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.

[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.

[The Toecutter]

I'd rather just convert one to electric. Per mile, it's the cheapest way to go if you design it right. Virtually no maintenance(cept for tires and stuff like that), just very low 'fuel' costs and periodic battery replacement. With insurance and vehicle taxes, it's possible to have lead acid EVs cost in the neighborhood of 20-25 cents per mile. It's just that the up front costs to build one automatically push lower income groups away.

[Silveredwings]

More things I like about used cars are used parts and the vast amount of DIY knowledge available from sites like this one. Someone else out there has not only solved most problems, but blogged it too. It makes it a lot easier, cheaper, and faster to fix and maintain things.

Compared with the alternative of making appointments, getting rides from others for dropping my car off, scheduling warranty work that they "don't seem to get to" for a whole day (why make appointments!?), cost of things not covered, etc, it's a no brainer for me.

[tulsa_97sr5]

Originally Posted by Silveredwings

More things I like about used cars are used parts and the vast amount of DIY knowledge available from sites like this one. Someone else out there has not only solved most problems, but blogged it too. It makes it a lot easier, cheaper, and faster to fix and maintain things.

Yep lots less mystery when buying a used model. Chances are if that model had a common failure point like weak tranny, likes to blow headgaskets etc you can do some research and know to move on. Plus I've found when shopping 5-7 year old used cars that after seeing 10-20 examples I have a great idea how they'll last overall.

Maybe not the best example for gassavers, but a few years back when shopping for my current 4runner I couldn't believe how nice and solid all the ones I looked at were. Most had 120k miles or more, and the only real 'issue' I saw on any was worn leather on the drivers seat of on e that was closer to 200k. I bet all the civic guys on here would say pretty much the same thing.

[GasSavers_StanleyD]

Originally Posted by tulsa_97sr5

... a few years back when shopping for my current 4runner I couldn't believe how nice and solid all the ones I looked at were. Most had 120k miles or more...

Kind of off-topic, but I bought my 97 4Runner when it was 5 years old (owner had JUST paid off) with 100,095 miles and it now has over 205K miles on it. NO PROBLEMS. It was better maintained by the previous owner than by me and is great. The 4Runner is one of the best mid-sized SUVs that you can buy, IMO.

Staying to topic, Id rather get a used (JUST off lease to get rid of reliability argument) Corolla than a new hybrid. As sweet as the Prius is, I cant justify an extra $7K over the Corolla which is beefier (like WE really care about HP), but gets good mpg on highway and will be cheaper to run when you consider that the extra $7K will NOT be realized in gas savings even with $3 gas. You have to drive over 200K to get back the $7K in gas and thats if you compare 52mpg Prius highway vs 38mpg Corolla highway. We all knwo that neither car gets those numbers but the Prius falls more short of its numbers. I ran these numbers a few years ago when the second generation Prius just came out an I was salivating. Then I decided to run the numbers to see how much financial sense it made. This test did not take anything else into consideration. This was new Prius v Corolla.

On another note: New car EPA estimates (before revised 2008 EPA) are much worse than those of older cars that gave more reasonable estimates. I was getting over 19/20 mpg combined in my 97 4Runner (rated at 17/19) which had 200K miles. I was surprised to get BETTER than EPA ona car with 200K miles. This was BEFORE I even heard of gassavers.org and with driving 100+ miles daily at high speeds. I prob averaged about 75 mph when on highway and would peak at about 80. Similarly I was getting about 29/30 mpg on my 98Camry before I stareted driving for FE and was hitting just over 30 hwy when the 98Camry is rated at 23/30 (22/28 NEW EPA). So just like the 4Runner my 98Camry was getting its stated mpg. Keep in mind my 29/30 mpg in my camry is combined mileage not highway. Try getting 41mpg with regular driving in todays Corolla. Good luck !!! Remember I said regular driving. I think older car EPAs are not as exaggerated as todays, probbaly because people look at that moreso than years ago. My .02

On the other hand, Id LOVE to have a Prius right now. High $$$ is drawback.

[FritzR]

I've been driving 10+ year old Corollas since 1990. i had a 83 then a 87 now a 90. I have averaged including purchase price, all maintanance and repairs 5 cents a mile. This does not include DMV or insurance but everything else. Let's see anyone beat that with a new car. I've had to be towed once in that time due to a bad starter and auto trans, no bump start.

I'm switching to CRX HF now due to fuel prices. I bet I'll not go over 7 cents a mile with this car and get better mileage than a new Prius. Of course the Prius might be cheaper in the long run if I got 360000 miles out of it with no maintanance. Also I'm self employed and will write off all my work mileage at 48 cents a mile

[GasSavers_BluEyes]

Originally Posted by Matt Timion

The electric cars ARE zero emissions.

Only where the car is. Somewhere there has to be a powerplant of some kind supplying the electricity. Depending on where you live it might be pretty clean energy, or it may be coal.
Either way, electricity is still cleaner than gas though.

I'm going to go out on a limb though and say that buying a used car may actually be cleaner than a new car due to the pollution caused in making a new car. There are so many used cars on the market that a great many cars which are still great running transportation (and some very fuel effecient as well) are simply scrapped because the owner is tired of trying to sell it. I see this all the time at a U-pull junkyard I go to. Each of these cars could easily give several years more transportation and many more given TLC. Think about it - if every person in the country kept each car they own 1-2 years longer, how many fewer new cars would we need? How much pollution would be saved?

Some day I'd really like to try running the numbers on the '70 Cadillac I own. Calculate the total pollution generated if you had bought it new and driven it for the last 27 years verses buying a new Honda Civic (CVCC back in the day) every four years and driving the same miles. Include all the pollution for all raw materials (steel, plastic, oil, etc) all the way back to when we pulled them from the Earth. Something tells me that at the least the Caddy will be a strong contender in that contest.

[rh77]

Good point, Matt. Since the Integra has long since been a "clean slate" (no payments), any routine maintenance or repairs are much cheaper than a regular monthly payment -- so it continues to pay for itself.

Quattrodave has a good perspective as well -- there's a point where you feel that you don't need the latest-and-greatest. It's sound financial advice not to have to finance an expensive vehicle over several years. Silveredwings: I completely agree with the DIY factor -- I've learned more about cars in general from repairing my own, than I could have from reading a book or magazine. I also have to attribute the help from folks at this site. It's fun, saves money, and is educational.

Of course, the drawbacks to older cars are emissions and safety. Newer models tend to have stronger impact protection and accident prevention technology. But even some models as old as 10-years have ABS, and dual-airbags. Also, if you keep an older model in good working order and achieve above-average FE, then emissions should follow suit.

RH77