Does a used car save money? Or is a used car a money suck? One of the main reasons many people prefer to buy new (or slightly used) cars as opposed to very used cars is the cost of maintenance. People figure that the cost and trouble of maintenance will add up to be close to the cost of a newer car.
Now that we are retiring our van, I thought it would be fun to make it as a case study and see how the costs stack up.
1997 Plymouth Grand Voyager
- Purchase date: May 2011
- Age of vehicle at purchase: 14 years old
- Mileage at purchase: 176,000 miles
- Purchase Price: $2,250 (private party)
- Retirement date: July 2015
- Mileage at retirement: 235,000 miles
Costs: purchase, maintenance, repair
I’m not including oil changes because you would be getting those on your car whether you bought it new or used. I’m also not including smog and registration costs, as those also don’t change depending on the age or condition of the vehicle. Newer vans get about the same mileage per gallon as our older one, so I’m not including the cost of gas either.
I omitted the $285 we spend in August 2012 to replace the side window of the van because it has nothing to do with the cost of having a used vehicle. It has to do with the cost of having children. Namely a three-year-old boy who likes to throw rocks.
- Months driven: 51 months (4 years, 3 months)
- Miles driven: 59,000
- Total cost (purchase and maintenance): $8,486
Over the 51 months that we’ve driven our van, the purchase price and maintenance (except oil changes) has cost us a total of $8,486. That breaks down to $166 per month.
Is a used car a great way to save money?
In our case, the answer was YES.
I think in most cases the answer is yes. It’s possible that we could have paid $5,000 for a newer van, and paid less than $3,486 in maintenance over the 51 months, or paid $7,000 for an even newer one and paid less than $1,486 over the 51 months, but there’s really no way to know. Every car is going to require some maintenance as mechanical parts wear out. While a used car will require more maintenance, I don’t think the additional maintenance is more than the additional cost of a newer car would have been.
Another thing I didn’t include is cost of insurance. Cheaper insurance is another reason that used cars can save you money. While insurance takes in lots of variables, generally insurance for used cars is cheaper than insurance for new cars.
For us a vehicle is primarily a way to get from point A to point B safely and efficiently. We aren’t worried about what it looks like or what frills it has. We also don’t have to worry about depreciation.
The Next Step
So our van is now retired now. I have a feeling it has a transmission problem. There have been a couple of times when it wouldn’t shift past third on the freeway and it sounded really strained. After letting it rest, it worked fine. Also, it just started making a loud ticking that might be the timing belt. Either way, we know the next repair will be expensive. Since smog and registration are due in mid-August, we decided to start looking for a van right away, rather than wait for our Voyager to die.
We got a new van a couple weeks ago, but we haven’t decided exactly what to do with our old one yet. It kind of makes me sick that we put $650 into it last month, but my husband reminds me that it’s a sunk cost. I’ll have a post coming up on how to get the most out of your old vehicle.
Side Note: We Love YNAB
Compiling this was not as simple as it should have been. Looking up what we spent since we started YNAB to budget was easy. Before that we used Mint (here’s why we switched). To find all of our van expenses from our pre-YNAB days, we literally had to go through every transaction and pull out all the ones relating to to the van. Even so, we didn’t always remember what the expense was for (hence the ?s). This exercise reminded us how much we love budgeting with YNAB.
How About You?
- Do you buy new, used, or very used cars? Why?
- What strategies do you have for buying used cars?