Manage Your Money

Should I Buy a New Car, a Used Car, or Keep My Old Car

This post may contain affiliate links which means we may receive a commission if you purchase through our links. For more information check out our Privacy Policy.

Should I Buy a New Car, a Used Car, or Keep My Old Car?

You may be asking yourself: Should I Buy a New Car, a Used Car, or Keep My Old Car? We would love to help you clarify that, but first, an anecdote. Less than a month after Mrs. RRR and I got married, we got pressured to do one thing. Amazingly, it wasn’t having kids…..yet (our families have since cranked this pressure up to a mild 7), but it was to get a new car. For some reason, the second we got married, the ’97 Toyota Camry that Mrs. RRR brought into the marriage became unsafe and inadequate, and everyone and their momma thought they knew best for us by telling us to get rid of it. Why, though?

Toyota’s are long known for their reliability, and this one was no different. Other than a couple of cosmetic issues, the Camry showed no clear signs yet of slowing down. When we got married three years ago, it had 244k miles, so the car had already made it past the two big milestones where it loses a ton of value: 100k and 200k miles. Frankly, we never even considered getting rid of it. We never felt like it was a “death trap” despite what some family members said. Besides, what would we get for it anyway? According to KBB it was worth $800-$2,200 back then on the private party market (LOL. Try selling an 18 year old car with ~250k miles on it for $2,200 and get back with me), and a whopping $180-$740 as a trade in.
Well, surprise y’all, the ol’ bitch made it another 3 years and to 300,000 miles! To put that number in perspective, it’s the equivalent of driving around the earth 12 times. Or, she’s making a round trip to the moon and has already got there and is 1/4 of the way back to earth.

Literally the only thing we’ve had to do outside the typical maintenance is change the spark plugs. Hell, changing the spark plugs is still considered routine maintenance. We’ve racked up some miles in it the past three years, but that’s partially due to the move to St. Louis, the move back, countless trips 2+ hours to see friends and family, and it’s our daily driver. But, as we all know, driving an old used car costs more than buying a new one. Exactly how much money have we “lost” vs. how much we would’ve “saved” by buying a newer car?


One of the biggest arguments for buying a newer car is the reliability and the things that could go wrong with an older car. By purchasing a new or newer car, you get to forego all those unexpected issues in an older car, but how much does that cost you? For the sake of comparison we are going to calculate the cost of three vehicles: the average new car, the average used car, and our shitty ol’ Camry. Of course, it goes without saying that your miles may vary (pun intended) but we are talking about ours here.
We are using the average monthly payment for a new car (January 2019), average payment for a used car (November 2018), and our monthly payment of a whopping zero dollars (Every damn month since 2015). Then, we calculate the average cost of the most frequent and common maintenance: a synthetic oil change. At a bargain of $45 per oil change ÷ 3 because you have to get those done every 3 months or 3k miles…at least what the oil people say. So, the cost for those are the same across the board. Finally, you’ve got the unexpected repairs: $0 for a new car, $0 for a newer used car, and $0 we’ve spent on our beater.

New Used Beater
Monthly Payment $551.00 $400.00 $0.00
Monthly Maintenance $11.25 $11.25 $11.25
Unexpected Costs $0.00 $0.00 $0.00
Monthly Total: $562.25 $411.25 $11.25
Yearly Total: $6,747.00 $4,935.00 $135.00
3 Years of Marriage: $20,241.00 $14,805.00 $405.00

Lord have mercy! We have saved a difference of $19,836 between getting a new car, and sticking it out with our old, paid for car. But wait, weren’t we supposed to save money by buying a newer car with less maintenace issues? Hell, we could’ve practically rebuilt the entire car and still saved money compared to the new car and even the used car. Those are some huge numbers, and at the end of the day, all three vehicles are serving the same purpose: to carry you, and your shit, from A to B.
We aren’t even going to add in insurance costs, which I think could skew the numbers even more. But, we would have to dive into the differences in the cost of insurance because it varies wildly by state, driving record, choice of coverage, etc. and that could be a whole article in itself. However, if we did include an insurance breakdown, the beater would just run away with the show because it’s the only one not required to have full coverage. For the sake of full disclosure, we pay $41.50 a month for insurance on the Camry.
To add insult to injury, the new and used car have lost you even more money when accounting for depreciation. The nice people over at Good Calculators have made this easy for us with their Car Depreciation Calculator. So let’s break it down:

Car Depreciation
New Used Beater
Purchase Price $36,000 $20,000 $2,200
Year 1 $27,000 $16,880 $1,856
Year 2 $22,788 $14,247 $1,567
Year 3 $19,233 $12,024 $1,322
Total Loss $16,767 $7,976 $878

I don’t want to over-step here, but it definitely isn’t looking good for the new car, first paying $20k more to own and maintain it for three years, but also to lose $16,700 on the value in the same time period. For those of you thinking that the used car price seems high, that’s the average sold used car in America as of the 3rd quarter last year. Monthly payments have reached an all time high of $400 a month for used cars with a loan term of 66 months. For all the idiots out there, that’s 5.5 years! People are spending 20% of my life paying off a single USED car.
New cars are even more egregious with an average down payment of $4,191, average APR at 6.19%, and average loan length of 69.1 months. Now, they’re even offering 72 and 84 month loans. That’s a hell of a sales tactic: pick up a new car when your kid is 9 years old, and you’ll have it paid off by the time they’re driving. To top it off, there’s a news article that just came out that says “a record number of Americans are 3 months behind on their car payment.” That record number you ask? 7 million people!! 
Let’s sum up the graphs and shit for those of you who aren’t following along.

  • The beater cost less to buy
  • The beater cost no monthly payments
  • It costs less to insure the beater
  • The beater depreciated less
  • You saved thousands of dollars a year keeping the beater

Future Value

How much has buying a new car cost your future? Not only in money, but also in time. The average net salary in the US is $32,760 after taxes. I’ll be damned, the average new car costs more than a year of the average salary. It’s no wonder the typical American’s financial life looks bleak. The average new car costs the average worker 412 hours a year, or just over 10 weeks of work. Good news, the used car only cost the worker 313 hours, or 7.8 weeks, per year. Our old beater that some people are urging us to get rid of? It only cost the typical worker 8.5 hours a year to maintain. Even if you had to replace your old car every single year, it would still only cost you 111 hours a year to pay for the whole car and continue to maintain it.
It should come as no surprise that we like real estate. Now, how much real estate could you buy in three years with $20,000? You could make a 20% down payment on a $95k place that would be a nice single family home in our area and thousands of areas across the country. You could put 25% down on a small multi-family property for just over $75k (we’ve bought three duplexes for under this price). Hell, you could house-hack a $150k 4-unit property with 5% down and still have $11,500 left over for reserves, and live for free while making money.
The only logical conclusion for us is to continue to drive this Camry until the wheels fall off, or until we leave the country and pass it on to someone else. The hundreds of hours, and thousands of dollars that driving an old car has saved us will put us decades ahead of the typical retirement age. I think I could sacrifice driving around in a newer car for that type of freedom in the near future. How many hours is your car costing you?


    • James @ Rethink the Rat Race

      Thanks for the perspective, Rachel. Sorry to hear that you’re still regretting it! If you aren’t upside down on it, you could look at selling it off and getting a more reasonable car. Crazy how the societal norm is to get a new car with a promotion or job change to show that you’ve made it.

  • Deanna

    Great stuff! So I have a 2008 Saturn with almost 200,000 miles. It drives great and I’ve had mechanics tell me it’s a well-built car and I should hold onto it; however, I have had some big repairs like replacing the shocks that cost about $700 this year. Every time I’m faced with a big repair I look at they typical payment of a newer car and calculate how many months I’ll need to drive it to break even. So far it’s worked out.

    • James @ Rethink the Rat Race

      That’s a great way of looking at it, Deanna. Every repair is only a month or two of car payments and maybe less when you include insurance. We have been counting our blessings regarding our cars not having any issues so far, which definitely makes the decision to keep them easier for us!

  • Free Before Friday

    1. The 300,00 mile club wow! I feel shameful only making it to like 150k-160k on my last two explorers. I sold them off around those mileage marks. It was hit or miss on the services for the last 50k miles. One explorer had a few smaller issues over the 100k mark.
    2. It really hits hard when you compare it to working hours. If people looked at purchases in terms of working hours instead of a monthly payments, they would definitely start to make better decisions.
    3. Most are paying probably closer to or over $100 a month for insurance. You guys are killing it. You could probably drive your point home with just the insurance numbers alone. I recently adjusted my insurances to save about $30 month for our vehicles. Progress!

    • James @ Rethink the Rat Race

      150k-160k seems good based on it being a Ford Explorer. I think I got ~170k out of mine back in high school but it was starting to show with every additional mile. Luckily it was wrecked so it was put out of its misery.
      We think comparing purchases or payments to hours worked is an easy way to put things in perspective. Especially if we are trying to retire early. Every additional purchase or expense is that much more we need to allot for later on in life.
      Our insurance numbers are really cheap for our cars because despite the high miles, we are typically driving less than the average person. An insurance article will definitely be coming down the pipeline, because we are running the gambit on policy charges. Mrs. RRR has never even had a ticket or wreck while I’ve had over a dozen tickets, a few wrecks, and even had my license suspended before so my insurance was astronomical.
      Thanks for the feedback!

  • Jared

    This is great! Thanks for the insights! Don’t know if you remember me, but I sold you the washer/dryer in Huntsville! I have actually driven a car until the wheel fell off lol. The excitement of the showers of sparks and billowing smoke is priceless. The following embarrassment lasts but a moment – cost savings lasts a lifetime!
    Also you should consider the sales tax savings on new vs beater initial purchase, as well as property tax on the vehicle (depending on your state)! I drove $2000 beaters my whole life, and one time I got frustrated after not having heat in the winter and it was a cold 10 degree Pittsburgh day and rashly decided to get my very first brand new car. That was a mistake I will not make again. In fact I discovered that the only reason my beater didn’t have heat was because the heater core was plugged up, and a simple back flush with the garden hose fixed it in minutes.
    God bless you guys!
    1 Timothy 6:6-7 NKJV
    [6] Now godliness with contentment is great gain. [7] For we brought nothing into this world, and it is certain we can carry nothing out.

    • James @ Rethink the Rat Race

      Jared, thanks for reaching out. Of course we remember you! Every time I drive through south Huntsville I say to myself, “I wonder how the preacher with the tiny house is doing?”
      That is a great story about actually driving the wheels off! Sorry to hear about the mistake with the new car purchase, but at least you learned from it!
      Also, great verse. One of my personal favorites is:
      Proverbs 13:7 – One pretends to be rich, yet has nothing. Another pretends to be poor but has great wealth.
      Thanks again for reaching out!

  • Jared

    By the way, have you done much research on the insanity of 401k savings? I have learned the hard way with this one, and the past year after having rolled it to an IRA and drawn on it for needed expenses, I can see how this was not a good idea to begin with. I have been telling folks to stop doing it and rather to pay off their mortgages!

    • James

      You aren’t wrong, but you also aren’t the only one! All we can do is learn from our regrets and choices for the future.

  • Car Dealers Auckland

    This is an informative article. This article provides a lot of information about buying car. This amazing article shows whether we should buy a new car used car or keep old car. This will help a lot of people. Thanks for posting. Do check out this, it has some great and nice ideas to look for.

  • Peyton

    Indeed. I learned to drive a 1982 Audi 4000D. My parents later gave it the Audi to me and I drove it until I gave it to a friend at 425K miles. I only needed to replace the battery, clutch pads, brake pads, brake fluid, anti-freeze, filters, and tires. It paid for itself over and over again.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.