Anyone who knows me knows I love my car. No, it’s not some fancy, sporty European coupe or a rock-climbing, off-roading, adventure-seeking vehicle. It’s not new, it has zero special features, and it doesn’t have leather seats. It’s just a plain ol’ Mazda sedan – a Mazda3 to be exact – that is one grade above the factory base model. In other words, it came with power locks and windows but that’s about it.
So why I do I love this little car so much? It’s obviously not any kind of status symbol, but it gets me where I need to go safely and reliably. It’s not a luxury car, but it’s not cramped and sits up to five people comfortably. More importantly, it will go 400 miles on one tank of gas that costs me about $35. And it was relatively cheap – $14,000 brand new off the lot – and it’s never given me any problems.
Most of all, I love this car because it’s paid off and all mine. I’ll be driving it until the wheels fall off, no matter how beat up it gets or aged it becomes.
You should feel the same way about your vehicle, and plan to keep your older car if you have one. From a financial standpoint, it’s a no brainer to keep your older car. Looks aren’t everything and the longer you hang on to one car, the more your bank account will thank you. Remember, function is far more important than driving your money around or having something flashy waiting for you in the parking lot.
So keep your older car until it just won’t run anymore. After all, the main purpose of our vehicles is to get us from point A to point B when the distance is too far to walk or bike (or if we don’t have to time to utilize these slower means of transportation, or are hauling a lot of stuff – you get the idea). The purpose is not to show off or to prove something about your self-worth to others.
Not totally convinced that your older car is saving you some money? Then consider the costs of buying something newer:
- New car = new car payment. Too bad your new car is taking up a huge chunk of money every month that could be going toward debt repayment, savings, or investments.
- Speaking of investments, cars are one of the worst. The second you drive your new (or even new-to-you) vehicle off the lot, it immediately depreciates by hundreds, even thousands of dollars that you won’t get back when you want to sell or trade up in another two years for something else new.
- Cars are assets that are risky in every sense of the word: not only do they depreciate at an astonishing rate, but thanks to people who don’t pay attention or make poor driving decisions, they are also likely to get dinged, scratched, or ran into every single time they move out of the driveway (and sometimes, even in the driveway).
- Expect your insurance to go up. Car insurance will be more on a newer vehicle than on an older car, but that shouldn’t stop you from comparing car insurance quotes to find cheap rates.
- Your taxes/renewal fees are going up, as well.
All those expenses add up to a huge cost that doesn’t make sense. The newer the cars, and the more frequently you get yourself a newer car, the more money your vehicles are going to eat through. If you’re convinced the smart money move is hanging on to your used vehicle, the next step is making sure you can do that for as long as possible. Implement these tips to keep your car running for years to come:
Track All Your Accounts With Personal Capital
Personal Capital lets you see all of your accounts in one convenient place. Sign up now for free.- Pay attention to the little things and adhere to regular maintenance schedules. Get your oil changes every 3,000 to 6,000 miles (depending on your car – check your owner’s manual) and be sure to check fluids.
- Even if it’s old and already a little beat up, treat your car to a wash on a regular basis. Cars pick up a lot of abrasive crud from the road; keeping things nice and clean will help paint and parts last longer.
- Drive as little as possible. The less driving, the less wear and tear (and the less you’ll spend on gas). You’ll also lessen your chances of getting tangled in an accident.
- In cold weather, allow your car to warm up to operating temperature, ideally before taking off – if that’s not possible, try to take care and drive slowly until the temperature heats up.
- On that note, try avoiding driving like a bat out of hell by smashing the gas and taking off like a rocket every time you accelerate. Jackrabbit accelerations are hard on car engines.
When your old car can get you around in a reliable and safe manner, why trade up for something that will function in the same fundamental way as what you already have? Do your finances a favor and keep your older car for as long as you possibly can – and enjoy all that money you’ll keep in your bank account, too.
I couldn’t agree more with you. Keeping your old car until it can’t serve you anymore is the best way you can save money because you’ll not be buying a new car.
Yup, the savings (especially over time) are significant. Especially considering how easy it is to damage a new car, via minor things like dings, scratches, or spilling your soda on the seat, and more major mishaps like accidents or something like hail damage.
Yes, and I would add that you might want to save some of the money that you would normally use to pay for a new car and that way when you want to buy a new used car you have the money that you can pay for it in cash. In five or even 10 years you would have enough money to either invest or either buy a brand-new car cash.
For instance if you only took $200 that you would normally be forced to give the bank and put it in the bank and had zero interest coming back on it you would still have $12,000 after 60 months which is what average length people pay for their brand-new cars.
Great idea, Roberto! Keeping your older car and then pretending you still have a car payment by “paying yourself” and adding a certain amount to savings is a GREAT way to plan for the day when you will eventually have to buy a newer vehicle. With this approach, I’d definitely stash the cash in a high-yield savings account or an invested savings account so you can benefit from bigger returns and the magic of compound interest while your older car is functioning fine. When you need something newer, you’ll not only have a great amount saved, but you’ll have put that money to work for you to make MORE money too 🙂
I’ve been doing this and sometimes I have to take money out to pay for repairs on my old car, which is of great headache reliever since I don’t have to worry if I have enough emergency funds to pay for new tires, new muffler, etc.
I recently bought a new car after buying used in the past and there is something to be said for having something new and not having to worry about maintenance, at least for a few years. I drive a 2007 Hyundai Elantra with almost 90,000 miles on it, and while it runs fine, I worry about it needing serious maintenance in the next few years. It stresses me out way more than our 3 week only 2014 Toyota Camry.
My Mazda is also a 2007 with about 95k miles on it. I’m not too concerned about it because A. it’s never even so much as hiccuped before and B. I take care of regular maintenance on it. If you regularly change the oil, that’s the biggest factor in keeping your car running for a long, long time without issues.
I don’t think you have to worry about maintenance on used cars, as long as you do your research and choose a car that has been proven to be reliable. If my car died tomorrow, I’d be looking for a 2005-2007 Madza to replace it – I trust those far more than the newer ones, simply because I haven’t researched how newer models perform and I know how older ones do (and how incredibly reliable they are).
I think it was back in ’07 or ’08 – somewhere around there – where new Ford trucks ended up having serious issues right away. We had friends who had to have the engine replaced after about a year of owning their truck. This compared to my parent’s 2004 Ford that has not had a serious problem.
Long story short, I don’t believe “brand new” is necessarily always superior over “used but well cared for”! I would still argue for buying pre-owned over brand-new. The markup and depreciation is just too much for me to swallow (and that’s just a personal thing!)
We bought the new Camry for effectively $17,000 (wrote about this on Monday). That was only a few thousand more than buying used, and assuming we keep it for 7 years and sell it for $10,000 (the price of 7 year old Camrys now), we’ll pay just $1,000/year for the car, which seems like a great deal.
With an older car, you might end up paying more per year to own the car since the maintenance costs (and one issue could be very costly) could be higher.
Many cars need serious maintenance around 90-100K. I went through it with my 2001 Toyota Solara and with my sister’s HHR too. The upside is once you spend 1-2K (usually the timing belt/chain needs to be replaced which can be 600-1000), you are good for another several years.
I looked at it as ‘buying’ another 3-4 years of standard maintenance coupled with reliability. Far cheaper than buying another car over the mid-term.
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One point missed in the article was that if you’re not using the car for a lot of driving you can request a reduced rate on your insurance. Mine is discounted because I travel 100% for work, and don’t use my car to drive to the airport.
I am a big proponent of driving our cars into the ground. My previous vehicle was a little Toyota pickup that had 265k miles when it could no longer pass the smog test. The one thing you mentioned about buying a new car that kind of grated on me was the premise that a person would take out a loan to buy a car. Here’s an idea, how about saving for a new car ahead of time. I have never bought a vehicle on credit. Not everyone does. I think people have been somewhat brainwashed into thinking that new cars go hand-in-hand with a car loan. The auto-finance companies thank you for extending this myth.
Sorry Bryce, I never meant to imply that taking out a loan was the only way to buy a car. Personally, I don’t plan on buying a brand new car in the future (new to me is good enough!) and I’m certainly not planning on taking out a loan to finance it. I only meant to point out that most people do take out a car loan – and some folks do not have the income or savings to immediately pay in cash for a reliable preowned car (think college students or grads fresh out of school and fresh into their careers). Therefore, for the majority of people, buying a new car means picking up a new car payment. This is certainly true of people who trade up to brand new cars every two years.
The point here was that you could keep your older car that has no payment, or blow your money on a car loan – and between the two of those factors, the solution was obviously the one that would save you money.
I actually had a separate post in mind for the future about the importance of buying used versus new – and avoiding loans/monthly payments was one of the reasons 🙂
Sorry if I came across a bit gruff. There are very few valid reasons, though, that I can think of for getting a car loan. People fresh out of college with not much money should buy and own a beater. That’s what I did in high school. I bought my little Toyota truck when I graduated college as a graduation gift to myself with $6,000 that I saved while I was in the military and in college. I had the GI Bill and I worked during college to pay for college, so I didn’t have to use my parent’s largess or loans to get my degree. There are ways to go through life without taking on debt. Yes, I did have a mortgage for my house, but my wife and I paid that off in 9 years.
Our van will be turning 15 years old next month! It’s been an embarrassment for our children for quite some time now, but I grow prouder of it with every passing year. Thanks for reminding me of how much we’re saving by not giving into the societal norm of buying something new and shiny. We’ll drive this van until it drives no more. Here’s hoping that’s another 15 years!
Whoo! Go you! I love it – I feel the same way about my car, too. The older it gets the more proud I am that it’s still running good as new and that it’s not eating up quite as much money as it could be 😉
Kali, you are preaching to the choir. My wife wants a new car and ready for this, she wants to lease it. Sacrilege at its highest level. I cannot fight here as we are getting older and she wants what she wants. A part of me cannot blame her but the part of me that agrees with your post 110% is scared. Anyway, it is what is so we are doing a 39 month lease. Yuck!
My spouse and i couldn’t concur far more together with you. Trying to keep the old car until finally it can’t last nowadays is the better technique you possibly can reduce costs mainly because you’ll not necessarily always be buying a completely new car..
Some assume it cost less to insure a new car for safety reasons, however if you run the numbers of you can find it will cost less to keep your old car. I like this: “Speaking of investments, cars are one of the worst”, actually cars are not a money investment at all. Look at the cost of a vehicle, 99 percent will never get a return on their money, therefore it could not be called an investment. Look at the amount of income people pay for car payments, repairs, insurance, fuel, etc. Add up the amount of expenses over ten years and it is a substantial amount of income.
Hi, It seems good. I have seen many people they don’t keep their older car. They are always found in changing from one to another and i own a car that is of my father! haha!
I`m planning to buy a new car for quite some time now. But you outline some interesting ideas here. It`s maybe best to keep the old car for many reasons, if you think about it.