I just signed a job contract thousands of miles away for 5 years. After these 5 years I will be moving again. I need a car and will be paying cash. The general advice is to buy used and that is always what I have done in the past, however looking at some lower-end new cars the math isn't as bad as I thought over a five year term.
New
2018 Hyundai Elantra SEL: $15,000 out the door
2013 Hyundai Elantra SEL: going for about $9,800 average right now (source: carsguru)
Net cost over 5 years: 15,000 - 9,800 = 5,200 total = $1,040 per year in depreciation
Used
2015 Toyota Corolla LE: $14,000 used (source: carsguru)
2010 Toyota Corolla LE: $8,000 used (source: carsguru)
Net cost over 5 years: 14,000 - 8,000 = 6,000 total = $1,200 per year in depreciation
2012 Toyota Corolla LE: $9,800 used (source: carsguru)
2007 Toyota Corolla LE: $5,980 used (source: carsguru)
Net cost over 5 years: 9,800 - 5,980 = 3820 total = $764 per year in depreciation
So obviously, the absolute cheapest option is to buy a really old Toyota or Honda where reliability is good, however even then you have increasing maintenance costs. The few hundred you save per year by buying a 6+ year older cost can easily be made up with maintenance and especially if there is an expensive repair. Whereas the new cars have warranties (Hyundai has a 5 year bumper to bumper and 10 year powertrain). New cars have very little maintenance or repair costs over the first 5 years which is what I care about. I have checked insurance and all of the quotes are within $50-75 per year, presumably because newer cars are safer to make up some of the cost.
I realize many people don't want to buy Hyundai and maybe I am comparing apples to oranges, but a new Hyundai with a warranty is a pretty good car (Kia/Hyundai being crap cars is not really true anymore), and it doesn't seem extremely expensive even compared to used.
Am I missing something?
May 14, 2018 at 12:11PM
