What car: the cheap seats

I am having a hard time swallowing the idea of spending $10,000 on a used car that will depreciate like a rock due to 40,000 miles a year. It will be worth absolutely nothing prior to the loan even being paid off.

I found another Protege5 today with 100,000 miles on it for under 3 Grand. It's already at the bottom of the depreciation curve. I could reasonably get another hundred and fifty thousand miles out of it before I could no longer use it for work. I could also pay cash for it and not have interest or a loan. However it would need a little bit of freshening and maintenance prior to be putting into service. It has all the service records for the last hundred thousand miles. The downside is that it only gets me an additional 8 to 10 miles to the gallon over the Subaru. Whereas the 12 up Mazda3 skyactiv, or mazda2 would get me 12 to 15 over the Subaru.

I don't think the gas mileage benefit would offset the depreciation and interest on a loan over buying a cheaper lower mileage car that is already at the bottom of the depreciation curve. What are your thoughts on it?

http://www.edmunds.com/calculators/gas-guzzler.html

I'd guess the biggest cost on the new car is probably depreciation, I'd ignore loan rates because they're pretty cheap right now. If you did include them, be sure to include higher insurance costs for the newer car.

I know of a late 90's Saturn wagon with a strong but leaky DOHC backed with a 5 speed for $300..

And it's not a penalty box, the cost of the narrower tires versus a newer 3 will help off set the difference in fuel economy. If you can find an example that's not while on it's way to returning to the earth, I say go for it. I'd also consider a contour svt if you can find an example and can live without a hatch.

This thing is completely rust free. Charlotte NC all its life. Newer tires, radiator started leaking on test drive. Also due for timing belt, all fluids, etc. Normal used car stuff except timing belt and radiator. Has some slight wrinkles on drivers rear quarter and scuffs/scratches. All maintenance records, so that's why I know what it's due for. I'd also have to tint it, but that's preference, not necessarily needs. Same with a USB radio.

Isn't that how half of this board already buys cars? I've never spent more than $4k and we have two normal decent grown up cars that are 10 and 12 years old.

Go for it.

I don't think the gas mileage benefit would offset the depreciation and interest on a loan over buying a cheaper lower mileage car that is already at the bottom of the depreciation curve. What are your thoughts on it?

I think you're right.

Which way will gas prices go over the next few years? I don't pretend to know but you may have an opinion. I think the best way to look at the difference in gas mileage between two cars is to compute gallons per 1000 miles and weigh those two numbers. Gives a better perspective than simply "mpg."

$3K car bought and paid for means you don't have to carry collision on your insurance policy. $12K car with a lean means another big wad of cash for the insurance. If you aren't one of those people that have to drive the newest and the best, then go older. My wife works at a supermarket. She gets what I find thats cheap. Her current daily is a 16 year old Range Rover HSE I picked up for $1000. 4 wheel drive in the winter means I don't have to get out of bed at 5AM and crank up the snow blower so she can get out. It gets awful gas mileage, but that is offset easily by cheap insurance, low excise, and the fact that someday I'll steal the 4.6 out of it and drop it in a little british car.

I think fuel prices will go up again in the next two years.

I also tend to carry comp and collision, so insurance won't be that much of a factor.

I think I can also still get around 2500 out of the current completely rust free subaru. That brings the out of pocket down to around a grand or so.

I may have to farm out the timing belt job due to time constraints, so that brings a higher cost.

I also really can't get excited about buying ANYTHING. the want for a new car isn't there, so that actually helps. I'm purely buying an appliance.

Looks like with the protege5 I'll be saving roughly 10 gallons per 1000 miles, or about 70 a month over the Subaru in fuel costs.

Keep in mind that fuel economy in MPG isn't linear. The first MPG gained is worth a lot more in fuel savings than the last MPG gained. I.E. 10 to 11 is worth more than 20 to 21. I'd say the Protege5 will easily be the value winner.

In reply to tr8todd:

Yup. Wife's driver is a '91 Suburban. TBI 350, 4 speed auto, 4x4. She put just enough miles on it in the last year to require exactly one oil change. And she loves it. "Black Betty" she calls it. Bam ba Lam.

OP: I'm definitely in the "rock a cheap commuter" camp. I put about 300 to 400 miles per week on a 1980 300TD. It's left me stranded exactly once, 2 miles from home, and the fix was a loose fuel primer. Insurance is around 300 bucks a year, parts are cheap, it's easy to work on, and in my area, 50 cetanes go for about the same price as 87 octanes.

I love the Protege5. If I had the opportunity to buy a cheap one that wasn't primarily composed of iron oxide, I would.

I've gone through this exact debate over and over again for a long time, as I'm in the same situation. What it comes down to is your personal preference on where you want to spend several hours of your day. Are you OK with spending it in a 15 year old car, no matter how well kept, that won't have some of the more modern touches? If your answer is yes, then go for it with a car like the P5...which is an awesome car by the way, I had a '99 Protégé sedan that I loved.

For me, it's worth the extra money to have a newer, nicer car. I work hard and don't want to spend my time in an old car. I agree with not buying a new car and destroying it. I like that sweet spot of finding a sub-5 year old car that takes a depreciation hit when it leaves the showroom. You can get a nice one for under $10k, it'll be a really nice place to spend time and last forever. Corolla, Civic, Elantra, Accord, etc... Yes, if you do the strict math, it'll cost more than buying a $1500 '97 Saturn SL1, but to me it's money well spent.

This is what all the Protege5's near me look like.

God I love living in the south.

Anyone want an 02 subaru that you can disassemble with a 3/8 drive ratchet? Threads on the suspension bolts still look like zinc plating....

In the main topic, all I really use is lumbar, air conditioning, cruise, and hd radio. A p5 has all but hd radio, but that's cheap. So no concerns about features.

And interesting on the first mpg being worth more than the last. Care to elaborate?

Dusterbd13 wrote: God I love living in the south. Anyone want an 02 subaru that you can disassemble with a 3/8 drive ratchet? Threads on the suspension bolts still look like zinc plating.... In the main topic, all I really use is lumbar, air conditioning, cruise, and hd radio. A p5 has all but hd radio, but that's cheap. So no concerns about features. And interesting on the first mpg being worth more than the last. Care to elaborate?

It's basically a percentage game. 1 mpg improvement on a vehicle that gets 10 mpg is a 10% improvement, but 1 mpg on a 40 mpg car is only a 2.5% improvement.

Put another way, buying an 11 mpg vehicle to replace a 10 mpg vehicle, driven 10,000 miles per year, will save almost 81 gallons of fuel per year, but buying a 41 mpg vehicle to replace the 40 mpg vehicle will only save about 6 gallons per year.

volvoclearinghouse wrote:

Dusterbd13 wrote: God I love living in the south. Anyone want an 02 subaru that you can disassemble with a 3/8 drive ratchet? Threads on the suspension bolts still look like zinc plating.... In the main topic, all I really use is lumbar, air conditioning, cruise, and hd radio. A p5 has all but hd radio, but that's cheap. So no concerns about features. And interesting on the first mpg being worth more than the last. Care to elaborate?

It's basically a percentage game. 1 mpg improvement on a vehicle that gets 10 mpg is a 10% improvement, but 1 mpg on a 40 mpg car is only a 2.5% improvement. Put another way, buying an 11 mpg vehicle to replace a 10 mpg vehicle, driven 10,000 miles per year, will save almost 81 gallons of fuel per year, but buying a 41 mpg vehicle to replace the 40 mpg vehicle will only save about 6 gallons per year.

Yep.

Lets say that the Subaru gets 20MPG and the Protege 28MPG. At $3.00 a gallon and 17,000 miles a year, the 28 MPG saves you $728.57. Lets take the same jump from 28 to 36--that only saves you $404.76 a year.

Using the same $3.00 a gallon and 17,000 miles, we get the following differences (NOT TOTAL FUEL COST):

• 20 to 30 is $850 a year difference
• 30 to 60 is $850 a year difference
• 60 to 1,000 is $799 a year difference. Yeah, there is a bigger difference from 20 to 30 than there is from 60 to 1,000.

I made a spreadsheet a few years back. Pretty easy to use:
https://docs.google.com/spreadsheets/d/1fHro6pDvZYK2lyeV9ingrdbzEkXNfhqcJU65cVggGPo/edit?pref=2&pli=1#gid=1 And the thread I made to go along with it:
https://grassrootsmotorsports.com/forum/off-topic-discussion/spreadsheet-i-made-showing-diminishing-returns-on-/69195/page1/

Remember, the OP is talking about 40k ( ) per year.

Its just math. If you are concerned about cost of ownership, just make a spreadsheet. Fuel cost, time value of money (negative number), insurance, maintenance, est. repairs, etc.

You'll quickly find that when you are trying to achieve absolute bottom of cost of ownership that either time value or fuel cost will be the most important, depending on how many miles you drive.

ProDarwin wrote: Remember, the OP is talking about 40k ( ) per year. Its just math. If you are concerned about cost of ownership, just make a spreadsheet. Fuel cost, time value of money (negative number), insurance, maintenance, est. repairs, etc. You'll quickly find that when you are trying to achieve absolute bottom of cost of ownership that either time value or fuel cost will be the most important, depending on how many miles you drive.

Still only a $750 difference from 28 to 34mpg. Which isn't insignificant, but also not astronomical. Especially if he can claim some of the mileage.

A few years ago I had a 25 mile (each way) commute. At the time I was driving a 2000 Cherokee that got a whopping 15 mpg. Gas did it's first big spike, something like $1.65 to $2.75 in just a couple of months. I bought a cheap Corolla that got 30mpg no matter how I drove it and saved a ton of money in gas. At the same time I did the math and the jump to a Prius for 45 mpg was a far lesser savings, combined with the higher buy-in I went for cheap.

I get .32 a mile from work.

Real world numbers for mpg (I already own 1 p5, and have for 60k) is 22 average on subaru over 84k. P5 is 27 over 60k.

My time value investment would be similar in both cars, as subaru is due for repairs and maintenance similar to p5 minus radiator.

Part of the reason for this thread is the math. Numbers beyond simple arithmetic boggle me. Been even worse since the last concussion.

mtn wrote: Still only a $750 difference from 28 to 34mpg. Which isn't insignificant, but also not astronomical.

Definitely not insignificant. That's fuel alone. Not sure what the OP makes, but lets say its close to the Median income in the US: 51,939

At a roughly 25% tax bracket, that's 38954 after taxes. Saving $750 is the equivalent of a 1.9% raise.

mtn wrote: Especially if he can claim some of the mileage.

If he can, he will claim it regardless of what kind of fuel economy he gets. So any saved is just more $ in his pocket.

Dusterbd13 wrote: My time value investment would be similar in both cars

I was referring to time value of the money. Paying $10k for a car vs. paying $3k for a car ties up an additional $7k in a depreciating asset. Thats money that could be earning you money elsewhere if invested. Lets say you get a not-very-good short term return of 3% on your money over 5 years, thats $1130 you've "lost" by not investing the $7K instead. If your short term average is the overall average of the market, that $7k could earn you $3500 in that timeframe.

ProDarwin wrote: I was referring to time value of the money. Paying $10k for a car vs. paying $3k for a car ties up an additional $7k in a depreciating asset. Thats money that could be earning you money elsewhere if invested. Lets say you get a not-very-good short term return of 3% on your money over 5 years, thats $1130 you've "lost" by not investing the $7K instead. If your short term average is the overall average of the market, that $7k could earn you $3500 in that timeframe.

Based on the original post, it sounds like he'd be financing the purchase of the higher priced vehicle, vs paying cash for the lower priced one. I'm not sure there's 7k to be invested in this case.

STM317 wrote:

ProDarwin wrote: I was referring to time value of the money. Paying $10k for a car vs. paying $3k for a car ties up an additional $7k in a depreciating asset. Thats money that could be earning you money elsewhere if invested. Lets say you get a not-very-good short term return of 3% on your money over 5 years, thats $1130 you've "lost" by not investing the $7K instead. If your short term average is the overall average of the market, that $7k could earn you $3500 in that timeframe.

Based on the original post, it sounds like he'd be financing the purchase of the higher priced vehicle, vs paying cash for the lower priced one. I'm not sure there's 7k to be invested in this case.

Agreed. Not sure how much he's putting down, length of loan, etc. So in this case there is the down payment to take into account, interest rate of that loan, time-value as the equity in the car grows, etc.

Well I just shook hands on it. The one payment plan Trumps the take out a loan for not much more fuel savings. It just feels better in my head regardless of the numbers.