Economics of retaining an older car, versus a buying a new car

Bhoot Nath · 2008-07-05T21:15:08+00:00

My wife and I are planner, saver types; we also had good fortune ofbeing born to families who stressed hard work and education and as aresult, we both have good careers, and have become financiallycomfortable, without any inheritance :) Spouse was able to switch to1/2 time, as one child started kindergarten last year, and seocnd willstart next year.One of the elements of frugal planning is that, until we got quitesecure, we only buy what we needed, not what is advertised. So westayed, 1 car family, from 1996 thorugh 2004. During this time, the1996 model Honda civic was driven an average of 25K miles/year. In2004 we got another car (smallest SUV), and since then the 1996 civichas been driven about 4K/year.I have done every scheduled maintenance, without fail, and oil changesall along, so the car runs (and has always run) without any issues,and the emissions are very low, always only 2% to 5% of the levelsrequired for SMOG. So that's not at issue.Now the civic paint is peeling, and a cheap repainting at Maaco isestimated at $800. The car will hit 180K miles in a few weeks, and isdue for the major maintenance + the timing belt + water pump stuffthat is done at every 90K miles. All of this is estimated to be about$1500. I estimate tires and brakes also, probably within a year, foranother $700 or more. So, within a year, it will add up to$800+1500+700 = about $3000.The car is probbaly worth 3500 due to mileage + usual wear and tearafter 14 years (& some dings), but no mechanical problem. We wouldlike to keep this car (we are not itching for a new car smell), butdoes it make sense to put $3000 into a $3500 car? How critical is toreplace timing belt and water pump stuff every 90K?We can afford a new car, without loan, and it won't impact our othersavings, yada, yada, but I feel crummey having to "throw-away" aperfectly good car...I would appreciate how prudent people who post on this newsgroup makesuch decisions...Thanks.Bhoot Nath-------------------------------------- is...

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Mark Bole 18 years ago

I was just repeating something I'd heard in a business setting years earlier. Even if the math is a more complicated than I implied at first, I still think it *sounds* like a really solid and easy rule! ;-)

Well, what does then? The older the car, the harder parts are to get, and the less likely you are to find a mechanic intimately familiar with the model and year. Some cars are so old (yet less than twenty years) that even when operating to manufacturer specs, they don't pass modern smog laws in some states.

I'm still claiming there must be *some* point when repair costs accelerate for an older car. Since older cars (excluding collectibles) are cheaper, then there would be a strong inverse correlation between the value of the car and annual repair costs.

To tie this back to financial planning and the OP, I got three things out of his message: older car (14 years), high mileage (180K), and peeling paint. What we don't know, although some hints were given, is the role this car plays in sustaining his (family's) earning capacity, and what the condition of non-essential systems (air conditioning, sound, safety/security, interior coverings and finishes) are. If he lives in the snow belt, there's sure to be some rust by now.

With those conditions, I'm still advising that after ten years, let's say fifteen max, it makes sense to buy a newer used car, say in the five-year old range, and plan to then keep it for another ten years or so. Others have suggested keeping it for another five years, never selling it, and at least one other suggestion to trade in a for a newER (not brand new) vehicle.

-Mark Bole

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Daniel T. 18 years ago

And no matter the source, 15,9375,000 BTUs of energy is 15,9375,000 BTUs of energy. Personally, I expect that a car's construction uses considerably more energy than that, but I don't have access to the source data to see what they might have missed.

BTW, according to

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a car's construction uses over 1,000 gallons of oil, not gas.

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Daniel T. 18 years ago

The first item on your list is the only viable one, and only for vehicles that are unusual. Honda Civics, even 10-15 year old ones, are quite common. (Almost 40% of the cars in service in the USA are over 10 years old.) It is generally easier to find a mechanic familiar with an older car, after all most of them learn their trade on older vehicles! As for the smog laws, older cars get grandfathered in so the laws don't apply to them anyway.

In other words, the suggestions on this group have been all over the map. :-)

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