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?