Never Buy A New Car Or A Car In Its First Year Of Redesign

Never buy a new car. Too many gremlins.

If you want to be rich, never buy a brand new car or a car in its first year of redesign. I've been a car fanatic forever, but I've also been a personal finance blogger since 2009. My goal for everyone is to reach financial independence sooner, rather than later.

After owning Moose, my 2000 Land Rover Discovery II for nine years, in 2014 I decided to lease a more fuel efficient car named Rhino, a 2015 Honda Fit. Since I was a kid, I've always loved the sportiness and reliability of Hondas. My parents always drove very used Japanese cars.

Even when I owned an $80,000 Mercedes G500 as an idiot 25 year old back in 2002, my fondness for compact cars never waned.

The older I got, the less I cared about driving a fancy car. All I wanted was to have a reliable automobile that required a minimum amount of maintenance so I could cherish my valuable time. I thought Rhino would be that perfect car, but he's not turning out this way!

New Cars Are Not Necessarily More Reliable

One of the biggest fallacies is the belief that new cars are more reliable than older cars. Based on my experience of owning 10 cars over the past 20 years, I feel that used autos are often more reliable than new cars because they've already gone through the “break in” period.

When I was still looking to save every penny I made before retiring early, I would look to buy cars within a year AFTER they completed their major 50,000 or 100,000 maintenance schedules. By then, the greatest depreciation hit had already been taken, and the big maintenance cost had already been spent.

Instead of feeling nervous about reviewing the mounds of maintenance records when buying a used car, I felt happy that all those maintenance issues had been already taken care. The more maintenance records provided, the more confident I was in buying the car. Besides, I had a trusty cheap auto-mechanic from my days living frugally in Chinatown.

After I bought a new Mercedes Benz G500 in 2002, the car was in the shop at least once a quarter during the first year due to electrical gremlins. Since that car, I swore never to buy new again until I relapsed in 2014. I figured, surely a Honda Fit would be one of the most maintenance free cars ever because of its awards, track record, and popularity. I was wrong.

Related: Check the NHTSA website for the latest recalls

Problems Begin To Mount With My New Car

Check out this image I took from the service man's computer of the various Honda Fit service recalls since I bought the car in September 2014.

Honda Fit Service Recall Issues

Since I bought Rhino, I've had to change my front bumper because of a crash safety test failure issue, do a couple other things I don't understand, and lubricate all my door handles because of some corrosion problems. These were all mandatory recalls based on my lease terms.

I'm glad Honda Corp is being proactive in making the Honda Fit as safe as possible, but they should have built the car right the first time because they've been making motor vehicles since 1959!

All told, Rhino has been in the shop twice for 8 hours, and I've had to rejigger my schedule by another 4 hours to drop him off and pick him up. In fact, I wrote this post at a coffee shop as I waited for them to finish my door handles.

To make the most out of an unexpected situation, I made $10 picking up a passenger along the way to the dealer from home, ate a power lunch with my largest online client downtown, saw another friend for coffee, and pounded out this post. Thank goodness for being able to kill time working online!

Auto dealers actually love recalls because the car manufacturer pays its service department to fix the problem. The gross margin for service and parts is over 50 percent for most auto dealers vs. just 8 percent for new-vehicle sales. If auto dealers can successfully sell you a junker for 0% profit margin, they probably would. 

The cost to fix newer cars nowadays is outrageous!

Now The Automobile Won't Start

Just the other day, after two hours at the tennis club, Rhino wouldn't start. Even though none of his lights were on while I exercised, the motor wouldn't catch because the battery somehow died. I had driven him for over 50 miles the weekend before as well.

Luckily for me, I pay $2 a month for roadside assistance. Unlucky for me, I had to wait another hour for them to come out to jump my car. When the guy finally came, of course Rhino's engine could start on its own.

The technician told me to always turn the auto headlights off during the day because even though the lights are off, they drain your battery while your car is off. He also said car manufacturers with this feature don't tell you this so they can make more money on service and battery sales. Not surprised.

A week later, Rhino wouldn't start again so I finally sent him to the dealer to get serviced. They told me there was nothing they could do because he started up just fine. Murphy's Law of course.

I told them that they should keep him overnight for at least two days, give me a free rental car, and then try again. Lo and behold, they couldn't start him up on the third day and found out he has a malfunctioning battery sensor. Rhino will be in the shop for a total of six days because they've got to order the part!

At least I get to do donuts w/ my brand new VW Passat I'm borrowing from Hertz!

Related: Consumers Stand Up For Your Rights: Honda MPG And Recall Issues

The Right Age Of Cars To Buy

I leased a new car $20,500 car because it complied with my 1/10th rule for car buying and I thought it would save me time. If I could do it over again, here's what I'd do:

1) Buy the second year of a new model. Let the car manufacturer figure out all the gremlins after a year's worth of consumer usage. You can also wait until the third year, but the new model may no longer interest you as much as when it first came out.

Further, a new model might be waiting in the wings, making you feel stupid for not just waiting a little while longer to pay a similar price for an updated model. I only recommend buying new if you have the financial means to do so, have no access to a good auto mechanic, or have no automobile knowledge.

2) Buy a second hand car that is five years old with between 50,000 – 70,000 miles. If taken care of properly, a five year old car still feels quite new. It's past the typical warranty period, so it's important the car has done all the maintenance according to schedule. Make sure you get all maintenance documents. Also make sure the big ~50,000 maintenance has been done. This often costs $500 – $1,200 to complete.

As you can see from the chart below, the average five year old car loses a massive 60% of its original value, from $30,000 down to $12,000, depending on mileage and condition. Meanwhile, cars can easily be owned quite economically nowadays for 10+ years or 150,000 miles. I've owned cars with both high age and mileage attributes with no problem. The only reason I got rid of the cars was mainly due to boredom, then maintenance costs, and finally safety issues.

Car Depreciation Chart Average

Planning For My Next Vehicle

As I wrote in The Best Mid-Life Crisis Cars To Buy, I'm currently saving up for a sweet new ride at the end of 2017 when Rhino's $235/month lease is up. There's still a good chance I'll be more financially responsible and just buy Rhino for his residual value of $12,600. But my current plan is to buy a five year old super car for up to $60,000. Given mid-life crisis cars are often second cars with few miles, I'm thinking $60,000 could buy up to a $150,000 original sticker price car.

Unless you are an absolute car nut, we can all agree that cars are a big waste of money. From the valuable time it takes to deal with recalls and maintenance problems to the necessary cost of car insurance, it's no wonder why car sharing companies have grown in popularity. General Motors' $500M investment in Lyft makes absolute sense because they see a future where less people will buy cars.

It's just not worth buying a new car in the first year of a redesign, no matter how reputable the company. If you value your time and money, practice some patience and wait at least one year for all the major problems to be discovered and fixed.

Related: Should I Own Two Cars?

Readers, anybody ever buy the first year of a new redesign and regret their purchase? What kind of car maintenance and recall issues have you had? If you're looking for low-cost auto insurance, check out AllState today. They have some of the best rates around and there's no obligation to get a quote. 

118 thoughts on “Never Buy A New Car Or A Car In Its First Year Of Redesign”

  1. Maybe the author knows “finance,” but he know little of cars or auto financing. And the “first year” rule is a myth. To wit: J.D. Power’s Vehicle Dependability Study often ranks first-year models at or near the top of their segments for 3-year dependability. On average, the last few Vehicle Dependability studies prove that first-year models don’t fare any better or worse than their longer-running rivals.

    1. Why wouldn’t you wait until the second year? I spoke to two car engineers and they have both told me that they really don’t know all the kinks until mass production release.

      1. One good reason is listed in my post March 21, 2016 at 8:46 pm :) Seriously saved me a bundle in depreciation. I got one of the first Porsche Macans sold in my area and demand was so strong that it continued to be almost worth what I paid for it by the 3rd hear of ownership. Only now are they starting to depreciate a little more normally as there starts to be more supply on the secondary market. Obviously doesn’t hold true for all cars, but for highly desirable ones, this is something to consider.

      2. The reason it’s best to wait 1-2 years after a re(design)/new design is that many of the defects are corrected post production – i.e., reported by customers, found by engineering later in the cycle because of quality misses, found by 3rd parties/researchers/dealer techs. Cars, unlike software, don’t have a true beta/alpha cycle allowing real customers to try out cars before production assembly.

          1. Right. Just reiterating reasons for @fritz why more problems occur in the first year(s) of new models.

  2. Oh yikes, so sorry to hear you’ve had to deal with all of those troubles. I sure hope they get resolved quick. Honda is one of my favorite car brands. Hope they get their act together so you don’t have to deal with any more problems. Best of luck!

  3. Warren Franklin

    I am waiting for autonomous cars before buying anything new. I read autonomous cars will be able to be programmed to go home after dropping you off somewhere.

    Therefore, a family can share 1 autonomous vehicle assuming there are no scheduling conflicts. Dropping me off at work, then my family at work and school.

    If this technology is slower than expected, I will buy a used vehicle. I also read a recent WSJ article about how a larger % of vehicles are being leased vs. bought. predicting a large supply of used cars to flood the market over the next 3-5 years.

  4. Buying 2nd year isn’t always the best move. I’ve now purchased 3 Porsche’s within 6 months of when they were released, and it has saved quite a bit on depreciation. The reasoning behind this is that for the first few years after a new release on many Porsche models, there is very strong demand which keeps resale values high. If you were to purchase in year 2 after release, you’d be looking at the next get model being released 1 to years later which will cause you vehicle to depreciate much more quickly than if you’d purchased within a few months of release and ideally sold about 2 years later. Porsches and most other cars generally have a 4 year life before the release of an updated model.


    Purchased 2015 Cayman (dealer demo) in March 2014 for $54,000. Sold April 2015, 13 months later for $2,000 profit. Put 7,000 miles on it.

    Purchased Porsche Macan S for $57,000 in Oct 14 for $57,000. Still have it but could easily sell for $54k with 11,000 miles on it. 5% depreciation over 18 months on a brand new luxury SUV is not bad! These have been sold out since they were released, and Porsche increased the price quite a bit in 2nd model year which really helped my resale value.

    Purchased Porsche Cayman GTS 3/15 for $84,000. It’s now worth about $80,000. Didn’t fare quite as well with this one, but still only 5% 1 year drop on a brand new car which I love.

    As far as problems, I’ve had zero. Porsche and Lexus consistently trade places for the #1 most reliable auto manufacturer. When it needs maintenance I just schedule an appointment with the dealer, drop it off, pick up the loaner Cayenne they have ready and waiting, and come back after work. Total time wasted is about 5 min at the dealer to drop off, 5 min to pick up, and 10 min driving off my usual route to work.

    So anyway, consider a Porsche :) Extremely fun to drive, most reliable manufacturer, and very low cost of ownership relative to purchase price if you play it right.

  5. Do you have an article on Leasing new vs Buying a CPO car?

    Im surprising you are leasing currently.

    Anyways, I’m looking to upgrade from our 1999 Toyota Camry soon (we bought it 9 years ago) and I’m looking at a Honda CRV myself.

  6. Hey FS,

    Yeah man. Can’t agree more. My daughters 2015 Fit is riddled with recalls. Quality is not the same as it used to be especially with Hondas…went downhill after 1994. They care about $$$ now that brand was in place. I know it’s tempting to get brand new models. They should give discounts to early adopters using beta and sometimes alpha products.

    First year major redesign models should be avoided until 2 years in!

  7. Apathy Ends

    We bought a new Honda CRV Two years ago, really happy with it so far – my wife’s family has been driving Hondas for a long time and I am impressed with the durability ( coming from a Ford family)

    Kinda bummed you are having issues, the only reason to buy a brand new car is you know that no one was spinning out and driving around like a crazy SOB before you got it

  8. I love cars and have only ever leased or purchased new Acuras, BMWs, Mercedes & Audis. I’m not a fan of used cars. I really do like the new car smell and the driving dynamics of the German brands can’t be beaten.

    My last car was an E Class Coupe which was absolutely stunning and glorious to drive, but also annoyingly unreliable. It cost me a small fortune on payments and maintenance too. I was happy to return the car once the lease term finished and I am now happily leasing a VW for one third of the cost. (I’ve been at least disciplined enough never to break my lease. I’ve had friends do it and you lose so much money.) Anyway, I’ve ‘saved’ over $5000 in just the past six months by not getting another high end car.

    I will say however that I’m really itching to get a second car for the family and would love to have a Porsche Macan, Lexus RC or BMW M235.

    1. If you haven’t driven an M235i please give it a shot. Once I drove one I was sold. It’s a 6MT car which is not everyone’s favorite but I like “rowing the gears”. The purist M car folks say it’s not a true M car but no biggie for me. I came from a E46 M3 and love the M235i.

  9. Wow! Back in December of 2013 I bought the same car, except mine was the 2013 model – the one before the redesign. I thought about waiting for the new model then, but decided to pull the trigger. It sounds like I made the right choice. Wish you were having better luck with your Fit, it really is a great car. Like you said, hopefully in a year or two all the gremlins will be worked out of them. Long time reader here, thanks for all your great posts!

  10. Aliyyah @RichAndHappyBlog

    You mentioned that you leased a car. Why didn’t you buy a used car in cash outright? I often read that that is the most financially sound decision. (Sorry if you’ve written about this already.)

    1. I go into detail through the linked article. Essentially the reasons are: my car is a business expense and I also don’t want to go through the hassle of selling a car anymore. When I was younger I love to buy and sell cars, now that I have more money and I’m older I can’t be bothered. Also, the residual value for my car is $12,600 which I can buy also, the residual value for my car is $12,600 which I can purchase outright.

      I have to pay about $700 or for leasing the car over three years. But that extra cost is worth it to me for the option of adding back the keys or just buying the car. This type of car, the extra cost is really low. If I were buying a higher price point car I would’ve ironically just pay cash.

      Bottom line: the older and wealthier you get, the more you value time over money.

  11. I always wait out the first release of things like game consoles and Windows versions, but I never thought about cars that way. Thanks for the educational post. I’ll definitely take it into account the next time I’m looking for a new car.

  12. Sam,
    I’m going to nitpick because as a car geek, I feel compelled to point out that not ALL cars depreciate in value. Some modern used cars hold their value very well and others have begun to appreciate. This doesn’t happen frequently, but here are some examples of super cars you could pick up used that are within your budget: any air-cooled Porsche 911 coupe, Acura NSX, BMW 1M, and the S54-powered Z3 M coupe. You’ll spend on maintenance, but you can be reasonably confident your money won’t vanish over time.

    Thanks for your in-depth blog posts. In my opinion this is the best personal finance website out there.

      1. theofficialjohnandre

        I’m trying to think of a politically correct answer. When I think of California or Hawaii I think of a nice BMW convertible, Cadillac with leather interior, porsche….etc. Honda Fit is economy….I’ll put it like this: a S250 pair of shoes are a waste of money but you might attract and marry a rich oil heiress….

        1. Interesting. From your POV, the idea is to drive a car to attract a wealthy mate?

          I would rather be wealthy already, and attract someone who has no idea I’m wealthy and finds out eventually over time. Money tends to convince others they are more attractive than they really are. It’s a much better challenge and end result to attract someone where money is OUT of the equation.

  13. Financial Slacker

    I have to say, what we are willing to spend on cars is ridiculous. Auto manufacturers have been brilliant in transforming the car from a form of transportation into the ultimate status symbol. For many, auto expenses (car payments, insurance, maintenance, gas) rivals their mortgage as their largest expense item.

    That said, I started off buying new cars. And even though I’m sure I violated the 1/10 rule, I did keep them for 10 years, so I think it averaged out over time.

    My most recent auto purchases were both used, second hand luxury cars, 2 to 3 years old. If you are buying lease returns through the dealer, most of them come factory refurbished with 100K warranties, so they tend to be in decent shape.

    And in addition to the cost savings, when the car is gently used, it takes some of the worry out about every little thing. Especially with kids riding around in it all the time.

    I think this will be the way I go again, but I’m not planning on buying another car again for a few more years.


  14. I have a difference of opinion. My parents only owned second hand cars and it used to drain our finances. When I started working, I bought two new cars, in 2007 a Nissan X-Trail and in 2008 an Opel Corsa truck. Apart from the standard maintenance (admittedly the truck’s got annoying LHS globe burnout problem which is probably a factory fault), we haven’t had to do much on the cars. Last year was the first time I changed the brakes on the bakkie and this year the clutch on the X-Trail.

    No hunting for spare parts, no forking out obscene amounts of money to spares shops and no scratching heads trying to figure out what is wrong with the car (my dad’s job, he did all the mechanical work). Parts are expensive and for older models, very, very hard to come by. Pirates parts are often bought instead.

    The condition of the cars may have to do with the fact that most of our cars are manual gearboxes and a lot of people buy their drivers licence. Second hands are notorious, especially Golfs, BMWs, etc. You have to see these guys hammer their cars on the roads. Do you really want to buy that and keep forking?

    No thank you.

    1. You bought TWO new cars back to back? May I ask how much were you making in 2007 and 2008 and the cost of the cars?

      If you are happy with your financial situation now, that’s all that matters. However, most people I know can’t afford your luxury.

      1. I was making below market for an engineering grad student at the time (probably less than $800?) but hey, I was happy; I had my dream job and a nice kickstart to my savings in the way of a late bursary.

        First car was maybe around $30000 and a combined effort between my parents and I. It’s the family car and we used my uncle’s old car to trade-in and our savings. I did pay my parents back for the portion they put in.

        Second car was maybe around $8800 between my dad and I. He traded in his old car and I put in the rest from my savings which I’d accumulated in one year of working. (Told you we’re supersavers!)

        We negotiated hard on the prices for both cars and got great discounts (around 15% off the advertised sale price) because we paid cash up front. And this was just before car prices became over-over-inflated.

        The cars haven’t been a financial burden on us. Whatever was blown out of my savings, I put back in within 4 years and then some (and I wasn’t even investing at the time, just saving).

        I’ll take the luxury of a new car that doesn’t break down in the middle of hijack central over a new phone/clothes, etc. any day!

        I’m not happy with my financial situation, mostly because my job is no longer secure. I knew so little about finance and financial history, I thought 2008 was just a blip and the future would be better. I didn’t know about the dotcom bubble and all the other mini bubbles. I was an overly optimistic person and also overestimated our political and economical climate.

        If I’d known then what I knew now, I would’ve invested like crazy (instead of starting in late 2011) and I probably would’ve reached FIREFUM by now even with the cars and three overseas holidays (two for my parents and one for myself). But hindsight is 20/20.

        1. I also forgot to mention the envy I attracted at work. Everyone assumed I was being showered with money, when in fact I was smart budgeting and cutting corners.

          The cost of living has since tripled so it’s unlikely I will be doing that again.

  15. Crystal Ball

    Well now, it seems I’m quite a naughty, wasteful person. I buy new cars and will keep buying new cars. Yay new cars! Specifically, Toyotas made in Japan. I don’t give a shit about first year design etc, but appreciate folks who enjoy that stuff – just ain’t my thing. I used to drive a lot for my job, so made a point of trying out a bunch of cars and test driving them in all kinds of conditions. And, after all that testing, went for Toyotas made in Japan and have been as happy as, well, happy as a guy in a great car.

    I grew up driving junkers and had my fair share of zen time sitting in a freezing car in the middle of nowhere in a Pacific Northwest winter storm waiting for the cavalry. Used to keep blankets and water in the back just in case. Never again. Will never forget the day my dad left our old 70s Ford station wagon to warm up for a few minutes and, after idling for a while, it decided “D” for Drive was sexier than “P” for Park – and that old paneled pile of metal drove itself across the street and through our neighbor’s fence. Thankfully, people weren’t so litigious back then. :-)

    I bought a 2004 Toyota Tundra new with the off road package etc….mmmmhmmm, yessir, what a truck. Drove it everywhere for 10 years without a single problem and sold it for about half of what I originally paid for it to a guy who almost had tears I his eyes cuz he was so happy to get a beautiful truck with 10 yrs of maintenence records.

    I 2010, bought a new Toyota Highlander and still love it. It’s had what, 1? 2? recalls over the years, but I don’t remember what the recall was about and didn’t bother me because I just took care of it with regular maintenance and drove a loaner car while they did the work – no waiting.

    Anyhoo, ya, I get that I could save some cash by buying used cars. But I don’t care. My enjoyment of certain new cars and the new car experience…the virgin leather and sweet knowledge that no former owner’s teenager came home and said, like my teen daughter once said, “Hey dad, I can’t get mom’s car to drift”….ya, I’ll pay extra for a new car and I’ll like it. Oh, and I hope none of you used car driversavers are sipping a glass of wine while you read this, cuz that’s a waste of money. Water! Drink your water. It’s free. ;-)

  16. My wife owns a VW Jetta TDI, it was the first model year the car came out. Thats the infamous diesel that has brought VW to its knees in terms of investor and consumer lawsuits. I am hoping for a buyback from VW. Don’t think I will ever buy another VW again, their near term future in the US is uncertain at best. Also I think its a total sham that they willfully cheated US emissions and the US consumer. (My wife and I thought we were doing something that could help save the planet not pollute like an 18 wheeler). So much for trust of large corporate entities. We will see how it all ends up.

    1. Saving the planet is buying a hybrid or electric and DEMOLISHING your old car. Because if you don’t take your old car off the road, you are now helping contribute to double exhaust, consumption, and traffic! Even better, just take the bus :)

      1. I got a free electric car and I love it. I went from a Sequoia Limited 4wd to a VW e-golf. 7500 fed tax credit passed through on lease, 2500 rebate check used as a down. Leased through my business so business write off 30-40%. Lease pmt is 169 month and I am saving 250 month in fuel costs. My electric bill also went down 80/ month due to EV rates. It’s actually cash flow positive. Also hov sticker.

  17. We’ll I remember my first car, which happened to be a 1st year car. It was a 2001 Ford Escape 4WD for those Chicago Winters. My prior vehicle to this was a 2004 April Moped. That bad boy was sweet at over 70 miles to the gallon!. That was back in IRL. Anyway, my 1st year ford Escape started off well but the problems soon emerged. After I relocated to Miami, and still had the Escape the problems continued. The amount of time I spent trying to get my car fixed was a joke. The service in Miami was sub par to say the least. I off loaded that car and moved onto a New Toyota 4 Runner. Never had any problems. It was a great Vehicle. Slainte.

  18. I have only bought 1 new car which after the lease was up bought out right then drove into the ground. All other cars that I have gotten are useed with 30-40K miles on them including my 1948 Lincoln Continental.

  19. Hey Sam,

    I definitely agree, new cars are some of the most overpriced things out there. You can see that in action with how much they’re worth as soon as you drive it out of the dealership.

    Luckily we (as a couple) only have 1 car which we bought second hand and we plan to hold for 10+ years. We only have 1 car because I use public transport to get to & from work.


  20. supernova72

    Good post. I have never owned a new car and the last three were between 1-4 yrs old. Have a friend who keeps an eye out for cars coming off lease. Sounds crazy but he swears by it since leased cars (BMW in my case) have scheduled maintenance as part of the pkg. So all the service records are there. So one cars ago I was able to get a 2004 M3 (in 2008) for $30.5K. 40K miles. Very nice car that I drove for 7 yrs and traded for $13K (see below).

    I didn’t follow your 1/10th rule this time and bought 2014 M235i that had depreciated 20% (9K miles). More money than most would spend on a car but it comes with maint and warranty. 0-60 in 4.9 secs will put a smile on your face. It helps “ease” my M-F commute (Seattle WA traffic–eek!).

    1. 0 to 60 in 4.9! Not on the 405 or the 520 or I -5 north or south! A washington eastsider here. I have no idea how you do it! A great place to visit but could never handle the traffic

    2. 4.9 seconds? My grandma’s 81 Chevette will do that! Lol, just teasing…I understand what you are saying since I can’t imagine giving up my straight out of the factory ride used car that does 0-60 in 2.7 sec, you can feel your brain compressing to the back of your head when you floor it : )

  21. I completely agree, as a practicing engineer, on buying the 2nd model year. We don’t always get it right out of the box!

    From my experience in the business, the dealers don’t necessarily want a brand or model that has a lot of recall or service campaigns since the manufacturer makes it incredibly difficult to fix within the amount of time they reimburse at. Plus, it just degrades the overall brand and makes futures sales that more difficult (new or repeat). No body gains from disgruntled customers other than the competitor.

    In general, they’d prefer the occasional ‘fluke’ issue that is covered by warranty and isn’t timed down to the nano second by the manufacturer. They can bill the time needed to fix it and look like a hero to the owner.

    The ideal car for a dealer is one that needs steady, continuous maintenance (frequent synthetic oil changes, brake fluid, etc) billed at THEIR OWN rates, that brings in the customer multiple times for other possible upcharges (new tires, brakes, wipers, car cover, license plate holder, matching gloves!, etc). Plus if the parts are proprietary, its a win-win for the dealer and manufacturer; lose-lose for the customer, independent mechanic, and local Pep Boys or NAPA.

  22. Sam,

    Totally agree but want to point something out to you as well about this particular vehicle. I was shopping for a Fit myself and decided on the 2013. The 2013 was the last year of the 2nd gen Fit and also was manufactured in Japan. Your 2015 model while a bit “snazzier” was most likely manufactured at the new Honda plant in Mexico. Not only a new gen but a new plant as well.

    I found this out during my research of Fits and decided against a 2015. I picked up a 2013 Sport with 40k miles last month for 12k and saved 7k in depreciation from sticker. Hopefully this Fit has the longevity that my Accord had.


  23. I’d love to get your insight (or a future post) on whether it is economical or in some other way beneficial to have a “beater” car. My dad gave me his 04 Civic with only 90k miles on it. I use it to daily commuting – about 60 miles round trip and drive my 09 C-300 Benz once a week. I’m still planning to pay him maybe 2-3k for the car cause I feel bad he just gave it to me.

    At what point is it worth it for me to keep this Civic considering incremental cost of insurance, wear and tear each year. Yet still there is the benefit of regular VS premium gas and better gas mileage. Any thoughts?

  24. I completely agree with not buying the first year of a redesign!! I buy a new truck every 3 or 4 years. I always buy either a Chevy or GMC Duramax 3/4 ton pick ups. I’ve bought 2 of them the first year of a redesign and they were both lemons.

    I buy new for 2 reasons. First, I get to depreciate them on my taxes. Secondly, I put about 30,000 miles on per year. I trade them in right before the 100,000 magic number hits. On average the difference between what I pay and what I trade them in for costs me about $300.00 per month. $300.00 bucks per month minus my depreciation to drive a new truck. Worth it to me.

  25. I approach car buying in the same way as new video game consoles. My number one rule is to never buy the first production run. I wait for after the first round of updates and fixes.

  26. My first car was a 1987 Mazda Rx-7. It was 10 years old at the time and a blessing in disguise. Seriously, that thing was broken down ever other month BUT it taught me how to fix generally anything on a car you can think of. The only thing I will actually need to pay a “mechanic” to do is change out my tires. Although for larger jobs, I no longer have the time to commit. Especially when I could be earning double of what the mechanic is charging. I also had the benefit of working in car stereo and remote start/alarm install in college. I learned a lot about 12 volt electrical systems, which has come in handy many times in my adult life. I would advocate for every person to get a beater and learn how to fix and properly maintain a vehicle. It is nice not to rely on mechanics. Plus there is some cost savings:

    For instance, a break job costs around $400 dollars, with just one hour of your time you could do it yourself for about $50. So unless you are earning more than $350 an hour, it would be to your benefit to DIY. Not to mention the personal satisfaction you feel actually accomplishing something tangible.

  27. Until recently I was driving my 10-year old Civic with 160,000 miles on it. I’d planned to drive it until it wasn’t reliable anymore or cost too much to fix (I’ve never had to do any major repairs to it, and it still looked good and ran well). Then a friend listed a car for sale – a sporty luxury car, five years old, under 50k miles, in pristine mechanical and cosmetic condition (still smelled like a new car!). I paid well under 1/3 the original MSRP, and after selling my civic, netted out under $10k. I had been expecting I’d be shelling out $30k+ for a new car in 2 or 3 years, but instead I got a $40k+ car for a fraction of the cost, which should easily last me for 5-7 years before I get bored.

  28. For reliability concerns, yes, buy the last year of the model for sure. Unfortunately, by the time the last year comes out, I and many people are already sick of the model. And if a new model comes out, there will be natural FOMO and envy for not having the newest model!

    Ahhh, the balance. The only pro of having the first year of a new model is the “I got the newest first” and you get to maximize the usage of the design for the longest time until the next model comes out. I say wait until 2nd year as the sweet spot if you can afford it!

  29. I actually got a new car, with a car loan. I’d not make the same mistake (loan, I mean), but the new car was great since it was in perfect condition (and still runs flawlessly after 8 years). Husband bought an used car and it’s already broken down few times.

  30. Kevin @

    “It’s just not worth buying a new car in the first year of a redesign, no matter how reputable the company. If you value your time and money, practice some patience and wait at least one year for all the major problems to be discovered and fixed.”

    Great advice here, and one of the foundations I’m building my blog upon.

    I would even venture to say that, if it’s your goal to buy a car on a tight budget, you shouldn’t ever have to spend more than $15K. Sports car, family van, commuter, truck. You name it, and with a little research and patience, you can find it. You need to be willing to sacrifice some of the latest and (sometimes not so) greatest, but you can save a lot of money this way.

    And for those who are WAY more concerned with reliability than the lastest-and-greatest features, you should buy the absolute LAST year in a particular model run (that’s why I bought a 2010 Toyota Sienna with 80K miles. Right before the redesign in 2011. Spent $13,300.) By that time, they’ve really had enough time to sort out the issues. The Sienna still had major recalls to address even in the 2008 model, which was the 2nd year of production. If I could, I’d buy the last one to roll off the assembly line, right before they tool up for the next model.

    People have it in their minds that a good, reliable car can’t be had for under $20K, and that’s just not the case, and then they end up strapped with a car payment of 300-400/mo. I’ve owned 7 cars, all bought used for under 15K. All but one gave me very very few issues beyond normal maintenance. It’s all about picking a reliable make/model to begin with, then go to the last year of that model run, then find a good used example with a good maintenance history as you suggest. Here’s a secret: mileage isn’t nearly as important as regular maintenance. I’d take a car with 100K miles and regular maintenance over one with 50K miles and spotty maintenance any day.

    To further prove my point, I’m thinking about buying a super used vehicle off eBay for under $2,000, just to do a blog series about it and show people that reliable transportation can be had for far less than you think. And then urge them to place that money saved into something appreciable, or just keep it as cash. Put it anywhere, just not into a car (and I love cars!)

    Well see if I actually have the guts to do it…

    1. For reliability concerns, yes, buy the last year of the model for sure. Unfortunately, by the time the last year comes out, I and many people are already sick of the model. And if a new model comes out, there will be natural FOMO and envy for not having the newest model!

      Ahhh, the balance. The only pro of having the first year of a new model is the “I got the newest first” and you get to maximize the usage of the design for the longest time until the next model comes out. I say wait until 2nd year as the sweet spot if you can afford it!

  31. I complained once here because my “newer” (2009) Lexus suv had a problem that required me to replace the entire engine for about $7000 … a few months later, I got a letter in the mail stating that the very issue that caused my engine failure was subject to a new extended warranty, so I returned the receipts and diagnosis, and a little over a month after that, I got a check in the mail for ~$7,000. When this car dies at about 300,000 miles, I don’t know I could not buy another one. I know it’s just anecdotal, but I am really pleased with the brand.

    1. I have a 1997 lexus with 280,000+ miles. It has had a couple issues (none of them ended up being major problems). I get it maintenance regularly and it works great! When I need something replaced I use toyota parts (less expensive but work just the same). I am seriously considering buying the same model and year, with <100,000 miles (you can still find them) and with good maintenance records, whenever my current car either quits or becomes too expensive to fix.

      1. Mid to late 90’s Lexus’s are legendarily reliable. There is a guy on youtube that is chronicling his 1994 1 million mile LS400.

  32. I forgot to mention that there were multiple recalls with Ebony.

    By far the BIGGEST pain was dealing with the push-button start. On several occasions, the damn thing just wouldn’t start.

    I’d gotten every explanation from local radio interference to problems with the gear shift.

    The tire pressure signal would come on every time the weather dropped below a certain degree.

    Let’s not even talk about the amount of money it took ($400) to replace two tires. I got a flat the day after I bought it!

    1. Damn Ebony! Well, my Push Start button wouldn’t work on Rhino YESTERDAY, which is why I decided to publish this post. Just *click* *click* *clicked*.

      As a new engineer grad making less money, the time isn’t as big of a deal. As an old man like me, the time become a GREAT BIG DEAL.

      1. MAN! I promise you that I put in every possible code and combination. *hold button for three seconds* *quickly let go and push again* , UP, DOWN, UP, DOWN!!! I’ve been stranded in the employee parking lot too many times.

  33. Bought a brand new Hyundai Sonata back in the fall of 2010 that I called Ebony. I was fresh out of engineering school and wanted to replace Goldie, my 2002 Saturn L200 that I’d had since 2004.

    Well, the truth is I didn’t set out to replace Goldie but it would’ve cost me $5k to repair her that day. The dealer convinced me (and my girlfriend at the time) that a new car was what I needed.

    I walked away with a beautiful, new Korean stallion with all the trimmings–and a $561/month payment.

    In September of 2014, I sold the Sonata and paid cash for a used 2002 Honda Civic, whom I’ve named Argentina. She’s silver, foreign, and won’t cry for me.

    The dealer thought I was crazy and offered to sell me a brand new, 2016 Hyundai Sonata.

    I respectfully declined.

    The $561/month that I was paying for the Sonata has since been going towards paying off my $30k in student loans.

    I have about $9k left to go in student loan payments.

    It sucks to know that my loans could have been paid off in the same amount of time that it would have taken to pay off Ebony. No more car payments for me.

    I wish I would have seen this post back in 2010. Or at least the depreciation chart.

    1. YES! Bad job buying a new car right out of engineering school for $561/month, but GOOD JOB going w/ Argentina and saving all that money.

      So what do you tell the folks complaining about student debt who are also driving nice cars?

      1. Without a doubt, I’ll tell them: As long as you owe people, you’ll always be broke. No matter what the hood ornament says!

  34. This is one of the biggest areas of financial disagreement with my wife. I buy reliable, used cars, also making sure to avoid redesign years (except that one horrendous mistake when I bought an Audi. Never again). Her most recent car was a brand new Honda vs my 3 year old Subaru.

    Now that it’s been a few years, it’s time to do a comparison and see who’s lost the most money in depreciation and repairs… Maybe she’ll see the light, at least I’ll be able to write about it!

    1. How about just make HER buy the car out of her separately funded checking/savings account?

      It’s easy to spend other people’s money or a shared pool of money. Just like it’s easy to OVEREAT when your company brings free food in for lunch!

      1. Well, that was before we were married so she could do what she wanted with her money.

        While we still have separate assets from before the marriage, everything since is shared, so any future big purchases are either mutually agreed upon or made with our separate money. We’ll see how it plays out in 10 years when we buy a new car…

  35. The only new car we’ve ever bought was a Nissan Versa, and we bought it on its 2nd or 3rd year of being out. That car lived in the shop more than it lived in our driveway. Constant problems, and the first one was that it wouldn’t start just 600 miles after driving it off the lot. They had to tow it from our driveway to the dealership. We sold it less than 2 years later and got more than we paid for it. Since then we’ve both had Subarus with tons of miles on them. Mine is 15 years old now and hers is 14 years old with 260k miles on it.

      1. On my WRX I barely drive it anymore since I work from home, but back when I daily’d that car the only thing that wasn’t basic maintenance (oil change, pads and rotor wear) was an a/c hose that leaked. $200 for that and I did the work myself., I have a lot of money into aftermarket mods on that car.

        On my wife’s Forester we bought it at 180k miles and I replaced all fluids and pads/rotors. At 230k miles I replaced both valve cover gaskets myself and that was $200 job also. Regular things like oil and spark plugs I did as well along with some suspension bits that wore out due to CO’s wonderful roads. Wife has been bugging me lately that she’s getting tired of driving around such an old car even though we bought it in cash a few years ago.

        I think it’s worth mentioning that many of the older 2.5L motors (figure 2003-2005) had a problem with leaky head gaskets, but nothing like that has happened since then.

        1. I had a 2001 Subaru Impreza 2.5RS and it was part of the leaky head gasket problem. But the dealership replaced the head gaskets even though I was out of warranty and didn’t charge me a dime for it. I’m not sure if it was part of a recall or not. What was really surprising is that they did the work without even telling me about it beforehand. I took the car in for a leaky clutch master cylinder, and when I picked the car up the next day I saw on the invoice that they had replaced the head gaskets, too, no charge.

          Apart from the clutch going out, I don’t think I ever had any real problems with that car. Handled GREAT, and was a lot of fun to drive. I had it for 113,000 miles and sold it private party for more than blue book value because that body style was in such high demand. I used to get notes on my windshield from random strangers offering to buy it from me.

      1. We bought it when gas was cheap. And two years later gas was pricey and everybody wanted a economy car. So the used lot that bought cars offered us about what we paid for it.

        My wife was rear ended by a high school kid not paying attention, and he had an illegal ramming bar on the front of his car. I pushed his insurance to pay for depreciation and we got a $1,500 check from insurance. But looking back we should have sued them, as that ramming bar destroyed the back of the car and my wife needed 6 months of PT before she could turn her neck again. That illegal brush guard made him liable, and we could’ve cleaned up. The kid’s dad was an IBM exec and lived in a million dollar house. No damage to the kid’s truck, as all the force was absorbed by my wife’s car.

  36. I have always liked to purchase 3 year old cars. That is the sweet spot for leases ending, so for cars like BMW, they tend to flood the market with 3 year old cars for about 40 – 50% of the new purchase price. As BMW warranty period is 4 years, it allows you to have 12 months of factory warranty to work out any remaining issues.

    I have never understood the new car purchase. On a $40k car, that is generally $20 a day of just depreciation every day for the first 3 years. Or to put it another way, for the average earner, that is an hour of work (post tax) every day, just to cover having a new car.

    1. Yep. I bought a CPO 3 series that was loaded (MSRP $49k) for $29k and have not had a second thought. Yes, I could buy a piece of crap for $22k (10% rule), but I love cars, so the extra money was worth it.

  37. I always buy new and drive them till they die.

    Always buy top-rated models like Toyota Highlander, Subaru Forester, etc.

    NEVER had a problem with any of them.

    Back in the day when the spread between new and used was huge, I would have thought more about it. But price used cars, compare them to new, calculate the “life remaining” in each of them, and there’s really not that much difference in the cost these days.

    Plus buying new is one “indulgence” (if you want to look at it that way) I allow myself and my family. We save in many other ways on many other items that are less important to us.

    1. But check out The King Of Recalls chart. Toyota dominating the list!

      Honda, not even on the recall list, and I’ve already got 3 problems in 1.5 years. And, I don’t drive much, around 8,000 miles a year.

      1. You know what’s weird about the list, though? It doesn’t take into account the number of models or the total number of vehicles. It’s just a gross number of vehicles recalled. Toyota sold the most cars worldwide in 2015, so its recalls should be the highest. It would help if they did the number of recalls as a percentage of the average number of cars sold over the prior 5 years or something.

        Another stat missing from the list is the number of voluntary recalls. Toyota does a lot of voluntary recalls, where some other manufacturers will only do recalls if they’re forced to. I have gotten two separate recall notices for my Venza, and neither of them were necessary. Remember the issue of the floor mats sometimes getting bunched up under the accelerator pedal? I got a voluntary recall notice for that, with Toyota agreeing to shorten my pedals to give more free space for the floor mat, but that issue doesn’t even apply to my car because there are hooks in the floor to hold the floor mat in place so it can’t bunch up. So that recall hit the statistics board, even though it wasn’t necessary at all for the Venza.

        I’m not saying Toyota is perfect, but the recall stats are misleading (not your fault — it’s just how they’re compiled). Kia/Hyundai’s numbers look better on the chart, but those guys only recall when there’s a gun to their head, and I’ve heard so many horror stories of important components (like seat belts) failing, that I am not inclined to buy one of those.

        1. Exactly. If I sell 1 million cars I’ll probably have more recalls than someone who sold 50,000.

          Also, models also make a big difference. No problems for us with two Corollas and one Highlander. Other models likely account for the issues.

          This is why I look at recommendations from places like Consumer Reports. They have thousands of people reporting on how they like/dislike their cars, so you can feel pretty good about their findings. Never “steered” us wrong yet! :)

          1. No excuses! The more you sell, the more you must be diligent in quality because the higher the cost of a potential recall!

            Meanwhile, my car didn’t start again today. Nice.

            1. Toyota leads the number one spot in reliability for decades now lol. More of a reason to keep pushing the beater around and not buy a new car!

  38. I agree with the general rule that you don’t buy a new car if it’s the first year of that model. Fortunately, I got fairly lucky in that my first-year Toyota Venza has been (mostly) trouble free.

    My biggest worry about buying used cars is what the person before did (or didn’t do) to them. I’ve gotten burned twice on used cars in the past. I bought a used Corvette and the first owner apparently never changed the oil for the first 5 years or so that she owned it. The motor blew just before 100,000 miles, and that was super expensive to replace.

    My next used car had a weird transmission problem that surfaced within a few months. I had bought it from a dealer, and even though it was outside their 30-day warranty, they tried to assist with the repair issue because it had been such a short time since we bought the car. After months of not being able to figure out the problem (and spending a couple grand on transmission work to try to fix it), I finally unloaded the car as a dealer trade in and bought a brand new car. I owned the POS for less than a year and lost about $9k on it, including the transmission repairs.

    At least there’s car fax now and dealer maintenance records. I wouldn’t buy a used car without good maintenance records.

      1. After I unloaded the POS transmission car, I bought a brand new Subaru Impreza 2.5RS. FUN car. Loved it. After 8.5 years and 113,000 miles, I had to get rid of it because I needed more space. My two big dogs barely fit in the back seat. Also, I made more than a couple of embarrassing home depot runs where I was remodeling and bought 8 foot lengths of baseboard, and had to run them out the sunroof (about 4 feet of baseboard sticking out) to drive it home. The bathroom countertop replacement was really crazy. I actually fit a 6 foot by 22″ wide countertop in the car (Home Depot refused to cut down for me). That took some mad Tetris skills to get it in the car. Reclined the seats, angled it in the doors, maneuvered around for about 10 minutes until one edge was wedged on top of the dashboard and the back edge was resting on the back windowsill. I barely had room to get in and drive next to it.

        After that, I bought the brand new 2009 Toyota Venza. Not too many problems with it, apart from (1) the rear-seat passenger light falling out of the housing a billion times, until I finally bent the bracket with a set of pliers to get it to hold, (2) the air conditioner system leaking and needing to be replaced/recharged in 2015, and (3) new front wheel bearings in 2015. It just crossed 100k miles this week, so I don’t think that’s too bad, especially for a first-model-year car.

  39. Hi Sam,
    I just bought a brand new redesigned 2016 Toyota Tacoma. I love it and have had no problems, but someone hit me at my work parking lot before I got my license plates (<500 miles & 2 weeks old). I was extremely upset as I don't buy new cars that often. I definitely would not have been as upset if he hit my old 2004 Honda Civic. Used cars have an advantage as you don't care as much about where you park, who you park next to, and if it get dings and scratches.
    Dave M

    1. I loooooved playing chicken in my 2000 Land Rover Discovery II! Bang the heck out of my doors, I don’t care as it’ll bang you right back!

      People got out of my way with an old big car. Now they try and bully me on the road with a small car. Quite interesting. Need to drive more defensively.

      1. The bullying was a big reason I switched from the Civic to the truck. I had a bad experience with a driver cutting me off (repeatedly) while getting on the freeway. I don’t think that would have happened if I was driving the truck.

  40. My Dad once said he only bought one new car in his life, and that it was the worst car he ever owned. I can’t remember which car it was, but it was several decades ago. There were always things going wrong with it.

    I personally like a used car about 3 years old because they can feel like a brand new car, and considering how long cars run these days, they practically are brand new cars. I’ve been driving a Ford Fusion for about 6 years without a single problem. I”m also happy to see Ford didn’t even make the Champion of Recalls list. lol

  41. Or, you can be like me, live in NYC within a short walk to public transportation and not have a car at all and have your travel expenditures (minus the occasional cab or Uber) nailed down to about $1400 ….less if your job takes it out of pre-tax.

    Not a solution for the masses, I’m sure, but there is merit for people who can pull this off.

    1. But then I’d have to pay NYC City Tax and $2.5 per subway ride!

      All good. NYC subway system is the best, except when it is overcrowded and the AC doesn’t work in August. Holy hell.

      1. My spring/summer will involve taking my bike on the crack of dawn subway and biking home from work in the late afternoon.

        As for the actual price, its an unlimited, so no $2.75 per ride. Flat monthly fare for bus/subway and you can lower your aggregate costs the more you ride. Its a fairly sweet deal even with the MTA running deficits yearly and begging for increases.

  42. I’m on my third vehicle and have never driven a car newer than ten years old. I would be on my FIRST car if I hadn’t gotten rear-ended/totaled twice!

    I’ve got some family members who LOVE hunting for cars, so I’ve let them do the hard work and find me a good condition, 10+ year old Toyota Avalon with ~100,000 miles on it twice now, then I go do the negotiating. My first (2000) was $7,000 and the second (2006) was $9,300 and I’ve bought both outright with the intention of driving that car until the wheels fall off. I may encounter some more regular out-of-pocket maintenance (not much!), but when I hear people talk about how much equity they have in a car and their auto loan rate, I look at my budget and I don’t know where I’d find room for a car payment+interest+maintenance. Plus, 10 years isn’t that old! My black 2006 Toyota Avalon XLS LOOKS luxurious, and feels even more so when I think about what I paid for it.

    Cars are a necessary evil to me until I can afford to have a blowout on a MLC whip.

  43. Bought a super clean off lease loaded 2008 G35X w/22k mi in 2010 for 25K….orig sticker $41K…car has been fun,stylish and bullet proof… far now with 82K. Bought last day of the month…end of Q1. An investment or really expense that has worked out well.

  44. Cars are so much fun, but such a monument a waste of capital. Having just escaped the auto industry it never ceases to amaze me how many $50k+ cars are sold…who is buying all of these? I suppose it is just like smart phones, nobody should be spending $600 on a phone every two years, but too many people do IMO. Sam you should write a post on a rule for spending on phones & data plans. Talk about an expense that really does not need to exist…this coming from a guy who remembers a time before cell phones & it wasn’t that terrible. Cars are a lot alike since people are so passionate about both.

    1. Kevin @

      Totally agree here. Most decently equipped toyota/honda suvs are all in the $40-$50K range. And I think to myself, “Who’s buying these things? Are they crazy!?” I can only guess that they operate with the mindset of “That’s just what you do as an adult.” Even adults make poor decisions…

  45. My first few cars were used, off eBay, and a great experience. I found the same rough sweet spot you did, 5 years and 50-70k with good maintenance records. Then I bought a new car, first year model Toyota Venza, and while it hasn’t been a disaster it has had more than a few PITA moments. There was a squeal in the steering column, the back gate lift had to be replaced, and while it was all covered under warranty it still cost time to get it fixed. (now the Venza’s been discontinued so… who knows how to read into that!)

    I just wanted to echo the “not the first year” rule. Let other people discover the kinks. :)

    1. Hey, fellow first-year Venza owner! Fist bump! Mine hasn’t had any major problems, but the squeaks and rattles drive me crazy. And I had a weird issue with the rear passenger cabin light falling out of the housing. It’s like the bracket to hold it up is too small, so it wouldn’t click into place. After several trips to the dealer where they didn’t have any good solutions, I finally bent the bracket myself with a pair of pliers and now it clicks into place just fine.

    2. I thought you’d be rolling in a H2 Hummer?! Yeah, I totally feel like the guinea pig right now. It’s not the money, it is the TIME.

      At least there is internet access in most places, and I’ve got a website to share my experiences. Otherwise, I donno. Maybe I’d just play a game on my phone for 2 hours and wait. That’s what people did pre smart phone and internet days.

      Could you make a bed out of the Venza?

    3. I bought mine fresh off assembly line 106k miles ago, and was looking to buy another. No squeaks here! Discontinued? Bummed.

  46. This is something that we follow. We have never purchased a brand new car because it depreciates as soon as you drive it off the lot. Brand new cars are a waste of money. Yet, I have several friends and family members who have not listened to our reasoning. These are not people with tons of disposable cash either….they are solid middle class families. My current car is a 2008 Town and Country minivan….I love it. We bought it used in 2010 and while it has had some maintenace, oil changes, etc., we have had no major issues with it. Currently it has 146,000 miles and I hope to make it to 200,000 with it. My husband bought a car about 2 years ago….a 1998 Ford Crown Vic for $3,000 with 46,000 miles on it. It was owned by an elderly person who passed away and the family wanted to get rid of it. He does not have a far commute, so who knows how long he will drive that thing! The best part about it is that in the 14 years of marriage, we have had only 1 year of a car payment and that was when we bought the minivan.

  47. I have been driving an ’08 Impala that was my company car. It was sold to me cheap by the bank that laid me off and I paid for it with the car payments I would have been making on my previous car but I had to sell having only one parking spot. This I have not had a payment in years and have continued to save. I could buy another car for cash now but can’t seem to justify the expense until the now 150k mile Impala kicks the bucket. Too frugal?

      1. To clarify my post, I sold my personal car, when they gave me the company car, since I only had one parking spot in my starter condo. I saved the $400 a month I was paying on the personal in a savings account and used some of that savings to but the car a few years later when they laid off my group. They laid off so many people they were offering a good deal on the car and I knew the maintenance record was solid, they even let my mechanic “fix” some stuff on their dime. 6 yrs later I am still driving it. That savings account. Helped me payoff my wife’s car early as well and now that goes in the account

  48. Luckily, I’ve never been attracted by having a fresh new ride. I spend a lot of time in remote areas (or at least I did when I had a car), so my most important criteria is that the damn thing just runs and doesn’t leave me stranded next to a picturesque mountain lake with no one around for 100 miles.

    My first car was a 1994 Mazda B3000 pickup. I believe it was the first year of a redesign. It had issues up the wazoo, but mostly because I was a 16 year old kid when I got it and I never had the money to do any maintenance on it unless it wouldn’t run or made horrendous squealing noises whenever I braked. But, I’d buy the thing over again if I had to because even though everything on it was broke, it still generally got me around where I needed to go (albeit grudgingly, sometimes).

    1. MedSchool Financial

      I wish I had just bought something that “ran” for my first car. I ended up getting a loan for it, because I had my first “real” job working part time in the summer. To this day, it remains the one purchase I regret. I got wiser with age though, and my current car is paid off and going to ride it till the wheels fall off.

  49. Distilled Dollar

    Reading this post makes me glad I don’t own a car. Living within walking distance to work has been one of the best decisions I’ve made in the past year.

    Having grown up with new and used cars, I can relate. It was almost comical as a teenager to be driving a one-year-old or two-year-old car before a light went on. Within a few days I would be driving the old car again.

    It quickly became a bigger surprise for the old car, even after 100k+ miles, to have an issue.

    You didn’t cite a source for your depreciation chart and I’m curious if the rate of depreciation should be even higher. Especially in the first 24 months. From a purely speculative position, I would add it would also take more time & effort to sell a 1 year old car as compared with a 3-5 year old car. Despite any good reasons to sell, the buyer is likely going to speculative of the motives to selling a recently purchased car.

  50. Prof. Services Consultant

    Don’t forget rebuild titles too as long as they had pictures and documentation of what the damage was.

    After driving my old 2002 car on business trips in 2014-15 about 35K miles for reimbursement (and netting $17.5k in reimbursement after gasoline, cha-ching!) I spent $10k on a fully loaded 2013 Ford Focus Titanium with 34,000 miles on it. it had nothing more than minor bumper damage front and back that they had to fix. Nothing else affected. I treated myself at the lowest cost I could :)

    1. You received $17,500 in car reimbursement for driving a 2002 year old car for only 2 years?

      Please elaborate! Did you drive 50,000 – 70,000 miles for the car and get reimbursed 25 cents a mile or more?

      1. The standard IRS milage rate for 2014 and 2015 was $.56 and $.57.5/mi, respectively. Depending on the cars MPG, it seems possible at around 35K miles.

        1. That’s right. I was too lazy to find what the latest rate is. Amazed you can deduct MORE than the value of the car?? Doesn’t seem legit. But if it is, time for a new business and post about making money off your beater!

          1. It is. They don’t care about your car really. As long as you can prove the miles traveled and have receipts.

            1. Prof. Services Consultant

              Yup, Ryan nailed it. I earned the IRS rate for 2014/2015. So, it was really more like $20k but when I subtract the gasoline I used it was $17.5k ;)

              I should probably include extra oil changes and maintenance, but the truth is 2014’s reimbursement alone covered the prior 6 years worth of maintenance spending. (I bought the car used in 2008)

              All I had to do was enter each day’s mileage in my expense sheet and submit to my company. They figured if flying/renting a car/etc is going to cost as much or more, they might as well let me drive if I want to.

              To my knowledge, the IRS rate itself is formulated as an average cost per mile if you buy a average priced brand new car from a dealer, includes money allocated for full coverage car insurance, gas, maintenance, the whole 9 yards. For my employer, the reimbursement to me is tax deduction.

        2. Looks like the expense is a DEDUCTION, not a credit. In other words, the deduction reduces one’s taxable income. So the real benefit is the deduction X marginal tax rate.

          I’m doing my taxes now, and am on the deduction part for my car.

    2. Following up, so you actually got ~$17.5K in REIMBURSEMENTS, like a $17,500 check, and not a $17,5000 DEDUCTION from your income, which would mean really a savings of $17,500 X your marginal tax rate?

      Please clarify. Thx!

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