By on August 28, 2012

Whether you drive a $30,000 or a $1,500 a car, one variable in life stays constant.

You want to minimize your costs.

The average owner in North America now spends well over $8,000 a year covering all the costs of their car. Gas, insurance, maintenance, repair, depreciation, taxes, financing… and even the occasional upgrade.

When they can afford it.

That’s one issue that I see as the crux of autos ownership for most folks. The means of ownership. Can they afford what they drive.

The struggling family that goes to a dealership and zeros in on the nearest Cadillac or Mercedes these days is just as culpable for their behavior as the fellow who considers cigarettes to be vegetables, and vegetables to be weeds.

They have an unhealthy destructive habit that is a reflection of a marketplace where the bad choices are just as easily available as the good ones.

Forget about big brother. This is overwhelmingly a matter of personal decisions. We can make it out to be as fair or unjust as we like. But in the end, there is a bluntness to all of it that can’t be denied.

On one side of the fence, we realize the Darwinian aspects of it all. People who make bad decisions face consequences. This is an outcome that is healthy for an economy because it extinguishes the unhealthy activities, and encourages the good ones… in due time.

But sometimes you also see the elements of a rigged game. The manipulative capitalize on the weaker elements of human nature. While the ones victimized often don’t know any better and continue to do worse.

After decades of looking at this learned victimization, you can’t help but wonder whether millions of people have been brought up to not live beyond a certain level of struggle and mediocrity. Even if they tried to get ahead, the scourges of debt and dependency would lead them to poverty because they simply don’t know what they need to know.

That’s the issue I have at this point. A lot of folks believe that ignorance and an arrogant attitude go hand in hand. In extreme cases they do. But when it comes to cars, ignorance is born more out of fear and apathy than anything else.

So how do you minimize the cost of owning a car? $8,000+ represents an awful lot of waste and opportunity. A lot of incremental improvements in the ownership experience could yield a better standard of living for an awful lot of folks.

Where should be the focus?

Should education and hands on experience be the primary drivers? Or should engineering and design be the driving forces that minimize cost?

I believe that the common person is simply taught to be ignorant when it comes to automobiles. They have other things to do with their lives. That’s not a big deal when you think about it, because the same level of apathy is true with most other tools and appliances.

A school teacher may get a better financial boost from learning how to repair cars, dishwashers, cell phones, and roofs. But society gets a far greater benefit from letting them teach instead of changing a timing belt.

We need teachers. Not timing belts.

So how can the market forces highlighted in that drawing above better serve the financial needs of an overwhelmingly apathetic public?

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115 Comments on “QOTD: How Can You Minimize The Cost Of Keeping A Car?...”


  • avatar
    cutchemist42

    I think 1 can be a schpol teacher and still know a thing or two about their car. For most jobs with the proper parts ahead of time, a lot of jobs can be done over the weekend when a teacher is not teaching.

    Just excluding teachers, I would say most people have the freetime on weekends and evenings to get stuff done on their car.

    Signing up for a messageboard devoted to your make and model is the first step.

    • 0 avatar
      Gary Jaffarian

      As the CEO of an automobile dealership, I’d like to offer my perspective which is the most important factor in minimizing the cost of a vehicle is to be and stay informed. While this can take on several different meanings, the most vital one I’ve experienced is to take your vehicle in for its regularly scheduled maintenance. Many drivers shy away from or completely ignore these checkups, fearful of a hefty bill afterwards. Yet not maintaining your vehicle according to the recommended schedule can exacerbate any existing problems, and potentially cause new ones. An informed consumer will generally make better decisions including understanding the real value (and savings) of OEM parts covered by warranties versus lower quality parts at a lower cost.
      In these challenging economic times, we aim to share information to help consumers make informed decisions in BOTH buying and maintaining a vehicle. We see our role on the education and hands on experience while the vehicle manufacturers focus on the design and engineering to offer vehicles with improved fuel efficiency and performance capabilities. At the end of the day, we work with the consumer to help them best select a vehicle that will meet their needs, and in most cases that conversation includes, and ideally starts with, fitting within their budget. Addressing apathy and a growing base of consumers not living within their means…that is a bigger challenge that we can at best help with one consumer at a time.

      • 0 avatar
        Ubermensch

        In other words, “Spend more money at the dealership.”

        It is possible to stay informed and perform all the required maintenance without ever having to see an overpriced dealer service bay stocked with overpriced “superior” OEM parts. Sorry for the snark, but it is hard to take seriously the advice of someone who most directly benefits from consumer ignorance more than a car dealer.

      • 0 avatar
        Landcrusher

        Gary,
        The problem with regularly scheduled maintenance is a lack of trust by buyers of what actually is going to reduce costs or is even actually required. Combine that with poor risk assessment based on experience (everyday the timing chain doesn’t fail, the driver learns its okay to not replace it) and you get modern behavior.

        If dealers make the decision to stop playing games on the service drive, this wouldn’t happen. You would need to price your repairs on a set margin, do the math on what actually saves money for your customers v what avoids emergencies v what’s a lousy deal, and educate your customers on that. The only question is how it would affect profitability in the short term. The problem being other dealers playing games and playing the part of bad apple.

        At any rate, overselling on the aisle makes your writers into used car salesmen rather than consultants, and in the long run, no amount of training overcomes that.

    • 0 avatar
      Felix Hoenikker

      Gary,

      I read an article about a year ago in Automotive News about how the source of profits at auto dealerships has changed over the last 20 years. IT used to be 80% of the profit came from car sales and 20% from the shop. Since then, the numbers have reversed, and dealers are trying to increase “customer paid repairs” that used to belong to independent shops.
      Dealers in general have the best trained techs, but also the highest costs. The savy customer knows this and divys up the repair work accordingly by sending thier mundane repairs such as brake jobs to the independents while reserving the more sophisticated work for the dealer.
      Also, the factory recommended maintenance services have decreased as technology has improved. Now we have 100,000 mile spark plugs compared to the old 10,000 miles. No points to change, etc.
      The local dealers I do business with resort to dubious marketing to attract work. One even invented maintenance schedules that are not listed in the owners manual. Naturally, they are more frequent that the factory intervals. Like the proverbial 3000 mile oil change, that kind of thing gets out and causes the customers to question your statement that the dealer is looking out for you.

      • 0 avatar
        Gary Jaffarian

        Felix,

        As the first point of contact between a driver and his or her new vehicle, I feel an obligation to offer the most relevant advice available. While the 100,000 mile spark plugs certainly do defy conventional advice regarding automobile care, this is more an exception than the rule.

        It is also not always true that dealerships are more expensive. A lot of car maintenance advice is based off of generalizations, and the only way to have advice tailored for you and your vehicle is to develop a relationship with a repair shop, and I’m not specifying dealerships. Just make sure you find a place you trust to service your vehicle, whether it be a dealership or independent shop, and always do your research ahead of time.

  • avatar
    Pch101

    A lot of the costs of car ownership are fixed or quasi-fixed. The initial price, sales tax, registration fee, etc. don’t vary based upon the usage.

    The inputs that you can control after the purchase are the variable costs, which are largely a function of usage. If you can, then drive less by eliminating unnecessary car trips. Try walking or riding a bike for short errands, use public transit (at least part of the time) for the work commute, carpool, etc. It’s not just better for the planet, it’s also better for your car.

    When you plan on depreciating the car in a short burst (i.e. taking a driving vacation), then give the depreciation to someone else, such as your friends at Avis.

    The other input that you can control is car care. In addition to timely maintenance (oil changes, timing belt changes, etc.), garaging the car will help to keep a car looking newer for longer; UV destroys interiors over time, so the less sun exposure, the better. Not that it makes sense, but a clean car sure does seem to run better; perhaps the maintenance is more likely to be performed if you have a bit of pride of ownership, and you’re more likely to have that pride of ownership if it doesn’t look like a rolling POS.

    • 0 avatar
      econobiker

      You can reduce your insurance costs (legally) by making sure you have the correct amount of miles driven listed. Say if you changed jobs from one about 30 miles each way to one 4 miles from your home this might help.

      And make sure that your company has your correct address and storage type. Sometimes a same named city area with different zip codes can affect insurance rates. This also follows to whether you have a locked secure home attached garage for your car versus storing it in an apartment building lot.

      There are other ways to save on insurance especially if you have to borrow a car from a relative who lives in a different and less costly geographic region or if you or your child is in college in an area with a lower cost of living.

    • 0 avatar

      I can’t believe I’m disagreeing with Pch101. I’m not going to rent a car for a road trip because I love driving my car, and the slushbox appliances you can rent just aren’t much fun. But most of the cars I’ve owned have come pre-depreciated, and have had relatively low depreciation. Between 1993-2012 my depreciation has averaged about $1,500/year (current dollars). That includes my one new car ever, and one used car.

    • 0 avatar
      krhodes1

      A normal average car is going to depreciate whether it is moving or not, so I cannot see why you would want to rent a car for a vacation – that is just writing a check for an expense in addition to the expense you are not writing a check for. Even a couple thousand miles is a drop in the bucket, relatively speaking. This is, of course, assuming you are not driving a hooptie that won’t make the trip.

      Ultimately, the best way to save is to do as much yourself as you can, and do your due diligence when you do need to pay for repairs or maintenance.

      • 0 avatar
        Pch101

        “I’m not going to rent a car for a road trip because I love driving my car”

        This is wrong. You can assume that a late model medium priced car will lose about a nickel for every extra mile on the odometer. With more expensive cars, this loss will increase.

        (In practice, of course, it will be easier to sell a car with lower mileage, since used car buyers do value a lower mileage car, which provides an extra benefit to the seller of the lower mileage car.)

        Combine that with the increased pace at which repairs and replacements need to be made, and the costs of additional driving add up quickly.

        “I’m not going to rent a car for a road trip because I love driving my car”

        The question wasn’t about your personal preferences, but about how to reduce the cost of car ownership. If controlling costs isn’t a priority for you, then it isn’t necessary to take some of these added measures.

  • avatar
    bikegoesbaa

    “You want to minimize your costs.”

    No I don’t.

    I want to maximize my enjoyment at an expense level that I can reasonably/easily afford.

    As I’m a longtime car guy with the proper tools and knowledge base, I could drive my automotive/transportation costs extremely low by getting buying a solid cheap car and doing the work to keep my beater reliable indefinitely. I already did that through high school, and then college, and then my first few years of fulltime work.

    Fortunately, I’m now at a place where I can safely afford to spend more than the minimum on vehicles without negatively impacting my financial security or overall quality of life. So now I have a motorcycle, and a sports car, and big fun old American hooptie, and a nice daily driver; and I’m really enjoying all of them without unreasonable expense.

    Spending above the minimum on vehicles is no different than any other discretionary purchase.

    To answer your direct question, a person’s ability to reduce automotive expenses is directly related to their automotive knowledge. Even a bit of learning pays big dividends. So, people who want to control their car expenses would be well served to spend a few hours getting educated about cars on the internet. The information is free and readily available. I have a hard time feeling bad for people who choose not to take advantage of it.

    • 0 avatar
      DrSandman

      Kudos for a good response. Asceticism is a virtue when possible or necessary. But on a site of auto enthusiasts, it is perfectly justifiable to spend a little more than necessary to make the life enjoyment better.

      After all, why did we work so hard to begin with?

    • 0 avatar
      redav

      No, I can guarantee if you can get the same enjoyment/satisfaction for half the price, you would do so. Just because you can *afford* to pay sticker price doesn’t mean you don’t check out what it’s actually selling for. Therefore, you do want to minimize costs.

  • avatar
    wstarvingteacher

    My daughter made all her children learn how to change a tire before she let them get a license. She didn’t know enough to teach them more and frankly, with the complications that have occurred in cars it would probably have been wasted effort.

    As a retired teacher I remember when as a kid the general business class taught me how to balance a checkbook. I don’t remember knowing that the class survived into this age. In special ed we taught a lot of stuff others take for granted.

    I think society has taught that cars are disposable and that is the crux of what you are discussing here.

    • 0 avatar
      sco

      I fundamentally agree with you and your daughter but the world is changing. If you have AAA or even had an recent oil change at a dealer, someone will come out and change your tire or give you a jump in 30 minutes or less, free, no mess, no danger of getting run over. Similarly while I’d like my kids to be able to change the oil, who changes oil on their own car any more? Coversely, even if i know nothing about cars, i can find a video about how to change a timing belt or any number of other even more complicated procedures. How to cut costs? Get to know your car and learn how to do those things that will need to be done (brakes, changing transmission fluid, radiator flush)and can be done more cheaply by you.

      • 0 avatar
        Dynasty

        I surely don’t change my oil anymore. The last time I changed the oil on my car was 2001. Frankly, unless a gun is put to my head I probably never will again.

        A few weeks ago I had the oil changed on my car. Labor was $8.42… I bought the oil and filter, and drove it to a local service station where I buy my ethanol free gas. The put my car up on the lift, and a short time later I was on my way.

        The best part was, in addition to less than ten dollars labor, I was able to watch the entire procedure, be sure they actually used my oil, changed the filter, and tightened the oil plug.

        Now if I had my own lift, I’d probably change my oil myself. But that’s not happening anytime soon or probably ever.

      • 0 avatar
        Robstar

        Well said Dynasty!

        I do the same thing for my wife’s car & my car — I get to choose my oil & filter and pay the guy $10 per vehicle. If he finds something wrong looking underneath, he will even have one of his guys drive me to work if it’s a problem that can’t be fixed quickly.

      • 0 avatar

        I dunno guys, at least changing oil makes you lift your bottom off the computer chair. Thought about how much a gym membership costs?

      • 0 avatar
        krhodes1

        I change my own oil, unless it is free under warranty. And the reason is that I can do it in the comfort of my own garage, while I am doing other things. And I know it was done properly, with the correct materials, and it gives me a chance to do a general inspection of the car.

        I live all of 2 miles from my local BMW dealer, and I would get a loaner, and I STILL would not even THINK of bothering to have them do oil changes once the warranty is up. Too much work to go over there and deal with them vs. DIY.

        If you don’t have the place or the knowledge to do it, so be it, I won’t think less of you.

        Brake work in particular is THE biggest rip-off out there in car repairs. Changing rotors and pads is dead simple on most cars, and the parts are fairly cheap, even for OEM parts. In the case of my car, dealers get upwards of $750 per axle for an hour’s labor and $250 in parts. Like printing money, those prices.

        I will admit, I probably would not change a tire on the side of the road myself – too many distracted idiots out there. No issue with doing the work, but I am not interested in getting run over. That’s what AAA is for.

    • 0 avatar
      Felix Hoenikker

      I also change my owm oil mostly for the convience of doing it in my own garage. I don’t trust the help at the quick oil change places coupled with the fact that I hate to wait in line. Since I work long hours during the week, the last thing I want to do is wait in line on Saturday for an oil change or a tee time at the local golf course. Did I mention I gave up golf because I hate waiting for the guy ahead to line up a put four ways and then miss the put anyway. Drives me nuts.

  • avatar
    Chicago Dude

    Avoid financing costs as a goal.

    It’s reasonable that you may need to finance your first few cars, but pay them off as quickly as you can and start saving for the next car. When you have enough money set aside to pay cash for a brand-new car, your whole view of the automotive world changes. For the better.

    • 0 avatar
      krhodes1

      At today’s crazy-low interest rates, if you can afford to pay cash you would be nuts to do so. You can leave the money in the market and make out like a bandit, and drive a nice car besides. If interest rates were in the historical 8-10% range I would agree with you, but not at the *free* to 2% that you will get with a decent credit score today.

  • avatar
    Landcrusher

    Depreciation is such a big part of the equation and people don’t know it. Edmunds used to have a page that estimated ownership cost. It was really educational.

    Since measuring is the first step to improving, getting people to quantify costs, and compare hypothetical costs of other vehicles for themselves would likely result in more savings than tire pressure checks and lighter feet dogma.

    • 0 avatar
      burgersandbeer

      Edmunds still has it: http:// www. edmunds. com/ tco.html

      Unless you meant something different.

    • 0 avatar
      redav

      People don’t have to know any details of real depreciation. Just assume the car is worth nothing after you buy it. Then, the depreciation is just the price of the car divided by the years you own it. Anyone can do that calculation, and it’s conservative, too.

  • avatar
    rhears

    Amen to bikegoesbaa. Certainly the car as appliance crowd would agree with the need to minimize costs of car ownership and this readership knows very well how to do that. But for enthusiasts who crave character, charisma, and excitement in their rides the cost to achieve those features is understood and accepted. I did notice that driving style was not mentioned as a way to keep cost down. I think it was a Tappet Brothers show a few years ago but they pointed out the very significant influence of driving style. I’m still stunned by the idiot that speeds from one red light to another, wearing out brakes/tires and overloading suspension systems, to say nothing of increased fuel costs. I’d go so far as to say that of the controllable factors, driving style is at least equivalent to maintenance is keeping a car young and viable.

    • 0 avatar
      Georgewilliamherbert

      I’m still stunned by the idiot that speeds from one red light to another, wearing out brakes/tires and overloading suspension systems, to say nothing of increased fuel costs. I’d go so far as to say that of the controllable factors, driving style is at least equivalent to maintenance is keeping a car young and viable.

      Maximizing entertainment value for the required time investment.

      Doing so unaware of brakes / tires / shocks / gas is foolish. Aware of it, tradeoffs are reasonable

      Also minimizing commute time. I get paid partly per billable hour; saving 5 min commuting is worth more than the wear and tear and gas costs, about 2x more in fact for me. Faster is tickets and returns diminish, but fast safe is good.

      .

  • avatar
    Georgewilliamherbert

    I consider driving as entertainment that life forces me to take.

    My 98 Mustang ($20k capital) went 200k miles before death, about 10k gallons of gas, $35k or so. Another $5k in lifetime registration and $15kish insurance. Repairs were oil changes ($4k?), an alternator ($500ish), two driver seat mounts ($1400, would have been 3 but I welded the last break). $1500 in diagnostics and disposal when it died. Three sets of tires, $2kish. Belts were in there somewhere.

    Total around $83k for 12 years. More like $7k a year.

    I might have saved a thousand a year driving slower, a couple thousand in a boringer ecocar; the $3-10 extra a day for the fun? Worth every penny.

    There’s a reason wife and I both daily drive RX-8s now. We top off oil like we’re supposed to, ’cause we aren’t stupid, but I’m not trading down to boringer unless gas hits $6.50 …

    • 0 avatar
      danio3834

      If accurate, you maintaining those figures is impressive.

      • 0 avatar
        Georgewilliamherbert

        I forgot the brake pads. A few of those, and I haven’t got the numbers convenient. Probably not significant.

        I don’t track every dollar (carwashes? New wiper blades? Gah). But gas predominates and I kinda want to know how much I am using up.

        Maintenance is a bigger deal with our RX-8s; both got new motors at 45k miles-ish (both bought at 35kish); hers under warranty ($1,100 misc not covered) mine at 8 years 2 weeks (owwww – $6,200). Both cost under $15k but with finance costs total capital cost will approach $19k in each case. About $1k for wheel well liner and airdam / nose bottom parts for hers. She got a new alternator, don’t have that cost convenient.

        She’s getting 22 mpg vs my 18-20 depending on how aggressively I drive.

        Tracking this stuff is just a few numbers….

      • 0 avatar
        GiddyHitch

        Agreed. I think your numbers for gas are off however. Or did your gas really average $3.50/gallon during 1998-2010?

    • 0 avatar
      icemilkcoffee

      $7000 per year? That’s a lot to lay out for a 98 Mustang.

      • 0 avatar
        Georgewilliamherbert

        98 mustang new in 98, including full depreciation; 15k plus a bit miles a year on the average (15,380), which translates to about 750 gallons of gas a year, which was $1,500 when I bought it and is $3,000 a year now.

        Or would be; head let go badly 18 months ago, it’s now someone else’s. Lifetime depreciation was full financed price new minus $300 for the salvage value when I disposed of the nonoperating vehicle 18 months ago (though its engine was repaired by the new owner, with some effort).

        Buying another one used right now, would be around $3k for the car, $3k a year for gas, $1,350 a year for insurance, $200 a year for registration, plus parts and stuff probably $1k / yr maintenance. So $5.5k/yr plus the capitalization (who knows how long it would last, if it’s a 100k car and it lasts to 200k at my driving rates it would be 6 years or about $500/year on straight line allocation). So $6k/yr, dominated by gas (50%).

        If you drive 15,000 miles a year, it adds up.

        My RX-8 is running at about $8,000 a year expected costs, including higher maintenance and slightly higher gas consumption and slightly changed mileage average (who knows if it will stay that way) and a purchase price that was, at the time, $14k (plus interest, around $19k total including interest over 6 years if I don’t pay it off early, ignoring time-value-of-money calculations for the sake of simplicity). It’s looking like 800 or so gal of gas this year, it was around that last year; at current prices around $3,500 in gas. $2,600 in payments I think, $1k in maintenance, it took a set of tires six months ago at $1,100, I need to upgrade the front brake rotors (cough) at probably another $600. Tires should last a couple of years, rotors should last life of car, etc. For amortization / writedown purposes I’m figuring the 2nd gen engine core should last 90k from time of installation, out to 135k miles; I’m at 55k now so 80,000 to go in about 5 years, so when it’s paid off I roughly need a new engine and either sell the car or reinvest another $6,200 plus inflation to get it another new engine.

        I’m simplifying a bit, but these are rounded real numbers. I don’t live my life constantly wondering how many dollars of tire I scraped off today (probably around $2.50, now that I check) or whether I should slow down 4 mph and less zoomy and save 2 mpg. I would if I were unemployed. Fortunately not. It’s just something to keep track of and be aware of.

        If you don’t track this stuff at all you are going to have nasty surprises. I had a surprise when the Mustang died; I was planning to replace it this summer (2012) rather than 18 months ago, assuming it would live to around 225k miles. I had talked to a bunch of mechanics and they advised walking away somewhere between 215 and 240k, when mileage just added up. Unfortunately it didn’t last long enough. That, you can’t avoid. Not planning at all for a replacement, not having a plan, not tracking this stuff? Your own fault…

  • avatar
    Polar Bear

    I would not rent a holiday car from Avis while the car I own sits at home being “saved”. With 90% of the cost occuring whether I drive my car or not, I might as well drive it and get something for my money.

    I know people who are too cheap to spend 10 dollars in fuel to go on a Sunday trip in their car which is falling in value by 300 dollars a month just by getting older, and which is costing them 500 dollars a month all included even if they don’t drive a mile. Complaining about the expense, they try not drive it to save money. In that case, what did they buy the darn car for?

    Once you own a car, the extra cost of actually driving it is low.

    • 0 avatar
      Robstar

      Hm, I’ll always rent. My tires, gasoline, brakes, rotors, suspension & other parts don’t use themselves up sitting in the garage….

      • 0 avatar
        JuniperBug

        My opinion is that cars are meant to be driven. Agree: keep it nice. If you have a high-buck luxo car or a fun, near-pristine sports car, it makes no sense to unnecessarily get it dinged up parking downtown or do bumper-to-bumper commuting in it. But I don’t buy a car I like to then not enjoy when I go on a road trip. That’s when a nice car will be the most appreciated, and the miles put on it are generally very easy ones. If the numbers on the odometer make you wince, you probably bought more car than you should’ve.

    • 0 avatar
      TEXN3

      I typically rent a car for our family trips. But I use points I’ve accumulated from work related travel. So, the rental is free and all I’m putting in the car is fuel.

      • 0 avatar
        golden2husky

        I will do the same as well. Also, you save big bucks by using the AMEX program for rental insurance. Unlike most credit card insurance policies which are secondary (they kick in after your personal insurance pays out) the AMEX policy costs $29 per rental period and is primary coverage, so your little green gecko or pale fat girl will never know if there is a claim. By renting, you spare a lot of wear on your car, especially on the interior from the usual road trip messes. I usually figure the cost of driving to be about 20 cents per mile for non-gas expense, and if that number exceeds the rental by a significant amount, it is off to the rental counter. However, when out in the fun car, I drive for just that – fun and stress release. I don’t care if I kill the brakes in 20K miles.

      • 0 avatar
        caltemus

        I’m confused, I know the green gecko is geico, but what insurance has a pale fat girl? Allstate? Maybe pale but she isn’t fat.

  • avatar
    danio3834

    If you are the average person and your goal is to reduce your cost of ownership, the key will be to make a solid effort to educate yourself about all of the areas noted as much as possible.

    Once you understand the mechanics of financing, insurance, depreciation, wear, and the vehicle itself, you can work toward reducing costs in those areas in ways that are relevant to your life.

    It’s disturbing how little people understand the cost if financing and even more disturbing how little they are interested in maintaining their investment in their daily transport.

    I think most people would want to do this, however more would rather have someone else do it for them. Apathy right?

    • 0 avatar
      dolorean

      My daily driver is an ’08 Astra XR 5 dr, which I love. It has a slick 5 spd manual, tight European suspension, very comfortable seats, enough room to fit the kids and the spouse or all my Army gear, I dont care if the dog comes along, has a bigass sunroof, kickass stereo, gets 30 mpg consistantly, and most important, it doesn’t look like anyone else’s car.

      Adding up the costs at 75K miles / 5 yrs. One battery ($130), two sets of tires w/ Nitrogen (4x $105/$840), gas (2500 gal x $3.50 average/ $8750), car payment paid off ($250 mnth x 4 yrs/$12000), oil changes (@$500) and spark plugs ($40) and a Tule roof rack system for bikes and cargo ($300 from eBay). Total: $22,560. Car itself cost $18K new.

      Would’ve saved a bundle had I not financed so much. Just can’t seem to be able to save enough money to buy a new car anymore.

  • avatar
    duffman13

    I minimize many of my costs through DIY basic maintenance. I am handy enough to do brakes, non-alignment suspension work, tire rotations, and fluid changes myself.

    It is true that car related costs add up though. Without accounting for maintenance, it costs me the following to keep a 2-car household with running transportation each month, and one of our cars is paid for:
    Payment:$377
    Insurance: $150
    Gas: 2 cars x 4-5 fillups x 12-13 gallons = $4-500

    Budget another $20/month/car to pay for maintenance items and add it up over time to defray one-time costs for large purchases like tires.

    This looks much better than my numbers did when I was single, under 25 and driving a sporty car, with $550 a month going to payment and insurance alone, and I put down over half the purchase price of the car at the time. 0% interest is great.

    • 0 avatar
      Polar Bear

      A car is paid for. It will still depreciate.

      • 0 avatar
        duffman13

        Depreciation is inevitable though. Unless I was a short term car flipper (2-3 years), it wouldn’t figure into my calculus. I come from the school of thought where I drive the car into the ground over the course of 10 years and get my money’s worth out of it. If it is not costing me money as far as payment goes, it is free in terms of the utility it provides me, since the alternative is not being able to get to work, etc.

        My particular ‘paid for’ car is an 00 S2000 with under 100k. unless I pile on another 50k miles in the next year, it’s depreciation is pretty well leveled off. That and the intention is to keep it forever as a fun car anyway.

  • avatar
    jdmcomp

    Amen brother, most people are so bling oriented they commit financial hari kari every time they spend money. From my too many years of driving I find that minimal upkeep prevents almost all problems from happening and the rest are entirely my fault. Buy a car you can afford to own. But I do love my Jag, faults and all.

  • avatar
    Polar Bear

    In related news, a Maybach will be worth 1/3 of its original price after a year.

    I guess I should settle for a Bugatti.

  • avatar
    SuperACG

    I really don’t get why people make such a big deal about Depreciation. You only see it if you sell the car (or trade) or if the car is declared a total loss.

    I don’t believe it should be part of yearly expense since you don’t pay out anything different, and really don’t feel any loss if you keep the car year-to-year.

    • 0 avatar
      duffman13

      I think it only makes a difference if you are a habitual car-flipper. But that being the case, you should probably pay the depreciation in your payment. They invented leases for people with that mentality.

    • 0 avatar
      bludragon

      In that case you need to decide how long you will keep the car (or how long it will last) and then factor that in to the cost. At some point the car will cost more than the depreciation to keep running, and you may want to get rid of it before then.

      • 0 avatar
        SuperACG

        At that point, it’s worth more as a car than it is as an asset with value. What could you realistically sell it for? At which point it would be worth more as scrap than what someone would pay for it. By then that’s just salvage value.

    • 0 avatar
      67dodgeman

      If you keep a car long enough, it will stop depreciating.

      • 0 avatar
        krhodes1

        Indeed! My ’74 Triumph Spitfire is appreciating quite nicely at this point. And it is as reliable as the sunrise at the ~1K a year I drive it. One afternoon a year in maintenance, $60/yr in insurance, $40/yr for taxes and registration. Cheap sunny day fun.

        Not really possible with a daily driver though.

    • 0 avatar
      Jellodyne

      The flip site of depreciation is the value of your equity. Say I buy a car with $20k cash. At the end of the first year, is my cost of ownership 20k+ a year? No because while I don’t have 20k in cash, I have a title that’s worth, let’s say $17k. So my cost of ownership for the year includes $3k worth of depreciation plus all operating expenses. Essentially the cost of ownership includes depreciation and interest, but _not_ the actual payment to equity. Which feels backwards since it’s the payment we feel, but it’s the right way to calculate it.

      • 0 avatar
        SuperACG

        Sure!

        But where did you get the $17k figure? From what others are selling their car for? What if dealers are offering $5k rebates on new ones, thus pushing the value down further.

        Insurance would likely not factor in rebates in a total loss, unless those rebates affected very recent auction sales.

        You see, what I’m getting at is Depreciation is really just an imaginary number.

      • 0 avatar
        redav

        Yes, it is just an imaginary number, until you sell. If you never sell, it never matters.

        I always consider a car as having no value immediately after purchase. Each year I own it, its average annual cost improves. If I do sell it, whatever I get is more like a bonus than a residual value. A good thing about this strategy is it forces you to work with real money and not depend on what you may or may not get for it. If you can’t afford the car without including its residual value, maybe you should reconsider the purchase.

      • 0 avatar
        Jellodyne

        Look, it’s a hypothetical example. I kept it simple to make a point, but apparently not simple enough. Let’s say a car is listed at $25,000 and with all the cash on the hood and discounts you payed $20k cash. Now in a year, you’ve got a title, which may be worth $17k (Honda Civic), $12k (Chrysler Sebring) or maybe you bought an appreciating classic and it’s worth $22k (’68 Mustang). The point is that you have some remaining equity in the vehicle which you could get out if you so chose. If you’re ignoring your equity, you’re not calculating things right. That equity is a real, not hypothetical thing. And the depreciation is a real effect on your real equity. You can’t calculate your actual cost of ownership without it, and like I say, the depreciation is the actual foundation of your cost of ownership, not your car payments.

        Look at it this way, suppose you bought a car that had no depreciation at all. Also, since this is a hypothetical example, it’s solar powered, never breaks down, requires no maintenance, and is sturdy enough that it didn’t suffer wear and tear, absorb odors, etc. You pay $46,521 for this wondercar, pay nothing to operate it, and 10 years you decide to upgrade to the wondwerminivan and sell it. Since it’s exactly as good as when you bought it, you sell it to your neighbor for exactly $46,521, the same as what you paid. Both transactions are cash, and since you live in a libertarian paradise, you pay no taxes on the deal. What is your cost of ownership for those 10 years? Is it $4,652.10 per year (cost/time), or its it zero? Yeah, it’s zero, because you can ignore the payments to your equity since it goes on the other side of the balance sheet and can be unwound back to the cash side. Your cost of ownership is depreciation and expenses, and in this example it’s zero.

        This is no less true in the opposite example, where you buy a car and 10 years later it’s worth next to nothing. You can in your mind equate your payments as the cost of ownership since your payments are roughly equal to your dpereciation of 100%. But It’s not the payments that cost you all that money though, it’s the depreciation, because if the car was still worth half its value after 10 years, you could recover half your money and cut that component of your cost of ownership in half.

      • 0 avatar
        22_RE_Speedwagon

        @jello
        where can I find this libertarian paradise exactly?

      • 0 avatar
        Landcrusher

        @speed
        Huh? What is the connection to libertarianism here?

      • 0 avatar
        Jellodyne

        @speedwagon, the same place you find a car with no depreciation or operating expenses.

  • avatar
    Gardiner Westbound

    I buy quality new cars and drive them about 10,000 kilometers a year. My long time mechanic says I’m anal about preventive maintenance. I keep them 12 or 13 years and then sell them for top dollar.

    My son is the nicest guy in the world. His house is the best maintained, prettiest house in the neighborhood. He does most of the work himself. Nonetheless, I cannot get him to check the oil in his car or the air in the tires. On a recent visit I barely got a reading on the dipstick, put in almost two liters. Tire pressures varied 8-psi. The underslung spare tire cable was immobile from rust.

    I wrote out a preventive maintenance schedule for him a couple of years ago. NADA. I just don’t get it.

    • 0 avatar
      jhefner

      Simple — he views it as an appliance, literally. You are anal about your car maintenance; but I assume you are like most people and don’t regularly lubricate the moving parts in your dishwasher, clothes washer, or dryer; or have a service tech do an annual inspection of your A/C, stove, and hot water heater? Most likely, you just run them till they break, and either have them repaired or replaced.

      I am not saying it makes sense money-wise; my guess is that in his mind, time and money spent on other things is a better investment. If he can afford to do so, more power to him; what amazes me is that they have gotten something as complex as an automobile down to such a science that in most cases you can drive it for at least a year or two and about 50,000 miles before it blows up in your face from lack of maintenance (usually.)

  • avatar
    Quentin

    Having a company subsidized 30k/yr, maintenance, insurance, taxes, and consumables included lease for the win. My $37k car cost $400/month in lease payments and the only other thing I cover is gas. And my lease vehicle gets 42mpg combined.

  • avatar

    Over 5 different vehicles, I could tell you how to MAXIMIZE the price of keeping a car.

    MINIMIZING is really hard though.

  • avatar
    Conslaw

    Marketplace Darwinism, the theory discussed in the first part of your article, is a theory that I learned to disagree with early in my college experience. I was taking economics courses that taught me that rational decision-making and free information flows were core assumptions in the theory that free markets reach efficient outcomes. At the same time, I was taking a consumer behavior course that focused on research geared to identify and predict irrational thinking.

    When I got into the real world, I could see how the biggest rip-off companies, in some form or another had learned how to exploit irrationality to their advantage. (How else can you explain timeshares?) It’s a matter of luck perhaps if we are born intelligent with good decision-making skills, but even if we are, if we are lucky, we’ll reach an age where those skills diminish. When capitalism is operating in Darwinian mode, it’s open season on Grandma.

  • avatar
    Felix Hoenikker

    I have my DD now for 8.5 years. When I bought it, I decided on a little experiment to see how long it would last if I did only the maintenance in the listed in the manual by myself. It took eight years and 185k miles before the first non wear part failed – an alternator. I’m now at 205K miles and chugging along after replacing the shocks and struts. So my total repairs excluding normal wear items like brake pads, oil, etc is about $400 or $50 per year. Not bad for a 2004 GM product.
    I credit my driving style for a large part of this record.

  • avatar
    stuntmonkey

    I minimize my costs by not using my car… the others on the board aren’t going to like that answer. I intentionally chose to live close to a major transit line where the riders are mostly upper-middle class worker types and where the commuting experience is clean and friendly. That saves my car for the weekend and the trips that I would really enjoy.

  • avatar
    tbp0701

    There are a number of issues here, many of them cultural. I think too many people are taught that they are judged or judge a person by the car s/he drives, causing many to attempt impressing others by buying a car beyond their means. I know some even justify this decision by thinking such a car will somehow help gain access to people who can help them be more successful. Compound this with the expectation that a car will be financed over several years. People are not expected to choose a car which they can buy outright.

    I can say that in my own car shopping, I looked at several used Acura, BMWs and Infinitis, among others. Several of the cars showed signs that they were owned by people who could not afford them, particularly inexpensive tires and replacement parts. I can also say that I felt a desire to buy something along these lines. There were a few factors in this: I am a middle-aged professional with controlled spending habits, but I am also a driving enthusiast. I also learned that people tend to be surprised when a man who is driving a well maintained, high mileage car is not doing so because he can’t afford anything else. Even when replacing things like the battery or tires, sales people would ask the mileage and year and show me the cheap prices, becoming surprised when I decided on something much better. Luxury car salesman, as well, would see my current car and, if they took me seriously at all, would start talking about long term financing. I’d get odd looks when telling them I would not need a loan.

    For me personally, my old Accord went over 200K miles and would not start one morning. It’s since been fixed, but I realized it was time to choose a car. While I strongly considered a 3 series or TSX, I wound up getting a manual Mazda 3 with the Skyactiv engine and am very happy with it so far. This is my modest but fun commuter car, was well within my means, and, for what I would have spent on a BMW, I can also find a true sports car like an S2000 or a Miata. Doing so would still be well within my means, partly because I kept and maintained a car for over 200K miles (which I still have).

    • 0 avatar
      SherbornSean

      tbp0701 is my hero.

    • 0 avatar
      ciddyguy

      I’m with you there, though I drive an ’03 Mazda Protege 5 that I love and I’ve only had it 6 months, put over 5K on it so far (several day trips, two of them over 300 miles in one weekend).

      It only has 115580 or so on it now, and I have no regrets paying $45-50 in gas to keep it filled, and just drive it when I need to.

  • avatar
    rentonben

    Buy a nice new car that you really like and love.

    Then keep it for ten years.

  • avatar
    redav

    Great QotD.

    But the infographic says $5,925/yr and the article says “well over $8,000 a year.” The infographic has some really strange values in it, like driving 8380 mi/yr, so I don’t trust it. What is the source for the $8k figure? Here’s my breakdown:

    Cost, including financing, TT&L, etc: $22k
    Years owned, to-date: 11.5 (I anticipate owning it another 9 yr at least) -> $1913/yr (so far, & decreases each year)
    Annual mileage: 8k
    Fuel: 27 mpg, $3.60/gal -> $1067/yr
    Insurance: $1000/yr
    Registration/Inspection: $110/yr
    Maintenance: $1500/yr (ball-park estimate, some years it’s more like if I have to repair the AC, but other years it only needs oil changes)
    Total: $5590/yr

    But… if you ever expect to rent a car or drive for work or even have a DL just in case you ever want a car, you need insurance, so you’re going to pay for that regardless.

    Clearly, the biggest factor in the cost of a car is the cost of the car. Buying a $20k vehicle will save you quite a bit over a $30k or $40k vehicle. But total cost isn’t the real parameter–it’s cost/yr, so the longer you keep it, the cheaper it gets. Thus, maintaining the car (combined with driving it sensibly) to maximize its life makes it cheaper to own. Driving sensibly improves gas mileage and the life of tires/brakes, and minimizing the amount of driving directly reduces fuel consumption, which saves at the pump.

    Saving up beforehand to finance as little as possible can save a lot, too. (Similarly, maintaining good credit to get the lowest interest rate is a factor as well.) Many states allow credit score to be used for insurance rates, so staying on top of your bills saves money in insurance, too.

    So, it looks like just a couple habits–make it last by driving less, driving sensibly, and maintaining the car; and keeping your finances in order–are all it takes to improve most costs of car ownership.

    • 0 avatar
      redav

      And on a side note: Driving less (primarily through having a short commute) reduces societal costs, such as traffic & pollution. If everyone could live closer to work (IMO, zoning to promote alignment of employment & housing would be effective), we would save a ton of money on fuel & wear-and-tear, get back time in our day, not be in such a rush all the time, reduce road-rage, reduce pollution, & reduce the trade deficit.

      No new tech would be forced on anyone, and everyone would still be able to own whatever they want.

  • avatar
    wsn

    “After decades of looking at this learned victimization, you can’t help but wonder whether millions of people have been brought up to not live beyond a certain level of struggle and mediocrity. Even if they tried to get ahead, the scourges of debt and dependency would lead them to poverty because they simply don’t know what they need to know.”

    — Very well summarized. IMO, that can be blamed on the social welfare system. In a real jungle, the less intelligent and the less fit are quickly killed and eaten, or at the least such male individuals can’t find a mate.

    But with the human society, the competition is far less fierce. Mediocre individuals can not only live, but also expect to find a mate.

    I won’t make the judgement call to say which system is better, but just to explain the points you mentioned.

  • avatar
    Landcrusher

    Depreciation thread got convoluted, so I am starting a new one. Lets get some stuff straight.

    Depreciation is real even if you never sell the car.Why? Because you then realize a total loss of your purchase cost. If you never sell, SP is zero.

    IOW: Depreciation equals Purchase Price minus Sales Price, or D = PP – SP

    Estimated Depreciation is NOT imaginary either, its an estimate. We usually leave off the estimated part because its understood, but technically they are different. The thing you REALLY want to know is Depreciation per Year or Month. Cost without time means nothing. NOTHING!

    Depreciation and Finance can be the largest costs of ownership, and if they are, you are likely spending too much.

    If you really do keep a car forever, then your depreciation per year becomes very small, and thats a good goal, but if your 35 year old Jag is eating all your weekends and ten grand a year in parts then the appreciation is likely not worth it.

    I really hope you guys can understand this. Its very important for everyone. Financial foolishness by others has both positive and negative effects on the rest of us. See 2008 for for examples.

    • 0 avatar
      redav

      Still way too complicated. How much did you spend for the car? Bang – that’s the depreciation. Done. That’s all you really need, and since it is frankly covered rather intuitively by the *price* of the car, there’s no need to invent other terms to handle it.

      • 0 avatar
        Jellodyne

        You’re right, that is simpler. It has the slight disadvantage of being entirely wrong, but if simplicity is what you crave, keep calm and carry on.

      • 0 avatar
        Landcrusher

        No, it’s not that simple unless you just don’t care about thousands of dollars. Before meeting me, my wife bought a new Mitsubishi for almost 20k, in 4 years it was worth 6 and not worth keeping due to cost and frequency of repairs. I bought a used truck for 22k, and reluctantly sold it 10 years later for 5k (it was worth 6500 but it needed repairs I was unwilling to not disclose). 3500 per year is a lot worse than either1700 or 1550 per year depending on how you calculate.

    • 0 avatar
      SuperACG

      You must be an accountant! Yes, I took the same class in college too. fact is, Depreciation only makes sense if you’re a business and, and have to write off all costs to stay within budget right down to salvage value.

      Everyone knows that a used item is worth less than what it cost new, but how much less? Anyone could pull a number out of their ass, and that’s why Depreciation is imaginary. There is no real cost.

      For those using their vehicles for personal use, it really makes no sense to keep track of day-to-day, week-to-week, month-to-month, declining values which can vary greatly. Those variances contribute to the whole “imaginary” point.

      Redav is the only one who explains it better.

      • 0 avatar
        Jellodyne

        Redav says depreciation is what he spent. Except that the things you own still have value, and that matters if there’s a chance you’ll ever sell it or cash it out from an insurance claim.

        It may be that years of buying terrible American cars has trained you to think a car is worth nothing the moment you take ownership, but even the better American cars are holding their value more than they used to.

        The original post is about calculating the cost of ownership. It sounds as though that doesn’t interest you much, or that you guys don’t care if the numbers you come to are wrong in fundamental ways. Like I said, it’s simpler to do it your way, so enjoy.

      • 0 avatar
        golden2husky

        I think Lucas has trained people to think that way…

      • 0 avatar
        Landcrusher

        No, I am not an accountant, I did take a college class, and many accountants are terrible car buyers. Depreciation means a lot more things to a business. The application here is actual cost. Business depreciation is a tax and accounting system which causes people to make bad decisions. Totally different.

        If you apply a little thought you find out that dependability is the real key to low cost ownership for everyone that does regular or lower mileage. Dependability affects maintenance cost and depreciation. If more buyers bought on dependability, the average quality would drastically improve.

        If more people understood the breakdown of costs and how much was due to depreciation, we would all be better off.

    • 0 avatar
      Polar Bear

      Landcrusher, when I discuss car depreciation with people the problem is more than just the complexity of how to calculate it. It is not that difficult, really. But many people don’t want to know. The amount they actually spend on car ownership can be unpleasantly high, and they prefer to focus instead on how much discount they got from the dealer (as if the sticker price was real to begin with), or how their 40k new car (which will be worth 30k after a year) gets 3 mpg more than the perfectly fine car they traded in and got 8k for.

      This is ego-nomics, self deception, but lots of people are happier that way.

  • avatar
    Dynamic88

    This might have been a more interesting article had you fleshed it out a bit more. I take the overall point to be that the cost of ownership goes well beyond purchase price, and who could possibly disagree with that?

    You’re correct that many people can afford the wrong choice. I see day care workers tooling to work in BMWs. I know they must be leasing because I know the payments would be too high if they were buying. I wonder where they came up with the scratch for the down payment? I also wonder why they don’t want to do something better with the money than show off to people who know approximately what they earn anyway? It’s a mystery to me. But since they are leasing, they don’t have repair expense to worry about.

    I think we’ve long since passed the point where hands on experience and education can be the driver of lower costs. Many people are just not mechanically inclined, and cars today are complex, not to mention just physically difficult to work on. The driver has to be design and engineering.

    I see people trading in too often. And by too often, I mean when their cars are less than 12 years old. Lot’s of people have figured out that a new or late model car can be driven 5-7 years with absolutely no unexpected repairs (and this is true of many cars, not just a few Japanese cars). But people are still afraid of big repair bills, so they trade in a car at 5 to 7 years, foregoing several more years of reliable driving. Getting a few more years out of a car that is still quite reliable and still has a lot of life in it seems to me one of the best unexploited ways for most drivers to reduce owner/operator costs.

    • 0 avatar
      Steven Lang

      The fleshing out I always leave to the folks here. There is a lot more collective wisdom here than I can ever provide with a single post.

    • 0 avatar
      golden2husky

      I can understand those who want to trade before 12 years, though I routinely exceed that number (and yes Dynamic88, more often than not in US iron). But what kills me is those fools that lease more car than they could afford to buy. My friends in Florida have leased two cars for three year periods for as long as they have been married. That’s 12 cars to date. Now their daughter gets a leased car, too. Add up all the junk fees that are part of leasing like acquisition/disposal fees, cap cost reduction, possible ding/damage fees, etc, and you have blown tens of thousands of dollars and in the end have noting other than x number of hours behind the wheel. Maintenance and repair would be far less, but then again if your wife forces you to do this and nothing less than a snot brand will do, you have a lot more to worry about…

  • avatar
    Darkhorse

    Depreciation really bites you in the ass if your car is totaled in an accident. I lost our 2003 Chrysler T&C when I was rear ended at a stoplight by a truck. Perp’s insurance would only give me $7,000 to replace a family car that retailed used at $10,000 in 2011. I’ve since learned that it pays to get the total replacement rider on your insurance.

  • avatar
    Gannet

    Cars cost money, and then ya die.

    Some pay more, some pay less.

    Some live longer, some live shorter.

    People do what they want. Some people even spend time on the Interwebs writing/pontificating/worrying about how other people spend their money/time/life. Is that a good use of one’s limited resources (time on this Earth)? Arguably not. But people do it anyways.

  • avatar
    econobiker

    If possible, I try to buy new and then keep a vehicle for 10 plus years. 5 years financed, 5 years as a used vehicle, and anything else is pure gravy.

    Also I have stretched oil changes (with filter changes) to 5,000 miles on every xx0,000 and xx5,000 mile interval.

    Used tires also help as long as you get at least two full sized spare wheels (in addition to compact spare) so you can shop the junkyard or the used tire place at your leisure for used tire deals and have the tires mounted and ready to swap out. Average retail in the US southeast is between $30 to $50 purchase per tire mounted and balanced and installed. This can be less if you get a couple of tires from a friend, relative, or pickapart and only have mount/balance/install/dispose of old tire. If you can go one tire size over this helps the used tires last longer also. Beats $100+ per new tire.

    • 0 avatar
      baggins

      Used tires by shopping the junkyard or used tire place?

      Two points

      – Tires contribute quite a bit to the safety and ride of the car, I tend to get replace mine pretty early. Maybe you are buying mine
      – What value do you put on your time? Cruising junkyards for used tires better be entertaining for you

  • avatar
    2drsedanman

    Buy a base Toyota Tacoma, change oil, and drive it into the ground!! Unfortunately, most people buy way more car than they need or can afford. Even when they try to “right size”, they are so upside down in payoff that they are forced into a similar situation so they can get another new car. I’m 43 and wonder how I ever survived childhood not being taken to school in a $45,000 SUV. Lucky I guess.

  • avatar
    Slow_Joe_Crow

    Bangernomics works pretty well for me. I drive a 97 Saturn that was a hand me down from Grandma. I live in Oregon, so no taxes and even with emissions testing I pay less than $50 a year for registration, and liability only insurance is about $500 a year since I’m over 40, married and no recent accidents or tickets. Gas mileage is mid 20s and I burn around a tank a week so $1500-1800 a year for gas. Factor in $1000 for maintenance, repairs and tires and I have running costs of around $3000 a year mostly due to cheap insurance and no loan payments or depreciation. I also stopped using it as a primary commuter vehicle in favor of a bicycle and public transport to save even more.
    It’s a bit of a beater with flaking clear coat and lots of bicycle related stickers but I take a perverse pride in parking my freebie next an upside down SUV.

    • 0 avatar
      ciddyguy

      A tank a week? You must do way more driving in a typical week than I do. I drive to work, 5 days a week at 10 miles each way (from Seattle to Bellevue, and back) for work, walk to the store when not heading there on my way home, walk every where else, and do the occasional longer trip, to say, Tacoma, roughly an hour to an hour and a half, depending on whether I’m going down from work or not.

      I typically fill my tank about every 10 days. I have a 14.5G tank, and my car is an 03 Mazda Protege5 that gets mid 20’s highway, at best.

  • avatar
    gtemnykh

    I recently learned the hard way just how much sense it makes to hang onto an older maintained car. I was gung ho to sell my MPV to upgrade to a slightly newer and more capable SUV (early to mid 2000s fullsize Montero). The MPV is in fantastic mechanical condition, just put in close to $400 over the past few months to get the AC blowing cold, a new wheel bearing, and new load leveling shocks (did the shocks at home, took the car to my brother’s friend’s shop for the bearing and AC). I blew away potential buyers with how well maintained the car was. Shiny waxed paint, smooth running engine, everything works. I made arrangments to sell the car for a very good sum of money, and spent the following weekend looking at used SUVs at used car lots. That scared me straight. The montero I looked at was listed as a clean car on cars.com, photos looked great, asking price was reasonable for the mileage and year. I show up to a horror show. Nasty cheap respray, oil leak from around the rear main seal that dripped on the cats, weird vibration in the rear end (differential, u joint?). A Isuzu Trooper I looked at had obviously spent time on its side judging by the caulk applied haphazardly around door seals and strange air leaks around windows.

    My MPV by comparison might as well be a brand new 2012 car. I decided that I’m hanging on to the MPV basically forever, I’ll eventually buy a newer compact car for commuting once I move and buy a house. The only thing wrong with the Mazda is that tin worm is creeping in. I’m slowly learning MIG welding, once I feel comfortable enough I’m patching up the rocker panels and rear quarters. My intial attempt at rewelding the front fender bottoms was only so-so. Still looks good now, the pseudo macho fender flares cover up all visible rust. The underbody of the car is drenched with Fluid Film as of this spring, hopefully that inhibts rust effectively.

    • 0 avatar
      LeaperNYC

      ++

      Same experience with the same car. 2001 Mazda MPV, owned since new, and since before we bought our home. 130k miles so far. It has gotten plenty of love and plenty of use. And it just won’t die. The thing looks and drives like new, or at least, like it itself did when new. Never a blusterer but solidly reliable without a rip or a fade or a visible mechanical degrade, anywhere. Body has taken some beating but at this age, they wear like battle scars. We considered renting for a road trip this summer but ended up just taking the Mazda, and used the savings for new tires and an AC recharge. I can let anyone drive it (unlike the *nice* car) and guess what – the kids love the high captains’ chairs, configurability, etc.

      MPV uniquely filled a niche for a 7/8th scale Odyssey/Sienna. Small on the outside (parks and handles well), big where it counts. Mazda5 is now too small, everything else is too big. I’ve often been heard saying I’d buy a newer, fully loaded example if I could (ours doesn’t have leather, or rear AC, or auto sliding doors), but who am I kidding – why even bother when you have a great, inexpensive (long since paid off) car that should go another 70k+ without complaint.

      This was one of Mazda’s great sleeper hits.

      • 0 avatar
        gtemnykh

        I should note that my MPV is the “1st gen” RWD model, which shares no parts with the later 2nd gen ones. I pay for it in gas (15 around town, barely 20 on the highway with E10), but it is a fantastic workhorse, and relatively easy to work on. I feel a very close bond with the car, I’ve done all manners of repairs to it, from welding sheetmetal to balancing a driveshaft with hose clamps (worked out great!). Also, parts cost an arm and a leg sometimes and can only be obtained through online OEM dealers. Just built a platform for the back so when I take out the rear bench and captain’s chairs I get a totally flat floor, the size of a twin bed. Just gotta find the right sized mattress and my gf and I will have an awesome mini-camper!

        I like to think of my MPV is the first crossover: based on a luxury sedan chassis with rack and pinion steering and a tight driving yet sturdy MacStrut front end, with the roominess of a van, and the part/fulltime 4wd system and hauling capacity (factory claimed 5000lbs!!) of an SUV.

  • avatar
    jacob_coulter

    I’m always amazed by how much people spend to own a car compared to their income.

    A $40k SUV is just considered a “normal” purchase for a middle class family. My opinion is that you’re being financially reckless witha purchase like that if you’re making under six figures. I can’t tell you how many friends I have with around $40k vehicles that are making $50k a year.

    If you can dodge the depreciation by buying used and buy a reliable make (avoid European) the cost per year goes down astronomically.

    • 0 avatar
      56BelAire

      I agree Jacob, I too am amazed by the $40k-50k SUVs and trucks I see young seemingly low-middle income people driving. Seems they value bling today rather than considering the future…..a house, kids, educations. I don’t know how they even pay for the various I-devices and their accompanying contract costs. Not to mention insurance costs on those expensive SUV/trucks are astronomical as well.

    • 0 avatar
      baggins

      If you make 50K and have a 40K car, you better have inherited a house.

      A car is a rolling sports coat. I can relate to your friends. Last year I drove a 2002 Taurus. Ran great. 60K miles. Perfect shape. But I felt like a bit of loser driving it. Didn’t feel in keeping with the image I thought I needed to project. Lots of people will claim they dont care about this, but most do. Some want to project a frugal image.

      So I wholesaled by Taurus for a painful 3K, and bought a new 2011 Accord for 21K. Definitely drives better than the Taurus, but not that much better. But I feel better when I pull into the parking lot at work.

      Now before everyone jumps on my case and says I am a fool for letting image waste all that money, note that I followed the two month guideline – spend as much on your car as take home in two months (just like the Debeers diamond engagement ring marketing).

      The point is, I am spending quite a bit more for the same “utility” as defined by a 5 pass, 4 door sedan. Because my psychological needs were met better by something that cost more.

      Oh, buying used wont astronomically reduce your costs. Have you priced late model used cars lately? Buying a 10 year old car could reduce your cost.

      • 0 avatar
        burgersandbeer

        I have never heard of this two month guideline for buying cars.

        This would limit someone making $100k/year to cars costing $12-13k. Certainly a great idea to make sure you live below your means, but it sounds excessively restrictive. Especially with the cost of used cars these days.

  • avatar
    wkiernan

    When I first got a Miata I was worried that the cost of such a fun toy would be prohibitive. To see if that was actually the case I made a text file called “mileage.txt” and recorded every cent I spent on it. For the one I have driven for the past six years and three months, a white ’99, the results to date are as follows: I drive 23K miles a year at a cost of about $6,100 per year or a bit less than $0.28 per mile. The total cost, including purchase price, loan interest, insurance, tags, parts, repairs and fuel, has come to $39,700. Of this, 41% – $16,200 – has gone to the gas companies. My long-term mileage is 27.7 MPG.

    Now while my text file records all these figures to many decimal places, I’m not even all that confident of three decimal places. Barring blunders, the money and date parts are precisely exact, and for the number of gallons of gas I depend on the pumps, which are regulated and tested by the Florida Department of Agriculture and Consumer Affairs, and are therefore ideally accurate. But I get the miles off the odometer, and it’s hard to believe that any odometer, dependent upon the circumference of the tire, could be accurate to three, or even two-and-a-half decimal places.

  • avatar
    multicam

    Depreciation.

    My example: I owned a Wrangler, famous for holding their value. I sold it after six years. Pristine examples of the same MY with MORE miles than mine were selling for only $4K under their original purchase price! I could have lost less than $1000/year.

    I took a much bigger loss than that over 6 years. Why? I used the product how it was intended to be used- I wheeled the **** out of it. I did all the maintenance, cleaned it constantly, kept it up, but it took a beating.

    Could I have babied it and lost less money? Sure, but I wouldn’t have 6 years of good memories in that thing, getting it stuck in muck, pulling people out of muck, getting dirty.

    The key to all this is that I could afford all this. I didn’t go into massive debt to get my next car. Obviously, this must be done carefully and not everyone can afford it- people just need the self-discipline and knowledge to make good decisions.

  • avatar
    geigs

    2005 Honda Odyssey EX-L, 2003 Mercury Mountaineer AWD, 1994 Cadillac Sedan DeVille. All very clean and no car notes. All owned since new (except the Caddy, bought that from a family member in 2003). How am I doing?

    • 0 avatar
      56BelAire

      God bless you geigs, you like your big heavy iron. I bet you do some serious road trips?

      • 0 avatar
        geigs

        You called it! Every spring, we head out on a 1,500-2,000 mile odyssey. Route 66 is on our list for a future trip. Wish I could find a Mopar or independent from the 1950s. That would be living the dream. From your avatar, it seems you already found yours.

  • avatar
    AoLetsGo

    I am all for minimizing cost of car ownership. My cars are modest, and get decent gas mileage and while not race cars are somewhat fun to drive. Insurance and gas are the killers for me living in Michigan (highest insurance rates in the nation) and driving 40-50k per year. Therefore the total cost is a big part of my budget – but so what I like to drive and there are many places I either need to go to or want to see.

    Let’s talk about fiscal irresponsibility. Going to the bars and drinking $5 beer, $9 wine or $12 fancy drinks. Don’t even mention the people who get DUIs and the thousands that costs them. Credit card debt and bad credit ratings which equal high interest payments. Illegal drug users and pain pill abusers – there is a pretty penny. Buying way more house than you need and then defaulting in bankruptcy. Lotteries and sports betting to say nothing of the casinos that are packed day and night.

  • avatar
    Polar Bear

    “Buy new and keep for ten years”. You still get the steep new car depreciation. You just spread the loss out on more years of ownership. If you want to avoid the new car loss you have to buy 2nd hand.

    Example:

    Buy a 30,000 $ car new and keep it for ten years. Assumed value when you sell it is then 3,000.

    30,000 – 3,000 = 27,000 divided on ten years = 2,700 per year.

    BUT buy the same car used at 4 years old at 15,000 $ and keep it for six years (till it is also ten years old)

    15,000 -3,000 = 12,000 divided on six years = 2, 000 per year.

    (The guy who sold after four years lost 15,000/4 = 3,750 per year)

  • avatar
    Roland

    WSN: “In a real jungle, the less intelligent and the less fit are quickly killed and eaten, or at the least such male individuals can’t find a mate. But with the human society, the competition is far less fierce. Mediocre individuals can not only live, but also expect to find a mate.”

    In hierarchical societies, the more fit individuals may tend to co-evolve symbiotically with the less fit, since in such societies, the success of the upper echelon at least in part depends upon the survival and reproduction of the lower echelon whose efforts contribute to that success.

    Bear in mind that sexual selection is what economists would call a “trailing indicator.” Females evolve to prefer certain male types, but those types are only those which up to that point have been relatively successful. In easy times for the species, the males most successful in optaining mates might not be the best adapted for later circumstances. In a rapidly changing environment sexual selection can have perverse effects, as females continue to prefer mates with formerly successful, but now less adaptive, traits. Sexual selection, therefore, can under some circumstances actually become a contributing cause of species extinction.

  • avatar
    Robstar

    I’ve only owned one new car/motorcycle and they are each 7 years old. Last used car I bought lasted 6 years 85k miles. I have no intention of letting either one go for the next 7-8 years unless my situation changes dramatically. Paid off = the best type of vehicle.

    I think at (52 k miles) in 7.5 years My car should last 20 unless rust gets it. My bike in the same period is approaching 26k miles. 250k/100k would be a good lifetime for both.

  • avatar
    Scott_314

    I’m surprised no-one has mentioned the most effective way to minimize total cost of ownership, a way that millions of people who know nothing about cars can easily participate:

    Toyota Corolla.


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