Cars are indispensable in the US. Most households have at least one car. They are big ticket items that can be a drain on your wallet if you do not manage them carefully. People waste a lot money on car leasing,over-buying and frequent car upgrading. Today, I would like share a few tips that have helped us tremendously with our car ownership costs.
Among of all three, car leasing is perhaps the most expensive. You pay a hefty price for staying up to date and no repairs. There are already a lot of articles out there that can break down the numbers for you.
Over buying is also pretty common. You see people commute to work on a moving couch like a pick-up truck or a large SUV that delivers very poor fuel efficiency. Do we really need to drive a V-8 to work every day? The fuel cost alone would make a huge difference between a V-8 and a 4 cylinder car over the lifespan of both cars.
Some people change their cars frequently. Some worry about the looming repair costs after 5-6 years. Some want the latest and greatest bells and whistles. Some are simply tired of owning an otherwise perfectly reliable car.
All these cost a pretty penny. If one buys a simple, reliable and safe used car, he will not only save on the total ownership of that car, he can also make nice compounded returns in the stock market with the saved money.
Car is a form of transportation to us. We treat them the same way as our dishwasher or TV. Our requirements for a car are simple. It needs to be safe, simple and reliable. We own 2 paid off well maintained cars. One is a 2005 Honda CRV and the other a 2005 Nissan Altima. To keep our total our car ownership costs down, we buy used cars from private sellers and follow the maintenance schedule religiously.
Car buying: keep the cost down
We are not opposed to buying a new car if we can get a good deal on it. A few popular reliable brands such as Honda, Subaru and Toyota carry a premium on their used cars. A 2 – 3 year old CPO Honda Accord. Toyota Tacoma or Subaru Forester are only 3000 dollars cheaper than the new ones. For this reason, I am not a big fan of CPO cars because I’d just buy a brand new one and keep it for 20 years. The longer you keep your car, the more negligible the cost difference between a new one and used one is.
My preferred method is to buy directly from a private seller. If I can’t find a car I want from a private seller, I would just a buy a regular 4-5 year old car from a reputable dealer such as Carmax, Carvana, Hertz or Enterprise. They all have some kind of no hassle return policy within the first few days. Based on my researcher, Carmax has a 5 day return policy, Carvana 7 days, Hertz 5 days/5,000 miles and Enterprise 7 days.
In addition to simplicity, reliability and safety, a car has to be mainstream because its parts have to be cheap and I can find a lot DIY repair resources on that car. In case of a repair beyond my ability, an independent shop should be able to handle it.
I bought my 2005 CRV in 2013 from an old lady who could not drive anymore. The car had only 22,000 miles on it. It was 2,000 dollars cheaper than an equivalent car from Carmax. The car has not disappointed me so far. Other than replacing a window regulator and the water pump, the car has been very reliable. Those 2 items are tear and wear items anyways. The downside of this method is that you need to be comfortable inspecting a used car or just take it to shop for a pre-purchase inspection, which costs around 90-120 dollars.
Car maintenance: keep it for 10+ years
Cars are not what they used to be 30 years ago. Their durability has improved dramatically over the years. Most family cars can easily reach 200,000 miles before any major repairs if their maintenance schedules are strictly followed. I do all the maintenance work and perform small and medium repairs myself where I can. It really pays off when your household has more than one car. Most of the maintenance tasks are easy to perform. The follow are very easy to perform on own your own.
- Oil change – about 30 minutes. I use ramps .
- Transmission oil drain fill-. about 15 minutes
- Air filter and Cabin filter- about 5-15 minutes
- Windshield wipers- 10 minutes
- Tire pressure -10 minutes. I top off tire pressure once per month using a tire inflator. It is not only good for the longevity of my tires, but also keeps my car fuel efficient.
I also change other fluids like coolant, brake and differential fluid. Rotor and brake pad replacement are also considered routine maintenance tasks. I have done them many times. These task are slightly more involved. It might take you a while the first time. But it will not take long before you become comfortable with them. Small to medium car problems are not hard either. I always try it myself first. YouTube helps a lot.
Tools are very important. With the right tools, I can finish my job quickly and safely. They do not have be be commercial grade because I use them only a few times a year. For example, an inexpensive electric impact wrench is a life saver when one needs to take his cars’ wheels off for work. I bought a similar one for $50 a long time ago and it generates only 250 ft-lbs of torque. For a weekend warrior/shade tree mechanic, a Makita or Milwaukee generating nut busting 800-1000 ft-lbs of torque is like driving a V-8 truck to grocery shopping. BTW, use only impact drive sockets. A regular socket can not withstand the impact generated by an impact wrench.
Another important tool that I have is this OBD II Scanner which recently helped me fix a faulty ignition coil issue on the Altima. Autozone and Advanced Auto Parts can read code for free. But I find it more convenient and inexpensive to own it after a few back ad forth trips to them.
With my religious maintenance schedule, both of our Altima and CRV are in excellent mechanical condition although they are not much of a looker anymore. We would not hesitate to take them on a long road trip.
All in all, paying cash for a used car and taking good care of it have helped us save a ton money which has compounded nicely in the stock market. It is a double blessing! What is your strategy to keep your car ownership costs down?