> Americans in particular tend to buy way more car than they need, and the difference in price is on an order of magnitude that really does matter in the long run for many of us

Not only that, they trade it in (sometimes with negative equity) every ~5 years.

I buy old, used Lexus'. Pretty much all modern features, quiet, and a fraction of the new price. Change the oil, and the timing belt if applicable, it will last forever. But people treat cars so much like appliances these days.

How old, and how roughly how much do you spend? Thinking of replacing my '04 Civic sometime in the next 1-15 years :- )

5 years is when maintenance and repairs start happening more regularly. Because these are labor intensive, if one lives in an area where labor is expensive, or if the opportunity cost of one's own labor/time is expensive, does this still make sense?

Also, there are some really modern features like rear-view cameras, sonar, etc., which are pretty cheap in newer cars but almost impossible to find in older ones

5 years? Not really. Pretty much any Japanese car made in the last 20 years, and domestic in the last 8 should last 10 years; 100/150k before anything major is needed.

But, to run the numbers, get a the total cost of ownership (car payment, interest, and non-warranty or whatever maintenance) for a new/virtually new car, divide it over a span of the expected months of ownership (say, 60, 120, 180 months).

Do the same for a $5,000-$10,000 quality used car that you can pay with cash.

The hard part is estimating repair and maintenance costs, especially for non-car-persons. But I believe that car reliability is so good for recent cars that it's wasteful to purchase new.

eg:

$20,000 new car

36 month loan @ 2% = $28,072.59

Estimated average maintenance/year: $500

TCO 60/120/180: $30.5k/$33k/$35.5

$7,000 used car

Estimated maintenance/year: $1,000

TCO 60/120/180: $12k/$17k/$22k

Now an older car will generally cost more over time, eventually, than a new one. But every 10 years or so it's much cheaper to purchase a used one.

And if your stereo is replaceable you can get a rear-view camera hooked up if you desire. They also have wonky standalone ones.

This is misleading, as:

- you're including interest for the new car but not the old

- you're ignoring the residual values of the cars at the end of the 5/10/15 year periods

[edit: and the "cost" of that 3 year/2% loan is $623, not $8073]

Whoa, I'm not sure why almost 50% interest added to the cost didn't ring alarms earlier, you are right.

So the corrected 60/120/180: $23k, $25.5k, $28k.

And true, it will be worth something after 10 years or so, figure $10,000@60, $5,000@120, $3,000@180 but it varies vastly with the brand, mileage, and condition.

Corrected again: $13k, $20.5k, $25k

Damn, looks like it's close to a wash after 10 years. But, consider that the used car is a Lexus with heated/cooled seats, leather, nice audio, power seats and windows, automatic wipers, etc. etc. and the new car is a base model Toyota Corolla.

Plus, the use car will not be worth zero, hopefully, after 10 years. I guess 60/120/180 would be something like $3k/$2k/$2k:

So for the used car: $9k, $15k, $19k

So a bit ahead again.

It looks like with these napkin calculations the $20-25k mark is the break-even point at around 10 years. So any new car more expensive than that is going to be more costly, obviously, relative to a used car.

Well it was a fun thought experiment.

If it were true that nothing major was needed until 100k or 150k then car warranties would be of that length.

There are reasons why cars depreciate, amongst which are the fact that they need more money put into them over time.

The modern day combustion engine is super reliable if maintained. You just have to maintain it.

I drove my last car to almost 300k miles and my current is at 240k miles. Of course there are major maintenance items but well worth it. When my car hit 200k I changed the timing belt, water pump, seals, etc. This is on a Lexus LS430. As expensive as it can get. Cost $1800. If I had a cheap car, it will be a $1000 job. Now you have to understand. Do I go get another car or spend $1800? Easy $1800. I'm at 40k more miles. What else have I changed? oil, brakes, tires. That's it. Nothing else!

Does it have issues? Meh. Navigation sometimes acts up and freezes which I suspect is the DVD but I can't be bothered. I use my cellphone in those rare moments I need it. Everything else works. All power seats, windows, heated seats, traction, etc And here's the kicker, it's a 2001. 17yrs old.

Most cars will hit 200k miles, some reliable ones like toyota, lexus, honda, will hit 300k easy with minimal maintenance. I rather spend $5k-$6k and add another 100k miles. :D

They are? Most powertrain warranties are 100k nowadays. Recent cars have unlimited miles/10+ year corrosion warranties as well.

Yes, you're taking more risk with a used car. But I have multiple cars, and am a mechanic so it doesn't bother me.

Idk I'm driving the same bell-free, whistle-less, sedan since 2006. @160kmi. But then again I'm not a bay area high-income developer.