In my 20s, I was a car fanatic. I'd trade cars every one or two years because it was fun. I loved to haggle with strangers to try and get the best deal possible. As I grew older and wealthier, my interest in cars waned. Today, I believe the ideal length of time to own a car is until the car turns about 10 years old.
If you drive a new car 10 years, you will have maximized its value while also minimized any safety risks that tend to appear due to age. I assume an average annual mileage of 12,000. Of course, if you don't drive much, you can easily extend your car ownership period.
If you buy a used car that is 3-5-years-old, drive it for at least 5-to-7 years before searching for a new one. If you buy used, you will skip the steepest portion of the depreciation curve. You can then turn around and sell the car for a reasonable price.
Just don't go look at new luxury car prices. They are outrageously priced at above $100,000. You'd do much better investing that money in stocks and real estate instead of a depreciating asset.
Forever Is Not The Ideal Length Of Time To Own A Car
In personal finance land, we always talk about about using things for as long as possible. This way, we get maximum utility from the product. We are then able to reinvest our savings for more passive income so we can one day be free.
For example, I own a bunch of tattered shirts I still wear to this day. Some friends at my tennis club make fun of me, threatening to report my “dress code violation.” But I don't care. I've got nobody to impress. If the hole in my t-shirt grows bigger, I'm not in any imminent danger.
But when it comes to cars, owning a car well past the 10-year mark should no longer be a badge of honor. Due to safety reasons, if you have the money, you should probably start looking for a new car after a decade.
I get the desire to save money and own a car until the wheels fall off. However, if the wheels actually do fall off while you're driving, you're screwed!
Roughly 38,000 people die in America from car accidents a year. Let's not be a penny wise and a pound foolish. The ideal length of time to own a car is when it's still operating safety and in great shape.
Older Cars Can Be More Dangerous And Less Reliable
In college, I used to own a 8-year-old, 1987 Toyota Corolla FX-16 hatchback with 150,000 miles. One day the manual transmission completely blew out, leaving me stuck on the side of the road.
Before the transmission went kaput, I was always afraid the timing belt would snap since it looked cracked at the 120,000 mark. It was only after I made enough money from summer jobs did I finally swap the belt out for new one.
When I was 28 years old, I bought a 1989 BMW 635 CSi classic for $3,500. It was my dream car from when I was in middle school. But one day, as I was crossing an intersection to go to Best Buy, my brakes suddenly stopped working! They locked up like bricks with no travel. Luckily, I managed to roll to a halt without injuring anybody.
Then another time, the BMW’s car engine just shut down after I got off a bridge ramp. While it was dumping rain, I had to call AAA to jump start my car.
Two cars ago, I drove a Land Rover Discovery II for 10 years until it was 14-years old. It had so many dashboard warning lights on that I used black electrical tape to block them out.
Although Moose never gave me any safety scares, I felt like it was time to buy a new car. He couldn’t pass the smog inspection. It would have cost me more to fix the car than the car's value itself.
Different Perspective About Car Safety As A Parent
As I look back upon my car-driving days, I've come to realize how the lack of money or being overly frugal caused me unnecessary risk.
Because my family was middle class and frugal when I was growing up, the only car we could buy before I went off to college was an $1,800 beater. While attending William & Mary, I drove my beater 155 miles each way from Northern Virginia to Williamsburg multiple times a year for four years.
As a parent today, there is no way I would ever let my kids drive an old hatchback with 120,000+ miles if they had to commute 3-hours each way to college. Maybe I'd let them drive a small car if they were zipping around the city. But if they had to regularly commute on the highway, I would buy them an under 10-year old SUV or used Cybertruck.
Recently, author Michael Lewis's 19-year-old daughter died in a car accident. I cannot imagine the pain he and his wife are going through. The other driver who was driving a semi-truck, walked away with minor injuries.
We would all give any amount of money to protect our kids from harm. And if we have enough money, then it's worth spending more money on a vehicle to minimize the chance of fatality.
Being Overly Frugal When Buying A Car
Because I wanted to follow my 1/10th rule for car buying, I bought Moose, my old 2000 Land Rover Discovery II for $8,000 back in 2005. I drove him for 12 years until he was worth just $3,000 when I finally traded him in in 2014.
As a personal finance writer, it was almost like a game to see how long I could drive Moose until he fell apart. A part of me wanted to prove to all the naysayers of my 1/10th rule that there's no need to ever buy a new car. If a guy could happily drive a car worth much less than 1/10th of his gross income, why couldn't everyone else too?
My frugal attitude changed in 2016 once I found out my wife was pregnant. At the time, we were driving a compact car, a Honda Fit we called Rhino. Rhino cost about $20,000 out the door after I traded in Moose in 2014. For about four months, I was worried about driving anywhere in Rhino with my pregnant wife.
Finally, in December 2016, five months before her due date, I opened up my wallet and bought a 2015 Range Rover Sport for $58,000, which I still drive to this day. I named him Moosey in memory of his retired older brother.
Except for needing to change the cooling fan, Moosey has given me no problems. No longer am I getting bullied on the road as I did many times with my Honda Fit. I feel more confident driving three or four other people around.
Finally, Moosey has been a blast to drive. Owning a Range Rover was also one of my childhood dream cars. In Malaysia, where I grew up for middle school, a Range Rover Sport HSE today would cost over $200,000.
Keeping Up On Maintenance As An Old Car Owner
There is a chicken or the egg dilemma when it comes to car ownership and saving money.
The people who own cars for a long time tend to be more frugal. However, to safely own a car for longer than 10 years requires regular maintenance. And over time, such maintenance usually gets more costly without an extended warranty. Therefore, we must find a crossover point where the cost to maintain is no longer worth it and sell beforehand.
The uber-frugal car owner will try to do all his own maintenance. Whereas the more risky frugal car owner may tend to delay car maintenance for longer intervals to save.
It's kind of like using one-day disposable contact lenses for a week to save money. Probably nothing will happen to your eyes. But over time, it’s not great for your health.
Just like how we know a renter doesn’t always “save and invest the difference,” a frugal car owner doesn’t always keep up with the regular maintenance schedule. When given an option, we tend to not be as diligent.
Forced savings is one of the reasons why the average homeowner is so much wealthier than the average renter.
Things Tend To Wear Down Or Break Over Time In A Car
Here are some car parts that tend to not work over time. If you don't replace or service the parts, you may be putting yourself at risk.
- Airbags – Airbags used to require getting replaced every 10-15 years. Supposedly, modern technology says there's no longer a need. But how can you be sure your airbag will deploy in an accident 10+ years from now if you don't own a modern car? There was a massive Takata airbag recall recently because it was found some of them didn't deploy.
- Transmission – The modern automatic transmission is a hydraulic system comprised of several seals, gaskets, and lines. They can become damaged, clogged with debris, or leak. When this happens, you might experience transmission slip, which could ultimately end up in total transmission failure like I experienced. After about 100,000 miles, the risk of transmission slip goes up. After about 200,000 miles the risk of total transmission failure goes up. Hopefully, you will have ample warnings before complete failure. However, you just never know.
- Brakes – Don't take your brakes for granted! Like any other moving part on your car, the brake system is intended to wear out over a designated period of time. When they display any symptoms of issues, like squealing, squeaking or a soft brake pedal they should be inspected by a professional mechanic as soon as possible. But, sometimes there is an electrical fault that causes your power braking to fail like it did with me.
- Alternator failure – The alternator is the part on your vehicle that keeps all electrical systems running once the car starts. It’s also responsible for supplying a charge to your battery to keep it in peak condition. One of the things that bummed me out about my Honda Fit was that I couldn't start the car on multiple occasions due to an alternator failure. I had to take the car in to fix it. And even after I fixed it under warranty, the problem still persisted.
- Flat tires – I've had too many flat tires to count. Did you know it is recommended you walk around and check your tires every time before you go for a drive? Nobody does that regularly. However, it's a good idea to check and see if your tires have any types of punctures and if your tires are properly inflated. I once had a tire blow out while driving across the Bay Bridge. Generally, rotating tires every 5,000 miles (or when you change your engine oil) is good advice to extend the lifetime of the tires.
- Dead battery – If you have a good alternator, most car batteries should last about three-to-six years or 50,000 miles. A dead battery is usually caused by reduced amps – or electrical currents – which naturally decrease as the battery loses its ability to maintain a charge. A damaged alternator, battery temperature sensor, or other charging system component can expedite this issue. It’s best to replace your car battery every 50,000 miles or five years, even if it’s not showing signs of damage. I replaced mine in 2024 for $420.
- Timing belt or chain – The timing belt or chain controls the camshaft and the valves to let fuel and air in and out. If the timing belt or chain breaks, your engine could experience major damage. Newer vehicles equipped with timing belts can go up to 100,000 miles before requiring replacement. Older vehicles, on the contrary, should be replaced sooner, around 60,000 miles. Thankfully, modern cars now mostly use timing chains, which last longer.
The list of things that could go wrong with a combustible engine car goes on. Once you start getting past the 10-year mark, unless the previous owner was super diligent in maintaining his car, your car may have increasing safety risks. Therefore, if you are buying a second-hand car, make sure the owner has all maintenance records.
It's Time To Focus On Car Safety
The safest cars and SUVs tend to be heavier with more safety features. Car engineers and designers are always trying to make their cars better to keep up with the competition. Otherwise, there would never be any progress in automobile safety. Car manufacturers would just keep on producing the same old car over and over again.
But just like how mobile phone technology grows by leaps and bounds after 10 years, so does car technology. Here are some of the most popular safety features in cars.
Most Popular Safety Features In Cars Today
- Adaptive Cruise Control (ACC)
- AEB: Automatic Emergency Braking
- Crash Imminent Braking (CIB)/Dynamic Brake Support (DBS)
- Adaptive Headlights
- Forward Collision Warning
- Blind Spot Detection
- Lane Departure Warning (LDW)/Lane Keeping System (LKS)
- Rear-View Camera
- Tire Pressure Monitoring System (TPMS)
- Facial Recognition Software
- Self-Driving Capabilities
Given all these available technologies, as a rational driver, you should want as many of these safety features in our cars today. We know these safety features help save lives.
As someone who values your life and the life of your passengers, you should probably get a new car every 8-10 years. It's as logical as getting life insurance at around age 30.
After 10 years, you will likely be much wealthier as well. Therefore, you might as well treat yourself to a new car every 8-10 years to enjoy your money more and drive a safer vehicle in the process.
What I Plan To Do With My Car
I plan to own my car until at least mid-2025 (10-years old) and then consider getting an all-electric SUV. Moosey only has about 52,500 miles today given we only drive about 6,000 miles a year. By 2025, the safety features and electric car technology should be even better.
When it comes time to sell Moosey, he should only have about 58,500 miles. I'll have all the service records and he'll be in great shape. As a result, I should be able to get about $20,000 for him. That comes out to a usage cost of $3,900 a year. Not bad.
By the time my kids are eligible to drive, I'm not sure if I will let them. In 12+ years, I hope there will be dependable self-driving technology. If so, inexperienced teenagers who are always checking their phones while driving can be put on ice. Distracted driving is a fatal epidemic!
As a driver with 25 years of experience, I encounter close calls on the road all the time. I have my doubts young adults with less experience will fare as well.
Instead, I'd rather have an experienced Uber driver or autonomous vehicle drive my kids around until they have at least 100 hours of supervised training. Driving a car is too important of a responsibility to be taken lightly.
The ideal number of years to own a car is when you no longer feel the car is safe. Safety is priceless!
Related Car Posts
The Average New Car Price Is Now Absurdly High
Tax Rules For Deducting An SUV Or Truck For Your Business
Options For Getting Out Of A Car Lease
Invest In Real Estate Instead Of Nice Cars
Cars are a money pits that make you poorer, not richer. Therefore, everyone should consider owning the cheapest, most reliable car they can and invest the rest of their money in real estate and stocks. For financial freedom seekers and car nuts, check out my House-to-Car Ratio to help you be more fiscally responsible.
To invest in private real estate, take a look at Fundrise, my favorite private real estate investing platform. Fundrise was founded in 2012 and manages over $3.3 billion with over 500,000 investors. The firm focuses on residential properties in the Sunbelt, where valuations are lower and cap rates are higher. For most investors, investing in a diversified private real estate fund makes the most sense.
Another great private real estate investing platform is Crowdstreet. Crowdstreet offers accredited investors individual deals run by sponsors that have been pre-vetted for strong track records. Many of their deals are in 18-hour cities where there is potentially greater upside. Crowdstreet is a solution where you can build your own select real estate portfolio.
Personally, I've invested $954,000 in private real estate since 2016 to diversify my exposure and earn more passive income. Both Fundrise and CrowdStreet are affiliate partners of Financial Samurai, and Financial Samurai is currently invested in Fundrise.
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Some great talking points here. However, as someone who has driven vehicles well beyond 400K miles, I can say that the value of not having a vehicle payment outweighs the risk, so long as you maintain the vehicle. If you keep up on the recommended service schedule as outlined in the vehicle owners manual, that’ll go a long way.
If you take it to the next level and proactively replace items that tend to wear over time, you’ll be ahead of the game as well. And it doesn’t have to cost you a fortune to do it. If you had a monthly car payment of $450.00, that is $5400 a year. Perform the scheduled and preventative maintenance, and you’ll no doubt only spend $1200-$2000 a year. Far less than the $5400 in car payments. And you still have funds for a rainy day if a major component/system fails.
400K miles is a lot! What type of car?
Definitely got to replace parts, air bags, and more for safety.
How should taxes factor into this decision? Bonus depreciation is beginning to phase out (80% in 23) and I may have a large tax bill for the year due to selling a rental property (with depreciation recapture). I am debating purchasing a new/used vehicle over 6,000 pounds which will mostly be used only for business in 2023 to shield myself from taxes a bit. My current car is 9 years old and I have owned it for 3 years; I am pretty happy with it overall. Should I buy a new vehicle in 2023 given 1) I will have a large tax bill and it will help shield 2) bonus depreciation is being phased out and won’t be as useful in years to come. I am weighing the additional cost of a new car vs the reduced taxes
Totally agree with this. I am open to leasing when there are good lease deals to be had that still allow me to spend less than 5% of my gross income on annualzied vehicle costs. I’m kind of intrigued by the idea of an EV for my next car. In theory, they should require much less maintenance and repairs. Unfortunately, that hasn’t seemed to be the case so far if you look at Teslas track record (sure the batteries seem to be ok but everything else seems to break). But, after the mainstream manufacturers get a few years of production under their belts maybe I’ll feel better about giving it a shot. A Mustang Mach-E or even a used Taycan in a few years both sound tempting.
I agree strongly with you that driving a new car for 8-10 years is most appropriate considering both costs and safety.
I don’t agree with your 10% rule. I use a annualized total cost + insurance + gas + maintenant <= 5% gross income rule.
Cheap cars require more repair and can drive safely for less years. So annualized cost is more comparable than total cost.
I live in Canada where income is lower and cars are more expansive. We have rough winters causing worse road conditions in Quebec, so safety is even more important.
I bought a new Kia Soul 7 years ago. Both my husband and I were new driver. We felt safer driving a new car. We leased a new car for 3 years, then paid for cash. I plan to keep it for 2 more years. Then we will probably buy a 3 yr old KIA SUV and keep it for 5-7 years. Vehicles in this Brand are the cheapest on Canadian Market. They are made well enough to last 8-10 years. So I don’t want to pay more for Japanese or American brand cars.
The thing I will note, is that Cars are designed to keep people alive “in the car” instead of outside. Pedestrian/bike rider strikes are becoming more common due to many more reasons. Some of those are actually the safety features they are making in cars (larger A and B pillars, smaller windows and larger windscreen angle for reduced drag, etc.).
Since the laws were passed in 1996 and 1998 for requirements for dual airbags, ABS, traction control, crumple zones, and heavier doors, etc. there really have not been huge “enhancements” in safety, just automation. I know people think that automatic braking and lane change warnings, etc. are considered “safety” features, but they are more automation to make sure the driver is awake.
I bought a new RAV4 back in 2019 and have been very impressed with the safety features. Lane trace assist is nice as it allows you to let go of the steering wheel for a moment without veering into oncoming traffic. Also it will automatically brake if I’m about to hit anything when moving forward or backing up. While I agree with those saying that being a good defensive driver is key, I think the safety tech included in these new cars IS beneficial and can save lives.
Impressive the RAV4 had automatic braking. And if a sub $30K car does, others will too, to stay competitive.
One nice thing about my 2017 used Infiniti QX50 is the fact that the maintenance free timing chain is rated for 300,000 miles lifetime use, there is no recommended replacement mileage on it whatsoever. I usually only drive cars to the 200,000 mile mark so I’ll never come close to having to replace it. My wife buys new and keeps cars 15 years. She just sold her 2006 Nissan SUV and replaced it with a brand new baby Bronco Sport.
I AM the best safety technology in the vehicle. I do not talk, text or mess around when I am behind the wheel. I also watch for drivers not doing the same and take action long before problems are accidents. I am always in positive control of my vehicle, and the technology of today does not encourage good driving, good habits or good behaviors. The reliance on autonomous driving is inferior to a human being. Mechanical, electrical, hydraulics, all fail, as you noted. There is no “Fail Safe” technology. None. It’s ME. It’s YOU.
I am a firm believer of keeping the old, because of the very reasons you specifically listed at the beginning of your articles. I cannot imagine what the replacement costs of all the “new gadgets and gismos” will be in ten years after purchase, let alone their availability when you will need them and if they are sourced from another country.
I am the proud owner of a 2002 Buick Regal (Joseph Aboud) edition (53k) and it has plenty of room – head, hip and leg. It provides comfort that is sorely lacking from car manufacturers these days. A front seat use to be as comfortable as a recliner – not any more. Now you sit with legs pressed together like a jet fighter with “clean glass” displays. Well, la tee dah. I love analog because it’s cheap and reliable. Wait till an electronic gismo burns out on your autonomous vehicle and you ploy into someone like me. Who wins in that liability jungle? Welcome to Thunderdome.
The other technologies you listed make for lazy and poor drivers: I drive the car, not the other way around. If more people took my attitude toward driving, perhaps auto insurance would be cheaper for all of us. I don’t understand this generations infatuation with a damn cell phone. Its people who make driving dangerous, and no amount of technology can excuse bad habits and poor driving skills.
I want to respectfully disagree. The gist I am getting here is “Old car bad because of safety risks”.
Well, this is absolutely true of pre-2000 cars, so if you still own one of them, I’d upgrade ASAP. But, and car made since about 2000 is fairly safe. The safety difference between a 1999 car and a 2009 car is HUGE, the safety advances from 2009 to 2019 are negligible. Sure, you have lane assist and fancy stuff like that, but a driver who is skillful and paying attention doesn’t benefit from that very much.
I don’t believe it’s worth thousands of dollars to go from 99% safe to 99.5% safe. I drive a 2003 Toyota Camry which I paid $3k for about 3 years ago when it had 100k on it. It now has 134k. The car has airbags all around, which the previous owner had replaced right before I bought it. It has a tire pressure monitor, stability control, ABS brakes, etc etc. I feel safe as a baby in his mama’s arms.
A more modern car has little benefit for me. I’ll invest that money and retire sooner instead.
In late 2020, my wife was involved in a car accident that totaled our 2016 Toyota Sienna minivan. Some fool in a work truck was making an improper left turn out of a driveway, not at an intersection, across multiple lanes of traffic. Fortunately my wife was alone in the vehicle. She hit the work truck probably around 45MPH in the drivers door. Little damage to the truck. Totaled the van. Every airbag in the van deployed……steering wheel bag, bag from the side of the seat, curtain air bags next to every seat in the van, even a knee bag from under the dash. Wife didn’t even get one scratch or bruise. Wasn’t even sore the next day. We’re both approaching 50 years old so have many years of driving experience and this is the first time either of us totaled a vehicle. Front of the van was destroyed but totally protected the passenger cabin. Interestingly, all electrical systems and power doors still operated perfectly after all of this. After this, we were so impressed with the safety that we bought the exact same van as a replacement, except a year newer. We definitely value safety more as we get older. Especially with these other fools on the road.
Glad your wife is Ok! I’m thinking of a minivan too. But I’d really like to get a Eurovan camper if a new one comes out.
I bought a used 190 Mercedes during medical school. I think I “bought it” at around $8k (had to take a loan). I kept it for another 7 years or so but it became so unreliable (broke down on way to work during residency more than a few times) that I finally traded it in. It was a money pit.
I bought a new 2004 Mercedes c320 right before I became an attending. Held on to that car way too long (over 250k miles and 12 years) because the repairs became so expensive that in the last 3 years of ownership could have probably bought a new car. I kept thinking this repair should be the last and give me more time with it but fixes barely lasted 6 months or so. It broke down several times when my mom was driving it and my daughter was in the car and I knew enough was enough. Finally traded it in and the headaches stopped.
Lot’s of Frugal people driving Mercedes here. A highly unreliable car. Scotty
I would always shake my head when I read personal finance blogs talk about the absurdity of owning a large SUV and how wasteful it is, but on the other hand talk about the 4% rule. If your expensive SUV gives you a 5% greater chance of surviving an accident, would you rather have that chance at survival or the money in an index fund and be in some econo-box that would be squished like a bug? Don’t even get me started on the bicycle nuts out there driving on busy roads during the height of traffic thinking they are somehow saving the planet. I know 2 people who have lost there lives on public roads riding a bike (one with 2 young kids).
When you have the money drive the safest thing possible!
I read the new Hummer EV weighs 9,000 lbs!. Try to survive a collision with that.
I bought my Mercedes SUV new 8 years ago and its been a great vehicle. We’ve decided to hold for now because the car still meets our needs (barely- it’s tight with 2 babies). In another 2-3 years we will need to switch anyway if we have a 3rd child. We will either get an electric car or the Mercedes GL model, but would probably buy used this time. We don’t drive much at all these days.
My wife and I own a 2008 mercedes c350 and a 2016 lexus suv. I had to replace the transmission in the mercedes a couple years ago ($4,500.00). I promised myself that if it broke down again, I wouldn’t replace it.
After reading your article, maybe I’ll trade it in earlier than i planned while I’m still ahead.
That stinks. It’s amazing how some of these big parts just go kaput.
However, seems like after spending $4,500 on a new transmission a couple years ago, you may want to keep it and get more bang for your buck. Perhaps use it as your backup car.
But I guess if I was looking for a 2008 C350, I’d feel good being able to buy one with a new transmission at KBB minus 10%.
I drive a 2008 Accord coupe. Paid $19.8k for it brand new in 2007. Seems I could get $10k for it in this crazy used market. That would leave me with $700 in depreciation per year, on average. Not bad.
I don’t have any plans to sell it however. The car still looks like new, runs like new, and is perfectly reliable.
I guess I take a somewhat contrarian view of new cars. They have many more systems on them, with features like adaptive cruise control, heads up displays, automatic lift gates, etc. But to my way of thinking that only makes the car less reliable, because there are so many more systems to fail.
Most new cars these days seem to be equipped with smaller engines and turbochargers—another red flag for reliability if you keep the vehicle a long time.
I think you can run cars a long time and do so safely if you are smart about it. A friend has a 94 Acura Legend with near 600,000 miles on it. Still looks and runs beautifully. He tells me the parts can be hard to come by, however he doesn’t mind doing the legwork to source them.
Readers, what do you think is the ideal length of time to own a car? I’m not sure. I’ve usually been a “drive it until it just has too many things to repair” but sometimes a newer car just feels so good to drive (everything is buttoned up) that we gave in and sold the 17 year old Accord we had. Likely 10 years is about going to be our new standard I would guess.
How long have you owned your existing car? Only about 4 years, pretty new to us still.
And how old is your existing car? 5 years old. Wanted a GLI and they’re kind of hard to find on the lot.
If you’re in the market for a car, what type of car are you looking at? Subaru Outback. We live in the snow and higher clearance to get out the end of our alley would be nice instead of plowing through with a sedan. Now… the frugal nature and the current car being 5 years old keeps holding us back; once a pretty cheap person I guess.
Of course, nothing lasts forever but, now a days cars are built to last IF . . . IF you take care of them. Just like you go to a doctor regularly in order to stay on top of your health, you go to a good car mechanic. Just like a primary care doctor who usually has a specialty, go to a mechanic who works on all manner of cars. Preferably, in my opinion and experience, a transmission specialist. Have your car inspected thoroughly every 3,000 to 5,000 miles. Get your oil changed regularly. Get your tires rotated regularly. Drive defensively. Get it cleaned and waxed to avoid rusting. Do those things and there is no reason one can’t get a car to last 15+ years and get over 250,000 miles.
I want to also share with you all how I bought my current vehicle. I own a 2013 Toyota Highlander Limited. During the summer of 2013, we decided to look for a mid-size SUV coming off of a two or three-year lease and “certified” by the car company. After looking at and test driving various mid-sized, mid-priced models, we decided on Toyota’s Highlander. Unfortunately, at the time, there wasn’t a Highlander with all the attributes we wanted. So, while the dealer was yapping at me trying to get me to buy one new they found for me in the area with all the “bells and whistles” I wanted and even the color I most preferred, it came to me, why don’t I lease it under a three year option and if the car works out, buy it used and certified after three years.
Under a lease, the maintenance of the car is totally taken care of for the first two years of the three-year lease. Whatever it costs to fix something, it’s paid for by Toyota. The interest was 0.9% but, and all monthly payments went into the payment of the car if/when I bought it. Before telling them I wanted to lease the car I negotiated the price of the car as if I was going to buy it. AFTER the price was settled (my wife and I have a “good cop/bad cop” routine that is non-pareil), I told the salesman I said I wanted to do a three-year lease then buy it. The monthly was determined off of the price I negotiated for buying the car.
When the three years was up, we liked the Highlander so much we went ahead and bought it. With what we paid every month subtracted from the buy price we negotiated three years earlier, we got it for less than we would have had to pay according to Blue Book if we had bought it “certified-preowned” plus, two years of six-month intervalled maintenance was totally covered by Toyota.
The works best I believe, when you are planning to own the car for at least five years after buying it. My plan was to own it for at least a decade if possible. It will be eight years in August since we bought it. The vehicle is still in excellent condition. I’ve replaced the tires, needed a new bulb for a back break light, new brake pads, front brake rotors and something else. I can’t remember at the moment what it was. I think it was the fanbelt and the fanbelt mechanism. Of course, oil filter and oil changes as well as tire rotation are done when I bring it in to my mechanic every 5,000 miles for his “multi-point” inspections.
Your mileage may vary.
This post is so spot on. Safety and maintenance are so important to consider over time. I’ve driven an old car before and had the engine die on me while I was driving on the road in the middle of city traffic. I was by myself too and didn’t drive that often so I was really scared. Thankfully the car was able to restart after a minute or two and nobody ran into me. Thus I totally agree with replacing a new car about every 10 years and maybe every 5-6 for used cars depending on the year.
My mom is a die hard Volvo fan – the old school box kind. When her last volvo finally died and would cost more to replace than it’s value, she started shopping around for another ancient one. I drew the line and told her she’d be making a mistake to buy another one b/c they all had over 150k miles and had issues.
It took a lot of arm twisting but she finally switched over to Subaru and found a used Outback. I’m sure she’ll drive that one until it croaks too but at least it’s safer and newer than the retro Volvos she was looking at before.
“There was a massive Takata airbag recall recently because it was found some of them didn’t deploy.”
No… they exploded. However, recalls are always no cost to the owner, and they never expire. A recall is not necessarily a reason not to buy a certain car.
The point is, you never know. But more problems tend to crop up with age. It’s only natural. So we can use money to minimize potential problems, then perhaps we should.
When I was 19 in 1979, my first car, an 1973 Buick Opel, DID have its wheel come off while driving! Needless to say, since I’ve been employed I’ve bought newer, better cars. Now own a 2019 Subaru Crosstrek. I love all the new features it has. My wife drives a 2021 Lexus SUV. She loves it.
I’m not sure the newer safety features would necessarily prevent the majority of those 38,000 deaths. As a mom of five, I think it’s better to focus on teaching good defensive driving skills rather than relying on safety features to keep our kids safe on the road.
I also think that you’re missing out on half your vehicle’s lifespan if you get rid of it at 120,000 miles. That’s actually about the mileage of all the used vehicles I’ve bought, and I typically drive about 20k a year. Today’s cars should all be able to hit 200k easily, and two of my last three vans nearly hit 300k before the inconvenience of frequent trips to the shop meant it was time to say good-bye.
All that said, I don’t think there is anything wrong with buying new (or newer) if you can afford it. I bought my first brand new vehicle last year and must admit that it is nice to go a whole year with only regular maintenance and no emergency trips to the shop.
When possible, do both. Teaching and practicing defensive driving plus buying a safer car makes sense. Unless one is financially struggling then at least do one.
Even though selling a car at 120,000 miles might be half the lifespan of the engine, the car at 120,000 miles still has value when sold. 200,000 miles, forget about it.
I view buying a car as a sunk cost. Hold it for 20 years or 300k and it becomes reasonable. I assume zero salvage value so any is a bonus. 20k miles a year in my area is normal.
You are right on the mark on this one. My wife and I have seen this first hand, even with a car that has low mileage it will start to wear down around the 8-10 year mark. We buy new, keep in good condition and sell in 8-10 years typically in one day on Craigslist or now Facebook.
And yes, our next cars should be all electric in the next 4-6 years!
Sam, thanks for a very interesting and comprehensive article on when and why to buy a new(er) car. You did not mention it specifically, yet it is obvious from your article that emotions play a large part in the decision making process. The more we recognize that, the better able we will be to determine how much they influence our decisions.
The best safety feature available for any car on the road today is a professional driving school. I consider the $1,000 that I spent on training for my two kids to be the best investment I have ever made. Unlike the emotionally charged situations where parents teach their own kids to drive, the pro school has a curriculum that includes theory and practice. There was only one scenario that my kids missed, driving in the rain. One benefit that I discovered was that I could discuss with my kids what they thought about the lesson and driving experience after each session.
Safety features have reduced the number of fatalities over the years. I approach them the same way I approach the latest upgrade in computer software. I wait to see when the bugs are fixed before I buy. The integration of safety features in cars is done by a finite group of people who adjust their perception of the effectiveness of the feature through constant exposure. Often enough, when the feature is released in the new car year, new owners are displeased and disoriented. The feature is changed and tried again.
Disregarding all other questions, when the cost of maintenance equals or exceeds the cost of a car payment, it is past time to buy a new(er) car. I include the cost of maintenance or repairs that are covered under warranty in my calculations. Anything that breaks under warranty will break after the warranty terms out. It is known future expense. Change the car under warranty.
At one point someone mentioned trusting Uber drivers. None of the rideshare companies train drivers. Rideshare is a service. It is not a safety feature.
I enjoy your take on life and financing it. Keep informing and entertaining.
The decision maker drives our Lexus GX we bought 2 years old. We have had it 3 years. according to KBB retail it would sell for 4,000 less Than we Paid for in cash. GX’s are very resilient. We will drive it another 8-10 years. The only thing we would buy after this GX is another GX or Landcruiser. Check out resale. It’s amazing.
I drive a 2011 Toyota 4×2 Tacoma quad cab. This is not a prerunner That looks like a 4×4. It’s an old school straight 4×2 that is 10 years old with 150,000 miles. We bought it new for when our twins were born.
Just did KBB on it. I could allegedly sell it for 5,000 less than I paid for it 10 years ago. I’m selling it
This fall and buying a brand New, yes brand new, 4×4 Tacoma. Worth their weight in gold. Reliable and durable. Boom goes dynamite!
Driven my ’08 Tacoma here in Alaska for 290,000 miles, very few problems and so far very few bills, lotta tires (summer and winter),tires are rated for 80k miles now btw
.I commute 30k a yr,and have for 6 yrs,and most likely will for another 3 till I retire..WEEE
Original clutch, original brakes (getting thin),replaced water pump and belt @ 120k,not because it needed it, but because I wanted peace of mind.I think Im on second battery, your short city driving is probably killing your battery in the Rover.Timing chain in Tacoma is supposed to last for life of vehicle.
Totally agree. On my 10th Land Cruiser and the only used vehicle I d consider. Bulletproof reliable, safe, but super thirsty! Just sold the ‘07 I drove for 10 years which sold for the same price I bought it for in 2010. GX/Tacoma same type of value retention.. Toyota/Lexus all the way!
The used car market has been going BONKERS. The prices are just skyrocketing into the moon and then some. I’m thankful for my used car that I had for the past five years. Because of the pandemic, I drive like 2,000 miles per year on it, IF that now. In the past 5 years, I averaged 6.7k miles per year.
Did your car give any warning signs before the brakes went out? That’s my biggest fear of having a car. That someday my car will just go out without any warning and I’ll get into a car accident without any warning.
Brakes go out for a reason. The systems are sturdy and not fail proof. Delayed or inadequate maintenance is the primary cause for brake failure. A good mechanic or a good service department will always inspect the condition of the rotors, calipers, lines, cylinders, fluid level and pedal pressure. If you don’t see anything about brakes on the invoice, ask about it before you leave. If they overlooked the brakes, find a real mechanic. Brakes should not be a source of fear, provided we owners maintain them.
That’s true. It’s important to find a good mechanic that takes good care of your car. Cars are made very sturdy these days so that’s extra comfort but brakes not working is the worst thing of them all.
Next January I’ll hit the 25th anniversary for my Acura Integra, which I bought new in 1997. I never intended the keep the car this long, but 21 years with no car payments (I financed for 4 years) had contributed to my ability to accumulate significant wealth. I’m also not a big driver and only have 170K miles. I’ve had several people make snide comments about the car (it looks pretty rough), but little do they know I’m a millionaire while they’ve traded their future of the “prestige” of driving a “luxury” car. But to your point, at this age I am getting concerned about the airbags and will be replacing at the silver anniversary.
I have found a much prefer renting cars for trips of any considerable length and have no worries about my own car. Even new cars can still leave you stranded. Personally I prefer driving smaller cars as they are much more agile than an SUV which also means the rental price is much lower. Until the pandemic began I was regularly renting small cars in northern Mexico for less than $2 per day. Now the price can vary up to $30 per day but still cheap compared to buying.
In 2012, I did a perimeter tour of the US. The whole trip took 10 weeks. I researched long-term rentals and found that Hertz had a flat rate, unlimited mileage in the 48 states. It was a very enjoyable trip. Hertz replaced the car after one day on the road because of a transmission problem. After that, it was a pleasure to see a year’s worth of driving run up on Hertz’ odometer, while mine didn’t move at all.
Great article Sam! Avoiding a car payment and allocating those dollars to retirement/investments are some of the items I’ve coached my daughters on as they begin adulthood.
We have 5 cars and 4 drivers. All of our cars are now 7-12 years old, all paid for in cash, long ago. I commute 30 mins each way to work, my wife and daughters commute to and from school just a few miles per day.
We bought my sister’s used mercedes sedan with 59k miles and hail damage for my oldest. It’s a GREAT first car. Mechanically sound, and it sits outside so of it gets hail damage, which is very prevalent in Colorado, who cares?!? Plus, liability only keeps her insurance rates low. I will upgrade my current car to a newer Cadillac SUV in the next 24 months when my youngest turns sixteen. At that point, I’ll give her my current one.
I do have a 1966 Corvette Coupe which I love and will never part with, but as for the other vehicles, I buy when they are 2-3 years old and then eliminate them at about the 10-12 year mark.
Hi Sam,
The general rule of driving a car into the ground (or until the end of its useful life) is a most reasonable way of approaching vehicles. I’m not a fan of picking ten years old as a litmus test to replace vehicles. I’m not saying that your proposal is unreasonable, but I’m more in the camp of driving until it doesn’t make financial sense (it costs more to fix than replace).
I haven’t noticed that there are a significant slew of new safety features from my 12 year old vehicle versus a new one (or at least there’s not enough to warrant “upgrading” every five to ten years).
Accidents still happen, and will continue to happen. The tragic accident you referenced with Michael Lewis’s daughter would very likely have happened regardless of the vehicle being driven, just based on physics. In particular, they accident didn’t involve an ordinary truck. It was a head on accident with a semi tractor.
To be “safer” (ie surviving an accident with injuries), the general rule should be to drive a larger vehicle than a newer vehicle. Moose would almost always be “safer” than a Honda Fit.
That said, the closer we get to more autonomous driving, the better it will be for all of society, and perhaps that’s your overarching point. I think there is a case to be made for improving and staying abreast of technology. I think that physics makes a big difference too with safety/survivability.
This general rule you speak of is primarily focused on money. But I argue driving has to incorporate safety since ~38,000 people die from a car crash a year in America.
It’s one of those things that when you know there are new advancements in safety technology after 10 years, when does it become irresponsible not getting a car with these technologies since we know they are out there?
There’s a simple side mirror car beeping warning system many new cars have that alert drivers when a car is coming up on the side, especially in the blind spot. As a driver, I’d love for all cars to have this technology b/c I’ve seen side swipes by cars who don’t. I’m always cautious driving by a car that does not have the warning tech.
After 10 years, we are generally much richer as well. Just calculate how much your net worth is up since 2011. As a parent, I cannot forgive myself for trying to save money on a car and something happens, if my wealth is much higher. But this is just me.
Better defensive driving is most important. But sometimes, you can’t help what someone else does on the road.
Based on your #’s, Car accidents kill .01% of population annually.
Seems like an Insignificant # for safety based, decision making.
There are lots of reasons for buying a replacement vehicle. I would argue safety might be least valuable from a fact based viewpoint.
Sounds good to me. That’s the beauty of the market.
Statistics are so fun. Even if that is the lowest % for death rate there are still numerous others who are merely paralyzed for life in car collisions, they just weren’t lucky enough to go out on impact. Then there are plenty who die later on because of injury and it’s not counted to the total either. Reporting numbers can always be skewed.
I think the point is people are becoming more and more distracted driving – texting, emailing, even trying to yell corrections at the various talking apps takes focus off the road. Taking some of the human error out of the equation seems like the best move. I personally hate that my truck doesn’t have the blind spot warning lights in the mirror. My SUV does and I get in the habit of scanning them and it sucks when you don’t have them. Similar to backup cameras and other “newer” features from 2016 on, I think they should be installed on all cars. People just can’t be trusted anymore with all the new tech to distract them.
Our net worth went from negative in 01/2012 to welll over 7 figures approaching 2.
Had not done a historical until this Article on cars. Go figure..I guess our wealth increased dramatically in 9 years. Coincidentally that is around the time we started reading FS and Ramsey.
Boom goes dynamite!
Sam, great article. I messaged you a while back as I have had the Land Rover Discovery Series 2 since high school (now 17 years) and it has been cross country 7 times with a little over 200k miles. I thought it was time to upgrade and bought a 2015 AMG in early 2020 with 21k miles to take advantage of the depreciation curve. Long story short had it for a year and put 8k miles on it for some backcountry ski trips but never really felt at home in it and I sold it two months ago for a profit. Now I am back in the original Discovery and could not be happier. Those warning lights in your dash are called the “three amigos”!
Ah yes, the three amigos! They were on for a couple years. But My LRD2 wouldn’t have been able to pass California smog inspection, so I felt it was time.
What about getting the new Land Rover Defender? Those look pretty cool and something I would consider getting. But I’m thinking, I want to get 3-rd row seating next time or the VW Eurovan camper if one comes out!
When I can’t pass inspection, I find a more “understanding” mechanic.