“You need to get a new, dependable car before your old car nickels and dimes you to death!” This is the phrase that is commonly used to justify a major outlay of cash, usually in combination with entering into a long-term financial commitment. But is it really necessary? With costs of “regular” vehicles running from $20,000-$30,000, many find only too late that they have overextended themselves simply by bending to the conventional wisdom that new automatically equates to better. This decision may also be influenced by immense societal pressures that suggest only “losers” would drive an old car because they are unable to afford a new one.
Practical experience suggests something very different. I have driven old vehicles my entire life, and have compiled the vehicle cost data on spreadsheets. These data, including the mileage at which repairs were required, the type and cost of repairs, and the average cost per mile, month and year indicate that an old car is actually far cheaper and more economical to drive than purchasing a new car. Of course it must be stressed that regular vehicle maintenance is the key to longevity, and thus the spreadsheet can also serve as a log of required maintenance intervals. There also appear to be some models that are more capable of accumulating less troublesome, high miles.
My first car was a 1964 Dodge “440”, which is similar to a Polara. This vehicle was purchased for $125 in 1986 at a community auction. The car ran and drove well, with a 225 c.i.d. “Slant-6” and 3-speed manual transmission mounted on the steering column. I had to replace the speedometer cable and thermostat, which represented my only required maintenance, other than oil changes. I drove the car from Wisconsin to California, and owned it for approximately two years, logging approximately 10,000 miles for an average ownership/operating cost of 1.2 cents per mile.
My next cheap car was a 1967 Chrysler Newport, which I purchased from someone who thought the car was junk, and undoubtedly believed that he was putting one over on me. I paid $150 for it, but before it was drivable, I had to pay $25 to have a radiator cap neck brazed on the radiator, had to fix the short circuits in the headlights and starting circuit, and had to rebuild the carburetor and give the engine a thorough tune-up. I purchased the car in the Summer of 1990 and drove it for over a year, making several 250 mile (one way) trips between college and home, and drove it to work every day. I put approximately 7,000 miles on the car, at a cost of $450, for an average ownership/operating cost of 6.5 cents per mile. However, I sold the car for $200 when I no longer needed the transportation, so had not gotten all the life out of it.
These cheaper cars represent an extreme end-member of automotive financial philosophy. I also own two long-term daily drivers. I bought my 1973 Dodge Charger in 1987 for $750, although it was in poor condition and barely qualified for a daily driver at the time. Luckily, I had the opportunity to pursue automotive technology as a hobby, and was able to overhaul the engine and get it drivable. Up until 2000, I had put just under 30,000 miles on the car at a repair (plus original purchase) cost of approximately $3,300 for an average cost per mile of 11.3 cents. This translates to an average monthly cost of $21 over the 13 years that I owned it. Since 2000, I have driven it an additional 30,000 miles, for a current total of 59,000 miles and total ownership/operating cost of approximately $7,500, at an average cost of 12.7 cents/mile.
My other long-term driving vehicle is a 1985 Dodge Ramcharger, which was purchased for $2,500 in 1996 with 163,000 miles on it. During the first 40,000 miles of ownership the truck required no repairs, yielding an average operating cost of 1.5 cents per mile (not including the initial purchase price). I drove this between Wisconsin and Colorado several times, experiencing no problems. After turning 200,000 miles, several repairs were necessary, although the engine, transfer case, and transmission have never needed repair. This vehicle remains my daily driver with 241,000 miles at a repair cost of $5,500, for an average operating cost of 6.9 cents per mile or $46/month.
The foregoing examples should indicate that old cars can be driven successfully if it can be accepted that repairs will periodically be needed. However, the periodic outlay of several hundred dollars for repair bills clearly does not constitute being “nickel-and-dimed to death”, because performing periodic repairs is actually much cheaper than the monthly outlay required by a car payment. In the case of the 1985 Dodge Ramcharger, running up 78,000 miles in 10 years is easily comparable to the service requirements of many new cars by their original owners. But note the Ramcharger’s ownership/operating cost of only $8,000 ($2,500 + $5,500) averaged out over the 10 years of ownership for a “monthly payment” of $67. Even the very cheapest new cars in the $13,000 range will represent nearly double that monthly cost over the same 10-year period simply by averaging out the purchase price. Furthermore, based on reviews of such cars, it appears highly unlikely that they will reach 10 years of age without requiring additional repairs, thus driving up the monthly average cost.
Therefore, a used car or even a “beater” should represent a very attractive, financially viable alternative for those who can choose to invest the money they would have spent on their car payment in a retirement plan, mortgage principle, or for paying off credit card debt. You may have to endure some ridicule from the masses who remain under the sway of advertising moguls and loan officers, but you will be the one laughing all the way to the bank.