Comparing the Cost of a New and Used Car
When customers bring out-of-warranty cars in and get a large estimate for repair, they often talk about selling instead of paying to fix the problem. That first out of pocket bill can be a shock. But while repair costs are not always as predictable as a car payment, they are usually 66% to 75% less costly than purchasing a new car.
For example, if you purchase a new German car for $70,000, financed for 5 years at 2.9% interest, you will make payment of $1,255 per month or $15,060 per year! Once the car is beyond its 4-year, 50,000-mile warranty and paid off, the only cost will be maintenance. Annual repairs will cost between $3,000 and $5,000 per year or equal to 3-4 car payments. While it’s always nice to have a new car, fixing a used car will save you between $10,000 – $12,000 per year, money you could potentially put into modifications.
Don’t let the sticker shock of a big repair bill scare you into purchasing a new car. It’s usually cheaper and more rewarding to hold onto the car in the long run.
Steve Dinan
Steve, I totally agree with your thinking on this. Now if I could just convince the wife I’d be golden. Living in California with rust free cars I believe in taking this thought process even further (especially if you’d love to modify your vehicle). If you have a car you love, and I do, but it has become worn out due to high milage/longevity, then why not spend $15-20k on rebuilding the engine ( or upgrading to a more powerful one), putting in suspension parts, repainting the car or any number of other things you could do to make your car unique and reliable once again. Sort of like the European version of what we used to do (and still do) to the muscle cars from the 60’s.