Financial graphic comparison of buying a new or used car

This ignores the fact that mandates over the last 70 years have dramatically affected the price of vehicles. The Governments hand lays heavy on the auto industry, we are getting the vehicles that many people voted for.

I look at a vehicle as a commodity that I am buying by the mile. For someone with some skills buying used can be the cheaper route. For someone with no aptitude or skills it will require paying someone else to perform repairs and maintenance. There are times when the fixed cost of a lease is cheaper, not for everyone though. Its all about being an informed consumer and playing the long game.
And that is largely offset by how long modern vehicles last.

Yes, they have more features and cost more. Yet, you can take most to 200k miles compared to the struggle of getting a vehicle from 50 years ago to 100k.

As you mention, cost / mile. The costs are the same or lower when you look at the modern lifecycle.
 
Sorry I misunderstood.

Your post said, “features”. That’s ambiguous. Safety features? Or heated seats and sunroof? Leather and Bluetooth are features, too. That’s how the luxury and convenience items are presented - as features.
Everything that comes with a 2025 vs 1955 car. It is a huge list.
 
Back to the new vs used comparison.

I’ve bought around 25 cars in my life - driven them all for many years, some for decades, after purchase.

All but 3 of them were used. I would buy them cheap, fix them, drive them, and save a lot of money.

Example 1. 1970 Ford Fairlane, bought for $250, fixed it up, it had no AC, but I drove it for 5 years. Junked it.
Example 2. 1990 Toyota 4 Runner. Bought in 1995 for $15,000. Drove it until 2016.
Example 3. 2002 Volvo V70XC. Bought in 2007 for $12,000. Still have it, 18 years later.

Cost/year when examining only depreciation was very low. Interest cost was zero. They were all reliable (or, I would have fixed what was wrong, for example, the Fairlane timing chain jumped a tooth and the car wouldn’t start. Took me a while to figure out what had happened, but I drove the car every day after I fixed it.)

But my maintenance man hours were high. My cost of parts modest.

When I look at my life as a young man - struggling to afford diapers and kids clothes with a mortgage and a bit of regular savings, I didn’t have any money - and driving a used car allowed me to pay for the car with my time, instead of with money I did not have. The used car allowed me to extend my budget, and allowed me to start investing in my future, instead of paying for a depreciating asset.

Also, I took a lot of grief from my peers (fighter pilots) at the time over my older used cars when they all had shiny new sports cars, but they failed to realize that I was paying for the cars with my time and investing the money I saved for the future.

Now, I am short on time. Lots of things I would rather be doing than fixing a car. Money is less of an issue, though I am going to retire soon.

So, at this point, I am transitioning to the “buy new and drive it for a decade” model. This is a major paradigm shift for me.

But work with me on the math - buy a new $75,000 car with cash (my truck would be more if I bought one today, and I like my truck, so that’s not a crazy number), keep it for a decade, then trade it in on a new car while it has some value, call it $25,000.

$50,000 in depreciation over 10 years is a loss of roughly $420/month. I can live with that expense, particularly if I get my time back, and it is far less than most people are paying for a car payment, which is a shocking $700/month on average.

I am Sarah, 40 years later - and now, I am able to buy new cars - because I had my priorities straight when I was young.
 
It’s way more than “features”.

A 1956 Chevy/Ford/etc. is a death trap by comparison, with basically zero crash resistance. A modern car, with an impact-resistant structure, airbags, seatbelts, and accident avoidance capabilities like ABS and stability control, is far safer.

So, it’s not about Bluetooth or heated seats, though they’re nice, it’s about a different level of safety.

Take a look at this - 1959 Chevy Impala vs. 2014 Chevy Malibu - while the Malibu is hardly a paragon of modern engineering, it destroys the Impala in an offset frontal collision (the most dangerous, potentially harmful type) despite being lighter.


I've seen that video before. It makes the point but, man, I hated to see that '59 Impala get sacrificed like that!

Scott
 
It’s way more than “features”.

A 1956 Chevy/Ford/etc. is a death trap by comparison, with basically zero crash resistance. A modern car, with an impact-resistant structure, airbags, seatbelts, and accident avoidance capabilities like ABS and stability control, is far safer.

So, it’s not about Bluetooth or heated seats, though they’re nice, it’s about a different level of safety.

Take a look at this - 1959 Chevy Impala vs. 2014 Chevy Malibu - while the Malibu is hardly a paragon of modern engineering, it destroys the Impala in an offset frontal collision (the most dangerous, potentially harmful type) despite being lighter.



I agree with you, and using the same principal, a party line with a phone attached to the wall in 1959 was like $12, which is around $120 today. So that smart phone you can take anywhere and do anything with is infinitesimally cheaper applying the same principals than a telephone in 1959 - yet that is the first thing this forum attacks whenever discussing the younger generation.

So next time I will remind them that it is infinitely cheaper and better than the black thing they used to have stuck to their wall, making the younger generation much smarter for having it than they were in their day :ROFLMAO:
 
This is a ridiculous, outlandish statement-especially considering the average age on this forum.
How old are you?
Go try it. Drive 55mph and pick a spot to start braking, using excessive force on the brake so the ABS is very active, chattering away. Then do the same thing at 50mph with you threshold braking, trying not use ABS. I think almost all of us could stop faster from 50 without using the ABS. Maybe not on the first try, but after a couple attempts.
My main point is that driver awareness, and risk management, is worth something, and if you are simply carrying too much speed into a bad situation, no system on your car is going to change the laws of physics and avoid the accident.
After all lots of commercial vehicles have nearly double the stopping distances of the average car, yet have much lower incident per mile rates than passenger cars?
 
Go try it. Drive 55mph and pick a spot to start braking, using excessive force on the brake so the ABS is very active, chattering away. Then do the same thing at 50mph with you threshold braking, trying not use ABS. I think almost all of us could stop faster from 50 without using the ABS. Maybe not on the first try, but after a couple attempts.
My main point is that driver awareness, and risk management, is worth something, and if you are simply carrying too much speed into a bad situation, no system on your car is going to change the laws of physics and avoid the accident.
After all lots of commercial vehicles have nearly double the stopping distances of the average car, yet have much lower incident per mile rates than passenger cars?
I recall a video produced by BMW years ago that had their test driver screaming around in an E46 M3. I vividly remember them saying a highly skilled driver could hustle the car around a dry track faster without the DSC enabled (Dynamic Stability Control, which includes both 4-wheel independent ABS and drive-by-wire throttle override/control), but on a wet track the DSC won every time.

FWIW,

Scott
 
Last edited:
Go try it. Drive 55mph and pick a spot to start braking, using excessive force on the brake so the ABS is very active, chattering away. Then do the same thing at 50mph with you threshold braking, trying not use ABS. I think almost all of us could stop faster from 50 without using the ABS. Maybe not on the first try, but after a couple attempts.
My main point is that driver awareness, and risk management, is worth something, and if you are simply carrying too much speed into a bad situation, no system on your car is going to change the laws of physics and avoid the accident.
After all lots of commercial vehicles have nearly double the stopping distances of the average car, yet have much lower incident per mile rates than passenger cars?
So how do we weave this into this economics narrative.

We could say Sarah drives a hoopty and doesn't have to pay for collision, so her insurance is also cheaper. But she doesn't care how she drives so has many accidents and her liability is much higher cost.

Or we could say Sam has negative net worth, so he carries the state minimum because if you sue him you can't get blood from a stone.

Ohh, this thread has gotten so complicated 😰
 
I recall a video produced by BMW years ago that had their test driver screaming around in an E46 M3. I vividly remember them saying a highly skilled driver could hustle the car around a dry track faster without the DSC enabled (Dynamic Stability Control, which includes both 4-wheel independent ABS and drive-by-wire throttle override/control), but on a wet track the DSC won every time.

FWIW,

Scott
I would have to believe per @goblin post, that early ABS just had too many lags and too many limitations - sensor lag, controller lag, hydraulic lag, hydraulic backed off too far on intervals, whatever.

Industrial electronic over hydraulic loop controllers such as used in stamping presses respond in under a ms. I would have to believe automotive systems have caught up, in which case there is no way a human could be faster, unless purposely drifting is faster?
 
I recall a video produced by BMW years ago that had their test driver screaming around in an E46 M3. I vividly remember them saying a highly skilled driver could hustle the car around a dry track faster without the DSC enabled (Dynamic Stability Control, which includes both 4-wheel independent ABS and drive-by-wire throttle override/control), but on a wet track the DSC won every time.

FWIW,

Scott
This would be completely different, DSC would prevent powersliding ever so slightly at the limit, making the car lose those few "pass the power to the ground" units, I'll call them Pirate Ninjas like in The Martian. Whereas a human would "overfeed" by a little. Not to mention those little drifts might help the driver position the car better to the best driving line.
On the dry it will work, as mentioned.
 
This would be completely different, DSC would prevent powersliding ever so slightly at the limit, making the car lose those few "pass the power to the ground" units, I'll call them Pirate Ninjas like in The Martian. Whereas a human would "overfeed" by a little. Not to mention those little drifts might help the driver position the car better to the best driving line.
On the dry it will work, as mentioned.
I agree.

I've experiment with mine a few times in a safe area, doing deliberate second gear, full throttle, oversteer power slides. ABS kicks in on the spinning rear wheel, causing the rear wheel to ratchet with ABS pulses. No way did the drivetrain like it! And in even more extreme power slides, i could feel the DSC close, or at least partially close, the throttle. It's weird feeling your thottle close when you've got it floored. For a few milliseconds you think, "My God, something broke!" Haha.

Scott
 
That's fair, the thing is, the ~10% is over the lifetime of the S&P. And there will be years and time periods where the rate varies (yes I am sure I am stating the obvious to many).

But this is why the graphics like this annoy me. It's great to encourage people to save, but at the same time, I look at it and wonder what someone thinks when their actual return is lower, especially since the graphic is specific to a 6 year window.

Here's another source of annual S&P returns:
https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

And a quick snap shot of the 6 year, 10 year and 30 year rate of return measured as the geometric mean, as well as a count of years with returns below X%. This is based on the data set I linked.
1749576330688.webp


^Makes me wonder if 8%-9% in a previous post I made is even too aggressive.

Full disclosure, on a personal basis I am all about dollar cost averaging in an S&P index. I look at it as the last dollar in is the next dollar to sit there for 30 years.
 
Yes! A three or four year lease on a new car. Full factory warranty, maybe even free oil changes during the warranty period, and by the time you turn it probably won't even need new tires.

Leases are not always poisonous.

Scott
One of the biggest benefit (that you may not need) with a lease is you let the lender hold the bag if the car turns out to be a lemon.

Nissan Leaf owners who bought the first gen new didn't know they would tank so fast so bad and if they didn't lease they would probably be out $9k in the end. Let Nissan hold the bag instead by using leases is the right thing to do.

I probably won't lease a Camry but just buy it outright instead.
 
... There are times when the fixed cost of a lease is cheaper, not for everyone though. Its all about being an informed consumer and playing the long game.
Ditto. For most New York City residents, you could be Sébastien Loeb's mechanic, you can't maintain a car yourself. When you spend seven years on a waiting list for a spot in your building's parking and the bylaws can put you in trouble for so much as opening your hood to check your oil because repairs are verboten, you have to go to a pro, and those pay NYC rents too. So if leasing works for you - you replace every three years and just drive it and change the oil. Once out of lease, the car goes in another universe.
 
Thanks. She “gets” it.

When her student loan payments were suspended during CV-19, she banked every one of them in her high yield savings, and then after a year of piling up cash, called me up, and said, “Dad, how do I open an IRA?”.

More recently, she asked me to look over her Volvo, stating, “The car is great, and I don’t want a car payment.”

We’ve discussed insurance products (doctor disability among them), car buying, real estate, and the various investment vehicles that will be available to her when she finishes her fellowship.

But, germane to this topic, the Plastic/Hand Surgeon wants to drive a used car, avoid a car payment, and shape her financial trajectory before ever considering a new car, much less an $80,000 one.

My brother-in-laws brother was an Orthopedic surgeon, specializing in hands. He has always lived far below his means, and retired from practice at 55. Although he's still involved in many aspects of the medical field. The last time I saw him he was still driving his almost 30 year old 4Runner.
 
Back
Top Bottom