Author Topic: When is it time for a new car?  (Read 5677 times)

RaveOregon

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When is it time for a new car?
« on: February 12, 2013, 07:39:11 AM »
Currently I drive a mid 90's Honda. It runs just fine and I like the car it has served me well. What I want to know is if there is a Mustachian rule of thumb for when it is time to move on to a new used car?

I own my car outright and I am in no hurry to get rid of it. Just curious if anyone on here has a different system for when to upgrade as opposed to what I would read anywhere else.

Ottawa

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Re: When is it time for a new car?
« Reply #1 on: February 12, 2013, 08:33:39 AM »
I too wondered the same thing awhile back here:
https://forum.mrmoneymustache.com/welcome-to-the-forum/keep-used-car-or-'upgrade'/msg25786/#msg25786

Of course one should never buy a new car - a new used car.  You should read MMM's post here:
http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/

Since then I have not purchased a replacement car and have had 5 months of trouble free limited driving (I say limited because I think about 5000 km have been put on since).  In short your car owes you nothing and since it is running well...this is a no brainer - KEEP IT!!

However, as an exercise...there are a couple of MAIN things that influence a decision like this I think.  The biggest is determining the exact annual running cost of your vehicle.  Use your own numbers for all the categories I've listed below (and possibly more depending on the country you live in).  Spreadsheet it.  Then it is easy to add in a potential purchase car in the next column and run the numbers. 

Here are some things to jot down and think about with respect to car costs.  Some of these are fixed (if you must have a car).  Some of these depend on how much you drive (running costs) and how much your car cost initially (i.e. depreciation).

Fixed
Insurance (shop around - I took collision and all perils off mine and saved $250)
Drivers licence renewal
Environmental testing or other (i.e. drive clean in Canada...WOF in NZ)
Licensing sticker renewal
Depreciation

Fixed (but depends on mileage and DIY/Craigslist ability)
tires
oil/filters/ww fluid etc.

Variable
Gas
'Unexpected' repairs
God forbid - financing or loan charges.

Find a depreciation calculator to get the figure for you current car...play around with things your thinking about and use the number as your annual depreciation.  Something like this: http://www.free-online-calculator-use.com/car-depreciation-calculator.html

Then there are all the things you can do to bring down car costs (and have been mentioned in the forums and MMM articles) - like scour the insurance industry; get a Scangauge, Ultragauge or Garmin Mechanic (which I have).  This will allow you to track your fuel economy and alter your driving behaviour to save money (as a bonus it will read any error codes your car throws up and you can research the severity (or not) of this information - and thus fix yourself or be informed if you get it fixed); modify your car to carry more stuff; buy used tires; DIY oil, filters etc.
« Last Edit: February 12, 2013, 08:35:14 AM by Ottawa »

ketchup

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Re: When is it time for a new car?
« Reply #2 on: February 12, 2013, 09:13:25 AM »
I would say keep the car until it blows up, you destroy it, someone steals it, or it falls apart.  However, that's not always practical.

I say keep it until there's major repairs needed. "Major" being defined as new/rebuilding engine/transmission or similar, if you can't do the work yourself, or if the parts are prohibitively expensive.  Any "long term wear" items such as a radiator, muffler, or brakes, I would replace without even thinking about it.  This of course all goes more smoothly (and cheaper) if you can do the work yourself, or find a friend to help you out.  A rule of thumb for expensive repairs that I read somewhere is $100/1000 miles.  Meaning, if you think a $100 repair will get you at least another thousand miles, it's "worth it".  $1000 for 10,000 miles of extra life, etc.  This basically factors a $0.10/mile maximum "depreciation" on the repair to extend the life of your car.  Not saying it's perfect, but it's a good way to quantify the relative cost of expensive repairs.

TN_Steve

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Re: When is it time for a new car?
« Reply #3 on: February 12, 2013, 10:11:26 AM »
Agree with the foregoing, but would add one category.

If you are dependent upon the car to get to work (I am, due to commuter rail having grossly insufficient operating hours here), reliability does come into play.  Can you count on it to start and take you in?  2 or 3 repairs a year might be doable if you have easy access to zipcar, enterprise, or the luxury of a "spare" pickup truck.  Get much beyond that, it would become problematic, I think.  (I've never sold a car with a functional drive-train though, other than to my kids; we've found that even north of 300,000 miles, a good car will maintain sufficient reliability if you've kept up with the basic maintenance/service)


RaveOregon

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Re: When is it time for a new car?
« Reply #4 on: February 13, 2013, 08:07:52 AM »
Thanks for all the feedback everyone!

Skyn_Flynt

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Re: When is it time for a new car?
« Reply #5 on: February 17, 2013, 12:29:45 PM »
A gasoline powered car will often need major maintenance around 250,000 miles or 15 years of age. By that point you may need new motor mounts, could be looking at putting a rebuilt transmission in, or overhauling the suspension and steering. You'll probably have various gaskets leaking by that point which are expensive to solve. So I think it's fair at that stage to say "you got your fair use from it" and replace.

frugal_engineer

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Re: When is it time for a new car?
« Reply #6 on: February 17, 2013, 03:46:22 PM »
You can make a reasonable argument to keep a car until the cost of a repair is greater than the value of the car.  If for example you have a 95 Civic that you could maybe sell for $1500 (I'm ball-parking, its always possible you could find a crazy person willing to pay $3000) and you need an engine rebuild for $1500, its time to let the mechanic keep it and buy a new one. 

Also keep in mind that early - mid 90s hondas and toyotas had significantly less weight from safety equipment than more contemporary cars and therefore often get really spectacular gas mileage even compared to the best new non-hybrids.

Also, mid-90s hondas are ubiquitous and therefore replacement parts are plentiful and cheap so you could pursue something like this:
http://www.youtube.com/watch?v=uyAm6BxGZfA

Dynasty

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Re: When is it time for a new car?
« Reply #7 on: February 17, 2013, 04:12:59 PM »
A gasoline powered car will often need major maintenance around 250,000 miles or 15 years of age. By that point you may need new motor mounts, could be looking at putting a rebuilt transmission in, or overhauling the suspension and steering. You'll probably have various gaskets leaking by that point which are expensive to solve. So I think it's fair at that stage to say "you got your fair use from it" and replace.

Any car will require the suspension to rebuilt around 75 to 100K miles. And some steering parts will need to be replaced too. With the state of roads deteriorating in the US, car suspensions take a beating.

Generally as suspension components wear out, we slowly become accustomed to it. Problem is, a lot of people can't justify putting a 1000 dollars worth of suspension and steering work into a 10 year old car worth 5K. Either that, or they don't even realize it needs it. Then they go drive a new car and are AMAZED at how nice it drives...

frugal_engineer

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Re: When is it time for a new car?
« Reply #8 on: February 17, 2013, 04:42:08 PM »
Generally as suspension components wear out, we slowly become accustomed to it. Problem is, a lot of people can't justify putting a 1000 dollars worth of suspension and steering work into a 10 year old car worth 5K. Either that, or they don't even realize it needs it. Then they go drive a new car and are AMAZED at how nice it drives...

100% agreed.  Suspensions (mostly shocks) wear out so slowly that they can trick you into not even noticing that they've deteriorated.  The difference after a set of new shocks is put on is usually night and day.

Skyn_Flynt

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Re: When is it time for a new car?
« Reply #9 on: February 17, 2013, 05:07:23 PM »
Always remember that a new car has many hidden expenses. You pay sales tax and titling fees on top of the negotiated price. There will be increased property taxes. You will probably carry collision insurance for a few years, while the car is fairly new and worth something significant.

The very cheap property tax on my 13 year old beater is one thing that has helped keep me driving it. :-) And all I need is basic liability and uninsured motorist coverage.

I do like buying new, for the peace of mind that all of the proper maintenance is done on time and that I have complete knowledge of the car's history. I just try to buy new ones very rarely.
« Last Edit: February 17, 2013, 05:10:42 PM by Skyn_Flynt »