Recently someone commented on my “really nice car” and I had to laugh. My car is 10 years old! My upper Midwest frugality has definitely seeped into my transportation choices, but that does not mean I don’t like to have a nice car. Here are a few tricks for stretching my transportation dollars:
- Save 19% right off the top. Twice now, I’ve bought one-year-old cars at a huge discount from what they would have cost new and then kept them for about 12 more years. Edmunds estimates that the minute you walk off the lot, your new car loses 9% of its value and after one year, 19% of the value. Bummer if you are the owner of a new car facing that front-end depreciation, but awesome if you are me and bought it gently used.
- Save more on taxes, registration and insurance costs. That used car discount extends to other costs as well. In most states, the less your car is worth, the cheaper the registration fees and, the less it costs to insure. Plus, if you buy a car for less, you’ll pay lower sales tax. Oh, and used cars don’t have shipping and destination fees.
- Trust factor. Buy a car with good safety features from a dealer/mechanic you trust and do your research. Both times I purchased my cars from a dealership, they’d just had a tune-up and even came with warranties. These days, you can check any vehicle’s history record by running its VIN through a service like Carfax.
- You can have it all. In the past I’ve had a year-old BMW 3 series that I loved, then bought a similar entry-level model Lexus sedan. I don’t need a flashy car but I figure if I’m going to have it for a long time, I want my car to be nice looking at the outset, with the best features currently available.
- Health considerations. By getting a one-year old car, I avoid potential health risks of new car off-gassing.
- Helping the environment. About half a car’s carbon footprint is created during its manufacture. Buying used and keeping a car longer helps decrease pollutants.
- TLC. Be diligent about following the recommended maintenance schedule on your car so it stays safe and reliable for you. I keep my car super clean, inside and out too, which makes it feel (and look) newer than it is. Due to the low miles I tend to drive, I’m on a mission to make my 2008 car last for at least three more years.
A brand new $40,000 car could cost just $32,400 a year later. That is $7600 in savings. By buying a car for less and keeping it longer, I am able to apply the savings to my two favorite budget line items: maxing out my 401k retirement plan and drinking good wine!
