Our Car Buying Rule: 4 Years, Under 50K Miles
Source: CarEdge
We all know cars lose value fast. But here’s something most people don’t think about: whiles the value (and prices) may drop really quickly during the first few years, after that, the price doesn’t fall nearly as fast.
That’s why I think buying a car that’s about four years old might be one of the smartest moves.
Here’s what I mean. When you drive a new car off the lot, it’s already worth less than what you just paid. And over the first few years, it just keeps going down. A car that sold brand new for $50,000 might only be worth $28,000 after four years. That’s over $20,000 gone, not because anything’s wrong with it, but just because it’s not new anymore.
That’s the hidden cost of buying brand new. You’re paying top dollar for something that’s going to be worth a lot less, really soon.
But if you buy that same car when it’s four years old, you’re getting a major discount. And you’re still getting a lot of car. It has modern safety features, decent mileage, and maybe even some warranty left. It’s not beat up. It still looks and feels great (let’s be honest, this is what we’re all looking for anyway). And someone else already took the biggest financial hit.
This is exactly what my wife and I do when we buy a car. We look for something around four years old with less than 50,000 miles on the engine. That’s our sweet spot. It’s new enough to be reliable but not so new that we’re paying for the “new car smell.”
The other bonus is that after that four-year mark, cars tend to lose value more slowly. So if you buy a car for $28,000 and sell it a few years later for $20,000, you only lost $8,000 over several years. That’s about $2,000 per year, which is way better than losing $5,000 or more every year just for buying it brand new.
Let someone else take the hit, and you get the same ride for a lot less money.
One quick note: The best thing you can do for your finances might be to not buy a car at all. Housing and car payments are usually the biggest line items in a monthly budget, so removing one of them can make a huge difference. If you’re inclined, by all means, drive that beater into the ground! But if you’re anything like me, putting my wife and two children in a safe vehicle is worth the expense, just at the right time 😉
