Good Used Cars are Big Money Savers
Are there good used cars out there? You bet there are. Plenty of them, and they'll save you lots of money if you'll give the used car market a try.
My approach to frugal living has always included used cars, and for a good reason - they help me save money.
I'm not talking about a used car lot at a dealership, but private parties where you can save many thousands, especially if you are in the market for a luxury automobile.
I've owned a Thunderbird, an LTD, and a Town Car, and they have been some of the smoothest riding and trouble-free vehicles I have ever owned. They were good used cars. The most expensive one I owned was about $1,500, and each one lasted me for many years.
The picture to the left shows my 1980 Cadillac. I paid $200 for it. The most valuable part of the car was the fuel in the tank and the tires on the vehicle. There's nothing wrong with that!
My friend Bob, the "King of Frugality" out in New Jersey reminded me of this great money saving tip, so if you want to save money, keep reading about the great deals that can be had if you are in the market for good used cars.
The Issue at Hand
Our focus needs to be on reducing the overall cost of transportation. Yes, we spend our money on gas and tires and maintenance, but we're really paying for transportation, so let's tally up the numbers with that in mind.
First, let's look at what our options are for new cars.
At one end of the spectrum, you have a large SUV. It is nearly as expensive as a small house, and gets about 7 to 12 mpg. It has the power to climb any hill, but can't pass a gas station.
The big lumbering SUV will cost you $3,500 in fuel each year, assuming 10 mpg and $3.50 a gallon for fuel. Add to this car payments of about $600 a month, and higher insurance premiums, and you get about $11,000 a year in transportation costs.
Over 5 years, you've spent $55,000.
At the other end of the spectrum, you have a hybrid or subcompact car. It is more reasonably priced, and gives you up to 50 mpg so you save on fuel costs. The drawback is the limited space in the vehicle for groceries and people.
The more fuel efficient vehicle costs you $875 in fuel each year, assuming 40 mpg and $3.50 a gallon for fuel. Add to this car payments of about $350 a month, and higher insurance premiums, and you get about $5,500 a year in transportation costs.
Over 5 years, you've spent $27,500.
Now lets look at some good used cars. I'm talking about a cheap luxury car that's about 10 years old with 100,000 miles on it. Just the kind of car my friend Bob likes to buy. They'll cost you about $3,000 cash, and you'll get 15 to 25 mpg.
The cheap luxury car costs you $1,944 in fuel each year, assuming 18 mpg and $3.50 a gallon for fuel. Add to this a yearly cost of ownership of $600 in lieu of car payments, repairs of perhaps $400 a year, and lower "liability only" insurance premiums, and you get about $3,100 a year in transportation costs.
Over 5 years, you've spent $15,500.
Good used cars save money over the 5 years:
- Door #1: $12,000 savings over the high mpg vehicle.
- Door #2: $39,500 savings over the SUV.
Now you have the math staring at you. Monty wants to know, are you interested in a nice new vehicle, or would you rather have what's behind door #1 or door #2?
Keep thinking good used cars, and you'll wind up with a nice luxury vehicle that is comfortable and will save you money now and in the long term. I know the cost of fuel can go up and change the equation, but even at $7 a gallon, you still save about $4,000 over 5 years even when compared with the more fuel efficient hybrid or subcompact.
Can I really put $4,000 in my pocket while driving a luxury automobile? Yes you can.
Admit it, what hurts is paying at the pump each fill up, and filling up more often with a big luxury vehicle. It just seems like you're paying more, when really you save money over the long haul.
Or is it that older car syndrome? Don't let that stop you. Remember, good used cars sit out in the parking lot, the garage, and at the airport just like those snazzy new ones.
Think of how seldom you're seen in your car. Is it worth thousands of dollars, even tens of thousands of dollars just to have a better feeling about yourself?
Perhaps it is. If it isn't, there is a world of good used cars out there just waiting for a new owner. If you want to save money, it's a great way to do it.
Remember, the bottom line is your overall cost of transportation, and the numbers don't lie. Good used cars make good sense - and good dollars and cents savings.
So, if your aim is to save money and stay on the course of frugal living, you owe it to yourself to investigate used cars. They can be very cost-effective transportation if you keep your eye on the idea of overall transportation costs, and not simple miles per gallon.
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