A few years back, I was inspired by a story my friend shared with me. She purchased a brand new car for $16,000, and drove it until it died. It lasted her family 14 years! That’s about $1200/year or $100/month. If you have a loan on something like that, you’re looking at even more. At 6% interest rate for a 5 year loan, it’s $2,560 over the life of the loan in interest alone. But what she did was brilliant, and it inspired me in my own life.
So, I purchased a used car with very low miles on it at wholesale pricing. I paid $5,500, and it lasted me almost 6 years. This is $1,100/year or $92/month, no loan as I paid cash, so saved me quite a bit of interest. And in that 6 years, I saved up my money each month for the day it would die, because I wanted to pay cash for the next one as well. When it died, I sold it on Craigslist for a few thousand dollars to an auto mechanic shop who was going to fix it and resell it again. This added even more to my purchase, so I was able to purchase an even nicer SUV than previously. I purchased this car with very low miles and expect to get 5 years out of it for around the same price. Maybe this one will last me longer; it’s certainly made better.
One of my jobs in my banking career was auto loan processing. It was the funnest aspect in all the work that I did. But really quickly into it, I saw how each time someone purchased a new or used car, they lost a few thousand dollars. Maybe the person does a trade-in and loses what they could have gotten by selling it private party. And it’s harder to find a car at wholesale, so usually they would overpay on their new-to-them vehicle as well. So, if you’re rotating cars a lot, you could be losing a lot of money on each deal. The less you rotate cars the better. I personally would not recommend rotating more than every 5 years. Drive your car until that thing is dead…or at least needs a new transmission or some other huge amount of repair that is not worth the money you put into it if fixed. Likewise, if you’re selling something like that on Craigslist, advertise in the title: “Mechanics Special” and you’ll get a lot more hits to your ad.