It’s an age-old dilemma: purchase a new car or keep the old clunker?
Which is cheaper?
Here, we’ll determine the costs of that shiny new Dodge you’ve been eyeing or the coughing, but reliable menace you can’t say goodbye to.
New Car Expenses
First, let’s break down the expenses of a new car in a single year.
Initial Cost
In 2017, the average price for a new car or truck was $36,113. Of course, you could always by gently used. The typical used car will cost about $19,400.
Assuming you have a 72-month loan, you’ll spend a little over $6,000 a year for a new car in monthly payments. For a used car, you’ d spend about $3,200.
Maintenance
You can’t forget your regular maintenance. Since you just bought a car, hopefully, you can avoid any major fixes. According to AAA, the average cost of maintenance for a new car is about $99 a month. That means roughly $1,200 a year.
Gas Savings
Chances are if you buy new you’ll be saving on gas. Most new cars average about 25 miles per gallon. Since the regular Joe drives about 13,500 miles per year, with gas at $2.80 you’ll be paying about $1,500 in gas.
Insurance
If you have a loan, you’ll be required to have comprehensive insurance. Rates vary, but it’s safe to assume you’ll pay around $100 a month.
That’s another $1,200 per year.
All in all, these expenses bring you to about $7,100 if you purchase a used car.
Old Car Expenses
Older cars have their costs, too.
Maintenance
“Maintaining an aging vehicle is integral in preventing personal injury,” states Jason Hennessey, the marketing consultant from Newsome Melton.
While maintenance costs vary, it’s safe to assume you’ll spend about three times as much a year in repairs. That means $3,600. And that’s if your vehicle doesn’t land you in a personal injury lawsuit.
Gas Efficiency
In 2006, the average mile to the gallon was about 21 miles, surprisingly close to where it is now. Using the same distance driven and gas prices, that equals $1,800 per year.
Insurance
Insurance will be cheaper because you won’t need a comprehensive policy. However, because prices vary, we’ll go with a lower average than before: $1,000 a year.
Rainy-Day Savings
If you have an old car, chances are you’ll have to keep some funds in reserve. To keep it fair, we’ll tack on an extra $500.
The total yearly cost for your junker, then, is about . . . $6,900 per year.
The Verdict
Although we were being liberal in amounts for the used car, even with minimized payments owners can still expect to pay roughly the same amount per year for a newly-purchased vehicle as they do for the beat up one. However, the old clunker will save you almost $3,000 per year if you buy brand new.
Maybe it’s time to say goodbye after all.
