The True Cost of Car Ownership - Buying New vs. Holding On
Let’s break it down
Introduction
When it comes to car ownership, one of the most important decisions you’ll make is whether to buy a new car every few years or hold onto your current vehicle for the long haul. At Stress-Free Auto Care, we believe that regular maintenance can save you a significant amount of money over time. In this article, we’ll break down the costs associated with each approach to help you make in informed decision.
Buying a New Car Every Five Years:
Many people enjoy the feeling of driving a brand-new car every few years. In fact, on average two-thirds of people will purchase a new car every 5 years. However, this approach comes with substantial costs. Let’s examine the financial implications of purchasing a new car every five years.
Initial Purchase Price and Depreciation:
Average Purchase Price: $40,000 (it’s actually $48,000 but we went a little lower)
Depreciation: New cars lose about 20% of their value in the first year and approximately 10% each subsequent year. After five years, your $40,000 car will be worth around $21,917, resulting in a depreciation loss of $18,083
2. Ongoing Costs:
Maintenance: $500/year for the first five years
Insurance: $1200/year
Registration and Fees: $200/year
Total Costs Over Five Years
Purchase Price: $40,000
Depreciation: $18,083
Maintenance: $2,500
Insurance: $6,000
Fees: $1,000
Total Cost: $67,583
When repeated every five years, this results in a total cost of $270,332 over 20 years. That means buying a new car every five years over the span of 20 years.
Holding Onto a Car for 20 Years:
Now, let’s compare this with the costs of maintaining a car for 20 years. Regular maintenance and proper care can keep your vehicle running smoothly, saving you money in the long run. Now you may think “how can I hold onto my car for 20 years?”. But we assure you, with the proper maintenance, and regularly scheduled check-ups you can do it!
Initial Purchase Price and Depreciation:
Average Purchase Price: $40,000
Depreciation Over 20 Years: $35,346 (the car’s value is significantly lower, but it still retains some value)
2. Ongoing Costs:
Maintenance: The maintenance costs increase slightly as the car ages, averaging $500/year for the first 5 years, $700/year for year 6-10, $1,000/year for years 11-15, and $1,500/year for years 16-20.
Insurance: $1200/year
Registration and Fees: $200/year
Total Costs for Each Period:
Years 1-5: $67,583
Years 6-10: $19,321
Years 11-15: $17,292
Years 16-20: $17,650
We will be great friends in those 20 years! Your mechanic will know your car as if it was their own, and will most likely get better and better at diagnosing any issues that arise. You’re able to build decades of trust with one another and get the most out of your vehicle. The total Cost for those 20 Years: $121,846.
Conclusion:
When comparing the two approaches, it’s clear that holding onto a car for 20 years is significantly more cost-effective than buying a new car every five years. The total cost over 20 years for maintaining your vehicle is $121,846, compared to $270,332 for purchasing a new car every five years.
Come and stop by!
At Stress-Free Auto Care, our ASE Certified Technicians combine decades of experience with industry-leading tools & equipment to get your service completed on-time and within budget. Our 24-month / 24,000 mile warranty gives you peace of mind, ensuring your repairs are covered in the event of the unexpected. If your car won’t start start, your friendly team at Stress-Free Auto Care is just a call, text, or email away from giving you the better auto care experience that you deserve.
