Save Money – Drive a Used Vehicle

Do you buy new or used?

When our 2001 mini-van recently rolled over 130,000 miles, I decided to ask my Facebook Fans if I was the only “weirdo” happy to drive an older, high-mileage, paid for vehicle.  Turns out… I’ve got company! ;)  A few commenters {ahem} even insinuated that my van was “practically new.”  Ha!

I’m fully convinced that one easy way to save big money is to purchase used vehicles (with cash) and drive them as long as possible.

It’s widely-known that new vehicles depreciate as soon as they are driven out of the dealer’s lot.  A vehicle is said to be one of the worst investments one can make, because it’s impossible to get out of it what you pay for it.  And for those who get a 5-year loan on a new car?  Yowsa!  Might as well be tossing hundreds out the window as you drive.

Even if you don’t make payments, even if you pay for your brand-new auto with cash, consider the following expenses:

  • Insurance – less expensive on an older, conservative vehicle
  • Tags – cheaper as the vehicle ages
  • Taxes – also less expensive on older vehicles

The only thing that might cost you with a used vehicle is maintenance.  I know many a disgruntled “new car” owner though, whose pockets are empty because “they don’t make ‘em like they used to.”  Point being… used or new, no vehicle is going to cost nothing extra in its life-span.

A recent article from Parenting magazine shed some average numbers on what my husband and I have experienced.

For most of us, making a decision between new and used entails juggling quality-of-life desires against how much cash we want to spend.  A new car will have higher up-front costs, depreciates more quickly, and costs more to insure.  A used car can be purchased outright (or for a smaller loan), will depreciate slowly, will cost less to insure, and will probably have higher maintenance and repair costs.

After all is said and done, a new car generally costs an extra $1,800 per year.

(source:  Parenting magazine, April 2010, author – MP Dunleavey, financial expert)

$1,800 more per year to have a new car.  Seriously. That savings alone would net you enough cash to purchase a different vehicle in just a few short years!

How much is that new car smell worth to you?

Another good read:  Keep Your Old Clunker, or Buy a New Car?

Linked to Frugal Friday.

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Comments

  1. I’m a HUGE fan of buying used cars and keeping them until the wheels fall off. Not sure why I’ve never really been interested in them (houses are another story). So, the new car smell isn’t worth much to me at all! Of course, you can buy that in a bottle for about $1.50 so I guess that’d be all it’s worth to me : )

  2. Ha! My 2002 van is about to hit the 100,000 mark this weekend! Bessie has been a blessing to us! We bought her used, and will drive her till she can’t run any more! We’ve even test driven brand new, thinking it was time for a trade, but, we always drive away…can’t do it. I so DO NOT want, or need, a car payment right now!! And the new ones don’t even compare!! (BTW… Children affectionately named her Bessie after ‘Ol Bessie, the paver, from Cars??!!)

  3. I agree with the people that said that is “like new” My car is a 2002 Toyota Highlander and it is the first time I have ever owned a car under 10 years old. My husbands car is a 2000, and it ran into some trouble recently, but I just blogged about how we ended up getting it fixed for $5.00, so I am definitely a believer of buying used!

  4. My car is 10 years old with 149k miles. I love my car. I love that I drive it and it does not drive me … meaning being car poor. Watching our other dreams grow is so much better than a newer car. Another thing I notice is that when you drive a newer car – people assume you make more money and expect you to spend more on everything – so to look frugal people will treat you better.

  5. It’s funny because we just sold our newer car to purchase an older, smaller used car. It will be such a relief to not have a car payment but of course the world cannot understand why we dont buy something bigger and better. With our savings we are hoping to adopt our second in another year or so.

  6. Karen P. says:

    we are still driving our bmw that just turned over 200,ooo miles! Yeah, we will outgrow it before it dies & we have to give it up.;)

  7. Well in 2007 the car I had was my husbands old one which had over 300 000km (Canada) and the steering column had rusted and they said it wasn’t safe to drive. (eek!) My husband and I attend different churches so we need two vehicles. As a stay-at-home mom, new cars would never be an option (though if I were working we’d still buy used!)

    DH gave me a budget of what we could pay cash for. I wanted something with 100 000km and 2004 or newer (this was in 2007) so rust shouldn’t be an issue. I wanted a van, didn’t care about color, features etc. It just needed to be those two things and within our budget. I looked, called used car dealerships and everyone laughed and told me the same thing; you’ll never find that for $.

    We prayed, looked, waited…and the Lord brought a 2004 Montana 118 000 km for 75% of what we wanted to spend. He is good! Three years later, no issues and we’ll still happily rolling along :)

    • Whoa, Jenn! You guys were *extreme* used car drivers. ;) I agree… even if I *wanted* a new car, it wouldn’t be happening on my SAHM budget. And I’m good with that. ;)

  8. We recently bought a 13 year old Suburban and I can’t tell you how much joy it brings me to drive it. I love that humongous thing!

    • Awesome! If we ever have to upgrade due to size, an older Suburban is something we have our eye on. In the meantime, we’ll cram into the van. :)

  9. When I married my hubby in 2002, he was driving a 94 Chevy Silverado. He drove that truck till 2007. It was 13 years old with 365,000 miles on it. I told him he should be in a Chevy commercial! In all seriousness, we bought a Tahoe in ’05 and we joke to our 7 year old that it will be her first car when she is 16. The thing is a tank. It is a basic model with cloth seats and I LOVE it! We have nicknamed it Spike. :)

    • Ha! LOVE it! Our second vehicle is still my hubby’s ’94 pickup. We’re hoping it’ll hang in there until one of the kids is ready to drive!

      • @Amy,
        Nice to see others with old trucks, too! My husband still drives is ’94 chevy that his parents gave him in ’97 before we were married. We’ve had many times over the years we’ve looked at trucks and we always end up talking ourselves out of buying a different one. He only has 130,000 miles, and we usually only end up spending around $600 per year on maintenance/repairs. Every time we get a problem I have to remind myself that it’s cheaper to pay $400 once a year than every month! We joke, too, that it’ll be our daughter’s (who’s 7) first car!

  10. Just hit 180k on our ’01 4Runner … still love driving a paid for car!!

  11. We did sell our car last fall that I thought we’d drive until it died. But that was only because we found an excellent deal on a used Honda Odyssey that had about the same mileage. When it comes to driving something with 150,000 + miles, we figured we’d rather it be a Honda than a Chevy (although I actually loved my Malibu), and we hope we’ll need the extra space in the future. It’s a 2000 model with around 170,000 miles on it at this point, and I fully expect to be driving it until it falls apart.

    • When we bought our van 8 years ago, it was purchased before the arrival of our first child. I felt a little silly toodling around in a mini-van BY MYSELF, but we knew we’d have it forever and were sure hoping to fill it up. ;) Planning ahead sounds like a great thing to me!

  12. Jessica says:

    We purchased a new Volvo station wagon in 2004 (now has 120K on it) through Volvo’s overseas delivery program. We knew that was the car we wanted and went about trying to find the cheapest way to get it. The thing is that Volvos here have so many options on them, they end up outrageously expensive. With the overseas delivery program, our car was built just the way we wanted (stick shift, leather & integrated booster seats). It turned out to be cheaper than the used Volvos we were looking at. We saved $3K by buying through the overseas delivery program, got 2 tickets to Sweden, 2 weeks of European registration and insurance and it was delivered to our front door in Texas. If you count the savings of doing overseas delivery, the free trip to Sweden and the savings of not having all the options put on it, it was WAY cheaper than buying it used. That being said, we’ll still drive it til the wheels fall off, then take another trip to Sweden! I think the Parenting magazine clip is interesting because it assumes that you can’t buy a new car outright. We paid cash for our new car. Funny!

    • You’re right, they did take the “payments” angle, and I do know people who have purchased new with cash. However, even with cash… the savings on a used vehicle trumps all. ;)

      • @Amy, Did you read what she said? The new one was cheaper than the used one. We just bought a new car because it was cheaper than the used ones we were looking at. Your opinion is not the only one and is not always right.

        • Absolutely! :) That’s what’s so great about blogging… lots of different perspectives and opinions. Thanks for sharing yours! Yes, she did get an amazing deal. I’d love to know out of curiosity what the “new” factor does to the insurance/tags/taxes numbers. All my research points to those numbers being less as the vehicle ages. Since those are “ongoing costs” it’s always something we consider. And then there’s always the type of vehicle to consider… so many factors!

  13. Only $1800 more a year to drive a new car?! Compared to what used car? A three-year-old used car or something?!

    I have no doubt that we save MORE than a mere $1800 a year by driving our eight year old Honda Odyssey van we paid cash for a couple years ago. And it has 131,000 miles ;o) But that is nothing for us…. that’s actually low miles! lol And, we haven’t had many repairs, just normal wear and tear things, like brakes and tires.

    And you know what else? We keep the van fairly clean, wax it once in awhile, etc. The van still looks nice. I don’t feel bad driving it; not one bit.

    Looks like all of us high milage, old vehicle drivin’ mamas are a force to be reckoned with ;o)

    • I’m with you, Jaime. I think $1,800 is on the LOW side of a good estimate. I was just happy to find *some* numbers to back me up. ;) And yes, if we take good care of the things we have, there is no shame in driving an older vehicle!

  14. Wow Amy! Your car is practically new. Both our cars are older than that, but nothing trumps my hubs truck. He had a 1984 Toyota truck with 300,000 miles on it. We eventually traded up for a 1998 Explorer with 120,000 miles. I should mention my father-in-law is a mechanic, which makes our old cars run like a dream at extremely reasonable prices.

    • Hooo-wee! Love that 300,000 mile truck! My dad had a little pick up when we were growing up that he got rid of when we “outgrew” it. He was always kicking himself… it would have been the PERFECT first car for one of us!

  15. I actually hate the new car smell! We are in the last couple of months of baby step 2, then I’m in the market for a new to me mini van–likely a 2001-2003! Our 2001 Accord is having transmission problems again, so we’ll move “up” in size, but pay cash this time.

  16. We have a 2003 mini van that we paid cash for. The best benefit is not having a monthly payment, but the next best thing is the type of car. We have learned over the years that we can get a much nicer car for less money if we buy used. The down side to all of this is that I am spoiled. I enjoy the heated leather seats, automatic doors, dvd player, all that good stuff that comes on a “loaded” model. There is no way we would spend the money to have those options put on a new car. So for one third the price of new we bought a 3 year old used family vehicle with all the bells and whistles. We plan to drive it until the wheels fall off, then search for another deal, pay cash, and smile.

    • Awesome, Jenny! Ours doesn’t have the “bells and whistles” but yes, when we buy used, it was “newer used”… 8 years ago… ;)

  17. There’s also the ecological benefit. A hybrid may save gas, but it takes a lot of energy to build a new car, while no resources are wasted on a used one.

  18. You already know this one thing you and I have to agree to disagree on… well, I don’t really disagree with you, I just believe that buying a new car doesn’t necessarily make you a wasteful, “un-frugal” person. (And you didn’t use those words in your post either, but plenty of people have! :)) We did SO much research before deciding to buy my minivan (new) and I don’t regret that decision for a minute. For the most part, though, buying used will save you a bundle in the long-run… most especially if you’re taking out a loan on said-car.

    • As long as you’re spending YOUR CASH money (which I know you did) then… it’s your money, spend it as you wish. I still say you’re paying for the new car smell, though. ;)

      • @Amy, Nope… I’m actually paying for hubby’s peace of mind. He feels infinitely better having his wife and three children in a new vehicle. Call it a quirk of his. But it’s worth the cash to us. :)

        • @JessieLeigh, Hi JessieLeigh – I completely understand the other commenters’ desire and commitment to buy used but we are with you. Living and commuting in Washington, DC, I am unwilling to have a breakdown in southeast and be mugged or worse. I’d rather have a paid off newer car.

  19. My 1998 car is still kicking!

  20. Jennifer says:

    We have a 1995 honda with 270,000 miles and a 2002 Ford with 205,000. We have had some repairs this year but sure beats all those car payments. My estimate is that we have saved at least 50k by not having car payments plus I don’t sweat it when a drink gets spilled or I have to haul six smelly sweaty kids home from practice.

  21. Julie H says:

    My husband still drives hi ’98 Chevy pick-up truck and my van is now paid for….a 2002 Chrysler mini-van bought in ’07 . We’ve had to put about $2k total in both vehicles the past year and a half but it’s still cheaper than 2 new cars. We will always buy used!

  22. Lindsey says:

    I have an 02 Nissan Altima, I bought about 5 years ago and never dreamed I’d still be driving it, but I love that thing and want to drive it til it falls apart! It’s been a good car, minus the repairs, but even if I spend $1000 a year fixing something that comes up, (it is the first year of this model and I have had some issues with it) I’m still saving a bundle by having no car payment and low insurance.

  23. I totally agree with you. Not to mention the fact that the longer we keep cars going for, the less trash we’re sending to the dump. It makes sense for our pockets and the environment to keep fixing up our cars. As long as you service them regularly and keep them tuned so they’re not pumping out clouds of black smoke, used is the way to go.

  24. Kathryn says:

    What a great (and timely) post! You are definitely not alone. Our current vehicles have 175K and 160K miles on them, respectively, and we plan to drive them until they fall apart. We’re passionate about being debt-free and about living “green”: paying cash for used cars satisfies both goals!

  25. Our two cars are paid for; we bought them new, but paid them off within 18-24 months. I know deep in my heart that buying used is best, but I happen to like that new car smell. With that being said, my husband drives a 2000 Civic and I drive an 05 Focus. We don’t really intend on getting rid of them anytime soon; our desire to avoid a car payment heavily outweighs our desire for something newer and shiny. We’re at the point where we could buy new or used with cash, but I’d rather hold on and save some more. Besides, both or our cars are in good condition, with relatively low miles. We don’t drive paid for, reliable, unflashy cars because we’re trying to prove a point about the wastefulness of our culture; we do it because it’s prudent. I’d rather it not become some sort of an Us (frugalites) vs. Them issue.

  26. Well, our goal is to be able to get a car from the 2000′s! We’ve only ever had cars from the 80s and 90s. :-) Our 95 Jeep has 230,000 and is going strong, and a 94 LeBaron we were given only has 149,000, but doesn’t seem like it will make it to 200,000, though we’ll drive it until it does. So, one day we’ll be in the 2000s- of course by then, it’ll be the teens. :-)

  27. We bought new (with cash) in 2007, and I go back and forth deciding if it was a good decision or not. It was the car my husband REALLY wanted, and after a lot of research he decided that the model (a Mazda6) had such a high resale value that buying used with a lesser warranty wouldn’t save us that much over buying new. The part of the decision I really regret now is buying a new car that can’t easily hold more than 2 carseats. I was pregnant with our first at the time and didn’t know to think about such things yet. In his defense, we had been sending one or both previous cars to the repair shop monthly for the last year, which was not at all frugal either. It has been really nice to avoid the repair shop with kids in tow. That’s worth something to me.

    • Sometimes doing what the hubby wants trumps all ;) , and I have no problem with that! Yes… if you’re vehicles were in the shop monthly, it was likely time for a change.

  28. we have also never had a car payment…my car has 150K on it, my husb’s has 98K++ on it. i would love advice on taking a long trip in these cars…we are looking to go to florida fr texas in august and i am a little nervous going that far in my car (my husband’s car is not an option to travel in). would love to hear from you guys on this!! thanks!!

    • I guess the thing to remember is that a well-maintained car with high miles is just as safe (or safer!) than a new one without much road experience. We never leave on a long trip without having the van fully inspected (which should be done on a regular basis anyway): serviced (oil change), tires, aligned, etc. Whatever is needed. Definitely leave room in your schedule (and budget!) for a thorough inspection.

      • @Amy, Just wanted to add our experience here… I personally don’t think those miles are a problem (we’ve had vehicles with much higher mileage – one was 300+ plus – with no major problems).

        Having said that, and maybe this is your situation, one vehicle we owned was just plain undependable, not b/c of the mileage or age, but the make and model just wasn’t known to be very reliable overall.

        Two of the years we owned that vehicle we were very uncomfortable taking it on vacation, so we rented a car instead. We had peace of mind about our travel, searched for a great deal on the rental, and got unlimited mileage and a couple free days for that ten days or so. Definitely worth it for us at that point in our lives.

        Just an idea! :o)

  29. melissa says:

    in 2007 I scoured craigslist for about 6 months looking for a used minivan. I had 20k to spend and figured Icould get a relatively new one if I was patient. Boy did my patience ever pay off….I ended up with a honda odyssey that was only purchased 8 months previously and only had 6700 miles on it…practically brand new!! The original owners paid 36k cash for it in march 2007 and then in nov. 2007 fell into financial distress and sold it to me for 20,200. Imagine that…they’re purchase fell in value almost 16k in 8 months! I know buying used is the way to go! What a blessing it has been to not have car payments.

    • I canNOT believe that story!!!!!!!! Amazing — and one I will remember when it’s time for us (eventually) to pursue a newer vehicle. Patience pays. :)

  30. I love my used cars. I have a 93′ honda civic that had 252,000 miles on it. It is currently in the shop getting a new timing belt, water pump and something else (can’t remember). All parts and labor are costing me $350.00, that is less than one months payment on some of these new cars. I have done the car payment thing twice and have learned my lesson. Pay cash for a used vehicle.

  31. We love our used vehicles! Dh asks me once in a while, when we have to drive past the car lots if I want a new one. I’m like “Nope, not with a car payment.”

  32. We have a driveway full of older vehicles. We have three teenagers and one child in his 20s. I drive a 2001 Toyota van that has only 98k miles on it but at 63k it had an engine problem and Toyota replaced the engine for free! I had read about the engine problems because we also have a 2000 Toyota Corolla and would read articles about my model. The engine problem was a gelling problem that Toyota would fix if you had all the paperwork and oil change receipts…which we did. We call it God’s Van. Mainly because we had prayed and prayed for a new to us van and God provided this van for an unbelievable price of 100.00! TRUE story of God’s provision.

    We have a 1992 Dodge pickup that one of the grandpa’s gave one son to drive when he turned 16. We have a 2003 truck that the other grandpa gave our other son when he turned 16. We have been blessed by the grandparents who have provided vehicles for our children to drive. I have no idea how we would have provided these. Our children work very hard and they pay their own upkeep, gas, and insurance. We will never own new cars again. I like being weird as Dave Ramsey says!

    • That IS an incredible story! Sounds like you have been blessed by grandparents AND blessed with lots of RELIABLE vehicles.

  33. Sorry everyone…we are going to buy a new van in the winter of 2011. (If all goes well!) It is a goal of ours to pay cash for it. If we can’t save enough before the door on our current van rusts off (I’m serious), then we will get a used van with the cash we have. Feel free to pray for my pride on the rust issue. :-)
    Don’t get me wrong, we have a ’97 truck and before that a ’87 truck. We have old cars. We just like to have one vehicle under warrenty and well, new!!

  34. I, too, am driving a 2001 minivan with around 120,000 miles! It’s still reliable and I’m planning to drive it for many, many more miles and years. We’re also big believers in paying cash for cars as well and driving them until they die.

  35. I just bought my 4th used vehicle in 16 years of driving and I have loved every car I’ve had and never paid more than $5000.

    I’m driving a 2003 and consider that brand spanking new:)

  36. Ah, drove my 2000 tracker til last summer, when 2 different “distracted” drivers hit me and totaled it two different times…keep your mind on your driving, people! The financial hardship that has caused me – it was paid off and very reasonable in cost to drive – has been tremednous!

    My brother bought a 1998 Olds Silhouette van for me to drive – 99,000 miles on it! Practically new! I’ve had it 6 months now, getting 22 mph, and wouldn’t trade it in even if someone handed me a new car!

    I would, however, sell the new car and bank the money for my next “used” purchase when the van dies!

  37. I’m new to your site and I love all of your money saving tips. This might seem like a silly question but I’m going to ask.
    We have a used ’93 Accord we bought through a private seller about 8 years old and a ’06 Altima we bought new from a dealer. Our next car purchase is going to be used and paid in cash, we will be donating the Accord. My question is who/where is the best place to purchase a used car? Should you go through a private seller or through a dealership? I have always wondered what is best. Do you have any thoughts on this? A place like Carmax maybe? Thanks

  38. Daniel Melott says:

    Just found this site. I have been driving a 1985 Ford Tempo that I bought for $350 back in 2005 and now it is 2014 so I have been driving it for 9 years. I learned how to fix almost everything on it and have weaned myself away from going to the mechanic when something needs to be fixed on the car. I have around $4,000 invested in it counting all the repairs and cost of car but a good chunk of that was mechanic fees in the beginning. I probably only spend around $100 to $300 a year depending if something major goes wrong or just minor fixes. The car runs better now than when I bought it in 2005. The older cars are easier to work on and the parts are cheaper for some reason on older cars. If a person can find a good used car and then learn how to work on it, that person can save thousands of dollars a year, I have been doing that for the last 9 years.

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  1. [...] last two years.Yes, there are lots of great reasons to drive used and paid-for cars. Which is why I loved Amy’s post today:When our 2001 mini-van recently rolled over 130,000 miles, I decided to ask my Facebook Fans if I [...]

  2. [...] Save Money – Drive a Used Vehicle – The Finer Things in Life [...]

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