While there are many articles on the internet about the best new cars or used cars to buy, few of them address the question on the minds of the most value-conscious consumers – what vehicles will have the lowest overall total cost per mile driven. This article discusses the cheapest or least expensive used car to own.
Years ago, a friend of mine introduced me to an interesting strategy. Here is what he told me:
1) Buy used. When you drive off the lot, a car loses a substantial amount of value, some vehicles lose more than 30% of their value in the first year.
2) Buy the cars that depreciate the most quickly. While the typical car (according to Edmunds.com) depreciates by about 19% in the first year and 63% in the first five years, some vehicles depreciate much more quickly. Larger American sedans like big Cadillacs, Ford Crown Victoria’s, large Buick’s, and large Chryslers can be bargains after 5 to 7 years, and often times they can be found with relatively low mileage. American made minivans also can be quite affordable after a few years.
3) Items to pay attention to that don’t have a large impact on the selling price, but do impact your costs:
- How old are the tires? A new set can run $500 and up, so why not buy a used car that has newer tires;
- How old are the brakes? New rotors/shoes can run $500 and up, so you may want to target cars that have had new brakes in the past 10,000 miles;
- Is the exhaust/muffler in good condition or newer?
- When do the license plate tabs expire? In many states, the license plate goes with the vehicle, and the annual license plate tabs cost can be substantial. So, why not target cars where the tabs were just renewed.
4) Resources to use: Go to the library and look at the most recent Consumer Reports annual buying guide. Look at which vehicles have average or above reliability records. Compare this to lists of American cars that depreciate the most and try to target vehicles that have the combination of high depreciation and average or better reliability.
5) Buy major American brands, because the cost of labor and parts is generally lower when you do have a repair.
6) Target vehicles that have received regular maintenance, where the owner has records of the same.
7) Get A vehicle inspection. Many garages will, either for free or a very nominal charge, review the major mechanicals of a vehicle – such as shocks, struts, ball joints, CV joints, brakes, etc. – to let you know if there are any obvious issues with the car you are contemplating the purchase of.
Want to truly minimize your cost of ownership? I had one friend who actually took this plan to the extreme. He would set a budget for himself of $2,000 or less for a used vehicle. His criteria were:
- Newer tires and brakes;
- Runs well;
- Not burning oil;
- American made;
- License tabs have 8 months or more to go before expiring.
He would keep the vehicle until it needed a repair of $500 or more. If it needed a repair of $500 or more, he would sell the car to a junk yard and generally recoup $100 to $800 toward the purchase of his next vehicle. As older, inexpensive, used cars are more apt to break down, he advised that the annual cost of a AAA membership, and its accompanying towing/roadside assistance benefits, was well worth the cost.
Additionally, he did not purchase comprehensive or collision insurance on his vehicles, as he did not consider the vehicles worth insuring. Lastly, he would only get his oil changed every 10,000 miles, as research shows this is generally acceptable when driving under normal conditions (need to check levels periodically though to make sure you are not running low). If the vehicle is covered by a warranty, you will want to review the terms of the warranty as it may require oil changes at a specific interval.
Cost Of Insurance Is A Major Factor In Vehicle Operating Costs Over Time
As the cost of your insurance can be one of the major components of your operating costs over time, it is important that you work with a professional insurance agent to evaluate coverage options and competing insurers. The cars that may seem like the least expensive to insure, may not be what you’d expect either. It is also important that you inquire about all the auto insurance discounts that you might be eligible for.
Some drivers look to minimize insurance costs by not purchasing automobile insurance. This can be a big mistake. In addition to the potential legal consequences of not buying automobile liability insurance, you are failing to protect yourself under PIP/No-Fault, Underinsured Motorist, and Uninsured Motorists coverage, which are very important.
If you are looking to minimize your overall cost of car ownership, some of these strategies may work for you. Conduct your own research and seek the advice of a professional insurance agent.
Other Enhanced Insurance articles related to car care and purchasing:
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