Keep your car!
The Consumer Reports editors did a test and compared buying a Honda Civic EX and driving it for 15 years (225,000 miles) and buying a new one every 5 years. According to their calculations you would save over $20,000 by keeping the original one for 15 years – even after taking maintenance and repair costs into consideration. I had always assumed that it is a better financial move to keep your car, but it is nice seeing the actual numbers.
Car Depreciation is the enemy!
The key here is that a car is a depreciating asset. From the moment you buy it goes down in value. By keeping it for a long time the car’s depreciation is greatly minimized. Most cars are losing thousands of dollars in depreciation each year when they are new. But when they are 10 years old depreciation has slowed to a much better rate – often only a few hundred dollars a year. So, as fun as it is to get a new car every few years – try to make a rare occurrence and your bank account will thank you.
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I’d like to see a study about whether it’s better to buy a new car & keep it for 15 years or to buy used cars every few years. I’ve heard equally strong arguments for buying new cars and for buying used ones.
My husband and I usually buy new cars (every 7-10 years) for personal reasons — neither of us knows much about cars, so we never really know if the used car we’re buying is in good condition; we hate taking cars in for repairs; and the most financially savvy person we know always buys his new.
@Shannon
I agree – there are a few good advantages to buying a new car… The key is to do what you do and keep them for a long time. The best car guys I know say that how a car is broken in has a dramatic effect on the life of the car – knowing that, it is strong support for buying new and taking care of the baby for a long time…
Maybe the key here is that they tested with a HONDA! That’s right – I’ve got one still going at 150,xxx miles strong.
Honda Rox!!!
I am a Honda rookie (with my first one only being 2 years old), but so far so good!
Great post. I work for company that manages and tracks gift cards, and I’ve been blogging about ways to save money on savvywallet.com. One thing I found is to buy discounted gas cars online. As for me? I run my car off waste vegetable oil. You can check it out on austinchu.wordpress.com