase just to have something younger may not be a worthwhile expense. Not to mention, you know what has been fixed on the van. The newer used car may need unexpected repairs over the next few years. On a side note, friends of our went on a driving vacation for their honeymoon. Since both cars were older, they opted to rent a car to reduce the chance of breaking down far from home!
Oof… Those Odysseys were known for being unreliable, one of Honda’s rare missteps. The transmissions are time bombs. I don’t know if I’d keep it and try to save for the transmission, or try to get as much as you can with some fresh repairs. How big/many are your kids? Since you don’t drive that often, Toyota Sienna, maybe a Honda Fit, or renting a car when it’s off to grandmother’s house since it’s only a few times a year.
I owned a Honda Odyssey 2000 van which I bought new and it was the worse purchase I ever made. Transmission failed at 60,000 miles. Rebuilt transmission cost $4,000 but they gave me $3,00o credit. Then rebuild transmission failed at 90,000 miles along with radiator, and catalytic converter. I had someone tow it away and sold it for scrap. A friend of mine had the same thing happen. These transmissions were well known for being underpowered and prone to failure. I will never own a Honda again.
The original Hondas were pretty bullet-proof. Unfortunately, over the years, they have succumbed to the General Motors syndrome. I would look to Mazda and Toyota. Mazda doesn’t import vans anymore, but they are the most under-rated manufacturer in the US..
Many don’t realize that of all the Japanese car companies, Mazda is the only one that still manufactures the majority of their vehicles in Japan. Honda, Toyota and Nissan almost 100% US made. I like buying American made products, but the Japanese still have superior build quality.
Honestly, it sounds like you’ve answered your own question. If you are expecting another 100K miles of life and the repairs are reasonable given the age and mileage, I’m not sure why you’d be looking at replacement. I have a 2003 Corolla with about 97K miles on it and have put about $1400 in over the past few months, but it’s for things like a brake job and belt tensioner – nothing that’s raising alarm bells about the life left on the car.
Check out Car Gurus (https://www.cargurus.com/Cars/instantMarketValue.action). When repairs are more expensive than the depreciation on a newer vehicle, it may be time to buy a car.
I was putting ~$2000 a year into my 2002 Honda Odyssey, but depreciation on a newer three-year-old van was only $2000 a year. So I went ahead and bought the newer van. That way I get a more advanced, safer vehicle for the same price-per-year; and as the depreciation slows, my cost will actually be less than keeping the old minivan. I would’ve loved to buy a six-year-old van, but the previous model had some issues with the engine. Hence the newish car.
I have been driving since 1977 and a vehicle owner since 1986. I am a mom of 6 (now young adult) children. 1 disabled from brain trauma. I am married but all of the car decisions are mine. I live 1 hour from Toronto but spend much of my summer in remote parts of Ontario. My vehicles are well maintained by local mechanic. Present fleet- 2010 Caravan-(doubles as work truck) 200,000 km; 2013 Hyundai Elantra 100,000 km. Elantra has been through 4 minor front end mishaps so front end is held together with tape. Family mileage on these vehicles 40,000km per year.
Through the years I have maintained a fleet of 1-3 vehicles at all times. Have purchased new, almost new with low mileage, and old with high mileage. On each and every vehicle I have kept a log of cost of vehicle, plus each and every repair made to vehicle. I then subtract what I sell vehicle for. Generally the only reason I dispose of a vehicle is because it becomes very unreliable and no mechanic can fix it. Those I often sell to dealer at lower price as I cannot knowingly pass my problems off to someone else. One car I donated to a family in a bad place willing to take it on. Another was totalled in an accident.
So for each vehicle I take the amount spent on each vehicle (all CDN dollars). Purchase price plus maintenance minus sale price. No gas price and no insurance cost here. I divide this number by the number of kilometers (NOT MILES) I put on each vehicle. The best vehicle has been a high mileage old Taurus purchased in 2002. It ended up costing 0.15 per km. The worst vehicle was a high mileage Taurus purchased in 2008. It was so unreliable we kept it only 13 months and it cost 0.75 per km.
So our highest and our lowest cost per km was from the high mileage / old group.
Generally we find that the newer, low mileage/used vehicles cost around 0.20 cents- 0.35 cents per km. Variation does seem to be due mostly to size of vehicle/engine. We did have one lemon in this the newer low mileage group also. But at the end of the day this is where most of our vehicle purchases happen. It is not just about the money- but the relative piece of mind with a newer vehicle in a remote area with a disabled child. We do have CAA but it is just really really difficult being stuck.
I do not even want to think about new vehicle. I was once broken down in remote area (dropped tranny on old car and husband 200 kms away at work-4 kids and dog at the time- 1 kid with active chicken pox) and found the town I was near (seemingly not unlike the area you live) did not have a rental car large enough for my family. Went to local dealership and the best they could sell me was a brand new minivan. It was NOT a good purchase.
So, my conclusion is that the older/ high mileage vehicles can result in some amazing deals. Also some terrible duds. The lower mileage/newer used cars seem to even out the cost per km., and give slightly more peace of mind while being a far better value than brand new.
My Brother-in-law and his wife buy used cars, but seem to replace them often. After a plan for a “newer” used car purchase, I asked why they were replacing their current car. She said they got tired of repairing it. In the past year they had replaced the tires, brakes, fuel pump and muffler (and maybe a few other things, I don’t remember). I mentioned that the car was probably good for a while now, since it’s been fixed and was running well, plus they had invested so much into it, wouldn’t it make sense to keep it? She smirked and said she just wanted a newer car. She got her newer used car,…and the used car loan to go with it! Meanwhile, my 20 year old daughter is driving a 21 year old Camry, which she will keep until she is out of college and can save up enough to buy a “younger” car for cash! BTW, kuddos for finding a wonderful mechanic, they are certainly priceless!
I was one of those new-car-only-buyers until we sold our only car because we didn’t really need it (and it saved us soooooo much money!). Yours is the first argument though that really made it click that a used car isn’t the worst thing in the world if you can find a reliable one in the sweet spot and just be willing to deal with the idea of more maintenance hassles. So maybe if we ever buy again, we’ll consider used. That said – you mention the cost of annual inspections, and at least here in CA, if you buy new, you don’t have to get any inspections done at all for the first few years of the vehicle’s life.
Glad to hear you’ve “finally learned how to spell maintenance”, but you may want to edit your post to correct the spelling of “breaks” to “brakes” 😉
Great article explaining the merits of understanding the depreciation curve when purchasing used vehicles.
Oh man! I KNEW something would be misspelled in here!
You are cute
My husband is a mechanic but isn’t working as a mechanic anymore so we’ve lost an advantage there. When he was working at a shop our only repair cost was parts, but now we buy our parts, which he scouts online for the best price, and then take it to the shop he used to work at, unless it’s something he can do at home. If we had a garage high enough to install a hoist he would do it all. So obviously that puts us at an advantage for buying and maintaining our vehicles. I drive a 2004 Toyota Sienna with 260 000km and he drives a 2007 Mitsubishi Outlander with somewhere around 320 000km. We bought the Outlander in May 2014 for $3500 and the Sienna we bought in May 2017 for $4000 because 3 kids. It did require some work to get it up to snuff when we bought it, but we don’t keep as meticulous logs as you so I can’t remember. We have had a major repair on the Outlander this year, the gas tank was leaking so my husband found a used tank for $700 (which was the cheapest) and then coated it with truck bed liner before taking it to the shop to deal with replacing because it is a messy and complicated job (you have to remove the drive shaft). My van has needed a couple exhaust leak repairs. But even with an expensive year for our vehicles it is still WAY less than a monthly car payment and we do have reliable vehicles that are set to last us for years to come. In fact I frequently wish my van would have something catastrophic happen because I’m tired of being a minivan driver, but no luck so far. When the van is eventually past the point of repairing we want to replace it with a Toyota Tacoma for my husband and I will start driving the Outlander. The problem is Toyota’s can really last. I will probably never drive anything other than old Toyotas or Mitsubishis.
Thanks for sharing your maintenance log, it’s a great idea to keep track. I purchased my used Jeep Liberty cash, it had 90k and was in excellent condition, new everything. Great deal except I only get 19MPG 🙁 now my recent job change has me driving A LOT, sometimes over 100 miles a day. I’m contemplated trading in for a little fuel efficient car since public trans isn’t an option. What would FW do?
What’s the resale value of your Jeep? Could you sell it and buy something (used, in cash) that’s more fuel efficient?
I feel like anything would be more fuel efficient. The resale value is only 8-10k (I purchased for 12k and have put 21,000 miles on in year one). I would have to put more cash down in addition to trade in to get a little used Kia or sonic, or similar. But in the long run, I think it makes sense if I keep driving this much, right?
We just purchased a 2009 Chevrolet Suburban to replace our 2001 Tahoe. We needed a big vehicle as we do most of our family travel via long road trips. With 3 sons and a dog, we knew we wanted a Suburban or Yukon XL (I drive a Nissan Leaf – so only one fossil fuel guzzler in the family). These vehicles can cost up to $80,000 if bought new!!!! No way – we paid $9,750 in cash and expected to spend another $1,000 to get new tires and a taillight fixed. My husband also bought replacement stickers for the A/C that had worn off for a mere $3 online. He also watched a YouTube video about another small fix. Even the not-so-new models of this car can run into the $30k – $40k range so we’re happy with our purchase and can’t wait for our inaugural road trip next month!
I just bought a 2 year old Hyundai Tucson from my sister-in-law and her husband. Actually, they had it on a 3 year lease and I bought out the lease early. I had been driving a 1998 extended cab GMC Sierra truck since we bought it, from them too, in 2006. We live in the snow belt country but my husband and son had kept the body going, doing body work on the old girl every couple of years. We deal with a local garage and have for 27 years now. The old girl was getting to a point where it was getting expensive to repair. I donated the truck to charity and will get a tax reciept for it. Not sure just what they will do with it but if someone wanted a farm truck, this would work for them.
The Tucson is nice to handle and wonderful to park after the truck!! I paid $16000 plus taxes for it and it would have been well over $20000 had they turned it back into the dealer. I’m happy with the deal. It will very likely be my last vehicle so it will get good care. I had to buy new winter tires for it as the ones my SIL had will fit her new car. Gas for the car is much less than I was used to paying for the truck.
My husband has serious health issues, AL Amyloidosis, as well as mobility issues so the car is easier for him to get in and out of. We have medical appointments out of town so I need a vehicle to get there and back. We’re happy with our new wheels and my SIL is very happy with her new red car….red being her favourite colour, lol!! I’m still getting used to the bells and whistles on Princess but liking her so far. And the guys at the shop think it’s great I have a new to me vehicle.
Oh and the mileage on the car when I bought it was only 24318 km as we use metric here in Canada so it’s less than 20000 miles. As I bought it from family, I have all the records from day 1 on it. I’ll see how it handles in the snow but it’s front wheel drive and I’ve driven that before. My SIL said it handles really good in the snow.
Great analysis. I tried to do similar analysis an cannot find historical pricing for used car. I looked on carGurus as well. Any more detail pointers to where is this data? Thx. (Love your book BTW).
I know this goes against the grain of accepted frugality wisdom but for me the depreciation argument is not convincing. I don’t look at a car as an investment, anymore than I look at winter coats or furniture that way. I have only bought a few cars in my life but they were new. I drive them until they drop. I pay cash (exception was a zero interest five year loan). I sell them only when I can’t afford the repairs and I just hope to give my old wheels a good home, not to make money.
New cars might not make perfect financial sense but I don’t see them as financially irresponsible. As with other large purchases, I buy new high-quality cars and use them all up.
I do exactly the same as you, Martha! Currently driving a 2010 Subaru Outback with 139K miles an I expect to drive it till it has at least 250K miles. I love my car!
This is why I buy slightly used – my car was 3 years old, had been a rental car, and had 30k miles on it. It was a decent bit less than the price of a new car, but was still very much new.
I’d be hard-pressed to buy a car with 100k+ miles…you don’t know how people took care of them before.
I routinely buy cars with over 150k miles on them. By that point, the lemons have all died. If they’ve driven that long while being abused by their previous owner, then the care that I give them will be just fine. That said, I only drive about 6k miles per year; and I have a great mechanic that I trust. Couldn’t do it without him.
That’s a great point! Most vehicles that can make it to 150,000 miles usually have a lot of life left in them!
You make a great point! I feel much better about the 2012 Ford Expedition with 146K miles on it that my husband bought yesterday. He said it should go for another 100K and I hope he is right.
……wow, great analytics!
I’ve been buying cars since 1965 when i was into vw beetles & buses and have come to believe
fuel injection is the greatest thing since mac & cheese in a box. I think you’re right that all cars are
NOT created equal, and my favorite YouTube and internet site for car research is SCOTTY KILMER.
He is an acquired taste, but his information is priceless.
Thanks for this piece, cars can be such an enigma!
Is there a sweet spot with buying a Prius? Is there major maintenance to consider with regards to the battery system? I am looking for one so this post is very timely!
We had a Prius and replaced the big battery. My husband watched YouTube for the step-by-step and it was pretty simple. The old battery has to be disposed of through a mechanic/shop. To have the dealership do it was way too much. A local shop would have done it for $1K less but it was VERY easy and we bought the battery on-line which was the least expensive approach. I don’t remember if the battery was sent directly to the house or if we had to pick it up from an AutoZone-like shop. All told, it cost us about $1,100 USD.
Hmm, seems like slope of depreciation should factor in here? Higher miles = lower prices, but that’s the trade off for wear and tear and approaching the ever more likely Money Pit Phase that all used cars will eventually hit. I’m a proponent of buying after depreciation levels off, closer to the new end of a life cycle, for that reason. But you can always luck into an unexpectedly long life! Above all else, BRAND matters. We also have two Toyotas, one a Prius, for this reason. I think Asian cars are a bit more common on the west coast, our Prius is literally one of seven on our street!
I agree with Sarah. I’m not sure your calculations take into account how much life is left in the vehicle, which is a huge consideration.
In any case, I don’t like buying new, not only because it costs more, but also because I can’t handle the new care smell, which is just toxic off-gassing. Blech.
I have a 2009 Toyota Sienna that we’re looking to trade in for a 2019 Toyota RAV4 hybrid. I was looking at older RAV4s, but there is quite a jump in mileage that the ’19 gets compared to ’18 or ’17. We’re waiting until the 2020 models come out until we go internet shopping.
I drive a 2011 Toyota RAV 4 that I bought new. It has just shy of 100,000 miles and has never cost me a repair. I keep up with my annual maintenance and hope to keep it on the road for many more years.
I wonder how this thought process applies to older ev cars that have an expensive battery to replace and run out of the battery warranty relatively early. Looking at buying a used kia soul ev in my area that has depreciated significantly from 2016 ie 35k to about 12k but also factoring in warranty on the battery if it needs to be replaced ie around 100k miles or 10 years. Any experience with this? I see tons of nissan leaf owners discuss this as battery packs become more advanced. My commute is about 60 miles round trip at times so with 120v charging and 12 hours off between trips trying to find a car with closer to 80-90 range making the newer ev’s ie 2016 more relevant.
This is a question I have as well. Living somewhere with deep, deep winter cold, these older model ev’s generally did awful from what I understand. I would be very hesitant to buy an older ev given how cold our winters get and what a difference that makes in battery life.
I drive a 2008 Ford Fusion with about 98k miles on it that I’ve owned since it was brand new. I got it at well below sticker because one of the salesmen at the dealership got in an accident with it and they had to do all this cosmetic work on it. I knew another salesman at that dealership personally and he knew I was in the market so he said “get down here fast this is a steal” and it’s lasted over 11 years now and I plan to keep it as long as I can. Hopefully it won’t rust out though.
I have no insight on cars. Only that “maintenance” is my word too. I can never spell it correctly on the first attempt. And even if I think I’m spelling it correctly, I make a typo.:)
I crunched some numbers, and over a 30-year time span, the two least expensive ways to buy cars are to buy a $5-10,000 used car about every 5-7 years (that’s about the sweet spot with vehicle age and mechanical life left), or to buy a new car and drive it for like 15 years. We’re currently running a 2007 Toyota Highlander Hybrid AWD (paid $9k, 135k miles, in 2016, 75% depreciation) And at 15k miles a year, that’s another 10 years before we hit the 270k mile mark, and I’m not afraid of many problems because it’s a Toyota. The other vehicle is a beater 2001 F-150 that we paid $3500 for, for mountain living things. Also, my frugal friends, we’ve dropped Subaru completely from consideration, because of the certainty of needing a $2000 head gasket or transmission repair, or BOTH! 80s and early 90s Subarus were awesome reliable cars, but not since 1998.
Not to mention the ongoing need to replace the timing belt and the clutch in a manual … hence our change in direction from my much loved Subaru to Honda ( manual transmission though with full service history… wouldn’t have looked at an auto so old)
I drive a 2008 Ford Taurus that I bought in January of 2015 for $3,200. It had 147,000 miles on it at the time. I’ve already put 57,000 miles on it, so it’s now over 200k. It still drives great and has required very little maintenance. Outside of the oil changes, brakes, tires, and other routine maintenance that would also occur on a new vehicle, I might have $500 in “old car maintenance” expenses.
I’m not sure I’ll ever go through the exercise of graphing out the depreciation of a vehicle, but I have a couple beliefs that weigh in when I’m looking to buy something.
1) I’m a firm believer that the 100,000 mile mark stimulates a significant drop in value. There’s something about that 6th digit in the mileage that causes buyers pause. From my experience, the “sweet spot” on most vehicles has been between 100k and 150k.
2) I would rather buy a newer car with the excess miles, than an older car with low miles. Low mileage cars usually fetch a premium price, but the market doesn’t seem to recognize how much age deteriorates a vehicle, even when it doesn’t get driven much.
I am too embarassed to admit what cars we have. Dumb, dumb, dumb purchases. But with one car paid off and plans to have the 2017 model vehicle paid off in a few months, we’ve learned our lesson and have agreed we will never again buy a brand new car. Having these sweet graphs is helpful for the future.
Like a few others, I think I actually disagree with this – in fact, when i first saw the headline, I misread it as “the BEST of both worlds” 🙂 I bought a 2013 Toyota in 2016 with about 30k miles on it, and I’m quite happy with that purchase. I think I’d do the same age/mileage again – a lot of the depreciation has already hit, but the car is young enough mileage-wise that I still get a lot of its life.
Another thing to consider is that some cars hold their value really well – Subarus and some Toyotas come to mind.
Hmmm. Maybe I should have waited. A few months ago, I replaced my 9yo Versa hatchback ( owned 7 years), with a 2yo Honda Fit that was just off-lease. Maybe I could have found a slightly older one, but the +10 average mpg and the fact that my insurance cost went DOWN ( better safety features the agent said) make me very happy. And the fact that for the first time in my 64 years I had saved up enough to pay cash😁
As a fellow spreadsheet nerd, I appreciate the maintenance log! I’ve been debating over the past two years about buying a good used car. I’ve been leaning to earlier models simply due to the lower price, so that I can pay cash for them, but I’ve been concerned about maintenance costs. Your log illustrates just how low maintenance some cars can be, though I also think I should expect to pay more just to be on the safe side.
P.S. Love the chocolate book on Littlewoods’ lap!
It’s spelled “brake pads”
My prior car was a 2004 toyota camry that I bought in 2006 with 36,000 miles on it for $15,000…. but we went through SOOO Many repairs despite regular maintenance over the last 4 years. It only had 132,000 miles on it when we sold it last month for $600, but it was dead…. needed over $5k in work.
My kid is 4, and we knew the next car we were buying would eventually be his… So, I bought a used 2018 used Subaru Outback with 7,000 miles on it last month. Closest to a new car I’ve ever purchased… We were able to get the original warranty extended to 7 years 100000 miles on it for $1500… so after taxes and registration in California, we paid $30,000 for it. The Outback had been a lease return. We lucked out and someone took a base model and upgraded the safety features, didn’t drive it much, and then turned it back in for the 2020 re-design on the outback. The dealership also wasn’t supposed to sell it to me for the $26,200 price tag they did so the store ended up only making $2k off me above what they paid for the car… and Subaru’s hold their value.
So we bought closer to new because it had everything we wanted on the car after doing our research (including me test driving 4 cars in one day from 4 different dealerships to compare trim line and packages so we could hunt for the used car we wanted). Since i’m a low mileage driver, the extended warranty on the initial power train stuff will make sense because cars are a lot computer now, and one repair will be worth the $1500 we paid to extend the initial warranty since we will keep this car for so long.
For us, because we don’t cycle through cars often, and we had a chance to get actual safety features, and because a car is not an investment to us, but something to use up until it doesn’t make sense anymore, We are feeling really good about this decision.
It’s interesting to see those graphs, thank you.
One of our 2 cars is a Landrover Defender which is about 19 years old and really good fun. However, now that I’ve taken early retirement, we’ve been considering reducing to one car despite being in a rural area with no public transport. We’ve been doing a car use audit for the last month and there have been only 2 clashes, both of which could have been avoided with planning. I calculated the running costs of the landrover over the last 4 years and was shocked to find it came out at £3963 a year on average, or £330 a month. And that is without fuel or capital depreciation. If we have just one car I’m sure we’ll use less fuel overall too because we’ll have to plan/share our trips better. This maths may well swing our decision….I’m happy to be a bit more flexible over when I go shopping or meet friends for £330 a month tax free!!! Even the occasional taxi ride won’t dent that much. Now I’ve just got to persuade my husband to part with his beloved landy….
I prefer used older model with low mileage. I bought a 2008 Subaru forester for $10k but it only had 58,000 miles. I hope it will last another 8-10 years and my 13 year old will drive it as her first car. I figure we generally spend $1500 per year when factoring in purchase price, maintenance, depreciation and life span. Not bad, if you ask me. My last car was a Toyota Corolla and that averaged less that $750 per year. I think with patience you can find a low mileage older vehicle that will last for years and cost relatively little per year.
I just bought a 2008 Subaru Outback for $5000 – it has 155,000 and runs perfect. I’m looking at keeping it for at least 5 years and just driving no farther than a couple hundred miles from home so I will probably put on another 100,000 before I get something else. My previous car was a 1999 Cadillac I got for $2500 6 Years ago…it needed about $8000 spent on it over the years, but still cheaper than buying a new car. I had previously bought 3 new Hondas (1984, 1997 & 1999) in a row so it was a big change for me. I gave my 1999 Honda CRV to my sis when I got the Cadillac and they have driven it like crazy until it wore out. I donated the 1999 Cadillac to PBS.
I wonder if any readers have any knowledge of cars with a salvage title. Most people will tell you to stay away from these cars, but I know of some people who only own cars with a salvage title because you can purchase them at prices well below market value. I wonder if there are certain things to look for that might make them worth the risk.
We own rental houses and so due to the need to frequently haul large items we decided last year to buy a truck. This also doubles as our teenage sons transportation. We live in the snow belt and wanted 4 wheel drive. New trucks with 4 wheel drive are expensive! While other kids at my son’s school are driving brand new Mercedes and Lexus, ours get to drive a rusty beatup 2004 Chevy Silverado! It builds character. At least that’s what we tell them. 😉
Paid $3800 for it…it came with brand new tires and about 140k miles. Needed about $1000 of diy repairs, my husband keeps all of our vehicles running and it is a very rare occurance for us to visit a mechanic. Maybe once every 5 years, unless it’s a recall issue.
We feel like we got great deal, and I don’t have to worry about things like the paint getting scratched. If you have ever priced a new pickup… Wowza! 60-70k! So we are all in on this for about $5k, paid in cash, and we could sell it for far more than that today.
I have kept my previous 2 cars for over 200,000 miles and resold them in good useable condition – keeping good recordsand being a fanatic about maintenance is the key. I never take them to a dealer but use a reliable and honest local mechanic . I have a 2010 Prius now and it has been the most carefree car I have ever owned. Presently at 76,000 miles, I hope to keep it a lot longer.
I too have a 2012 Prius, the cheapest kind with now about 100k miles. Mrs. FW, I have 3 teenage boys and a husband. We do a 14 hour road trip twice a year. We bring bikes, ski gear, camping gear, etc… We’ve joked that we need to put our boys in boxes to sleep at night so they will stop growing, BUT WE ALL STILL FIT. My Prius is AMAZING. I can carry anything and yes it’s a bit squishy and there is a lot of prodding and sugar snacks as condolence at rest stops, but it is THE BOMB. Best family car EVER.
That’s awesome!!! You should take photos of how you cram everyone in there!
Can you tell us which website you use for buying auto parts?
We’ve used RockAuto.com in the past for buying parts.
We too are all in favour of older used vehicles and we hunt for ones with low mileage too. I drive a 2009 Toyota Corolla that we bought in 2017 for $7,000 with 70,000 km (~44,000 miles) on it. My wife drives a 2011 Chevy Equinox that we bought in 2018 for $8,700 with 80,000 km (~$50,000 miles) on it. Both were steals frankly and required a lot of due diligence but if you are serious there are deals to be had. And like you said, you need to find that sweet spot (which requires research). We’ve found that a car that’s ~7 years old is the golden ticket. We are looking to sell the Equinox (now with 88,000 kms) and are confident we can sell it for more than $11,000 today if we wanted to. And I likely could sell the Corolla today (now with 105,000 kms) for $6,000 but we plan to continue driving that gas efficient beauty (her name is Carol) for awhile. And, as you mentioned, we have a kid (and hoping for another one in the future) and know that Carol will be just fine for our family.
I drive a 2013 Subaru Impreza ($15k in 2015, now value estimated by Kelly Blue Book at $9k), not terrible depreciation but we didn’t hit that sweet spot as it was the kind of “new-ish” low-milage (35,000) used car you’re talking about avoiding here.
My husband however bought a 2006 BMW 3 series coupe in 2018 with 90,000 miles and a sunroof in powder blue. People seem to find it exceedingly sporty and impressive which is HILARIOUS because he got it at a steal for $6k. Kelly Blue Book estimates it’s still worth $5,500. He seems to have hit the sweet spot and loves this little car to death. It has 4 wheel drive and fits 2 carseats so if he’s happy, I’m happy!
I drive a Suzuki Grand Vitara (in West Yorkshire, England). It cost a £1000 in cash. It has needed some repairs, but is still no where near what it would have cost to buy a new one. It was ten years old when we bought it three years ago! Love reading about the Frugalwoods’ adventures.
My car strategy’s a little different. though I can see hitting that sweet depreciation spot makes economic sense.
My husband and I cannot stand car shopping…. so we only buy a car only once every 20 years.
We buy new and pay cash. For a time period, new and old car overlap. When the old one dies we live with one car.
Currently, we have a 21 year old car and a 1 year old car. Both cars are low mileage for their ages with reasonable insurance costs.
We will drive the old car into the ground. It is so easy to pay for repairs because back in the day there were fewer bells and whistles to break.
We’ll try the old car, high mileage at our next car purchase…. in 2038.
$160 for 4 new tires, mounting, balancing and an oil change? Seriously? That’s less than $40 for 1 tire. Are they refurbished tires?
I will take my recently used car and even pay for an extended warranty. Doing so has saved my nearly $50,000 and I only spent $9000 for the warranties (2 cars). Look at what I saved there!!!
Sorry for the confusion–that’s not the price of the tires, just the mounting. The price of the tires is reflected in our monthly spending reports, most recently here.
I drive a 1999 Camry with 218k miles on it. Still going strong. We’ve had to put a couple thousand into it in maintenance and repairs in the past 4 years or so but like you said, it’s way cheaper than buying another car. There are lot of categories where I am not frugal enough but I always feel like I’m justified in paying a house cleaner since I save so much on my car.
As we’re about to add a third kid at the end of this year, we finally jumped on the minivan bandwagon and kind of love it, ha ha. It may not look cool (and still gives me a shock every time I see it in our driveway), but man, it’s nice having so much space! I feel like we got a good deal for a 2010 Honda Odyssey with only 72,000 miles on it for $11K. I was happy to read through this and realize that I didn’t have to feel at all guilty about our recent car purchase, as we’d followed the guidelines you spelled out, ha ha 🙂
Congrats on baby #3! We loved our Honda Odyssey, so I hope yours is good to you too 🙂
I drive a 2011 Honda CRV, bought new, and feel no guilt…..however , I bought a honda with the expectation of going at least 250,000……it really depends on the make and model, not all cars are built for longevity….my 2001 Ford Escape needed a new tranny at 60,000, my 1992 Ford Explorer needed a new tranny at 90,000…..Hondas and Toyotas have a reputation for going to 250,000 miles….
I don’t know if someone else already mentioned this, but an additional advantage of purchasing an older car is the lower insurance costs.
Our kids drive a 2013 Civic and a 2007 Corolla and holy crap, the insurance on the 2007 is SO much less than on the Civic.
Of course, this is especially relevant for younger drivers; the difference for older drivers might be more negligible.
My DH and I have 6 kids so I drove a large vehicle for 25 years….until 3 months ago I traded the large beast for a 2011 forester with 125k miles. Got a good trade in value for my 205k mile expedition and wrote a check for my new sweet ride. Hope to drive it for another 125k! Great article and as a former marching band cool person ( I was band pres too so extra cool!) I understand needing room for instruments. Girl trumpet players rule!
I have a 1996 Corolla, my wife has a 2013 Camry. Both paid off. I am trying to decide what my next car should be and I’d like to either go small (Prius C) or big (Tesla model 3/Electric VW van that hadn’t even been produced). Because the EV/Hybrid technology is developing so fast, I feel like they haven’t been around long enough for depreciation tables to have enough data, but I also don’t think my next car should be a gas car… So, I’ll just keep driving my 96 Corolla until the wheels fall off and maybe by then some of the current EV’s will become reasonably priced.
Would be good to address the battery cost issue.
Also there are disposal regarding hybrid batteries:
I’m a living example that newer car w/lower miles aren’t the best option. My husband and I decided to move from a warm state to one where it snows. We assessed our vehicle situation and decided to keep my 2013 Subaru Outback and our shared 2000 Ford F-150, but sell hubby’s 2016 Nissan Maxima. We bought the Maxima at about 1.5 years old and low miles. It wasn’t new, we don’t do that, but we said he’d drive that car for ages. The best laid plans… 🙂 We took a major hit on that car! Hubby debated keeping it vs taking such a big loss, but we figured we might as well take the hit now vs a few years later when it’d be worth even less. We now know better and won’t buy that new of a vehicle again. The F-150 isn’t a fantastic truck. In fact, we now live in a bit of a fancy neighborhood and you need to be part of the community to use the local trails. We had a guy follow behind and take pictures of our truck while headed to a trailhead. We can only surmise it’s because of its age and surely no one would drive a beater like that in our ‘hood. Hubby was offended. I was cracking up. I don’t think it’s THAT bad, but I also don’t put too much thought into what others think. 😀
Now, my little brother… he’s a total car guy. Like, he really, really loves cars and they need to be f-a-s-t. He also makes boatloads more than I ever will. There are those among us who make enough in pay to seriously not have to think much about saving more. I’m not saying it’s right… he invests a ton, but he also takes a bunch of vacations, has a really nice place, and drives fast cars. He’ll also be retiring early. He has an uber-expensive Audi he just loves. He’s cycled through a variety of BMWs along the way, another Audi, now this one and all were new or nearly new. I love going for rides with him, but holy moly is he bleeding money from the depreciation. But, you know… that’s his *thing*, he can afford it easily, and he’ll retire early with more money than he knows what to do with (raising my hand here to be a recipient of his excess 🙂 ). So I think it depends on your values – we’re so very different in this regard! We’re also on very different planes financially and I consider folks like him outliers.
One thing though – Mr. Frugalwoods seems quite handy. Why doesn’t he change your brake pads, do oil changes, etc. There are some car maintenance tasks which are really very simple, yet the general public doesn’t entertain attempting them on their own. Why is that? For some reason, car maintenance seems to have a perceived difficulty rating set to high when that’s inaccurate.
We like to go for what we call the Grandma car. A car with very low miles, that is a much older vehicle. For instance when we were looking for a van (exchanging our Subaru Forester) we found a 2006 honda odyssey with under 24,000 miles. It was six years old and in excellent condition, the price was right only ($1200 more then a similar vehicle with 95,000 miles on it) and we haven’t had any expensive repairs or maintenance with it. Grandma cars are the best!
Your graphs lack a very important piece of information. Mileage. Plays a huge part in the cost/value of a car.
I just bought a low mileage 1.5 year old car. I took a totally different approach than your logic. I looked for cars that lost significant value the first year but also needed to have a good factory warranty.
The people first warranty from VW is great. And VW loses a ton of value after the first year. But I have the confidence to load the kids up and drive across the country in my low mileage 1.5 year old used car.
Avoid used car lots, they are auction bought rebuilt cars. Trade in or repossessed are the way to go. Gotta run the Carfax to make sure your car will qualify for a transfered factory warranty.
Life is too short to drive the wrong car or a POS high mileage car you baby down the road due to a fear of breaking down.
I’m 47 and have bought a lot of cars a lot of different ways. I’m thinking I have nailed the right technique. But honestly I see cars becoming much like phones. The next latest greatest is already in R&D before it’s predarsessor is released. With significant upgrades in safety and technology every year.
Good luck car buyers.
Earlier this year, we traded in our 2013 Prius C for a used 2016 Nissan Rogue. We needed more space because we now have two boys. When we had the Prius C it was perfect for just the three of us but now with the newborn(now 4.5 months old) we believe that having a mini SUV like the Rogue was necessary.
With the closing cost of Rogue close to $19K and the trade in value for the Prius C at $6K we paid about $13K for the Rogue. We paid it off immediately with cash since we do not want to deal with car payments. We love it so far and hopefully it will be in our family for 10-15 years. The only setback is gas usage. The Prius C was great where we only go to the gas station 1-2 a month and paid only $30-40 a month. But with the Rogue I have go to the pump at literally every week and have to pay $40-50 each time so we’re talking about $200 a month at most for gas. Some of it is the high gas prices here in the SF Bay Area but still going to the gas station on a weekly basis adds up to a lot of money spend on gas compared to when we had the Prius C
Just want to add- for people who plan to put tons of miles on their cars, buying a set of tires with a good warranty (70k + miles) and keeping up on the rotations to keep the warranty valid is a very smart move. I live in Pennsylvania and the weather, road conditions and hilly terrain are all tough on tires. Cheap tires with a 20-40k warranty wore out constantly. I bought a set of 80k warranty tires from Costco early and have put 100k on my car since then, and am on my third set of tires, which have been pro-rated for the warranty. I’ve also replaced 3 tires for quite cheap with the road hazard insurance. They’ve started to be jerks about it (I think few people keep a car long enough to make out on the warranty) but they still honor it. A great deal for those of us who drive a car for many years.
Suggest that you look into Discount Tire which takes a very different approach to their tire warranties. I buy Michelin Rain tires & they are a 44 psi tire which I run at around 40 psi due to FL extremes of temperature. They are a 55k warranted tire which I find, with every 3 oil change FREE lifetime balance & rotations from Discount Tire to be the sweetspot for Michelins to wear beyound the penny test. I run my cars into the 300,000 mile age before switching & I take pretty good care of them. My Kia had a rough middle age, because of a manufacturer’s timing belt that gave way mid drive & destroyed the top of the engine. That, finding out that all the wiring harnesses were brittle & having to replace parts that had suddenly been dumped on the market by Hyundai, has made her late middle age a little more difficult. But I won’t trade her, just keep piecemeal fixing until I can get a 2015 Tesla S or elsewise.
Then I’ll try to sell her to family
Paying cash is key because most (all?) banks/ credit unions won’t issue loans on cars past a certain point. Don’t remember exactly what the cut off is, it probably varies a little.
The smartest thing you’re doing is buying Toyotas; those things just keep going. We have a 1996 4Runner with almost 500,000 miles on it. I’m driving a 2006 Highlander with “only” 170,000 miles on it. Both were bought from my BIL who bought them new and took meticulous care of them. I am going to be hard pressed ever to want to drive anything but a Toyota or Honda.
I own my 2007 tocoma and have 400k on it. Still runs good. I payed it off in 2010. So tell me how much money have I saved not buying a new car. I don’t buy in to the hole “you going to loose money buying a new car”. I you buy it to own it and take care of it you will save a lot more money in the long run by not having a car payment and a high insurance payment. That is my thinking.
I bought my 1997 Honda accord se in 2003 with a little over 123,000 miles (first ever used car) and I’m still driving it with more than 210,000 miles. Best, most reliable, car I’ve had and no major parts replaced, just normal maintenance. Had more trouble with brand-new purchases and none with my used. Have a very reliable mechanic as well (my secret for keeping a car young).
I’ll just state the obvious, buy Toyota’s. When it comes to cars, the simpler the better. Manual transmissions are more reliable than automatic transmissions. Avoid hybrids, CVT transmissions, modern emission controlled diesels, and anything turbocharged. Probably the simplest, most reliable, and easiest to repair car in the world would be a manual transmission Toyota Corolla. Automatic transmissions can be good but you have to do your research.
Recently, two 2007 Toyota Tundras reached one million miles. Both had simple V8’s and the transmissions lasted 800,000 miles. Honda builds the best engines but Toyota has better transmissions, with the overall win going to Toyota for overall quality and reliability. Toyota transmissions are built by Aisin, and excellent transmission builder, Honda chose to build their own transmissions and had many failures especially in their Odyssey’s.
Toyota’s, Honda’s, and Ford trucks, avoid everything else if you value your money.
After VW was forced to buyback my 11′ TDI lemon I purchased a manual 02 Honda accord for $1,500 with 190K miles on it. That off the lot >$30K VW was constantly in the shop and cost me thousands out of pocket. The Honda’s maintenance has been over-covered with the $50/m I set aside for its maintenance. I am now at 228K.
I understand frugality and purchasing used, however. We have mostly bought new and traded the cars in while still low mileage at trade in. Because of this we have always been able to get good trade value and drive a newer car without the fear of breakdowns. We are much older and would not be happy getting stuck somewhere with a breakdown. Yes, I know new cars can breakdown too but just not as likely. We cannot justify the aggravation of old cars with high mileage. We always pay cash, no interest on loans as we do not need to finance. I think when a person gets to the point that they can pay the cash difference, it is much easier to make a deal and drive newer safer cars that will not need maintenance every time you turn around. Also our daughter is an adult now but when we bought her a car it was a one year old car. We did not want to worry that she would get stuck with a breakdown in the middle of an isolated road. I know many will argue against this but peace of mind is worth a lot to us.
Wow, I’ve always been one of the “buy new, drive it into the ground” people because of a childhood of breaking down and being stranded on the side of the road. The charts here have me rethinking that. If you can get it just before the flattening point you really are getting the best of both worlds!
Oh, and I aspire to spreadsheet things as often as you do. I also intend to but somehow never start or never keep up with it as long or thoroughly as I should. This is true for everything from vehicle maintenance to those big household expenses you showed before. Thanks for being a good super nerd example!
I drive a 2005/6 Kia Optima EX which started breaking down spectacularly at 10 years old. But she is my Sapphire Dragonfly & I’m holding out for an off lease long range Tesla S or elsewise since they all can be upgraded.
I’m the only one who bought new, but I bought her online, for cash & only had to pay minimal sales tax plus tags for her & my insurance was also a lot less.
My significant of 15 years, drives a 1996 Mercury Sable
& my step son has been driving a previously 1 owner 1996 Crown Vic & just bought himself a $2000 2010 Lexus from a guy in Miami, getting ready to have it painted & saving his money for the registration next year .
Minor grammatical note: Since only two cars, the Prius is the one owned longer (longest for three or more).
I am currently driving a 2012 Toyota Rav 4 (4wd). I bought it one year ago. The owner of the car lot had used it as his vacation vehicle for when he jetted down to Florida (we live in Kentucky). So, it was six years old when I bought it and had 26,000 miles on it. I paid cash, and even got him to come down a little on the price. Hope to drive it for many years to come. Love Toyotas. My 16-year-old son is learning to drive in my 2009 Toyota Camry. I bought it used in 2012 with the plan to pass it on to him when he started driving. Hope it gets him through high school, college, and beyond!
I inherited the 2003(2004?) Suzuki Wagon R from my mother. Maintenance and repairs incl. TÜV cost me in average 200 Euros/year. If I’d bought a new Suzuki that would be the rate/month for leasing. People who claim that a newer car is much cheaper on maintenance and therefore is more frugal to buy a new car just need to excuse themselves, because they can’t admit to themselves that they want a new car. I mean, you don’t have to excuse yourself for me, it’s not my money, you can make with your money what you want! But don’t lie to me!
Longtime lurker, first time poster.
Thanks for the analysis. It is true you always run the risk of a lemon. My previous car, 2000 Ford Taurus, I got in 2011 with 89,000 miles for $2,000 cash ran me $4,000 of fixes in 18 mos. Then I lost my job in NJ and two and a half months later got a job in So. Florida. I made the best of my bad options and financed a 2006 Nissan Sentra with 62,300 miles in Dec 2012.
My FL job is 74 miles in each direction. At first, there was a sponsored carpool by work. Then one day that went away about the same time all of my co-workers moved to other towns or retired. I put 100,000 miles on that car in 2 1/2 years. I paid her off as quick as I could.
She’s got 218,400 miles, now. I have carpooling buddies again. I budget $1800 a year in maintenance, which is low some years and plenty in others. This year has been one of the ‘expensive’ years with $2,400 in maintenance so far. But it is allllll maintenance – brakes, oil changes, struts, tires, flushes, and a new window motor. I also ‘make a car payment’ every month into a savings account.
The difference between the two used cars. The first one I trusted a friend-of-a-friends-mechanic I purchased the car from. With the Sentra, I took my bulldog of a negotiator little sister to a VW dealer to buy a Nissan (<- they don't like keeping competitors on the lot, likely a trade-in). Next day, my ex-stepfather mechanic gave it the once over.
The only thing I would change on your analysis Mrs. FW is I would buy earlier on the depreciation curve because of the potential mileage I would be forced to drive in a year. I would also like to pay cash for my next car. But, those are all factors that dependent on the person's/families' situation.
Our 21 year old car is a Nissan Sentra. We love it! Our mileage is lower than yours but we have never had a large repair bill.
We owned a Toyota that had a lot more repairs. From our own experience and that of family and friends I’ve found that any car, good brand or mediocre, young, middle-aged, or old can be a lemon.
Mrs. Gardener, I agree. I have just learned to pay as low as you can if you have to finance (cash is always better) and have a mechanic you trust. As for repairs, I suspect if I did not drive her as much she would not need the repairs. Also the two previous years were ‘cheap’ years, I think it was just time for a lot of things.
I think you are right about the 6 year or so sweet spot. My last car I bought was 10 years old, a 2008 Infiniti EX35 that had 175,000 miles on it and only cost $7,000. However if I only drive it to 200,000 miles then I’m paying $7,000 for 25,000 miles of us and depending on the resale it might not be the deal I thought it was. I think going way past the sweet spot may be a bad value too, you’re really making me think about that.
I love the Frugalwoods philosophy for many aspects of my life. However, I am on the opposite end in terms of car purchases. The way I view frugality is to buy new cars with a very high trade in value. For this type of car there is another flat line slope between 30 and 60K miles. Even a car dealer will eagerly offer a premium for this type of trade in. I advised both of my sons to trade in three year-old Subaru Imprezas for newer models. They were impressed with the outcome and enjoy driving their new Imprezas. In this situation, I would advise against a private sale, since the full sales tax on the new car would have to be covered. With a trade-in, only the sales tax difference is charged to the buyer. As a former owner of high mileage cars who was stuck helplessly with many thousand of dollars worth of repairs, I have made a vow to never drive a car with over 100K again. The financial and emotional headaches are not worth it for me. I prefer depreciation of my car instead of time and money spent for tow trucks, loaner cars, and repair shops.
This is such good info!! One other thing for people to consider-I bought a 2013 Nissan Leaf with 10.5k miles on it for a little under $9,500 (and paid all cash). This price for a new 2013 Nissan Leaf is about $29,700. I think this car was so inexpensive because it is a shorter range electric vehicle and it can go about 80 miles on a full charge (depending on if you are driving on a highway, blasting AC, etc.) as opposed to other EVs that can go over 200 miles.
This short range works wonderfully for me because I live in a small city and the furthest I drive is typically 20 miles away, round trip. It can work well in a larger city that has more charging stations. I charge my car at home 1-2x a week by simply plugging it in our outdoor electrical socket when I get home from work and unplugging it in the morning. In our old rental house, I charged it at a free charging stations that was a 5 min walk from our house.
My husband has a regular gas car that his parents gave him in high school, so we use that for road trips. If we didn’t have that car though, we could rent a car for the 1-2 road trips we take a year or we could trade with my parents or a friend for the trip.
All of this to say, a short-range electric vehicle has been an awesome, inexpensive car for our family! Not to mention the environmental benefits.
I bought mine from Carvana.com (an online, used dealership) and had a wonderful experience. Used electric vehicles can be hard to find, and they had a great selection to choose from. They delivered it, which was very helpful for buying a short-range electric vehicle from a few states away. And after they deliver the vehicle, you have a week to test drive it and return it if you don’t like it for any reason! I highly recommend both Carvana and Nissan Leafs. 🙂
Thanks for the info! My husband’s SUV is about to roll 200K miles, so I’m keeping an eye out. I will def be checking out Carvana. In my area it is challenging to find decent used vehicles for sale.
If you look at Cargurus (https://www.cargurus.com/Cars/instantMarketValue.action); you’ll see that, after the first year, most cars depreciate 10% per year. If your used car is worth $20k, that’s $2k; if it’s only worth $2k, then it’s $200. Newer cars, used or not, are always more expensive.
Basically, the idea with buying an older car is that you’re not paying for sex appeal. I invest my money and enjoy my life; that’s all the sex appeal I need. The newer the car, used or not, the more sex appeal the car has, so it’s more expensive and thus more depreciation. If you buy cars at the end of their life over and over, then you’ve never paid for sex appeal. Make sense?
Until my last purchase, I’d never purchased a vehicle newer than 9 years old. Since I drive very few miles (6-8k per year) and don’t care about the sex appeal of my car, this meant that I frequently purchased vehicles that already had 130-150k miles on them. With a good mechanic, you can keep them going for 5-6 years and then repeat the process when the repairs are more expensive than the depreciation on a newer vehicle. Plus you won’t get a lemon; it’s pretty easy to tell the cars that are about to die when they already have 150k miles on them. It’s obvious at that point.
Basically cars are glorified motorized wheelchairs. I never cared to have a particularly sexy wheelchair. Twenty thousand dollars goes a long ways towards a healthy lifestyle for a physique which makes any car look fabulous. Lol.
Great post! I’m almost done paying off a car that I ought brand new & let’s just say I’ll never make that mistake again! These tips are so useful for someone who doesn’t want to spend aka Waste money on a new car lol
I would love to see an analysis on circumstances where the owner is driving significant miles per day. I am personally a proponent of NOT doing that when at all necessary, but in my experience it is not always avoidable. And this is where I see the numbers tend to break down a little less cleanly on high vs low-mileage purchases. I have always followed this advice but after numerous multiple thousand dollar repairs, have been second-guessing myself. Currently attempting to pull together an analysis of our current and previous cars using the above methodology, and hoping to find that it holds up in these cases too!
So in essence if you looking to to buy a used car that has depreciated off its initial 50-60% then buy a 4-6 year old car. Buy an older car its cheaper than a newer one.
I have a 2007 Honda CRY with 140,000 miles. I paid $5000 for. We just bought my daughter 2004 Honda Civic with 94,000 miles for $5000. We found this car salvage place that only accepts Honda with front in back end damage. Engine untouched. They fix them all up, repaint them after we put down $500 deposit. It was ready 6 weeks later. I love the car so much not sure if I can give it to my daughter when she turns 16. Great gas mileage. We have had no maintenance needed. Just oil changes. It is so nice to not have car loans.
A 2002 Monte Carlo, inherited (free) in 2012 with 68K miles. 7 years later, I’m about to roll 90K miles.
I think my favorite car story is the 2006 Hyundai Elantra we bought for $6K circa 2010. I drove it for a few years before totaling it in an accident. The insurance paid out $7,200. Then I started driving the free Monte Carlo. XD
Regarding the AC recharge, after paying to have this done a couple times on my 1999 GMC Sonoma, I researched on YouTube and found how easy it was to do myself with a can of refrigerant for less than $20. I’m not familiar with how it would be done on the Prius, but I got the impression that the process is probably pretty common across vehicles. Just an FYI for people I know are into the DIY.
Amazing timing, my car over heated and i decided to pack it in this morning! I blogged about my choices for a new secondhand car here in Australia. Its not much different but its important to consider also where and how you are using the car.
I have a 2009 New Beetle that I bought in 2017 for $6500 USD. It now has 83k miles or around 133,500 kilometers on it, but I hardly drive it for in town trips as I ride a bicycle to work and for any grocery trips where I can fit my shopping into basket/panniers or a seat post mounted trailer. Our major repair recently was the AC compressor – we get temps anywhere up to 41C (106F) in summer. Another consideration depending on where you live is emissions testing/repairs. My brother in law recently got the catalytic converter stolen out of his Prius and it would almost cost more than the car is worth to get a new converter – around $2000-$2500
I have a 2017 Toyota Yaris and have put 73, 000 miles on my car as of October, 2019 (exctly two years.) I drive two hours a day120 miles round trip for work. There is no cell phone service and I am in a very remote area for three/fourths of those miles. I was probably stupid, but I paid cash, a little under $17,000 for the car new including tax, and I hope it lasts me until 300,000 miles, or at a minimum 200,000 miles. I take very good care of it. It was not the financially wisest choice, but it has given me peace of mind because it is so new.
Peace of mind is worth a lot in my opinion! And kudos to you for paying cash…
I would agree with everything you said, except for one thing. Taking your graph for example, when you bought your 2010 Prius in 2016, extrapolating the curve (I mean the very scientific “take your finger and draw out your best guess at the curve in the future based on what it’s done so far” extrapolation), there was no indication at the time that the depreciation had started to flatten out yet. The 2017-2018 data shows that this did indeed happen, but based on your graph, this was just a hunch. Did you have other data – like maybe the typical depreciation curve on earlier Prius’s that had already flatlined – to support your guess that your 2010 was about to flatline?
While buying used can be a frugal, good investment, I buy new. Drove my last car 15 years/250K (and we get all flavors of winter weather – snow and ice). I pay cash when buying new. I buy exactly what I want – no more, no less. I continue banking the “payment” to myself. I tell my kids that if you finance, payment of no more than $300 for three years. Since that is the amount of my “payment”, I have plenty left over after I purchased this vehicle. I’ve not had a car payment since the mid-80s.
Great article. I agree with the whole idea of not buying a used car with low-mileage. I made the mistake of buying an SUV with only 12K miles. I thought it was a sweet deal, but then it turned out to be a lemon and was the worst vehicle I’ve ever had. I ended up spending 5K on repairs within 2 years and I felt that I was swindled. I’ve also owned a Toyota and Honda with well over 100K miles and spent less on repairs compared to the 2-year old SUV.
Glad your prius has been cheap to keep up. Our 2010 prius needed a new main battery which the dealer wanted 4K for but I was able to find online replacement for 2K thru greenbean.
Ah, a hail damaged used Prius: My literal dream car!!! (Not sarcasm, this is the car I want!)
Wow, your first rear brake job lasted 1 1/2 years and 15k miles. There is nothing frugal about that. As an auto tech for 45+ years, either those first pads were poor quality, or the rotors should have been replaced to the first time, or the workmanship was deficient.
Similar car repairs are double to triple in my area. Yes, I buy the parts and a friend works me in at his shop. I’m forwarding this to my daughter and family as they are looking to buy a new to them vehicle soon with the 3rd baby arriving in January and no room for a 3rd car seat in their current car.
Yes , I understand about saving money and all but I did buy my Corolla in 1996 brand new and I am still driving it today at 456739 miles later, never replaced a motor, still the OEM motor and trans , how could buying my car new be bad?
I understand some makes do last longer with regular maintenance but new car cant be all that bad.
So we have one car my grandparents bought off the lot- 1992 Honda accord-that has been through 3 generations and has close to 200k miles and haven’t even replaced the clutch yet. That was a good purchase. It’s the “kid’s car” now. It actually provides a neat connection to their great grandpa, who babied that car.
We have a 1996 Toyota Tacoma we bought in 2017 with 160k and it was babied by one owner. Of course it runs like a champ and we have done maybe $800 in repairs. Due to inflation, if we needed to sell it today, we would actually be able to sell it for more than we paid for it.
And we have a 2005 Honda Pilot we bought in 2011 with 139k miles and as of now, almost 2020, we are up to 265k. It also was a one owner car who had meticulous maintenance records. It has been our family car and we drive ALOT between town, road trips, and my real estate business. We thought the tranny was going about 20k miles ago so we did a slow drain and a shudder fix additive and it’s been perfect. In 9 years we’ve probably only put $2500 of actual repairs into this beast. I drive it on long 1500 mile+ road trips a few times a year without any worries.
Even though the accord 1992 off the lot purchase has been amazing, due to all the new technology changing so fast, I would not trust a new 2020 accord to last for almost 30 years. So
we support the “buy high miles at the sweet spot” theory. However, the interior/exterior of our Pilot have taken a beating. I drive so much for work and need to occasionally drive clients, so I’m in the market for a more fuel efficient, older but pristine Honda or Toyota. Since it will be for business use, I’m tempted to get a lower mileage newer car (like a 2016), but I don’t trust all the new transmission systems will last like we are used to. And dang, that 6-7 year sweet spot is a real thing, and I’m tempted to just buy a 2013 something with over 100k again. Can’t quite wrap my head around paying $20k of my hard earned cash for a 2017 car when I can pay $13k for a 2013 model – albeit with twice the miles.
So, we will keep the pilot for the family skiing, camping, and hauling car… Plus now it’s fun to see how many miles we can put on it. But it’s not fun to pay for gas as a daily driver now that I don’t need a 3rd row, and it’s not fun to have clients in it. I still haven’t decided, but I appreciate this article to support all the reasons to buy an older, higher mile, pristine car. Thanks for reminding me to stick to the older car plan and saving me several thousand!
I’m running a VW Passat 2000 year, now with 170,000 miles at almost 20 years. Bought for £3,000 with 75,000 miles when it was 7 years old. £16,000 spent on maintenance, of which £10,000 for repairs………why do I still own it paying for that many repairs?…….fuel costs and experience from other cars, I run it on LPG (Propane)
Two previous cars cost 40 pence or 45 pence per mile.
My Passat is now on 37 pence per mile, for everything, and current value in the UK, £500, therefore no depreciation at all, current estimate about 30 years of life left in the engine before major overhaul as I do about 6,000 to 7,000 miles per year.
The cost per mile has actually dropped in the last 3-4 years from 40 pence per mile.
Yes I record all my car costs as well, it’s the only way you can see what mistakes you make on maintenance costs. It was about 50 to 60 pence per mile when I bought the car at 7 years old and 75,000 miles for 4 years or so.
e.g. If you have a CV boot fail, change the CV joint at the same time, and always use the manufacturers CV boot, never an after-market product……why? CV joints fail about 2 years after the CV boot has failed before, and the after-market CV boots fail within 2-3 years….waste of money.
Always use fully synthetic oil, no matter what the manufacturer recommends, don’t use semi-synthetic, and change the oil between 8,000 to 10,000 miles or 2 years if you are not doing the mileage.
But why does it cost so much?……..you’re getting stung by manufacturers for high mark-up on parts for repairs, but since the advent of ebay, can now source many parts at 20-30% of the price, and service parts are dirt cheap, e.g. brake pads/filters.
Yes I have spent £2,500 on the engine (two different events) and probably £1,000 on the brakes (rear caliper seized), £1,000 on front suspension rebuild – VWs are complicated machines
So, I agree entirely with Mrs Frugalwoods, buy a reliable secondhand (used) car that has been maintained well by the previous owner, but try to avoid multi-owner cars because someone has usually abused it by not doing oil changes.
And the dreaded RUST?……None yet apart from stonechips on the bonnet.
My MIL died last year at age 88. In her garage we found a cream puff 1999 Ford Explorer with 20K miles. She had ordered it new with luggage rack, running boards, tow package, 4 wheel drive and Michilen tires. She evidently hadn’t driven it for 2 years as the license plate was expired and the battery dead. We had it flat bedded back home and had the old gas drained, gas tank flushed, oil and batteries changed…just completely tuned up for $ 1500.00. We are delighted and we expect it to last us another 20 years!
I really enjoy reading your blog, and I do agree with the majority of the content in this article, but the heading “Low Mileage Used Cars Are a Bad Deal” isn’t actually supported by any data listed in your article. All your data supports the conclusion that used cars depreciate less with age, so buying an “old” used car is a better financial decision than buying a “young” one. The mileage of a car, however, is an independent variable that is not directly correlated with vehicle age.
A 10-year old Honda Civic driven infrequently with only 80,000 miles on it can often be purchased by a savvy car purchaser for the exact same price as a 10-year old Honda Civic with 160,000 miles on it.
I would contend that when a vehicle reaches a certain age the “sweet spot” is often the lowest mileage version you can get because the mileage has such a minimal effect on the price.
Case in point, I bought a 1994 Toyota Tercel 5 years ago for $400. It only had 105,000 miles on the odometer which is very low for a 20-year-old car. I don’t think that I could have found a cheaper version even if it had three times the mileage!
Note: I’ve since put about 25,000 miles on the car with very minimal maintenance costs aside from regular oil changes. Also, another financial bonus with older small cars is 13-inch wheels. A brand new set of four tires is less than $150!
At any rate, I’m enjoying reading your blog and if you find some data that combines both vehicle mileage and vehicle age as it relates to the price I would be interested to read a revised post.
I agree with Tyson’s criticism. None of the charts to date points show depreciate compared to mileage. Age is only a proxy for mileage. I think the general points of the article stand, but it would be nice to see mileage specifically addressed.
I know the general rule is that after 5 years almost every vehicle flat-lines in depreciation. Plus, as you said many cars are capable of lasting longer than many new cars. In fact, I have heard that many of the newer cars will be in the junkyard while the older cars will still be running smoothly (they don’t make them like they used to).
I also like the concept of trying auctions. There are risks, but government fleet vehicles tend to be well maintained.
I drive a 1995 GM Sierra, which I purchased in 2009 with only 32,000 kilometres on it. Still have it in 2020, only 145,000 kilometres. Better than new.
I am having a hard time working the cargurus website. How do you find the cost trend line for a specific car? Hopefully some of you guys could help me out. New to your website! Great stuff!
Why did your rear brake pads need to be replaced with less than 15K miles?
Hey! Newbie here. I love the posts and tips on this page! They are helpful especially being a college nursing student! *Broke nursing student.
It’s hard getting to and from clinics considering I have no vehicle and such a demanding life right now with this. I plan to push forward and try my very hardest to get to my classes and clinicals it’s just hard with no vehicle and relying on someone else because you all know how fustrating that can be. Unfortunately, struggling is a part of life and we all go through it at some point. It does suck especially when most of the college students get help from their parents. Unfortunately my mom is disabled and father is deceased 😭💔 I’ve tried my hardest to get ahead and get a vehicle but there’s always something that happens whether it be a bill that is past due, nursing books that are 800+ dollars and financial aid only covered tuition so books were on me. Ya know the things in life that unfortunately happen to all of us. No use complaining it will pay off one day right? When I finish college hopefully. Ahh the struggles of life, can anyone help? Point me in the direction of help? I tried taking loans but I’ve done that for school so my credit is shit, and debt I’m already in is overwhelming. Not sure if this is the place for this and if not I sincerely apologise for it. Stay safe, and bless you all.
Alicia, I was in a similar situation in 2009-2011, I was a BROKE state university student working part time and needed a more reliable car for commuting since my 1996 Ford Taurus was about to go out (over 4 years, I replaced the fuel pump, radiator 2x and the transmission had to be rebuilt in 2009) After the transmission I knew I needed a more reliable car for commuting but didn’t have much money. It was so hard and I struggled tremendously, but I managed to save up cash for a couple of years and at the end of 2011, I bought a 2002 Kia Optima with 96k miles for $4,000 in cash. It had minor cosmetic and the only big repair was replacing the alternator for a a couple hundred dollars, but overall it helped get me from point A to B. I drove it til I could afford a better car in 2015 and then passes it on to my dad. He still drives that car today and it’s never really given him major issues. But for peace of mind we have AAA in case of a break down. Hang in there. Life is hard sometimes, but remember everything is temporary.
You are a wonderful writer. Not often you read such an entertaining well written piece about cars. Also informative. Thank you.
Hi! I loved this sharing. I am a college student and I’m in the process of searching for a used car but don’t know where to start. I’m specifically looking for a Prius and I see that you have experience with this car so I was wondering if you could help me with some advice. Thank you!
We’ve had new cars mostly since 1992. Small Mazda’s you wouldn’t get in the USA, which I did 190,000km in 11 years. Then a couple new VW Golfs and my 2011 VW Polo (not sure you get Polos in the USA) which has only done 50,000 miles. With 1 service a year, nice to drive with 4 cylinder turbo engines, they still feel new. There’s no way I’m going back to secondhand cars or cars with high mileages. Yes I’d love an exotic or a Golf GTI but get around this by renting one from Hertz every now and then. Australia we have low speed limits, 40/50/60km/hr in metro areas and 100/110km/hr on highways (65mph), all heavily policed.
Can someone enlighten me on the age of covid? The used car prices seem to be higher these days. Is it the same ethics, but you’re paying more?
This all makes sense, if:
A) you’re a student
B) you’re on a very low budget
C) to you a car is just a box on wheels for the sole purpose of getting you from A to B to do the weekly shopping and take the kids to the park
If you’re in the above categories this is great advice
If, like me, you spend a lot of time in your car and want want the latest technology and safety features, then this doesn’t really apply. Sure I know I can buy a 15 year old car with 150,000 miles on it and save money, but is it going to be as fun or as safe to drive as a new car? Hell no! Sometimes you get what you pay for, and sometimes if you can afford it it’s good to have some fun once in a while. You can save money when you’re dead 🙂
Hmm. But as most accidents are driver error, am I significantly safer in a new unfamiliar vehicle or a slightly one (slightly older – not something 15 years old if you look at what the writer of this blog is proposing) I really know well? I’m saying I know the answer to this question, it’s just something I have mulled over several times.
I’m not sure that fun and safe always go together in a car, but then I suppose it depends on your tastes in vehicles. Obviously if you spend a lot of time in your car then a modern vehicle may be the way forward if that is what you feel most comfortable driving. But I think if your idea of fun is driving a new car then this article wasn’t written for you in the first place as it seems to be written for someone in A B or C who would rather save the money and do something else with it.
Sometimes, a car, new or used will have a small sensor that will cause a check engine light to come on, no problem, just a small part located under the hood, that only takes about 30 min. To replace, at only about $500.00, not including labor cost. Just thought I’d let everyone know, nice article overall, and thanks.
I bought my van for £1000 8 years ago. It was probably worth £1500 but well overdue some maintenance so I had to do some work to it immediately. I had 6 years and around 20,000 miles use out of it with two breakdowns (new alternator and new coil spring required) and I have done basic maintenance (oil and filter changes and a new battery etc.) in that time – nothing expensive. It has sat for the last two years unused through no fault of its own and I can’t be certain that it will go back on the road (though I expect it will). I could probably still sell it for £800 assuming it still runs and passes an MOT test, but I’d rather hang onto it so long as I can keep it running. It’s now 17 years old.
Sorry, I’m not sure how to ask a question. But there is a 2012 Toyota Touring Car with only 17,500 KM s on it. The dealer said the people had a second car, what could be going wrong with this Unicorn? Thank you jacqueline of New Zealand
So I’m just going to say what I say when my parents gave me the drill about financing having an older car versus a newer car and I tried to do the whole you know I need a reliable car and they gave me their speech what it really boils down to and was most people don’t want to say is that they just want a new car with the gadgets in the gizmos in the modern day workings in new cars versus waiting until someone else is used all those things well before they get to them at least that’s my response I want it today I don’t want to wait. And I know that’s a change in generations from older ones to mind to younger ones. Im in my 50s now. But with touch screens and theater lighting and displays that are better than TVs who wants to wait until that stuff catches up and I buy it in a car that reaches The Sweet spot and once again there’s even better and newer technology that I’m still missing out on. I don’t have children so I was able to redirect my discretionary income in ways that families may not be able to and lose that would probably be or make more sense for them as you have stated just not as fun.
Actually, the 2010 Tacoma I priced on insurance was $550 more per year to insure than the brand new 2022 Tacoma insurance. The reason the insurance company gave me was “safety features” for a lower insurance cost. This was surprising to me because I assumed what you had assumed, which was that older cars would be cheaper to insure.