I?ve read the arguments supporting buying a brand-new car. I?ll admit that there are times when that is the better choice. Certainly if you have a very long daily commute, or live in an area with a particularly hostile climate, a new car will be the better choice over a used one. But in most other situations I think that a decent $5,000 used car is better than having a brand-new one.
If you doubt it, think about some of the following?
No monthly car payment
Most households these days are carrying more than enough debt. The existence ? or absence ? of a monthly car payment could mean the difference between a comfortable life and living on the financial edge. My own thought is that if you have the option to buy a car without going into debt, that?s the choice you should take.
But going into debt to buy a car isn?t just about having or not having a monthly payment. Since a car is a strategic asset ? most people need it in order to earn a living – you could be putting your self in jeopardy if you owe money on it. If you lose your job, and are unable to make the monthly payment, you could lose the car ? and your ability to find a new job.
Lower auto insurance and ad valorem taxes
The more valuable your car is ? and newer cars are much more valuable than old ones ? the higher your auto insurance and ad valorem taxes will be. A new car is required to have collision coverage, and ad valorem taxes are a percentage levied based on the value of your car. Having a brand-new car could mean that you will pay hundreds, or even thousands, extra each year that you own the car.
By owning an older car, you keep both of these expenses to a minimum – in fact, you probably won’t even need collision coverage at all.
Less of target for thieves and vandals
It?s a fact that new cars are more attractive targets for car thieves than older cars. This is at least part of the reason why car insurance on new cars is higher than what it is on old ones. The risk of theft is substantially greater.
Newer cars also present more attractive targets for vandals. What right thinking vandal can resist the opportunity to key scratch a brand-new car? It?s just more exciting than if you were to do the same thing on older car. And that?s to say nothing of having hubcaps or even wheels stolen, to be sold down the road as replacement parts.
When you drive an older car you just don?t have those concerns, at least not the way you would with a new car.
Repair it your way
A routine repair on a car these days easily runs between $500 in $1,000. And if it is the least bit complicated, it will soar well past $1,000. If you have a late model car, you are virtually compelled to make these repairs. Worse, you are largely dependent on the dealer for the repairs, especially if the car is leased. And any other repairs you might make have to be done at top quality shops. After all, you?re not just fixing it – you?re trying to maintain the value of the car.
If you have a $5,000 used car, your biggest concern repair-wise is the functionality of the car, not the value. That opens up a whole lot of repair options you don?t have with a newer car.
Do your own repair work. Late-model cars are more computer sensitive, and you need to be more concerned about making a mistake that might cause other problems. But with an older car DIY repairs are always an option. This can save you thousands of dollars on repair work.
Hire a backyard mechanic. If you?re not comfortable or skilled enough to do your own repair work, you might even locate good ?backyard mechanic? who can do them for you. He may not be able to do deep engine work, but he?ll probably be able to do everything else. This can save you a small fortune over full shop mechanic rates. You would probably never use such a person to fix your late-model car, but on a $5,000 used car you can do whatever you want.
Using second hand parts. One of the biggest ways to save money on repairs is by buying used or rebuilt replacement parts. There is an excellent website that I use myself called Car-part.com. It?s a network of used car part suppliers, that will enable you have the widest selection of parts at the lowest possible prices. You can have the parts shipped to your home, so you don?t have to do a lot of legwork in order to get what you need. If you can use these in combination with doing your own repair work, or using the services of a backyard mechanic, you can easily cut a $1,000 repair bill down to something like $300. I know – I?ve done it, several times.
Opt not to fix some things. We have a van that?s 16 years old. The ABS warning light went on about 4-5 years ago. We checked it out with a couple of mechanics who said that it would be expensive to repair even though it was not a threatening situation. Since the van was already over 10 years old at the time, we chose not to fix it. You would never do that with a much newer car.
By the way – the van is still running, and the ABS light is still on! But that?s one of the perks of driving an older car.
From a financial standpoint, I?d much rather have a $5,000 used car than a brand new one – I don?t think the comparison is even close. Do you agree?
I have beeou on both sides of the dilemma (new versus old) and this is my opinion as to what fits for you. First like mentioned in the article check your budget as to what will fit into it cost wise. Not just the monthly payment,especially if you have to finance the car (used or new). Then add in the insurance cost which will be effected especially by the area in which you live (e.g.in my area doesn’t matter how good of a driver you are and I have an excellent record,the cost is higher matter who you go to for insurance) Okay you can cut the monthly payment of car by paying full cost of car all at once..Once you have decided you can swing the costar the monthly expense, you need to figure out the long range costs just to maintain the car. Figure at least another $5000 at minimum plus gas and transportation costs (tolls,etc). After doing that shop for a car, whether new or old. A newer one will save you on major expense on the first 2 years but a good researched used will also do the same. You also need to figure out how you are using the car especially if you are doing more than local travel. Any long range daily commute will put wear and tear on car and lower any covered maintainence by lowering the time factor. We all need to work to cover our costs but not by straining our budgets. The other option, less used is figuring out cost of using public transportation versus cost listed above, if area has a good reliable public transportation. Yes the commute will be longer but the cost may be much cheaper in the long run while you get yourself into a better money budget.
Hi Maria – I agree with all that you’ve written. You really do have to start by carefully – and objectively – analyzing your financial situation. Distance commuting has to be considered, because if its a long trip, you may be repairing a used car more often than you know. Are you thinking of $5,000 per year for repairs and maintenance? Based on my history, that’s incredibly high. In most years it’s been below $1,000 per car. But then we buy our own parts and use backyard mechanics for the most part.
I’m also with you on public transportation, but in most of the US it isn’t an option. Even where it’s available it’s often very limited. For example, Atlanta has the MARTA system, but it doesn’t go to most of the places people need to go, and you first have to drive to a station. Also, I grew up in the NY metropolitan area, in a bedroom community with an NYC rail line and two stations, and it was more than obvious that public transportation usage has declined, even where it’s readily available. Since the early 1970s rail traffic has collapsed. I often wonder what keeps the railroads afloat, since no one seems to use them.
Glad to know that I’ve sparked an interest in considering public transportation as a means to get to work. I feel the main reason that it has not been considered is the reliance of freedom that a car gives one. It has resulted in lower use by those who could use the rails especially since all the amenities of former grandeur rail travel have basically disappeared but it can be made better if more use by commuters and less emphasis on profit making by owners. More following the adage of you need to spend money to make money not spend less to make a higher profit. Everyone wants instant gratification, I was forced to use public transportation as the most economical way to travel to work with my budget because of job cutbacks. and I learned to make it work despite to longer time involved. I found out how to communicate to the site for the transportation I used and with determination I achieved better timing because they became aware of problems in route that the conductors would not mention using the excuse the cameras tell the story. No one is looking at those cameras unless needed. I would be the one to point out potential problems that most people ignore and got results. (If you see something say something rule)
I think you’ve also hit on the fact that commuter rail has gotten stale. They want to do things the way they’ve been done for decades, and not make changes. A lot of that is the mindset of the rail workers, who tend to have that “union mentality” (doing the least for the most amount of money). And of course you have management that wants to just collect fees without doing anything to improve the system.
What’s surprised me is that people have continued to commute via auto even though traffic has gotten worse, and commuter times are longer than ever. You’d think that people would have had enough. But it seems like the independence that cars provide is insurmountable. It’s fascinating – and more than a little bit disturbing – to me that so many people will value convenience above all else.
That said, there are indications that the Millennial generation is moving back to the cities, in part to avoid both car usage and the expense of keeping a car. We have to hope it will be an enduring trend. My sense is that the more popular pubic transportation becomes, the more attention and improvement it will get. But who knows? We live in a time where so little makes sense.