Hi everyone,
I'm in need of a new car (my 1998 Camry was totaled after I got rear ended) and am deciding between getting another used Camry or a new Camry hybrid. The used Camry is a certified pre-owned 2009 with 51,000 miles on it, and the dealer is asking for $16k. They also told me they recently reduced the price and aren't willing to go any lower. The new Camry hybrid is $26k. I have $12,500 to use for a down payment, so I'd be able to pay off the used car in a year, but it would take me 3-4 years to pay off the new car. My mustachian gut tells me to go with the used car because it's closer to what I can afford now. Everyone else is telling me I should get the new car.
I wrote out a spreadsheet estimating the annualized cost of each car, taking into consideration cost of the car, interest paid, and gas. I didn't consider maintenance because I don't think I'm informed enough to make a good guess on that. I tried out various assumptions about how long I will drive the car and found some pretty interesting results. If I assume I'm only going to drive the car to 100,000 miles, the new car's annualized cost is significantly better, to the tune of $1600/year. My previous car had 164,000 miles on it when it was totaled though, and I hope my next car will last just as long. If I change the assumption to 150,000 miles, the new car is still better by $500/year. If I am optimistic about the life of the car and change the assumption to 200,000 miles, the new car is still better by nearly $350.
Essentially, the shorter the life of the car, the more of a difference it makes that the used car already has 50,000 miles on it. But as I drive the car longer, that 50,000 miles becomes less significant, and the annualized cost of the used car becomes better. But then you factor in the annual fuel savings on the hybrid, that's $600 every year. Even if I drive the car to 250,000 miles, the annualized cost of the used car is only about $250 better.
What do you guys think? Does my math sound believably accurate, or do my calculations seem wrong? My gut tells me the new car can't be the better deal, but it seems like it is in the long run.