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7.1 COST OF OWNING A USED CAR VS. A NEW CAR - DETAILED SPREADSHEET; AUTOMOBILE
DISCOUNTS - BUYING, LEASING, REPAIRING
EXPLANATION:
This spreadsheet is an attempt to get at the real cost of buying a new car vs. buying a
used car. Today the average price equals $20,000. If you normally buy a $15,000 auto (new
price), then multiply the figures by .75. If you buy a $10,000 car (new price), then
multiply the figures by .50. For the sake of simplicity I have shown in detail the costs
that are affected by the age of the car and lumped together those costs that are about the
same for all cars (gas/tags/inspection and liability insurance).
NEW VS. USED CAR COMPARISON - EACH CAR TRADED/FINANCED EVERY 3 YEARS
NEW
YEAR 1ST YR. 2ND YR. 3RD YR. 4TH YR. 5TH YR. 6TH YR. 7TH YR. 8TH YR. 9TH YR. 10TH YR.
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SELLING PRICE OF AUTO 20,000 15,600 13,000 10,800 8,800 7,200 5,800 4,600 3,600 2,800
TRADE-IN (AFTER 3 YRS.)* -10,800 -8,800 -7,200 -5,800 -4,600 -3,600 -2,800 -2,200 -1,800 -1,400
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BUYER'S COST 9,200 6,800 5,800 5,000 4,200 3,600 3,000 2,400 1,800 1,400
INTEREST* 1,410 1,128 1,012 914 804 721 613 501 384 305
COLLISION/COMP. INS.* 1,049 831 688 565 456 123 98 78 62 48
SALES TAX* 552 408 348 300 252 216 180 144 108 84
PROPERTY TAX* 1,485 1,188 981 810 657 531 423 333 216 168
MAINTENANCE + REPAIRS* 1,154 1,608 1,865 2,030 2,132 2,201 2,235 2,258 2,261 2,264
INITIAL REPAIRS* 0 100 200 300 400 500 500 500 500 500
GAS+TAGS+INSPECTION 1,905 1,905 1,905 1,905 1,905 1,905 1,905 1,905 1,905 1,905
LIABILITY INSURANCE 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200
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TOTAL COST FOR 3 YEARS = 17,954 15,168 13,998 13,024 12,006 10,996 10,154 9,318 8,435 7,873
This area gets you a late model For the more adventurous and mechanical
car with very good savings. these years get even greater savings.
SAVE EACH YEAR 0 929 1,319 1,643 1,983 2,319 2,600 2,879 3,173 3,360
SAVE - 10 YEARS 0 9,287 13,186 16,432 19,826 23,192 25,998 28,786 31,730 33,603
SAVE - 20 YEARS 0 18,574 26,373 32,864 39,651 46,383 51,996 57,573 63,460 67,205
SAVE - 50 YEARS 0 46,434 65,932 82,161 99,128 115,958 129,991 143,932 158,650 168,014
TOTAL COST 50 YEARS = 299,230 252,796 233,298 217,070 200,102 183,272 169,239 155,298 140,580 131,216
For
the sake of simplification, I have assumed that each car is financed for three years and
then traded-in after three years for the same kind of car (i.e. a new car is traded for a
new car, a 3 year old used car for a 3 year old used car). New car buyers will finance at
a lower interest rate and pay for fewer repairs, but the car will depreciate more and
owners will pay more for insurance, sales tax and property tax. Also I have included an
initial repair cost when buying used (usually about $500).
For
the sake of comparison, I assumed that all cars get the same mileage. Obviously cars get
very different mileage, but that choice has nothing to do with new or used, and the same
buyer probably would choose among new and used cars that got about the same
mileage.
==
*TRADE VALUE = Edmund's/US Dept of Transportation INTEREST = 9.5% for new, 10.25-13.25%
for used (Wachovia Bank, NC)
==
COLLISION INS. = 1.5% (dropped after 5 years) COMPREHENSIVE = .8% (source AAA) SALES TAX =
6%
==
PROPERTY TAX = 3% MAINT + REPAIRS = US Dept. of Transportation INITIAL REPAIRS =
guesstimate
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