Buy Used, Drive Cheap, Live Well
Nothing inspires like conversation.
A day or two after going through the ins and outs of the true value of electric cars, another interesting topic has come up: the value of a used SUV versus something new with better fuel economy.
In this case, a very dear friend owns a 2005 Kia Sorento with almost 100,000 miles on the clock. The car has been well maintained and taken journeys, on road and off, in nearly every remote wilderness corner of the northwest United States. Needless to say, the Sorento has served her well, but its meager fuel economy has her wondering if it’s time for a change.
The ’05 Sorento is a truck-based SUV with genuine 4WD. It’s well built, solid and reliable with very few reported engine or transmission problems. The Sorento should be good for 200,000 miles or more. Its 192-hp 3.5-liter V6 is a thirsty little bugger, and its 14 mpg in the city can be a little hard to stomach. Factor in a 21-gallon fuel tank at $3.70/gallon and $70+ fill-ups become a reality pretty quick. One thousand miles per month would require about $264. That’s still a fairly low operating cost when the car is owned outright, as my friend’s is.
Factor in regular oil changes and other maintenance, and the car will still cost considerably less than a comparable new rig. Let’s say, just for fun, that my friend wanted to upgrade to a new Toyota Highlander Hybrid to save on gas costs. She’d lose some (a lot) of off-road capability, but let’s say in this little scenario that she’s more of a downtown Bellevue traveler than a Hell’s Canyon backpacker.
The Highlander Hybrid gets 28 mpg and holds 19 gallons of fuel. That same 1,000 miles per month would cost only $132 in fuel, but would also require a hefty monthly payment that could be north of $700 ($40,000 purchase price, $2,000 down, 3.3 percent interest for 60 months). It goes without saying that keeping the Sorento and paying to keep it fueled saves hundreds of dollars per month.
I’m a big advocate for buying used cars with cash for this very reason. When buying new or used, pick a car you know you can live with for the long term, pay it off as soon as possible, and then reap the rewards of driving cheap for years to come.
When you pay off your car, will you keep it or take out another loan?