Just discovering this thread after spending a few hours in a garage working with my brother to fix his car. He and I were discussing the "Cost per Mile Driven" on the cars we've worked on recently. This can be hard to calculate with gas prices changing so much during the "life" of a vehicle, but for the sake of testing it out, we decided that it was this:
What you paid originally - what you sold it for (or current book value) + parts and maintenance / miles driven.
Disclaimers: this is assuming you keep good records of the parts/maintenance, which we have done because we are kind of nerdy like that. Most of this work was done in our garage and buying parts online or junk yards to save money.
*This does not
include cost of gas/gas mileage avg. which varies greatly from a small VW to an SUV for example. These estimates are rough, but we found it to be a fun exercise and thought we'd share it.
1994 VW GTI
$2,250 Paid cash
Miles driven since: 125,750
Parts and maintenance: $1,400 (timing belt, alternator, plugs, misc wiring, headlight, fuel pump, oil changes/filters, heater and a/c parts)
Total: $2,250 (no interest) + $1,400 - $500 book value = $3,150
Cost per mile driven: $0.025 (this is very low in my opinion - maximizing the value as much as possible)
2002 VW Beetle 2.0
$15,963.00 Paid cash (actually my Mom bought it, then my brother bought it from her - long before we knew about being good little Mustachians)
Miles driven since: 88,640
Parts and maintenance: $2,100 (timing belt, tires, oil changes/filters, sensors, fuel pump, seat, taillight, plugs, battery) Same deal, did work ourselves, getting parts cheap online or junk yards.
Total: $15,963 + $2,100 - $1800 (book value) = $16,263
Cost per mile driven: $0.183 (this is obviously much higher,but that's what happens when you buy from a used car dealer, but still not horrible since we've done a lot of work and it will probably run another 80-100K)
Obviously you need to take into account what your miles-per-year consumption is and what the gas mileage will be. Also, not everyone can get away with a small car. (kids, using it for side work/construction, hauling things, etc.)
Our main goal in our calculations was trying to figure out the "sweet spot" of "Cost-per-mile-driven" to determine when it's a lost cause to fix a vehicle any further and move to the next one. Again, there are a lot of factors to consider and perhaps this is better suited for a separate discussion thread? Not sure.
We were just curious is anyone had come up with a more sophisticated formula for calculating the value of a used car??
One more example:
Let's say I want to buy an "MMM Approved" 2010 Mazda 3 with 75K miles at $9000 like this one: https://denver.craigslist.org/cto/6004135948.html
It says it has new brakes and new tires. Great! My question is, what else needs to be done in the next 100K miles?
Let's assume we'll need: new tires (in 50K miles), timing belt, shocks, spark plugs, fuel pump and standard oil changes every 5k miles. For the sake of the example let's estimate that at $3,500. (we'll do most of the work ourselves, except maybe the timing belt, because those suck!)
Cost: $9,000 cash
Miles Driven: 100,000
Book value at 175,000 miles: ~$2700 (hard to guess that in the future so I went with a 70% reduction)
Total: $9,000 + $3,500 - $2,700 = $9,800
Cost per mile driven: $0.098 (not bad? We got it under the $0.10 per mile driven)
Now, with that last example, if I had already dropped $3500 in it and I was at 175,000, unless I had a big reason to sell it, why not run that sucker another 100K and get that "cost-per-mile-driven" down even lower?
Anyway, my point is, I would love to hear if someone has a much nerdier/better formula for this. Perhaps one exists on the interwebs already and I just haven't found it yet. Until we do, my brother and I are feeling pretty safe with anything we can get under $0.10 per-mile-driven for now. I feel like that's a pretty good deal.