Much to the chagrin, I’m sure, of a segment of my audience, I’ve written a lot of blog posts about cars. There are probably two reasons for this. Number one? I love cars.
I’m a car guy, though not in the way most people think of when they refer to someone as a ‘car guy’. My mechanical skills are limited to topping up fluids, changing tires, and practicing YouTube diagnostics.
I just love cars. More specifically, I love driving. In fact, ever since I purchased my first car, a silver 1982 Volvo, 21 years ago, I’ve logged more miles driving than I care to admit.
I’ve owned a manual transmission (on 3 different cars) since 1999, for the sole reason that it’s the closest I can get to a pure driving experience. Never mind that stick shifts are better on gas, cheaper to buy, and to maintain.
It doesn’t matter if I’m driving a Corolla, or an Elantra, and not a Porsche. Whether it’s the daily commute, or a 24-hour road trip, driving is one of those things that, for me, never gets old.
Car Buying Philosophy
In addition to my passion for driving, I write about cars because this is a personal finance website, and when it comes to personal finances, the sheer cost of transportation is high on the list for most individuals and families. In fact, it’s right there with housing and groceries
Because of this, when I think of anything that may help people keep their vehicle costs down, such as my $1500 rule for car buying, I tend to share them in a blog post.
My objective with this post is not to get into my entire philosophy of car buying. In fact, anyone familiar with this blog will know that I am pretty dead set against buying cars new. That’s not because I haven’t done so myself, in fact, much of this conviction comes from my own experience with buying new cars.
The simple fact is that a brand new vehicle suffers far too much depreciation the moment it leaves the car lot to have any chance of becoming a better value than buying used.
My personal preference is to buy a 6-8 year old vehicle with cash, that has an excellent track record for reliability. Doing plenty of research is key. I’ve repeated this formula a couple of times now, with great success.
That’s because, in this age range (6-8 yrs), it’s very easy to buy what was once a $30,000 car, for well under $10,000, and expect it to last for several more years. It’s going to look and feel very much like a brand new car, have at least 50% of life left in it, for around 20-25% of the original cost. Let someone else shoulder all of that depreciation.
That’s the strategy, in a nutshell.
Recently, however, my own logic was challenged. In late July, we were planning a road trip to Minneapolis. Nothing major, about 1000 miles roundtrip. But our beloved minivan, a 2005 Toyota Sienna, is now 15 years old with almost 300,000 miles on the odometer. And while it’s completed several road trips over the years without any issue, there comes a point when you start to get a bit nervous about taking an older, high mileage vehicle on a long journey.
So even though our van was running fine, I began to think of how expensive and terribly inconvenient it would be if the transmission were to blow in the middle of our drive. Which got me to thinking about our travel plans for NEXT summer (2020), when we plan to embark on a 4000+ mile road trip.
While to some degree, my fear of the van breaking down was not rational, when you own an older vehicle, reliability is something you need to consider. In the case of our trip to the Twin Cities, I felt like perhaps our van was reaching a point where it was too old to trust on a long trip.
It was the same reasoning so many people use to justify breaking the bank on a brand new car. The belief that it’s the only reliable option, especially for those long trips.
A Better Solution
“Maybe they have a point.”, I thought, and I started to wonder whether it was time to upgrade our long in the tooth, yet perfectly functional Sienna, for a newer model. I tossed the idea around for a few days, until I came up with a better solution. One that would provide the peace of mind I was looking for (for our trip), at a far lower cost than buying a new van.
I decided to rent.
I know. Sounds like a no-brainer. But for $150, we were able to rent a 2019 Jeep Cherokee for 3 days, for our trip to Minneapolis. It came fully loaded, was perfectly comfortable, a nice way to do a road trip. It even had navigation built in, which made getting around the Twin Cities a breeze.
I’ve rented cars before, but never as a replacement for my own vehicle. At first, the idea seemed a bit frivolous. After all, our van would likely have been up for the trip. At the same time, I felt like my peace of mind was worth $150.
When it comes to car buying, people come up with a lot of excuses to justify buying new. “It was the warranty I was after”, “Zero % financing? I’d be crazy to pass up free money!” or “I plan to take a lot of long trips, so I need something new, that’s going to be reliable…”.
My decision to spend a small amount of money ($150) to rent a car, made it easier to defer a far greater expense (replacing my vehicle). In fact, these are the types of choices that make a huge difference in the long run. Not only is driving an older vehicle (vs. buying new) a perfectly viable option, it will move you that much closer towards financial freedom.
All it takes sometimes, is a little creativity.