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Automotive Finances & Money Frugality

Your cheapest new car is the car you already own

In the never-ending quest to convince myself not to buy a new car, I had a revelation. Of course, it was from other frugal friends and blogs repeating it over and over until it sunk in:

Your cheapest new car is the one you already own

Granted, there’s a disclaimer that if you bought a $500 clunker and you’re spending thousands per year to keep it running, it’s time for an upgrade, but consider the following:

  1. When I say “time for an upgrade”, it might be a $1000 “commuter car” rather than a cheaper clunker, if you can even find those anymore. I don’t mean go from a 1990 Ford Escort with 200,000 miles to a 2012 Ford Mustang GT500.
  2. Compared to a NEW car (not a used car), the money that you spend in payments, interest, or even cash if you pay in full, is going to be significantly more than most things you would buy for your car (unless you’re driving luxury German or Italian car), including a transmission and even a new engine. Seriously.
  3. If you’re swapping in your gas guzzler for a smaller, more efficient car, you’re an idiot. That’s unless you bought your guzzler used and someone else took the big depreciation hit, but with current prices, you’ll still take a hit. If you’re trading in a newly purchased vehicle (1-3 years old), you’re going to lose a chunk on depreciation right off the lot plus a lot because people are shying away from guzzlers.

If you own your vehicle(s) outright, like I do with my 2006 Honda Ridgeline and 2007 MINI Cooper S, and you keep it maintained regularly, it can last 10-15 years easily. And if you follow the news, owners are keeping their cars for a record 10+ years on average. I wonder if they’re just using average age of vehicles registered on the road to get that number because I can probably name 1 out of 10 people who actually have owned their car 10 years or more. I’m at 6 years this month with my truck and that’s a record for me.

Now, let’s throw out another disclaimer about my statement that what you got is cheaper than what you could buy new. If you own something you can’t afford, it’s not worth keeping. If you bought a BMW 5 Series but can really only afford a Chevy Sonic (it’s a good car by the way), then you might want to try to sell it on the market, take the depreciation hit and get yourself into a more affordable vehicle. If you can’t afford paying off the remainder of the loan (cause you won’t get what you owe on it), you might be stuck negotiating on a trade-in, but saving $30,000 or more on a car is usually the more economical thing to do, even if if it hurts and you have to pay off the depreciation for some time.

Here are other bonuses of keeping your car:

  1. You know it’s history
  2. You know it’s strengths and weaknesses (like how it rides in bad weather, etc.)
  3. If you’re thinking about a new car because it has a flashy multimedia system, you can spend much less on buying one on the market and installing it yourself or at an expert center. New wheels? Cheaper to buy outright. New paint color? Cheaper to repaint the car. However, put them all together and yes, it might be cheaper or smarter to get a new car.
So unless you’re in a REALLY crappy car or a REALLY expensive car, you should really just stay in the car you own. Maintain it well, treat it like it’s new even if it’s 10 years old and you’ll find that it will treat you well back. And lastly, save up all that money you would have spent on payments and in 10 years you’ll be able to pay cash for a good new car (accounting for inflation over the next decade) or an excellent used car.


About the author

Clever Dude


  • My pickup truck was built in 1995 making it 17 years old. It still gets me to work daily and rarely gives a problem. It is a toyota, so about all I have to do are oil changes. I was driving a 1997 toyota camry until about 6 months ago when I switched to a 2008 Lexus IS250. I bought the camry used a couple of years prior but it was really ragged out.

  • We have 3 vehicles…my 2002 Chev Cavalier still looks new & gets good gas mileage at 10 years/90,000 miles. We bought it new.

    Our 2002 Olds Silhouette minivan we bought a couple years ago for $2000 cash. We have put very little money in it & expect to drive it for a few more years. With a family of 5 & a dog the van comes in very handy.

    The van we had before that was a 2000 Ford Windstar that we paid $1200 for…drove it for a few years until the A/C went out then sold it for $700. So we got the use of it (and I liked it even better than our Olds) for 2+ years for $500 – you can’t beat that!

    My husband’s work truck is a 1996 Ford F250 extended cab, that we bought on ebay for $1675. He has used it for work for the last 4 years.
    We did put a new head in it, but we bought the parts online & dh & a mechanic friend put it in. That truck has been a bargain!

    You just never know what you are getting when you buy used, but we have done well with the 3 used vehicles we have purchased.
    Just remember to run the Carfax to get all the info you can, and be prepared to put some money in it for the stuff that does need replaced.

    I love not having a car payment! It helps to have a dh or friends that are mechanically inclined in case of problems… or a good garage you can trust to work on your car when you need it…but I definitely think it is much cheaper (and better for the environment) to just keep those cars maintained & on the road instead of letting them get tossed in to the junk yard!

  • I agree with you. Most of the cars I’ve owned have been over 10 years old although I’ve never owned a car for ten years. The one new car I bought was a lemon. I currently own a 1996 Camry and hope to get a couple more years out of it.

  • My 1999 Tahoe was purchased used over 6 years ago. My fil drove it and checked out everything under the hood and made the car lot replace the radiator before we bought it. We used some savings and paid cash. We saved the payments that we would be making and kept the car up and replaced the engine and transmission as they needed it. Now I have no worry that it will last another 10 years. It had 92,000 miles on it at purchase and now it has 209,000 and it runs like a kitten. I sleep really well at night not having to worry if I lose my job how would I make my car payment, and plan to never have one again.

  • I’ve had one car payment in my life and paid off the car in 2 years. I keep immaculate care of my cars and it’s not that difficult. My 10 year old car looks better than some newer cars that I see.

  • “And lastly, save up all that money you would have spent on payments and in 10 years you’ll be able to pay cash for a good new car (accounting for inflation over the next decade) or an excellent used car.”

    I almost agree with all of this statement. The only thing I would say is that is seems to always make sense to purchase used, even if it is slightly used, to avoid paying for the instant depreciation of a new car.

    I say save up and buy slightly-used.

  • Hey Clever Dude, i’m a finance student living in Singapore, learning from Andrew Hallam who wrote “Million Dollar Teacher”. I agree with you on your points about the bonuses of keeping your car. The instant depreciation value of cars after the first year is so large that in most cases it is very uneconomical to purchase. The advantages of following your 10 year plan is that you can buy the car upfront and avoid the dangerous powers of compound interest from loans. Being a future car buyer would you suggest that it is smarter to buy a clunker from $1000-$3000 and have to suffer from the costs of low gas mileage and possible repairs? Or would it be more wise to buy a nicer used car that would have less variable costs but would depreciate more?

  • @Brendan, There’s always a good looking car with a bad history/future and a crappy looking car that will last decades with minor repairs/maintenance, so it really depends on so many factors like car history, brand history/reliability on that model, current condition, parts availability and cost, maintenance cost, etc.

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