When is It Time to Get a New Car?

Here's an interesting discussion of when it's time to get a new car. In this particular case, the "new" car is used, but the idea applies to truly new cars as well -- when is the time to buy a new car.

Many of you will likely disagree with my car-buying philosophy as I veer from the "buy slightly used" standard, but here goes:

1. We start saving for a new car the second we buy the current one. As such, when we buy new, we pay in cash.

2. We prefer to buy new and not inherit someone's potential problems. Yes, I'm aware that cars are made to last longer than ever, there are re-serviced/checked cars for sale, that you can have a mechanic look over a potential used car purchase, etc. But I don't have the time, expertise, or desire to mess with the various factors involved in making this happen. Hence, we buy new.

3. We research Consumer Reports, decide on a couple models we're interested in, then go look at the options. Once we decide on one, we start the negotiation process (a very successful process to date.) Ultimately, we make a purchase.

4. We then drive the car for about 100,000 miles. I know many of you will say that this is way too early to turn in a car, but based on my experience, it's roughly the time that you have to start shelling out $1,000 here, $2,000 there, and so on to keep the car running. I'd rather put this money in a new car. In addition, no amount is worth the risk of my wife and kids being stranded somewhere -- hence we put a premium on a reliable car that won't brake down.

5. When we reach the 100k mark, we start the process over again at step #3 and the cycle repeats itself.

Given the 100k rule above, this means my car gets replaced every six to seven years. My wife's car gets traded in every ten to 15 years (her last car was 10 years, but her current car has had only 20k miles put on it in 3 1/2 years.) Needless to say, we take my car on long trips because it has more room.

So, what's your take on the issue? When do you replace your car for a new(er) one?

Comments

[Kevin]

I've only purchased 3 cars for myself or spouse so I have limited experience, but here's what happened in each case:

1) my truck died after the transmission was replaced once, so rather than doing it again we decided to cut our losses and purchase another vehicle

2) car I inherited from my parents was getting old (13 years) and although it still ran fairly well I was ready for something else and found a good price on a car I've always wanted.

3) wife was in an accident that totalled her car - it was set to be replaced within a few months anyway, this just sped up the process

For the next car - replacing #2 above which now has almost 140k miles on it and is 10 years old - we are saving but hoping it lasts a few more years. I have had really good luck with it so far - no major repairs, just new tires and oil changes, etc for the 6 years I've owned it.

[Ryan S]

I buy used cars with 20K to 40K miles on them for between $6K and $8K, and replace them every 6-10 years.

["Mo" Money]

I recently read an article that said to buy a 2 year old car and sell it after 5 years. The reason was that there is close to zero depreciation for those years.

[David]

I agree with your practice, FMF, though I don't impose a mile limit. I buy a car new with cash then drive it into the ground. I think that's easier and smarter than buying used.

[carol]

I'm almost 61 years old, have owned cars since age 19, and I'm on my fifth car. I've both new and used, and have kept each car until it's too inconvient to take the car to the garage! My present car, '99 Mazda Protege LX, has almost 120,000 miles on it, and my neighbor had the exact same car. He drove it almost to 180,000 miles without putting much $ into the car. I'm hoping to do the same. However, since there's so much new safety technology in the auto field, I've set a limit of $2,000 per year in car repairs and maintenance. So my short answer is, I'll just keep truckin' with my Mazda, and wait and see..

[Mark]

Why would a slightly used car (20K miles) have a much greater chance of breaking down than a brand new one? I understand you don't want to risk your wife's car breaking down, but if you already keep a car for at least 7 years, the chance that it will happen anyway is significant.

Unless buying brand new is extremely fulfilling to you, then buy slightly used. That "new car smell" comes from cancer-causing pthalates and other chemicals in the plastics that you really don't want your family exposed to anyway.

If you must have new, you can even find "used" new cars that you can bargain down $1000's off the sticker by just buying the least popular color. These cars may have had 9 months to air out, also. The dealer doesn't want to keep new cars on the lot that are nearing the next model year, so insist on getting the date when the dealer got the car, and bargain down from there.

As far as how long to keep the car, it really depends on the cost of repair and the reliability of the model you've chosen. Don't go by years owned, or miles driven, just do the math and make the right decision. Unless you have to replace an engine or transmission, or you totaled the car and didn't carry collision insurance, then keep that old hoopity-car a few more years!

[justin]

Regarding getting a new (or new to you) car, I am considering taking a job that will increase my commute by a great deal. I have a 5 year old car with 113k miles on it that hasn't given me problems, but is on the verge of needing some work done to it. Would I be better off to swap it out for another used car with a much lower mileage total on it or just hold on to it? I don't want to get a fancy new car or even a fancy used car. I just don't want to start racking up so many miles on this one that it becomes a burden to maintain.

[MonkeyMonk]

I'm also a big proponent of the "buy slightly used" (1 to 2 years old, less than 25,000 miles) method of car buying. In my car buying lifetime I've bought two brand new cars and two almost new and in both cases I had more problems and higher bills with the brand new cars. Add the higher depreciation for the brand new and the decision became a no-brainer for me.

Otherwise, the timing of my buying and selling is nearly exactly the same as yours.

[Todd]

All of the approaches I've read here are pretty sensible, and it comes down to a matter of preference.

My personal preference is to buy a car about a year old with under 10,000 miles. That way it is lightly used and still under warranty for 2-3 more years. My wife, on the other hand, likes to buy new.

We currently have two cars, both '98 model years, with 70-80k miles on both. I don't plan on replacing either one for at least 5 more years. They have both been very reliable and we like them both a lot. And I don't want to shell out another 25-30k anytime soon.

[That One Caveman]

I love how you've approached this practically, especially for Step 2. After Katrina, we (finally) started hearing about flooded cars being reconditioned and sold without mention of the potential problems associated with water damage. If you buy new, you're spending more, but you may be saving as far as time and maintenance is concerned.

We don't drive our vehicles to 100k simply because we'd never reach that amount. My truck is 14 years old and just turned over 74k. I now drive about 30 miles a week max, so reaching 100k would take almost 17 more years!

[Foobarista]

Our strategy is similar:

o Buy new and highly reliable cars.
o Over-maintain them (oil every 3-4K miles, etc)
o Once they're out of warranty, find a skilled mechanic at a reliable garage for the maintenance, etc. The dealer is way too expensive.
o Drive them for at least 150K miles. We really don't have a mileage limit, but you'll know when the car's ready to go...

We live in California, which is far easier on cars than Michigan, so we can "get away" with this.

[Joshua]

It's my first car, but here's the cost data. (Cheap car because I was only willing to pay cash.) I'd be curious if anyone else has a less costly car.)

Car: 1993 Honda Accord purchased in July 2006 for $2,000 cash with 193,000 miles; currently has 240,000 miles.
Total cost of all repairs/oil changes (@3K miles): $2,282.65
Averaged cost per month (without purchase price / with purchase price): $99.25/$186.20
Averaged cost per mile: $0.09/$0.05
(In addition, I average fuel costs of $0.14 per mile.)

We'll see how my cheap car experiment turns out!

[Joe]

FMF:

I'm sure your process works for you, and as such - rock on! ;-)

But there are other factors to consider. For example: if you get to 100k miles in 6 or 7 years, it sounds like you don't have much of a commute. I hit 100k in just over 4 years. This also means that the miles you do drive might not be primarily highway miles. If that's true, you'll experience greater wear and tear on the hardware too.

Also, it may seem unpatriotic (that's another discussion) but foreign cars really do last longer.

So, while I can agree with your practice, I think the details need some tweaking to fit individual situations

[Greg]

Buy Honda or Toyota...High quality and American labor!

I have always been a "buy a beater, drive the wheels off" kind of guy. Marriage changed that.

When my first kid came, I got rid of my '87 Jimmy (cost more to get it through annual inspections than the value of the vehicle). The deal refused to take it in as a trade...was not worth the cost of storage.

Bought my wife an '02 Accord, it was '03 and the body style changed. I got my wife's '93 Civic.

After the second kid, traded in the Civic on an Odyssey (at the end of January) and I took my wife's Accord.

I plan on giving the Accord to my son (who is 5 right now) when he begins to drive. My wife gets a new car. WhooHoo! I get to drive the minivan!

[Blaine Moore]

My first two vehicles were used and both had a lot of problems.

My last car I bought slightly used, and it served me well for about 7 years. Then I got sideswiped by a tow truck last year that blew through a stop sign, and it gave me nothing but troubles after that.

Eventually, I donated it and spent 6 months driving my wife's grandfather's car around until the snow melted and the streets got cleaned up.

I'm buying my first brand new car on Saturday. Paying cash. I expect to keep it for hopefully 7-10 years if I don't get in any accidents.

[Karen]

I've had great luck with several used Toyotas, yet we currently have 2 Scions that were bought new because we bought them before there were used ones available.
They're cheap, yet don't depreciate much at all and are Toyota quality. We've paid off both cars (2005 and 2008), will drive them until they have any major issues (at least 8-10 years), and are putting money in savings to hopefully never have a car loan again.

While I have nothing against used cars, after having a Toyota make it to 225,000 miles. But we keep them for so long, there's no reason not to buy new!

[Steve]

Don't any of you guys actually enjoy driving nice cars? Maybe it's because I live in Southern California but I just recently bought a nice BMW with 21k miles on it. I absolutely love the horsepower and the driving feel. I'm actually hoping to get a used Porsche in a few years.

I know it's an unnecessary luxury, but I just love cars.

[Pat]

I agree with you on the point about buying new. I am 42 years old have have only owned two cars in my life. Both were brand new. Sure I took the hit on depreciation but I also kept each car for at least 12 years. I have never felt like I didn't get my money's worth out of both cars.

[Todd]

Steve, I would imagine that many here do enjoy driving nice cars, but have simply decided that the expense is not worth it. For my part, I consider my cars to be pretty nice and I like to employ the "slightly used" buying strategy so as to obtain a more expensive car at a lesser price. This strategy works particularly well with American cars because of their generally steeper depreciation.

I have often thought about buying a Lamborghini in retirement if my finances are in really good shape and I have an extra 250-300k lying around. I don't know if I'll ever do it but it's something to think about it. :)

[Thomas]

Regarding getting rid of cars once they have passed 100k:

94 Corolla wagon, purchased at 105k miles, $4000
Currently: 226k. Value: $2000 to $2500
Total repairs: $2000 over 5 years (no failures, just wear)
Total cost of repairs plus depreciation, per mile: 3 cents.
Current summer MPG: 40 average

With such low maintenance costs, I would rather drive this car until it turns to dust.

[Kevin]

Steve - to me the difference is so negligible the extra money spent on a BMW for example is really not worth it. I drove a friend's father's Acura TL a few years ago and honestly could not tell that much difference from the Eclipse I was driving at the time.

[G.E. Miller]

I have a fairly simple answer to this:
A. Until a viable electric vehicle under $30K hits the market. Within the next ten years, with the exception of millionaires, few will be able to afford gasoline and your car won't be worth anything.
B. Don't get a new car, move closer to work and get a bike.

[Lord]

I pretty much agree with you. I do check the initial depreciation to see if it is worth buying used. For most models, it really isn't.

[kitty]

I pretty much agree. The only difference is that I don't bother saving specifically for the car. I don't separate savings into groups - this part is for this, this part is for that. To me it is just savings. I also buy models that are cheaper than what I could comfortably afford - currently it is Honda Civic.

Very first car: 1977 Olds Cutlas bought in 1983. My parents bought it for me after grad school. Totalled it in November 1986. This car cost me more in repairs than the payments on new car would've been. Looked good though; also very comfortable.

1987 Toyota Camry, bought new. This one I paid half, half-financed. Kept it until it had 100K miles. Sold it in 1995.

1995 Toyota Corolla, new, all cash. Gave it to my parents in 2003, after their very very old car broke down. They still drive this Corolla.

2003 Toyota Corolla, new, cash. Planned to drive it for a very long time, but one tire apparently hit something and blew up on a parkway in 2006, total loss. I got pretty good amount for it from insurance, so I only needed to add about 5K to get a new car.

2006 Honda Civic, new, cash. I hope to drive it for a while, but who knows....

I don't particularly care about fancier cars - I hate driving. To me it is just - get from A to B in the most reliable way.

[Anitra]

My husband and I have been talking about this recently, partly because we are deciding how much longer we can afford to keep his light truck (eight years old, we've had it four - it has over 100k miles, since he often uses it to commute to work - a 70 mile round-trip).

Neither of us have had many cars, and we haven't been saving specifically for a car, so there are several factors in our decision:
1) The cost of necessary repairs (at this point, any repair that costs over $1000 will push us towards buying a "new" car. We've recently had a lot of major repairs, but we were able to do them cheaply, so we're still doing OK).
2) Inconveniences (small things that are broken and haven't been worth fixing, gas mileage, seating capacity, and soon, the difficulty of using a carseat - if #1 wasn't an issue, we might just buy an additional compact car so we could keep using the truck for hauling)
3) How much car we can afford to buy - at this point, that's probably about double the truck's KBB value if we don't want to get a loan. (Basically, how much of an improvement will a "new" car be?)

I find that #1 is usually the deciding factor, but I did get rid of my last car primarily because of #2 - it ran fairly well (for a 12-year old car), but it required a LOT of time on maintenance/upkeep that I wasn't willing to do through another winter. Of course, I replaced it with a car that I had to finance (although we paid it off almost 2 years early). Not planning on doing that again.

[Greg]

re: G.E. Miller "...move closer to work and get a bike."

Walking to work is a nice sentiment.

Walking to work, living in the neighborhood, and raising my family where I work would be very dangerous.

[Amy]

FMF - I continue to be amazed that you prefer to buy new, instead of 1-2 years old with low milage. It just doesn't jive with the rest of your financial philosophy. If you really studied the numbers and took a close look at it, you'd see that you're needlessly wasting thousands. The odds of a prior owner "doing something" to a car in the first year that will cause it to have problems down the road must be around 1-2%. Certainly not enough of a risk to justify the higher sticker price of that "new" car. I don't get it!!

[FMF]

Amy --

Different things matter to different people. Does anyone ALWAYS make the lowest-priced/cheapest selection on ALL their purchases? Nope.

[Mike B.]

I'm a bit skeptical on those claiming lots of savings on 'slightly' used cars. I hear all the time about how much a new car depreciates once you drive it off the lot, but when buying a 3rd car recently, I noticed prices on the reliable cars (Toyota, Honda, Mazda to a lesser extent) staying quite high and the availability of 'slightly' used cars to be almost nil. Who is selling cars after only 1 or 2 years? A lot of them tend to be rentals or other fleet vehicles that I'd prefer to stay away from.

[Todd]

You can usually find "slightly used" cars at dealerships that sell those kinds of cars. For example, in 1999 I bought a '98 Lincoln Mark VIII from a Lincoln-Mercury dealer for around 27k (including sales tax, etc.). It had 8,900 miles on it and nearly 3 years left on the warranty. It has been a great car and I've had next to no problems. It was probably driven by members of the dealership or perhaps given out as a loaner when a customer's car was being serviced for a few days at the dealership.

[Lord]

Retrospectively, even though I buy slightly used (I like cars that depreciate fast), and kept them for long periods of time, my costs have always been 1) capital, 2) insurance, and 3) gas, maintenance and repair, although they were not that far apart. Now gas is moving up, but with less driving, capital costs are still likely to end up the greatest. Most cars depreciate only 2-3k more the initial year than the straight line depreciation, which over 10 years amounts to only and additional 2-300 a year. It is worth checking though.

[Alexandria]

I regularly buy very used cars.

I've never been stranded anywhere.

Overall, I agree with your methods, but the fear of used cars is often ridiculous.

I think people also assume often that new cars are safer. I find the whole thing ridiculous. At least with older cars you can check on consumer reviews, recalls have passed, crash tests have been done, etc.

I could be strange, but most of the lemons we have come across were brand new. So I really don't like new cars. They just cost twice as much.

Warranties are a joke. They don't cover anything you would want it to cover (like a lemon off the assembly line).

I would admit you probably take as much or more risk on a used car. But I cringed when I read you trade in your cars at 100k miles because you would never want your family stranded. If you don't want your family stranded, maintain the car. It's that simple.

[Alexandria]

I regularly buy very used cars.

I've never been stranded anywhere.

Overall, I agree with your methods, but the fear of used cars is often ridiculous.

I think people also assume often that new cars are safer. I find the whole thing ridiculous. At least with older cars you can check on consumer reviews, recalls have passed, crash tests have been done, etc.

I could be strange, but most of the lemons we have come across were brand new. So I really don't like new cars. They just cost twice as much.

Warranties are a joke. They don't cover anything you would want it to cover (like a lemon off the assembly line).

I would admit you probably take as much or more risk on a used car. But I cringed when I read you trade in your cars at 100k miles because you would never want your family stranded. If you don't want your family stranded, maintain the car. It's that simple.

[thomas]

FMF - Your comment to Amy seems a bit off. Sure, that rationale works when you go for the Coke instead of RC Cola, but this is thousands of dollars, and the second biggest household expense (besides the household). You are putting a price on your expectation, and that price is overvalued.

To those saying used cars are rentals - that's american, and I'm fairly sure they don't pop up at the dealership. Most 2-4 year olds are from leases where the owners took care of them for fear of owing money. That or it's the people trading in for personal reasons - need a van b/c the accord can't fit twins, giving up the truck b/c of gas for a prius.

Sure, answering the craigslist for "94 TOYOTA $6K MUST SELL TODAY" is going to cause you problems, but you can shop wisely.

Cars are holding their values because they are (mostly) made to last longer. Simply saying "Well for $6k more I could get it new" isn't using your intelligence.

There is also the Dave Ramsey approach, where you upgrade every year till you eventually have that nice BMW. It's not as easy as he makes it sound, but trading up is and can be done.

All this being said, I did buy new 2 years ago when having to get a family car. But I do realize the price I paid, which is why this car will be mine until I can't even push it to work.

[mr.danny]

I have a question about buying a car. I currently drive a 2000 Nissan Pathfinder with 163k miles on it. It's in good shape with brand new tires. Based on it's condition and KBB/NADA, I believe I can sell it for somewhere around 5k. (I bought this SUV at a great price 3 years ago from a family member for $5k with 100,000 miles.)

I would love to keep it until it dies, but I only get 17 mpg on the highway and even worse driving around town. I'm basically just tired of paying for gas all the time. I need cargo space and room for 2 young kids so am looking at some smaller SUV's, roomy cars, or a station wagon. (Specifically a 2004 Mazda6 wagon).

I believe I can improve my gas mileage to around 25-28 mpg with a new(er) car. I'm also willing to pay up to 10k cash for a car. Any suggestions on keeping the Nissan or buying a different car with better mpg? Is it smarter to keep paying more for gas or should I sell my Nissan now while it's still worth something? Thanks for any help.

[Justin]

My last car was a Honda Civic with 270,000 miles on it. I bought used off lease with 17,000 miles on it. It still had some warranty when I bought it. There were two expensive repairs its whole life, one was 1200, one was 800. the $1200 was for a new head gasket and radiator. The 800 could have been avoided had the service shop told me the CV boots were cracked.

I drove it for 8 years before I was rear ended and it was totaled.

I drove my wife's old car for about 8 months until the summer when it would have cost me more than the car was worth to refit the AC. That's why I bought my now current car. I intend to drive it until it won't run no more.

[Justin]

My last car was a Honda Civic with 270,000 miles on it. I bought used off lease with 17,000 miles on it. It still had some warranty when I bought it. There were two expensive repairs its whole life, one was 1200, one was 800. the $1200 was for a new head gasket and radiator. The 800 could have been avoided had the service shop told me the CV boots were cracked.

I drove it for 8 years before I was rear ended and it was totaled.

I drove my wife's old car for about 8 months until the summer when it would have cost me more than the car was worth to refit the AC. That's why I bought my now current car. I intend to drive it until it won't run no more.

[troy]

I have a used truck that I drive towing a used trailer with a new truck on the trailer everywhere I go. Keeps the miles down;)

That usually takes care of the risk of being stranded, because being stranded is the end of the world. Ask anyone who has had it happen. Their life is now over. Especially in the US, where there are not cell phones and gas stations every 3 miles.

As for your response to Amy, you are right, most people do not always make the cheapest decision on all of their purchases...but that is not what she was asking.

This isn't all purchases. This also isn't the cheapest decision. Buying a 1-2 year old slightly used vehicle is not the cheapest alternative...walking is.

Also, it's not like we are talking about a coke and some fries. A car is most peoples 1st or 2nd most expensive item ever purchased.

Since all land is used, and a vast majority of homes sitting on that land are used as well, that makes cars, this topic, most likely the MOST EXPENSIVE NEW ITEM people ever consider buying.

You have every right to buy new. I have done it as well. For me, one of the worst financial decisions I ever made, and it was a brand new 2006 Toyota. I'll not do that again. But, it sure was easier.

I think what amy was saying was it seems to vary from your reputation. Your retort was misaligned.

[Hectorartm]

How about this: I bought a new V6 2007 Jeep Cherokee with the lifetime drive train warranty. On top of that I bought the Max Care Lifetime warranty, which covers everything except cosmetics. For example, every time the electric windows break, they will fix it with a $100 deductible. Therefore, I can drive this car to the ground. As long as I keep paperwork of all the appropriate maintenance, I should be good. Think about this when buying a new car.

[Sandra Brown]

I don't think taking the car to 100k then starting the process again is the answer. Nor buying new, nor leasing. I think the best way is to buy quality used vehicle at auction, fleet auctions or repossesed car auctions and keep the car for as long as possible. When the car is starting to cost too much money sell it and buy again.

[Jill]

I just scoped out the local Toyota dealership, looking specifically at crossovers like the RAV-4. There was hardly any difference between the "slightly used" and the new vehicles, between $500-2000, depending on the accompanying gadgets. When I asked the salesperson, he explained that depreciation on Toyota vehicles was so minimal that many customers looking for used vehicles end up buying new. Skeptical, I asked him to prove it. He pulled up various Kelly Blue Book rates on vehicles in the lot. The lot prices were dead on.

With regards to when to buy a car, I would love to know the answer! Everyone seems to have a different opinion. If only there were some sort of equation that took into account your personal preferences: safety ratings/features, repairs/upkeep of current vehicle, interest rate on an auto loan, etc. I just want to make an informed and fiscally responsible decision. Everyone keeps telling me to trade in or sell my 2003 RAV-4 for a newer model. A part of me thinks, "Are you crazy? This thing has gotten me through thick and thin, has only 100,000 miles on it, and still looks good to boot." The other side of me says, "Yeah... but at the last servicing you had to pay $2,500. It's time."

Truly, when is the right time to call it quits on your current vehicle and trade up?

[FMF]

Jill --

I set about 100k miles as a time to get a new car. That's about five to six years for me. It's kind of arbitrary, but I've had some bad experiences keeping them longer...

[Kelara]

I was under the iseprmsion that there was a 30-day (or some finite period of time) span where inquires from the same type of businesses only counted as one against your credit. I think my mortgage guy told me this. Am I totally wrong?

[Joe]

last year my transmission blew on my 2003 accord with just over 100,000 miles. I found out a new transmission installed would have been have been about $3500-$4000. I probably could have gotten $2000 for the car as is. (And put that towards a newer car) However a friend who works on cars, was able to find me a used transmission with about 40,000 on it and told me it would be $1800 get and have it installed. At that point it became worth it to fix it. I now have 120,000 miles and starting have other problems (non-mechanical so I can drive it everyday) which would cost around $1500 ($800 of it for AC system). It nearing the point of winter beater car.