More drivers are keeping the old heap
A new survey indicates U.S. car owners are driving their vehicles a lot longer. Hopefully, they're also saving for a replacement.
Is that frugal? Or dangerous?
I'd go with "frugal." Properly maintained, today's wheels should still be rolling long past the 100,000-mile point. Keeping a car an extra few years means saving more than just payments on a new vehicle. As the car ages, you'll pay less for insurance and, in some states, less in registration fees and personal property taxes.
It's not exactly a buyer's market right now anyway. A recent article in U.S. News & World Report notes that three things are working against prospective car owners:
- Rising gas prices.
- Supply-chain disruptions caused by the Japanese earthquake.
- A dwindling auto industry.
Which is cheaper?
But how long should you wait? When do maintenance costs cancel out the savings?
"In the absence of a gigantic repair bill -- you need a new engine, for example -- an old car is almost always cheaper to own than a new one," according to a post at Kiplinger's Personal Finance.
My dad drove a VW bug for 21 years. My sister drove her Toyota for 17 years. A friend is currently driving a 16-year-old Honda. Amateurs, all of them, compared to Robert Brokamp of The Motley Fool: He kept a vehicle for 264,000 miles.
Last year, though, Brokamp dumped the family's minivan after "only" 182,000 miles. Frequent maintenance issues made him worry that the vehicle would break down while his wife was driving with their kids.
"The old van just didn't feel safe anymore," he wrote in a guest post at partner blog Get Rich Slowly.
The "new" vehicle, incidentally, was actuallly a used minivan bought from someone who'd maintained it faithfully. Score! Post continues after video.
Why pay interest?
While you're coaxing your old car through the last few years of its useful span, make sure to save for its replacement. In a post at the No Credit Needed blog, "Planning to replace my old car," blogger "NCN" writes of establishing a monthly budget category for a new car.
New to him, anyway: Like Brokamp, NCN will buy used. He'll also compare mileage, insurance costs, safety records and other factors before deciding on make and model.
His 2001 Honda is approaching 200,000 miles. But NCN hopes it hangs in there another five years, so his daughter can learn to drive in it. By that time, he should definitely be able to pay cash.
Here's how a former co-worker's sister did it: After paying off her car she continued to write an "auto loan" check, which she deposited into savings. When she needed a new car, she paid it all upfront. (If you're unable to do the same, see "How much car can I afford?" to determine monthly payments and thus determine the right car for you.)
Happy motoring. Eventually.
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