I will bet against you here and now. In July 2027, I bet at least 5% of new cars sold in the US will not have full self-driving capability. Meaning they will be unable to drive between two arbitrary street addresses in the US without a licensed human operator.
So your being that we'll have at most 95% self driving cars in ten years? That seems uncontroversial... Unless there's a law banning human driven cars by then, I would expect to see that level of ownership just from the people who like the act of driving cars.
That video is from 2009. I'd argue that mechanical safety innovation has slowed quite a bit in the last eight years. The real question is whether the recent electronic safety features: backup cameras, lane departure, blind spot warnings are worth the new car premium.
Not sure what you mean by "mechanical safety" but in addition to advances in energy dissipating crash structures, the use of advanced and high strength steels has risen dramatically in the past couple years.
That's an 22+ year old Volvo without airbags. "Volvo was the first to introduce side airbags and installed them as standard equipment in all models from 1995." First 940 was produced in 1990 so it could be 27 years old.
you are wrong - this is a video of a car manufactured in +-1990 - that is 27 years ago. I agree in last 30 years we've made quite a progress on safety, but 10 year old car these days means something like BMW E90 (or any equivalent) and safety progress from there is minimal.
considering release cycles of car manufacturers, in 10 years at least 80-90% of the cars on the roads will be usual cars, not much change there. no politician will ever have the balls to force majority of their voters into buying new expensive cars.
it will come, but it will take longer than you expect, that's all
Yes. Stability control is now mandatory (it was rare 11 years ago), antilock breaks are also mandatory, lane deaparture warning and blind spot warning are ubiquitous, phone interface(hands free) is a lot more prevalent, tire pressure monitors were a novelty in 1999, the number of airbags has increased, automatic emergency breaking is now a thing. Huge number of improvements in the last 10 to 20 years.
Antilock brakes and stability control are mandatory now, but they've been common for a long time. Most cars probably still don't have blind spot and lane departure warnings standard, and I'm not sure how much safety they add.
My sense is that if cars are safer now, compared apples to apples (i.e. a base model mid size sedan) to ten years ago, it's marginal. And the same will be true (driverless cars potentially excepted) in five years.
The new technologies have really contributed to making cars safer. Consumer Reports says that automatic emergency braking (AEB) and forward-collision warning (FCW) should be standard equipment.
I prefer to buy rented cars over previously leased cars. I think (no data to back this up) that a majority of leasers don't care to do routine maintenance (oil changes, etc) while the rental companies do.
I also think that folks who rent aren't any more rough on a car than folks who lease, but again, that's just my feeling.
Should note this seems to be for an F-150 (truck) and the data tied to it. In my experience, F-150s are very reliable although extrapolating that out to all "cars" may be a bit of a stretch and renders this graph really only useful for that model.
You can probably extrapolate this to any work truck made between 1995 and 1997. You'd be lucky to find a tape deck, power windows, or A/C in any truck from that period. They're also very simple to work on. My old C1500 from that period had an engine bay that I could lay down in.
This sort of implies that they wouldn't generate a lot of repairs. Crate transmissions for m that truck ran about $2000 for a remanufactured one. For my current truck it's more like $4000.
I have a 98 C2500 and it has all three. I recently replaced the tape deck and AC. AC compressor replacement took less than an hour to replace on that truck vs. my 2010 sedan that took several hours for the same job.
You're giving "the data" too much credit. There are only a few variables:
- new cost
- depreciation per year
- increasing maintenance costs per year
The "F-150" assumption was used to estimate new cost and depreciation over time.
You should not discount the data based on a single model, but it is wise to recognize those three variables can diverge significantly between models - enough to change the outcome.
Now adjust for frustration of sudden issues of an old car. Adjust for the fact that your car is not an average - pretty high probability of getting a piece of shit repaired by electric tape and bubble gum.
The main problem with used Hondas is that their reliability is priced in so they cost more than other brands' used cars. Though this helps you a bit when you try to sell, balancing it out somewhat.
Or pretty much any used car for that matter. My Lexus and my mom's Audi both needed the Takata recall performed (circa 2007). There were supposedly 60 million cars affected
The CR reliability score I saw recently lumped together the power train reliability with the entertainment system jankiness. I think this makes it not as useful
The JD powers rating still rates Honda highly.
>Now adjust for frustration of sudden issues of an old car.
Everyone keeps saying this, but when I ask, no one answers:
How much should I adjust for sudden issues?
I once got stuck in the middle of a national park because my starter malfunctioned. People might have laughed at me for buying a used car. But let me ask you: I'll give you two choices:
1. For free, I'll give you a special insurance. If you are ever inconvenienced in a fairly populated national park, I'll pay you $5000. Heck, I'll sweeten the deal - I'll pay you $5000 if you're inconvenienced anywhere because of your car. Heck, I'll sweeten it further. I'll pay you $5000 even if you are never inconvenienced due to the car!
2. You get to not be inconvenienced. This option will give you no money, though.
Which would you take? Note that in reality, my special insurance can be worth a lot more than $5000.
It all depends on what opportunities you miss because you break down, right? Weighed against the chance of a break-down? Of course even new cars break down, but the chances are probably much lower.
I imagine some people may not take your "insurance" deal with a 50% chance of breaking down versus no insurance deal with a 5% chance of breaking down.
Folks probably put a large price tag on the time and trouble they'd have to spend waiting for help, getting towed, and dealing with the repair, plus the opportunity cost of losing that time and interrupting or missing outright whatever they were on their way to.
There's also the consideration that a small fraction of break-downs may be dangerous (either high speed loss of control, which I'm sure is rare, or even standing at the side of a highway, which I bet is much less rare but also dangerous). What value do you put on that?
>I imagine some people may not take your "insurance" deal with a 50% chance of breaking down versus no insurance deal with a 5% chance of breaking down.
Not some - many. It's just that few are willing to put an actual number they would pay for that insurance - especially given how under other circumstances, most of them do their best to get the cheapest insurance. On this one type of insurance, they think differently. Perhaps this is a clue that they are not viewing it as insurance.
>Folks probably put a large price tag on the time and trouble they'd have to spend waiting for help, getting towed, and dealing with the repair, plus the opportunity cost of losing that time and interrupting or missing outright whatever they were on their way to.
Yes, this is how they rationalize it, but always careful to avoid putting a number on it. My $5000 is a low estimate. Realistically, think $10K. For less than a fifth of that, you can have a great vacation for two for a week. You're ruining the experience of one vacation so you can have 5 or more of them. (This particular trip cost me less than $200, so it can be a lot more than just 5 vacations). But instead, people prefer to have fewer such vacations in order to not have a breakdown.
For that one experience that you're worried about being ruined, I could have had (and may actually have had) many that you did not take due to lack of money.
>There's also the consideration that a small fraction of break-downs may be dangerous (either high speed loss of control, which I'm sure is rare, or even standing at the side of a highway, which I bet is much less rare but also dangerous). What value do you put on that?
I'll invert the question back to you, or to whoever is using that argument to justify a much newer car. How low a probability of it occurring would make it not be a consideration for you? If this happens to 0.1% of people who buy used cars, I don't even consider it as a factor. If it happens to 20%, it's definitely a consideration. And I'd compare it with the likelihood of other ways of dying.
My point is people will come up with these rationalizations (a fancy word for excuses) without really thinking about them. Very often, people just want a shinier car and use these reasons. Or they're scared to admit how much they'd pay for their insecurities, so they exaggerate the costs (be it in Dollars or in human life) of a used car.
Don't get me wrong. One of my cars is a very expensive 2 year old car, which I got primarily for safety reasons. So I am aware of both sides. But I'm not going to try to tell anyone that getting a safer car can, in any way, be a wise decision purely from a financial standpoint.
Why assume it is them being dodgy? Perhaps it is really hard to put a number on it.
What number would make me risk my life on a low-shoulder highway in the middle of the night with my son in the back seat? I have no idea, but I can tell you it is not in the ballpark you are discussing.
> purely from a financial standpoint
Maybe you've never suffered significant financial loss due to a breakdown, but can you guarantee no one ever will?
And there's more to it than finances, obviously...
>Why assume it is them being dodgy? Perhaps it is really hard to put a number on it.
>What number would make me risk my life on a low-shoulder highway in the middle of the night with my son in the back seat? I have no idea, but I can tell you it is not in the ballpark you are discussing.
As you say, you yourself do not know your tolerance threshold (and that's OK). So it's futile to use it in decision making unless you do put a number on it.
As for the difficulty of putting a number on it - I don't know, as I have not tried. But do you think you could find out if you're willing to pay $1000? Just because you can't put a number on it doesn't mean you have to pay $10K more. There are intermediate options.
>Maybe you've never suffered significant financial loss due to a breakdown, but can you guarantee no one ever will?
I know people who have paid a lot of money due to cheap cars dying much earlier than expected. Looking a those in isolation, the cheap car was more expensive than the newer car.
But that's all part of the insurance mindset, which is to think in terms of probabilities. If I buy a cheap used car from a reliable brand every 7-8 years, do I expect all of them to end up being disasters? No. Do I expect none of them to be disasters? No. I expect I probably will end up with a bad car from a financial standpoint one day. But the amount I'll save over all those other cars that turned out fine will more than compensate. I won't get upset - it's all part of the strategy.
I think what I'm trying to get at is everyone points to the person who bought a cheap used car that ended up dying within a year or two and point at how wasteful that was. Yet few people point to those who buy much newer cars and talk about how bad that decision was. Purely from a financial standpoint, both are bad decisions. Yet society tends to think only one of them is.
>And there's more to it than finances, obviously...
Sure, there's peace of mind and comfort. And if you're open about it, that's fine. I often see people justifying it as being cheaper or "almost the same as used car when you factor in repairs". I think my goal in this thread is to highlight that if you do your research, that statement is just not true.
>Why assume it is them being dodgy? Perhaps it is really hard to put a number on it.
>What number would make me risk my life on a low-shoulder highway in the middle of the night with my son in the back seat? I have no idea, but I can tell you it is not in the ballpark you are discussing.
I should add: While you don't know the number, it's not as nebulous as you may think. If you paid $10K more to get a newer car that you think is safer, we know it's at least $10K.
If I offered you a car that costs $40K more than your current one and convinced you that your son will have a 50% lower chance of injury/death than your current car. Will you pay for it? What about $100K?
Let's not kid ourselves. Everyone has a number. It may be hard to tighten the bound, but it does exist. There will be a price point where for a 50% reduction you'll say "You know what? I'll take the risk". Or even "You know what, I think the risk is low enough as it is in my car - a 50% reduction of a tiny number is not much of a gain"
I do hope you will never respond with the latter, because you have no idea what that number is. Or at least realize that if you rationalize that way, so do people who buy cheap cars. They likely think the probability of serious injury/death for their son is not much different from a newer car.
There's also the consideration that a small fraction of break-downs may be dangerous (either high speed loss of control, which I'm sure is rare, or even standing at the side of a highway, which I bet is much less rare but also dangerous). What value do you put on that?
What types of breakdowns happen unexpectedly while driving outside of tires going flat, without any warning and people ignoring the obvious signs and getting the cars fixed once they see the light or hear strange noises?
The car breakdowns I've had requiring a tow usually involve the car not starting at all.
This is really cool to see visually. I buy 15 to 20 year old Toyotas and keep them for 10 years or until they really break-down. If you can find one that's been serviced regularly (engine oil, coolant and lub), it'll last a good bit.
I've only had one real lemon using this approach. The previous owner told me it had over-heated once, but I took a chance anyway. Part of the engine was warped due to the over-heating. I had to replace the engine after it kept breaking timing chains. Otherwise, I've been fortunate.
I've been doing the same with BMWs. They tend to be single-owner and well-maintained. For the last 10 years I've been driving a 2003 5 Series that now has 125K miles. I plan on driving it into the ground.
Then you just start to run into random problems: dashboard lights go out and are too expensive to replace, electric windows or door locks start to fail, steering develops a strange wobble that comes and goes and 3 different mechanics can't figure out. Etc.
I just sold my 2003 Odyssey (that I had bought new and maintained it well) with 230K on it. I'm glad to not be dealing with it anymore.
I still own a 98 Cherokee XJ which is built like a tank but still has its weaknesses. An electric door lock is failing but a replacement part is no longer made, so I have to find a used replacement or adapt a part from a newer vehicle. That sort of stuff.
If you're willing to deal with it great, but there's definitely a large tradeoff there.
There's also safety issues. My new cars have collision detection, lane keep assist, air bags all the way around, etc. I'm happier having my family in vehicles with these options.
Well, gas consumption surely are not identical between a 10 year old and a new car. Depending on your usage buying a newer and more expensive car might be justifiable due to savings in gas prices (you folks in the US might not agree since gas is so cheap for you).
Could you give an example? Not saying there isn't one, but I haven't noticed a major trend of increasing fuel efficiency for a given model over the past 10 years. It looks like the difference would have to offset 2000$/year (so, what about 20-40 full tanks/yr in the EU?).
Or do you mean there are just more hybrids and electrics available now than there were 10 years ago?
But it might be more interesting to look for, say, the lower 30 percentile. I have the feeling that the improvement at the lower end is not as great, but I don't have numbers to back that up.
Why look to ten year trends? That graph has the extreme case of buying ten year old cars and keeping them for five years - meaning with that strategy you are at times driving a car which is fifteen years behind the curve of fuel efficiency development. Not to mention the effect that 15 years of engine wear has on the efficiency of the specific car.
To get specific: a 2017 Ford F-150 (to stick with the absurdly parochial example used here) gets 19-26mpg; a 2002 F-150 got 17-21 - that may not look like much but is a 12-25% improvement, not a completely insignificant difference. A 1987 f150 got 10-12mpg, so it's clearly a continuing trend, too.
A ten year old car with 100hp using 95 octanes could make on average about 8l/100km. Currently they're about 5l to 6l on average. On 1000km that's close to 30l, with a rate of 1.20€ per litter that's 36€. On a lifespan of 150k that's 5400€.
Given the Volkswagen affair, I'm not sure that any official efficiency figures can be trusted. Improvements in average efficiency might be genuine, or they might be the result of gamesmanship to meet CAFE requirements.
There are no environmentally friendly cars. Only some models are less bad for the environment than some other models. The only environmentally friendly car is the one that isn't built.
By extension, that also means that the best choice from an environmental perspective is not to have a cell phone, not to turn on the lights or A/C, not to use a computer or the Internet, and not to purchase pre-packaged food.
Tires are not equivalent either. Tires for a truck or SUV, or for a high performance car, can be 5x or more the price compared to tires for a small economy car.
I rather find the trend going upwards. My 2002 VW Golf 4 Variant (station wagon) consumes 5-6l/100km(47-39MPG) (Diesel), and I often drive rather fast and furious, can get it down to 4,5l (52MPG) by slowing a bit down. Try to find a current car that size and power (1,3tons empty, 100hp) consuming less (measured, not the manufacturers claims).
The downwards trend is not coming from similar vehicles slurping less, but from more people buying extremely small cars, like VW Up. At least in Germany. All my humble opinion.
Absolutely a factor. Fuel efficiency gains gets wasted on a lot of car models as they got larger and heavier. And it's larger and heavier cars that are the top sellers now (not just US, even in Europe cars are more bloated on the whole than 20 years ago).
Government should tax cars by weight. The heavier a car is, all other things being equal, the greater it's negative externalities. Heavy vehicles cause more road wear&tear, take up more street parking space, are more dangerous to other road users if an accident occurs, reduce visibility more greatly for other road users, worse for the environment.
In the large car arms race, everybody is a loser. Plus, smaller cars are just more fun to own and drive, heh!
Sounds like an absolute reasonable approach. I would have thought driving them into the ground would be most effective.
In My experience though, a lot of the car selling business is focused on producing unreasonable buying decisions.
Cars keep getting more expensive despite most other inflation-basket goods aren't.
One way of achieving this is by adhering to emotions. See Tesla fans doing basically "anti-leasing" for the newest model, or the whole genre of SUVs or better yet even more erratic: SAVs. My favorite in this is the new Range Rover evoque mini-SUV/convertible: 2 cars in one, each deminishing the usefulness of the other one. Yet already a success.
Of course: IMO Tesla making you pay a deposit in order to being able to pre order a unreleased car.
This is AFAIK the exact opposite of what the car industry is doing. At least in the high price range. There, the newest models most of the time are being sold via lease.
I did this math when I was buying my last car. The things I did different
I kept the end point constant at 10 years. So it was:
* Option 1: Buy a new car, keep 10, and sell
* Option 2: Buy a 3 year old car, keep 7, and sell
* Option 3: Buy a 5 year old car, keep 5, and sell
* Option 4: Buy a 7 year old car, keep 3, and sell
At the time I was shopping, the car I wanted had really high resale. So option 1 was coming out CHEAPER per year than option 2. (new price / 10 compared to used_price / 7). Options 3 and 4 were cheaper, but not by a ton. But then the thing I thought about was:
* With option 1, the car I am driving is an average of 5 years old
* with option 3, the car I am driving is an average of 7.5 years old
* With option 4, the car I am driving is an average of 8.5 years old
So that pushed me to go for option 1. No regrets so far, my car just passed his 7th birthday. Not 100% sure I will sell at 10, but a strong possibility.
I think the simple math of "new car = always bad unless you are rich" is wrong. "new car every 3 years trading in = always bad", sure. But throw in dealer incentives and financing, and the new vs used debate can be less black and white.
I bet it's a different story if you calculated opportunity cost and risk. Are you paying cash for the car in all cases? Or are you getting a loan? Increased positive cash flow has a real economic value. A loan has real economic risk. Are you investing the cost difference between option 3 and option 1 to get a return on that money?
Car dealers do not loan you money for free. Interest rates are low, but it costs them money to service that loan. What they did, since the dealership owns the bank, is they shoved their profit into the principle instead of getting it back in interest. In other words, they simply charged you more for the car. And even a 0% loan is a risk from a personal finance standpoint. Options 3 and 4 carried no risk, lower cash in hand, but higher positive monthly cash flow (because no monthly bill). This freed up your additional monthly cash flow which would have been spent on a car payment to be invested and earn a return.,
From the point of view of these calculations it doesn't matter that the principle included loan servicing or sales commissions or what have you.
The cash flow calculations vs the cash on hand - risk costs are where the math happens but it is perfectly possible to walk away with the decision to buy new to work out better on certain models of car.
I saw this with inexpensive manual Japanese imports the last time I shopped ~4 years ago. In particular lowend civics & Subaru imprezas were holding their value such & the dealer incentives & financing made the calculation essentially even.
I have friends that said the same thing about certain diesel sedans (pre mpg scandal) but never calculated it myself.
In my case above it was for the wife, so it was a Honda CRV.
Small Japanese SUVs had a very very high value retention for the first 4-5 years.
Something like maybe the sticker price new is 25k, but what you really pay is closer to 21k new. A 3 year old would be going for 17-18k. After the maths above, it ended up costing more per year to buy used.
Loans = higher principle price is false. It could be true in some cases, but it was not in mine.
I negotiated a cash rate. I had the cash in my hand, and I got the lowest possible cash price, after talking to 6 dealers. Once I had the price printed on paper including all fees, I then said sure I will do the 0% APR loan. My price did not go up a single dollar.
Options 3 and 4 I could take that cash I would have spent on the car, and put into the stock market. It would have generated me 5-6% return, on average, over the life of my car.
As written, Option 4 you only have a car for 3 years. I'm pretty sure that's not what you meant, but fixing it makes the math below also wrong: if you keep a car that is 7 years old for 10 years, it's an average of 12 years old in that time period.
edit: my mistake, I guess you want to have 3.333 cars in 10 years for Option 4. Carry on...
We have 4 kids and only one vehicle, so a potential breakdown is a huge inconvenience. Also my wife is the one doing over 90% of the driving. So here what has been our strategy:
Buy a brand that is fully guaranteed for 5 years. We sell them at 4 to 5 years old. This completely kills the repair budget.
Buy vehicles 6 months to 1 year old. That one brand we buy (like most but not all brands) doesn't depreciate linearly, and depreciate the most the first year. So this reduce the depreciation budget significantly.
The only difference in the consumable budget, compared to a 10 year old car is that we pay a lot for insurance (full vs 3rd party only).
The plus of our strategy is that an accident does not change our budgets, which it would in OP's case, as they might have to increase repair (assuming 3rd p ins) or force them to buy their next vehicle early, throwing out some of their calculations.
Look at the car, not the brand. My 2003 Honda Pilot costs about $500/year in repair on average. My wife's 2005 Odyessy is about 3x that, despite being mostly the same car.
Why? The sliding door roller system is garbage and breaks semi-annually. (@$900/per incident) Biggest issue the Pilot is a poor quality key cylinder system that was a recall in several 1999-2004 models, but not the Pilot.
Interesting, wasting money on a Toyota Sienna's sliding doors and windows which kept breaking down the minute it was out of warranty, and its write-off in what seemed a minor accident is what drove us to the above strategy.
Purely cost wise, an old reliable car is much cheaper than anything you mentioned here.
Let's be upfront and frank about it. You will pay more for the added convenience. You really should put a number on it to get an idea.
I bought my car 6 years ago for $9000. It was an 8 year old car, but with low miles. In the last 6 years, I've paid $2100 in repairs and maintenance (includes changing oil, tires, etc). So a total of $11,100 in 6 years. My car is worth $2900 now. So a loss of $8200 in 6 years. That's $1367 per year.
How much will your car depreciate in 6 years?
If I compare it with a top of the line Subaru Forester, that depreciated at least $8K in the first two years.
Your situation may be good - I'm not sure. But unless you really run the numbers, you'll never know. People always do hand waving rationalizations in their hand. Don't. Get a spreadsheet and run the numbers.
Not saying paying a lot for peace of mind is a bad idea. That's for you to decide.
I ran the numbers, and I think depreciation was ~ 2000 CAD / year.
Yes piece of mind is worth that, and I can attach a number to that to, we've had a car that was maintained regularly and broke down, cost of tow + taxi to go to the rental place, rental (we need a minivan => expensive) was close to 1 K CAD. Kia warranty comes with 24 h emergency. We will have an older car once the kids are out (or possibly live somewhere we don't need a car), but today I'm happy to pay this.
Buying a super complicated engine with high reliability is a different risk than buying a simpler engine that has lower reliability, but that can be repaired much more cheaply.
>Yes piece of mind is worth that, and I can attach a number to that to, we've had a car that was maintained regularly and broke down, cost of tow + taxi to go to the rental place, rental (we need a minivan => expensive) was close to 1 K CAD.
As you admit, it's for piece of mind. Because I can't imagine something like that happening to you every year if you owned a used car.
I understand there's something of a bell-curve effect on insurance (in the UK, at least), whereby the cost of insuring cars of 10+ years of age increases. I'm curious to know how much of a difference that would make to the total cost of ownership.
>whereby the cost of insuring cars of 10+ years of age increases.
Have not seen this. Keep in mind that insurers only care about the cost to replace the car. If the car's value is so low (which it will be after 10+ years), the cost to insure would be low too.
Insurers also care about passenger risk. I assumed it was related to the safety and reliability profile of the car, as well as the profile of claims involving older cars (i.e., older cars possibly being involved in more claims).
Author notes that depreciation has the greatest impact, in which case the F-150 is in a whole different ballpark than most luxury cars; trucks have a much gentler depreciation curve than luxury cars.
A truck may retain 80% value after 3 years, where a luxury car may retain 50% or less.
Edit: I should also note that variation between depreciation curves on luxury cars is also much greater.
This doesn't really fit with my own experience. I've bought 2 brand new Fords and kept them for about 6 years each. In sum total I had about $100 of unscheduled maintenance for both. However older cars always have expensive maintenance: timing belt, suspension, brakes, and other things all start to wear out somewhere around the 7-10 year mark (timing belt will depend on distance).
It also doesn't factor in the 0% financing that Ford has offered for the last 10 years, which is a significant benefit...Ford is essentially paying you about 5% of the value of the car each year (as you can avoid getting a 5% loan, or if you have the cash you can invest it in the stock market for a 5%+ return).
>This doesn't really fit with my own experience. I've bought 2 brand new Fords and kept them for about 6 years each. In sum total I had about $100 of unscheduled maintenance for both. However older cars always have expensive maintenance: timing belt, suspension, brakes, and other things all start to wear out somewhere around the 7-10 year mark (timing belt will depend on distance).
So, which option is cheaper?
Isn't that the ultimate question?
In another comment, I showed how a good 8 year old car had depreciated in 6 years (including repairs) as much as a new Forester did in 2 years (no repairs). Even for the 8 year old car, most of the loss was in depreciation, not in repairs. Yes, this included:
1. Change in timing belt + water pump (most expensive)
2. Changing brakes.
3. Changing tires.
Everyone seems to want to avoid $200-500 repairs on their car, but few seem to be concerned about avoiding $10K on the price of the car to begin with.
Leasing is generally the most expensive option. You're basically getting a loan for the depreciation + profit. Since it's not technically a loan you don't get the interest rate disclosed to you. And market research shows the interest rate you are paying is 14%.
It's a fantasy that you're going to pull one over on the ginormous mega-bank that does this for a living. I recall a time when many manufacturers were offering 0% interest on car loans. Obviously they just shoved all their profit into the principle.
Dealers don't usually volunteer it, but you can just ask your salesperson for the money factor. Take the number and multiply by 2400 to get the interest rate. My current lease rate is 0.75%, while the interest rate on a loan would've been 1.9%. The lease worked out to be cheaper than buying. Some car companies also have a multiple security deposit discount that lets you further reduce the money factor by a significant amount.
Is it just me or are some of the formulas in the spreadsheet used to generate this wrong? I don't see the cost of purchasing / financing the used vehicle in there. Also, in the leasing cost column, the re-lease is not 3 years every time. Additionally, in the my area, the registration would be much lower but wouldn't decrease along with the vehicle age.
Interesting idea,and I'd love to see this work, but this particular chart isn't helpful in practice due to huge differences in vehicle depreciation, repair and insurance costs (e.g. S Class vs Land Cruiser)
Another thing that this chart neglects and which I feel is a very important consideration, is safety. The difference in safety of a current vehicle with one from even just 10 years ago is striking (never mind 15 years).
So you pay a little more than 2x as much to have a car that is 5 years old at most, vs forever having a 15 years old car. Sounds alright if you have the income for that.
I grew up in a family that did the "buy used cars keep until the repairs got too expensive" thing. We spent a tremendous amount of time at mechanics, paying lots of money for repairs that may not have even been needed, and then selling or trading in the piles of junk to repeat. I remember many times waiting for tow trucks by the side of a highway or out in the middle of nowhere to come tow one of our cars. I made a list one time and I believe my family has owned at least 20 different vehicles this way.
Thus conditioned, the idea to me of buying a used anything and keeping it for 10 years sounds like a recipe for answering the Ship of Theseus thought experiment.
When I first struck out on my own, I had a used, but good condition Toyota that a year later had $3500 worth of engine trouble that ended up costing me a job. I finally swore never again.
After that Toyota, I bought a brand new, small, car for $12k with the highest reliability I could find and kept it for over a decade. It required exactly one repair to an O2 sensor after 10 years. Being small and commodity, maintenance was cheap (a set of four new tires ran under $350). One day, 12 years in, the engine conked out and the repair was estimated at $500. The car was still worth $5k. I made a deal with the mechanic and he bought it for $4k.
Considering that the cost to "buy" the car was about $8k, maintenance was cheap, and fuel efficiency was high, the car cost pennies per mile to drive over its life with me.
I've since bought another reasonably priced new car that I fully expect to drive for another 10-12 years. And my family, after seeing my experience with proper cars has also cried uncle and now only buys new, reliable, cars. My father can't believe that he doesn't even know a mechanic anymore, whereas he used to spend significant time cultivating relationships with "good" mechanics to deal with repairs. Hundreds of dollars a year used to go into towing fees, and thousands were lost to lost work or other opportunities when a vehicle was down and being worked on or to rental fees so we could still get around.
I know that its possible to get a highly reliable used vehicle, but honestly, its impossible to know what a used car has gone through before it ends up in your hands.
How about purchasing a car that's only say 1 or 2 years old? I read that cars drop massively in value as soon as you drive out of the showroom because it's no longer "brand new".
Googled it and found this quote: "On average, a new car will lose as much as 19 percent of its value in its first year of ownership. That means that your $20,000 new car will be worth about $16,200 after just one year."
The biggest difference is how much car you buy rather than new vs used. Commonly I see people buying used to 'save money'. But the car they buy to commute to work is a three row luxury SUV. Much higher cost than a new hatchback. Still signing 60 month paper at much worse interest rates than new. Constantly eating up gas, tires and brakes.
'Buying used to save money' in this case is like getting the diet soda to go with your big mac and fries.
I lease high end German cars. Zero maintenance and zero of my time dealing with repairs or random "won't start" surprise. What's value or your time and frustration?
Whether this analysis makes sense depends on your perspective. Also assumes you are not a car lover. And even in this, the three year lease is not substantially more than the other options.
It has never made sense to me to keep cars until I can't trust them anymore.
If you're going to drive a lot, buying a new prius and driving it for 15 years is something you should look at. With really low maintenance and gas costs combined with really long service life (>500k is possible) the cost per driven mile can be really low.
The used cars section in Consumer Reports is invaluable to avoid white elephants. Also, take a candidate vehicle to your mechanic before finalizing a deal.
Why do the 5/10 year new car graphs start at 6 and 11 years respectively? Why does the new 20 year new car graph start at year 1 but with a cost of less than $10k (for a $35k car)? I'm not sure how to read this graph or what it says. Are the dots overlapping and hiding one another? Even if so, how am I not paying at least $35k the first year for a brand new $35k car?
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[ 3.3 ms ] story [ 204 ms ] threadhttps://www.youtube.com/watch?v=emtLLvXrrFs
10 years from now all new car's will probably self driving.
PS: That Moderate overlap / frontal offset test configuration is relatively recent in crash testing. http://www.iihs.org/iihs/ratings/ratings-info/frontal-crash-...
considering release cycles of car manufacturers, in 10 years at least 80-90% of the cars on the roads will be usual cars, not much change there. no politician will ever have the balls to force majority of their voters into buying new expensive cars.
it will come, but it will take longer than you expect, that's all
My sense is that if cars are safer now, compared apples to apples (i.e. a base model mid size sedan) to ten years ago, it's marginal. And the same will be true (driverless cars potentially excepted) in five years.
http://www.consumerreports.org/car-safety/positive-impact-of...
I also think that folks who rent aren't any more rough on a car than folks who lease, but again, that's just my feeling.
This sort of implies that they wouldn't generate a lot of repairs. Crate transmissions for m that truck ran about $2000 for a remanufactured one. For my current truck it's more like $4000.
- new cost
- depreciation per year
- increasing maintenance costs per year
The "F-150" assumption was used to estimate new cost and depreciation over time.
You should not discount the data based on a single model, but it is wise to recognize those three variables can diverge significantly between models - enough to change the outcome.
The main problem with used Hondas is that their reliability is priced in so they cost more than other brands' used cars. Though this helps you a bit when you try to sell, balancing it out somewhat.
Everyone keeps saying this, but when I ask, no one answers:
How much should I adjust for sudden issues?
I once got stuck in the middle of a national park because my starter malfunctioned. People might have laughed at me for buying a used car. But let me ask you: I'll give you two choices:
1. For free, I'll give you a special insurance. If you are ever inconvenienced in a fairly populated national park, I'll pay you $5000. Heck, I'll sweeten the deal - I'll pay you $5000 if you're inconvenienced anywhere because of your car. Heck, I'll sweeten it further. I'll pay you $5000 even if you are never inconvenienced due to the car!
2. You get to not be inconvenienced. This option will give you no money, though.
Which would you take? Note that in reality, my special insurance can be worth a lot more than $5000.
I imagine some people may not take your "insurance" deal with a 50% chance of breaking down versus no insurance deal with a 5% chance of breaking down.
Folks probably put a large price tag on the time and trouble they'd have to spend waiting for help, getting towed, and dealing with the repair, plus the opportunity cost of losing that time and interrupting or missing outright whatever they were on their way to.
There's also the consideration that a small fraction of break-downs may be dangerous (either high speed loss of control, which I'm sure is rare, or even standing at the side of a highway, which I bet is much less rare but also dangerous). What value do you put on that?
Not some - many. It's just that few are willing to put an actual number they would pay for that insurance - especially given how under other circumstances, most of them do their best to get the cheapest insurance. On this one type of insurance, they think differently. Perhaps this is a clue that they are not viewing it as insurance.
>Folks probably put a large price tag on the time and trouble they'd have to spend waiting for help, getting towed, and dealing with the repair, plus the opportunity cost of losing that time and interrupting or missing outright whatever they were on their way to.
Yes, this is how they rationalize it, but always careful to avoid putting a number on it. My $5000 is a low estimate. Realistically, think $10K. For less than a fifth of that, you can have a great vacation for two for a week. You're ruining the experience of one vacation so you can have 5 or more of them. (This particular trip cost me less than $200, so it can be a lot more than just 5 vacations). But instead, people prefer to have fewer such vacations in order to not have a breakdown.
For that one experience that you're worried about being ruined, I could have had (and may actually have had) many that you did not take due to lack of money.
>There's also the consideration that a small fraction of break-downs may be dangerous (either high speed loss of control, which I'm sure is rare, or even standing at the side of a highway, which I bet is much less rare but also dangerous). What value do you put on that?
I'll invert the question back to you, or to whoever is using that argument to justify a much newer car. How low a probability of it occurring would make it not be a consideration for you? If this happens to 0.1% of people who buy used cars, I don't even consider it as a factor. If it happens to 20%, it's definitely a consideration. And I'd compare it with the likelihood of other ways of dying.
My point is people will come up with these rationalizations (a fancy word for excuses) without really thinking about them. Very often, people just want a shinier car and use these reasons. Or they're scared to admit how much they'd pay for their insecurities, so they exaggerate the costs (be it in Dollars or in human life) of a used car.
Don't get me wrong. One of my cars is a very expensive 2 year old car, which I got primarily for safety reasons. So I am aware of both sides. But I'm not going to try to tell anyone that getting a safer car can, in any way, be a wise decision purely from a financial standpoint.
Why assume it is them being dodgy? Perhaps it is really hard to put a number on it.
What number would make me risk my life on a low-shoulder highway in the middle of the night with my son in the back seat? I have no idea, but I can tell you it is not in the ballpark you are discussing.
> purely from a financial standpoint
Maybe you've never suffered significant financial loss due to a breakdown, but can you guarantee no one ever will?
And there's more to it than finances, obviously...
>What number would make me risk my life on a low-shoulder highway in the middle of the night with my son in the back seat? I have no idea, but I can tell you it is not in the ballpark you are discussing.
As you say, you yourself do not know your tolerance threshold (and that's OK). So it's futile to use it in decision making unless you do put a number on it.
As for the difficulty of putting a number on it - I don't know, as I have not tried. But do you think you could find out if you're willing to pay $1000? Just because you can't put a number on it doesn't mean you have to pay $10K more. There are intermediate options.
>Maybe you've never suffered significant financial loss due to a breakdown, but can you guarantee no one ever will?
I know people who have paid a lot of money due to cheap cars dying much earlier than expected. Looking a those in isolation, the cheap car was more expensive than the newer car.
But that's all part of the insurance mindset, which is to think in terms of probabilities. If I buy a cheap used car from a reliable brand every 7-8 years, do I expect all of them to end up being disasters? No. Do I expect none of them to be disasters? No. I expect I probably will end up with a bad car from a financial standpoint one day. But the amount I'll save over all those other cars that turned out fine will more than compensate. I won't get upset - it's all part of the strategy.
I think what I'm trying to get at is everyone points to the person who bought a cheap used car that ended up dying within a year or two and point at how wasteful that was. Yet few people point to those who buy much newer cars and talk about how bad that decision was. Purely from a financial standpoint, both are bad decisions. Yet society tends to think only one of them is.
>And there's more to it than finances, obviously...
Sure, there's peace of mind and comfort. And if you're open about it, that's fine. I often see people justifying it as being cheaper or "almost the same as used car when you factor in repairs". I think my goal in this thread is to highlight that if you do your research, that statement is just not true.
>What number would make me risk my life on a low-shoulder highway in the middle of the night with my son in the back seat? I have no idea, but I can tell you it is not in the ballpark you are discussing.
I should add: While you don't know the number, it's not as nebulous as you may think. If you paid $10K more to get a newer car that you think is safer, we know it's at least $10K.
If I offered you a car that costs $40K more than your current one and convinced you that your son will have a 50% lower chance of injury/death than your current car. Will you pay for it? What about $100K?
Let's not kid ourselves. Everyone has a number. It may be hard to tighten the bound, but it does exist. There will be a price point where for a 50% reduction you'll say "You know what? I'll take the risk". Or even "You know what, I think the risk is low enough as it is in my car - a 50% reduction of a tiny number is not much of a gain"
I do hope you will never respond with the latter, because you have no idea what that number is. Or at least realize that if you rationalize that way, so do people who buy cheap cars. They likely think the probability of serious injury/death for their son is not much different from a newer car.
What types of breakdowns happen unexpectedly while driving outside of tires going flat, without any warning and people ignoring the obvious signs and getting the cars fixed once they see the light or hear strange noises?
The car breakdowns I've had requiring a tow usually involve the car not starting at all.
I've only had one real lemon using this approach. The previous owner told me it had over-heated once, but I took a chance anyway. Part of the engine was warped due to the over-heating. I had to replace the engine after it kept breaking timing chains. Otherwise, I've been fortunate.
- timing chain should be replaced at 100K. Should do the water pump at the same time. $800-$1000.
- starter motor (typically the brushes wear out). $300.
- engine mounts.
- CV joints.
- suspension bushings, possibly shock absorbers, wheel bearings too.
- pneumatic door lifts.
Then you just start to run into random problems: dashboard lights go out and are too expensive to replace, electric windows or door locks start to fail, steering develops a strange wobble that comes and goes and 3 different mechanics can't figure out. Etc.
I just sold my 2003 Odyssey (that I had bought new and maintained it well) with 230K on it. I'm glad to not be dealing with it anymore.
I still own a 98 Cherokee XJ which is built like a tank but still has its weaknesses. An electric door lock is failing but a replacement part is no longer made, so I have to find a used replacement or adapt a part from a newer vehicle. That sort of stuff.
If you're willing to deal with it great, but there's definitely a large tradeoff there.
There's also safety issues. My new cars have collision detection, lane keep assist, air bags all the way around, etc. I'm happier having my family in vehicles with these options.
It's expensive on gas (12-13mpg), but cheap to insure.
Not even an airbag.
Well, gas consumption surely are not identical between a 10 year old and a new car. Depending on your usage buying a newer and more expensive car might be justifiable due to savings in gas prices (you folks in the US might not agree since gas is so cheap for you).
Or do you mean there are just more hybrids and electrics available now than there were 10 years ago?
https://de.statista.com/statistik/daten/studie/185831/umfrag...
But it might be more interesting to look for, say, the lower 30 percentile. I have the feeling that the improvement at the lower end is not as great, but I don't have numbers to back that up.
To get specific: a 2017 Ford F-150 (to stick with the absurdly parochial example used here) gets 19-26mpg; a 2002 F-150 got 17-21 - that may not look like much but is a 12-25% improvement, not a completely insignificant difference. A 1987 f150 got 10-12mpg, so it's clearly a continuing trend, too.
An older exampl of ~40mpg for Golf III Diesel combined is not bad even in todays standards.
That's why buying used is the environmentally best choice.
Government should tax cars by weight. The heavier a car is, all other things being equal, the greater it's negative externalities. Heavy vehicles cause more road wear&tear, take up more street parking space, are more dangerous to other road users if an accident occurs, reduce visibility more greatly for other road users, worse for the environment.
In the large car arms race, everybody is a loser. Plus, smaller cars are just more fun to own and drive, heh!
In My experience though, a lot of the car selling business is focused on producing unreasonable buying decisions.
Cars keep getting more expensive despite most other inflation-basket goods aren't.
One way of achieving this is by adhering to emotions. See Tesla fans doing basically "anti-leasing" for the newest model, or the whole genre of SUVs or better yet even more erratic: SAVs. My favorite in this is the new Range Rover evoque mini-SUV/convertible: 2 cars in one, each deminishing the usefulness of the other one. Yet already a success.
This is AFAIK the exact opposite of what the car industry is doing. At least in the high price range. There, the newest models most of the time are being sold via lease.
I kept the end point constant at 10 years. So it was:
* Option 1: Buy a new car, keep 10, and sell
* Option 2: Buy a 3 year old car, keep 7, and sell
* Option 3: Buy a 5 year old car, keep 5, and sell
* Option 4: Buy a 7 year old car, keep 3, and sell
At the time I was shopping, the car I wanted had really high resale. So option 1 was coming out CHEAPER per year than option 2. (new price / 10 compared to used_price / 7). Options 3 and 4 were cheaper, but not by a ton. But then the thing I thought about was:
* With option 1, the car I am driving is an average of 5 years old
* with option 3, the car I am driving is an average of 7.5 years old
* With option 4, the car I am driving is an average of 8.5 years old
So that pushed me to go for option 1. No regrets so far, my car just passed his 7th birthday. Not 100% sure I will sell at 10, but a strong possibility.
I think the simple math of "new car = always bad unless you are rich" is wrong. "new car every 3 years trading in = always bad", sure. But throw in dealer incentives and financing, and the new vs used debate can be less black and white.
So cash in my pocket, option 1 was the "best". I had no initial outlay, the car dealer loaned me the money for free.
So yes that is even 1 more reason why option 1 worked out best for MY case. But who knows when I next get a car what will be true.
The cash flow calculations vs the cash on hand - risk costs are where the math happens but it is perfectly possible to walk away with the decision to buy new to work out better on certain models of car.
I have friends that said the same thing about certain diesel sedans (pre mpg scandal) but never calculated it myself.
Small Japanese SUVs had a very very high value retention for the first 4-5 years.
Something like maybe the sticker price new is 25k, but what you really pay is closer to 21k new. A 3 year old would be going for 17-18k. After the maths above, it ended up costing more per year to buy used.
I negotiated a cash rate. I had the cash in my hand, and I got the lowest possible cash price, after talking to 6 dealers. Once I had the price printed on paper including all fees, I then said sure I will do the 0% APR loan. My price did not go up a single dollar.
Options 3 and 4 I could take that cash I would have spent on the car, and put into the stock market. It would have generated me 5-6% return, on average, over the life of my car.
edit: my mistake, I guess you want to have 3.333 cars in 10 years for Option 4. Carry on...
not sure what 3.333 cars means
Buy a brand that is fully guaranteed for 5 years. We sell them at 4 to 5 years old. This completely kills the repair budget.
Buy vehicles 6 months to 1 year old. That one brand we buy (like most but not all brands) doesn't depreciate linearly, and depreciate the most the first year. So this reduce the depreciation budget significantly.
The only difference in the consumable budget, compared to a 10 year old car is that we pay a lot for insurance (full vs 3rd party only).
The plus of our strategy is that an accident does not change our budgets, which it would in OP's case, as they might have to increase repair (assuming 3rd p ins) or force them to buy their next vehicle early, throwing out some of their calculations.
I heard 7 years in Europe. Is it true in the US too?
I wonder why 5 years only in Canada!
Why? The sliding door roller system is garbage and breaks semi-annually. (@$900/per incident) Biggest issue the Pilot is a poor quality key cylinder system that was a recall in several 1999-2004 models, but not the Pilot.
Let's be upfront and frank about it. You will pay more for the added convenience. You really should put a number on it to get an idea.
I bought my car 6 years ago for $9000. It was an 8 year old car, but with low miles. In the last 6 years, I've paid $2100 in repairs and maintenance (includes changing oil, tires, etc). So a total of $11,100 in 6 years. My car is worth $2900 now. So a loss of $8200 in 6 years. That's $1367 per year.
How much will your car depreciate in 6 years?
If I compare it with a top of the line Subaru Forester, that depreciated at least $8K in the first two years.
Your situation may be good - I'm not sure. But unless you really run the numbers, you'll never know. People always do hand waving rationalizations in their hand. Don't. Get a spreadsheet and run the numbers.
Not saying paying a lot for peace of mind is a bad idea. That's for you to decide.
Yes piece of mind is worth that, and I can attach a number to that to, we've had a car that was maintained regularly and broke down, cost of tow + taxi to go to the rental place, rental (we need a minivan => expensive) was close to 1 K CAD. Kia warranty comes with 24 h emergency. We will have an older car once the kids are out (or possibly live somewhere we don't need a car), but today I'm happy to pay this.
F.ex. adding something like this: https://news.ycombinator.com/item?id=11879869
Buying a super complicated engine with high reliability is a different risk than buying a simpler engine that has lower reliability, but that can be repaired much more cheaply.
As you admit, it's for piece of mind. Because I can't imagine something like that happening to you every year if you owned a used car.
Have not seen this. Keep in mind that insurers only care about the cost to replace the car. If the car's value is so low (which it will be after 10+ years), the cost to insure would be low too.
A truck may retain 80% value after 3 years, where a luxury car may retain 50% or less.
Edit: I should also note that variation between depreciation curves on luxury cars is also much greater.
It also doesn't factor in the 0% financing that Ford has offered for the last 10 years, which is a significant benefit...Ford is essentially paying you about 5% of the value of the car each year (as you can avoid getting a 5% loan, or if you have the cash you can invest it in the stock market for a 5%+ return).
So, which option is cheaper?
Isn't that the ultimate question?
In another comment, I showed how a good 8 year old car had depreciated in 6 years (including repairs) as much as a new Forester did in 2 years (no repairs). Even for the 8 year old car, most of the loss was in depreciation, not in repairs. Yes, this included:
1. Change in timing belt + water pump (most expensive)
2. Changing brakes.
3. Changing tires.
Everyone seems to want to avoid $200-500 repairs on their car, but few seem to be concerned about avoiding $10K on the price of the car to begin with.
Leasing is generally the most expensive option. You're basically getting a loan for the depreciation + profit. Since it's not technically a loan you don't get the interest rate disclosed to you. And market research shows the interest rate you are paying is 14%.
Another thing that this chart neglects and which I feel is a very important consideration, is safety. The difference in safety of a current vehicle with one from even just 10 years ago is striking (never mind 15 years).
Thus conditioned, the idea to me of buying a used anything and keeping it for 10 years sounds like a recipe for answering the Ship of Theseus thought experiment.
When I first struck out on my own, I had a used, but good condition Toyota that a year later had $3500 worth of engine trouble that ended up costing me a job. I finally swore never again.
After that Toyota, I bought a brand new, small, car for $12k with the highest reliability I could find and kept it for over a decade. It required exactly one repair to an O2 sensor after 10 years. Being small and commodity, maintenance was cheap (a set of four new tires ran under $350). One day, 12 years in, the engine conked out and the repair was estimated at $500. The car was still worth $5k. I made a deal with the mechanic and he bought it for $4k.
Considering that the cost to "buy" the car was about $8k, maintenance was cheap, and fuel efficiency was high, the car cost pennies per mile to drive over its life with me.
I've since bought another reasonably priced new car that I fully expect to drive for another 10-12 years. And my family, after seeing my experience with proper cars has also cried uncle and now only buys new, reliable, cars. My father can't believe that he doesn't even know a mechanic anymore, whereas he used to spend significant time cultivating relationships with "good" mechanics to deal with repairs. Hundreds of dollars a year used to go into towing fees, and thousands were lost to lost work or other opportunities when a vehicle was down and being worked on or to rental fees so we could still get around.
I know that its possible to get a highly reliable used vehicle, but honestly, its impossible to know what a used car has gone through before it ends up in your hands.
'Buying used to save money' in this case is like getting the diet soda to go with your big mac and fries.
Whether this analysis makes sense depends on your perspective. Also assumes you are not a car lover. And even in this, the three year lease is not substantially more than the other options.
It has never made sense to me to keep cars until I can't trust them anymore.