There are articles online that break down the X cents per miles formula. But lets make our own example. Let's say we buy a nice used honda civic with less than 100K miles on it. On average people drive 12,000 miles per year as per Kelly blue book research. so the civic will be limited to 2005 and newer civics. Based on kelly blue book a 2005 base model civic in flagstaff, AZ (Where I live) with 100K miles on it is worth 7,000 bucks. lets say I find some little old lady with a really nice one and buy it from her for a great deal. 5,500 bucks. it has 80,000 miles on it because she only drove 10,000 miles per year. I expect to get atleast 200,000 miles out of my new purchase, so I should own it for about 120,000 miles. Now lets assume that I am Mustachian so I drive HALF the distance every year as most people, or 6,000 miles per year. I should be able to expect to own the car then for 20 years before it dies. I bought it with cash so I only pay 14 bucks a month on insurance and registration is 100 bucks a year-268 bucks/year=5360 of the life of the car. So if the car is the best built civic ever and never ever needs any mainenance or new tires or oil change then the total cost of the car over 20 years is: $10,860 and if I drive it for 120,000 miles then that is just over 9cents per mile. And this example is for a fancy, fairly new Honda. You can get cheaper cars that you own for less miles that might be a better deal. A car you buy for 1000 bucks doesn't have to get you very far for it to be a better deal. And of course you can use the same formula to see if it makes sense to fix-it or buy another one. Let's say the engine head cracks and it costs 2400 bucks to fix. at our 6,000 miles per year and 9 cent per mile, we should only fix the car if we can reasonably assume that after the fix, we can get another 26,000 miles and 4.5 years out of it. It is a gamble as you don't know what will happen to the car in the future, but if you can reasonably assume the use you can get out of it, then you can predict if the costs involve make sense.
On the flip side, if you know it is a junker and you think it will barely last another year (or 6,000 miles because we are mustachian) then you can figure out how much it is worth to you. 6,000 miles X 9cents = 540 bucks. If it breaks again and the cost of the repair to limp the car through another year costs more than 540 bucks, then you might have to think twice. of course if it is broken and you think you can get more than 540 bucks on craigslist for the broken car, then that might make sense too( but ONLY if you have a new car fund that can purchase a new car with cash)
Hope this helps.
Cheers,
Scott
P.S. I would never buy a fancy new honda civic for the absurd price of 9cents per mile, sounds too expensive to me. I try to keep my cars with an initial purchase price of under 8cents per mile. so far I have been successful. 1978 VW bus (had it forever! but haven't driven it in years, because it needs some engine work, hey! its a volkswagen!) and a 2003 chrysler sebring. I bought with 82,000 miles on it for 2100 bucks and I hope it lasts 160,000 miles = 7.2cents per mile for the next 13 years. so I have some leeway to fix it and still stay under my 8cents per mile