I've been building some spreadsheets lately to better understand where I am on the car ownership curve, versus where I want to be.
One thing I have determined, is that between insurance, registration, taxes, fuel, tires, oil changes, and DIY maintenance, there is an annual sunk cost of about $2k, give or take depending on how many total miles a car is driven and what fuel economy it gets. My car is about 32 mpg overall, and I've used it about 10k to 13k miles a year. Beyond that, it's all depreciation, what did you pay for it, what will you sell it for, and how many years are in between. In my case, I have owned a 2003 Corolla since new, and with depreciation, my annual TCO is around $3100, with annual maintenance expenses being around $350, fuel around $850, taxes/reg around $200, and insurance around $600. I have a hard time thinking those costs can come down much, except if I would happen to drive significantly fewer miles in a year, which could save a few hundred. The car also currently has about 190k miles on it after 15 years, and is probably good for another 60k before it needs any major maintenance items, or four more years. At which time the annual depreciation will work out to about $850, and if all continues to go as it has gone, my annualized TCO will have been $2850.
When I think of used cars, the sweet spot for depreciation seems to occur around 7 years, when the car retains a little north of 40% of its value, and assuming you can find a 7 year old car with 70-80k miles on it, you can probably get a solid 10 years for $8k or so with average mileage, so your depreciation out of the gate would be a couple hundred lower. But when you do the math for an OLDER car, and factor in that there will be higher maintenance expenses due to major maintenances coming due after 250k miles, it can begin to become more expensive again. My spreadsheet shows the jalopey being $3500 cheaper over a decade, but this doesn't account for inconvenient breakdowns and associated costs (towing, car rental, costs of searching for new vehicles every couple years, etc).
keep 10 keep 15 keep 20 keep 7 keep 5 keep 3 7 year old car new car new car new car 7 years new car jalopey purchase price 7200 18000 18000 18000 18000 2000 sales tax 648 1620 1620 1620 1620 180 annual maintenance 600 400 400 300 250 600 fuel cost 836 836 836 836 836 975 miles driven 13000 13000 13000 13000 13000 13000 start mileage 100000 0 0 0 0 250000 end mileage 250000 195000 260000 100000 80000 290000 sell price 2000 3000 3000 7200 10000 1000 years owned 10 15 20 7 5 4 total maintenance costs 6000 6000 8000 2100 1250 2400 total fuel cost 8357 12536 16714 5852 4179 3900 insurance cost 400 600 600 700 800 300 annual tco $2,420.51 $2,943.71 $2,666.71 $3,610.29 $3,809.71 $2,086.67 decade difference baseline $5,232.00 $2,462.00 $11,897.71 $13,892.00 $(3,338.48) per mile 0.186193407 0.22643956 0.205131868 0.277714286 0.293054945 0.160512821
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