Can You Afford to Drive a Used Car? (Part 2)

The question, as the title says, is: Can You Afford to Drive a Used Car?

In Part 1, we learned how expensive it is to buy a new car. Depreciation Sucks! 

You may or may not have ever thought about it in this way, so I’ll walk through the thought process slowly.

Let me establish my position: I do not believe in buying new cars. Most people (like me) simply cannot afford to buy a new car “just because”. The new car smell is simply not in the budget of people like me.

Take for example the car I’m currently driving. I purchased my 2011 Toyota Camry (probably the most popular car that year too) USED in 2011. I was spending up to two hours each day sitting in traffic and I just couldn’t justify the fuel expense for the 1994 Chevy Silverado 1500 Z71 I was driving at the time. I heard an advertisement on the radio that a local dealership had a shipment of 2011 Camrys in stock, so I went to investigate.

I ended up trading my 2004 Z71 with 90,000+ miles and $6000 in cash for a Certified Pre-owned 2011 Camry with 32,000 miles. Granted, I had traded a car and some cash for a car that I traded for a car and some cash for the Z71 – over a couple years, but I owned the truck free and clear.

When I drove into the dealership, I had a printout (from NADA.com) of what my truck was worth. I handed that printout and the keys to the truck to my salesman and said, Here’s what I want for my truck. I’ll give you what you’re asking for the car. Can we make a deal?

The salesman took me to the lot where I had my pick of several colors of 2011 Toyota Camry. I chose the one with the least mileage (color didn’t mean much to me). After test driving that one (it reeked of cigarette smoke), I asked for the one with the next lowest mileage. After driving a couple, I decided on one. I said, If I get what I want for my truck, we have a deal.

They made the deal, I wrote a check for $6,000 and I drove my “new” car off the lot.

The year was 2011.

That’s right. In 2011, I bought a 2011 Certified Pre-owned Toyota Camry with 32,000 miles. It still had a little bit (4,000 miles) of the factory warranty left, and even with my [very clean] trade-in I saved more than $6,000 off the sticker price of a new one. Here’s the best part: The drive train (i.e. the most expensive part of the car) is still covered under the CPO warranty for another 9,000 miles. (As of 6/2016)

Even better than that, I’ve never had a major mechanical problem. I’ve replaced the tires twice, and that’s it. I may need to charge the A/C this year, but that shouldn’t cost more than a couple hundred bucks. AND I have that much in my car repair fund – after all, it can’t cost more than a couple hundred bucks to fix the air conditioner.

On the other hand, I know several people who have told me that they “… can’t afford to drive a used car.” That is, they don’t have sufficient funds set aside to cover warranty items – AND they want to drive vehicles that are “nicer” than a Toyota Camry.

Let me address that last part first.

In my opinion, there is nothing – and I mean NOTHING – nicer than a car that you own. I don’t mean a car that has you name on the title… with a bank as lienholder. No. I mean a car that has your name on the title and NO ONE as lienholder. In other words, a car that you OWN.

“… Condo paid for. No car payment.” – Notorious BIG, Hypnotize

Parked next to each other, my 2011 Camry may not look as nice as someone else’s 2014, 2015 or 2016 Whatever. However, when I’m not making a monthly payment and the other person is, you’ve got to wonder what your definition of “nice” is. To me, it is SUPER NICE not to make a payment.

So, why am I trying to compare a five-year-old car with a brand new one?

The two have more in common than you might think. They also have some BIG differences, which we will cover in the next installment.

Can You Afford to Drive a Used Car? (Part 3) | Make Dollars Make SENSE - August 17, 2016

[…] Part 1 of this series, we covered the impact of depreciation (OUCH!) and in Part 2 we talked about the benefits of buying a used – even a Certified Pre-Owned (CPO) – […]

Can You Afford to Drive a Used Car? (Part 4) | Make Dollars Make SENSE - August 17, 2016

[…] Part 1 of this series, we talked about new-car depreciation, in Part 2 we talked about the benefits of buying a used vehicle and in Part 3 we discussed some of the […]

Comments are closed