Sunday, May 08, 2005

Keep your old clunker or buy a new car?

Keep your old clunker or buy a new car?

In this article, it is said that it is much cheaper to keep an old car than buying a new one, even if you have to put a new engine in your old car.

I used to plan to change my car when it will be seven years old, which will be the case in one year an a half. Now, I'm reconsidering this plan. Maybe I'm better keeping it for another four or five years. If I do so and put aside $200 a month like I'm doing now, I will have accumulated $12k in five years, a large paydown on my next car.

I remember my parents having bought a Chrysler LeBaron GTS. This model was discontinued the next year. We used to think it was a very bad choice, since the car had a bad reputation and the discontinuation. And since its resell value was so low, my parents decided to keep it as long as they could. When they finally sold it to a friend, the car was 10 years old and they put less than 3000$ in repairs during all these years.

If you consider that a new small car costs between 3500$-7000$ only accounting for depreciation, we can estimate they saved about $20k keeping their ol' LeBaron. That's a lot of saved money in five years. That might partly explain why my parents retired before 55.




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