COST OF OWNING A USED CAR VS. A NEW CAR - DETAILED SPREADSHEET; AUTOMOBILE DISCOUNTS - BUYING, LEASING, REPAIRING

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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.
-------------------------------------------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------------------------------------------
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
-------------------------------------------------------------------------------------------------------------------
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).

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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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