A New Car Versus a Used Car

[Matt Timion]

Author: Timion, Matt
Publication: www.gassavers.org
Date: 09/07/2005

So you're ready to get rid of your gas guzzling car and get a more fuel efficient car. You have read ads, searched websites, and have found that your choice is between a new Hybrid or an older car that you would expect to see a 16 year old in. The choice is obvious, isn't it?

The real question is WHY do you want a more fuel efficient car. This will actually answer which car you should buy. If you are buying this new car because you want to save the ozone layer, cut down on polution, etc., then you should buy the new car. Some of these cars are as close to zero emissisions as possible. The electric cars ARE zero emissions.

If you are buying this car to save on gas money, then an older car may be for you. Before you start talking about your car needing more maintenance than a new car, you are absolutely right. But we need to first establish a new way of looking at gas mileage. Instead of talking about how many miles per gallon your car gets, let's start talking about dollars per gallon.

Let's assume, for the sake of argument, that you want to buy a $20000 hybrid (that's actually pretty low for one of these things). Assume you are finance for 5 years at a low rate of 5%. Assume you have no money down, and have no trade in. These assumptions may vary, but they are typical of a lot of buyers. Your monthly payments will be $404.60. By the end of the loan you will have paid $24,300 in car payments. Assume you drive the "typical" 12,000 miles a year. over five years that is 60,000 miles. Your actual mileage may vary. Based on purchase price alone, you are paying 40.5 cents per mile you drive.

And then there is insurance. If you finance your car, you must pay full coverage, which will probably run you around $100 a month (more if you have a bad driving record). your $100 per month over five years will cost you an extra 10 cents per mile.

So with the new car you are already paying more than 50 cents per mile you drive. Assuming you get 50mpg in your new car, and assuming gas stays at $3/gallon, you will pay 6 cents per mile. so far we're at 56 cents per mile, and that's assuming we drive 12,000 miles a year. If you drive less, the price per mile goes up.

And then there are tune ups, oil changes, tire rotations, etc. I imagine you're looking at around 65 to 70 cents a mile after all is said and done.

Suddenly the new car doesn't seem as affordable.

Buying a used car for (let's get a nice one) $5000 will grant you a few priviledges. You will have it paid off much sooner, if not right away. let's assume you are able to buy this car for cash. While $5000 is a lot, it isn't unreasonable to assume that someone could pay cash for it. A $5000 car by the same standards will cost 8.3 cents per mile. Insurance will be half (if not lower) of full coverage. Add another 5 cents. The older car may not get the same fuel economy as the new hybrid, so let's assume you bought a car that gets 35mpg. At $3/gallon your cost per mile is 8.5 cents. This figure can change with tips and tricks found on this website. So we're paying about 22 cents per mile on a $5000 car. Add oil changes, etc and we might hit 30 cents per mile.

Accounting for all spending, a used car is cheaper with gas and service than a new car without gas, service, etc.

More ways to save money are to do your own oil changes, tuneups, etc. Not only is it faster, but it is much cheaper to do it yourself.

The bottom line is that if your goal is to save money, a new car is not the way to do it. The technology may be great, and the status symbol of driving a new Prius may be great, but while your ego may be bloated your wallet will not be.

If you disagree with me, please express your disagreement. I will happily consider your argument as I drive around in my 89 Honda Civic that I bought for $2000 (which I overpaid for) that gets 38 miles per gallon.

[RGR...]

like I received. Non-running 89 Mercury Tracer. (from family)
I had to find a computer, (other years work or we would not be
discussing this!) change a rear strut, and new tires. I would
suggest finding certain older cars and amking a few improvements,
I'd say more but the wifey needs the terminal

[quattrodave]

One sign of maturity is that you no longer buy things for "prestige". Happens to most of us at age 25-30. There are no brownie points for buying new. I've owned a dozen cars or so, have never purchased one new, and the typical reliability that I enjoy is better than most folks I know who bought new.

A few colleagues have Toyota Priuses, and are terribly disappointed in their fuel economy. Even when they're trying all manner of driving techniques, they are unable to get past 50MPG. However, when I owned my '86 CRX HF, I routinely got 55 or so MPG, and this was well before I started "techniquing" my driving.

As of this writing (March 2006), you can purchase a 1996 Civic LX Coupe for about $5,000. A buddy has one, he achieves a legitimate 48 miles per gallon - actually besting our other buddy with a Prius.

Doing your own maintenance is a good idea, if you are handy. Beware that all of today's front-drive cars are a pain to do belt changes on - you have to remove an engine mount on most of 'em. The dealers, and the mechanics, charge unbelievable amounts for "routine maintenance". Most Hondas and Toyotas require a timing belt/water pump/accessory belts every 60,000 miles, and that's typically a $600 service. So, you're stuck with 10 cents a mile just in "scheduled maintenance". I can't lie under cars for any length of time any more without throwing my back out, so I have to pay to have these services done. I still do my own oil changes. I reduce that cost by doing them less frequently. Based on recommendation from an old college pal who now designs engines for GM, I change the oil when it appears dirty, which seems like about every 10,000 miles on our Civic (1997, 120,000 miles). I adopted this philosophy about four cars ago, and I have used it to take three cars to at least 280,000 miles, and by that age, not one of them had required any internal engine work.

Bear in mind also that the manufacture of a car consumes a huge amount of energy. I did this analysis a while ago, and it comes down to this - no matter how you spend a dollar, you're consuming about the same fraction of a barrel of oil, because the cost of most things comes down to energy input. If you pay less for something, then you forced less energy usage in its construction.

[krousdb]

Glad to see you here Dave. I also used to get 55MPG routinely with my 85 CRX HF. But also be aware that the Prius is capable of extrordinary FE if enough effort is put into it. In the summer my Prius is worth 70-80MPG on my daily commute. In the winter it drops down to 65. It ain't easy, but it is certainly doable.

My wife is driving the Prius this winter and her last tank was 51.5 MPG. Not bad for someone who doesn't put much effort into it. But ever since I have been beating her with my 13YO Del Sol, she has been trying harder.

[quattrodave]

Whoops - I meant "HX" Coupe. The LX doesn't get the high MPG, but it's cheaper. I paid $3800 for my LX sedan recently in perfect shape at 120k miles.

My 55MPG on the CRX was while driving the pants off. I wonder what I could have done had I then known about driving techniques.

[tomauto]

I bought my LX sedan 3 years ago and payed 3,000 for it. I got quite the deal. But a year later, I had to pay for new CV joints, as the first set had the rubber seals bust flinging grease all over the wheel wells, not a pretty site. So when you buy a used car, check those for cracks, and wear....

If you actually want to save money, you must buy a used car. You would have to drive the wheels off a new hybrid to get the money back for the technology.

Personally I have been keeping my eye on those 200,000 mile plus Honda Insights...their price has been coming down considerably. I have seen many around the $8,000 dollar range - and a few lower...The only thing is, you really couldn't do your own battery pack service. (those batteries are quite expensive!) I think it would be worth looking into..

[Sludgy]

Other than my Honda XR650L, my last few vehicles have been new full size trucks.

I got hosed by the salesman who claimed I'd get 25 mpg with my 2004 diesel F350. My best tank was just 20.7 of highway driving. I got better mileage with a 1995 gas V8 Chevy 1500! I wish I still had that truck now. I'd have no car payment, and I'd be paying less per gallon for gas than diesel.

New trucks have gotten heavier, bulkier and have bigger engines. I'll never buy another new full size truck until it's EPA certified over 25 mpg.

Fat chance of that happening soon. The GM GT900 platform is a porker, Ford just finished its designing the F150 at nearly 5000 pounds bone dry. Nissan's Titan is titanic, and Toyota's new Tundra has gained middle-aged flab. Forget Honda's Ridgeline, it's not a real truck, except for the lousy mileage.

My money is staying in my wallet.

[Matt Timion]

Sludgy,

My uncle just purchased a new Excursion (maybe it was used, dunno?) Anyway, that thing can seat about 10 people comfortably and is probably about the same size as a Hummer. I believe it's a V10.

It's diesel and get's better mileage than his previous car, a smaller V8 gasoline SVU. I wish I could remember the type of SUV it is, but I forget.

The difference between diesel and gasoline is night and day. When it comes to trucks it seems that diesel is the way to get higher MPG. Then again, you already knew that. :P

[invisiblegold]

Matt,

You have a good point... Though I should point out that my used Honda Insight has the highest MPG on the market and only cost $6500. Add the fact that I save $1200/year in gas (compared to my last car) and saved $800 (in taxes) at the DMV...it should work out to be a pretty sound financial investment. (even if it doesn't drive any further.) It was just one car on the spreadsheets and I mostly bought it to save money.

Then a surprise hit me... I have never loved a car so much. I feel like an environmental evangelist. I ended up buying a gauge to go in the house an monitor electrical usage and now run my home and business entirely on wind power. I sold my toy convertible (a cheap Lebaron) because I couldn't deal with 23mpg, etc. This all started when I bought this silly car.

Your results may vary...but somehow this car activated a gene that I didn't know that I had before. It excites me on a technology, environmental, and penny pincher way all at once.

[ELF]

Used will always be cheaper than new, But it should be noted, If you buy a new car and keep it for 10 years, and or drive it for 200k miles the cost per mile goes down. so a new car is not a bad deal if you plan to keep it for a long time/or drive a lot more miles than average per year.