Used car savings for savvy shoppers
(Consumer Reports )
You can save thousands, which is like getting
years of free gas
A used car can be one of the best values you’ll find
when buying a car. With modern safety and convenience features, and usually a much lower price than similar
new vehicles, those used cars are in the sweet spot of auto deals. But how sweet?
A Consumer Reports study of
owner costs shows that choosing a three-year-old car instead of a new one can save you thousands of dollars over the first
five years. In many cases that’s enough to pay for all of your gas during that time.
According to the used car
savings analysis, buying a 2005 Toyota Camry with a V6 engine, for example, could save you about $13,000 over five years compared
with buying a new 2008 version. At $4 per gallon, you could pay for all of your gas during that period (based on driving 12,000
miles a year) and still be almost $2,500 ahead.
Similarly, buying a three-year-old Ford Focus can save you more than
$8,000 over the first five years, or the equivalent of four years of free gas, compared with buying a new Focus.
a large SUV but you’re scared of the dismal fuel economy? With demand for big SUVs plummeting and their used-car values
dropping, you could save $25,500 over five years—or the equivalent of seven-and-a-half years of free gas—by buying
a three-year-old Chevrolet Tahoe instead of a new one.
On average, our findings show that you can save 32 percent in
the first five years by buying a three-year-old car. Similarly, with a one- or two-year-old car, you can save 19 and 27 percent,
Our analysis also highlights another appealing option of buying used: the ability to get a more upscale
model with more features for the same owner cost as a less expensive new car. Buying a new $28,000 Ford Mustang V6 convertible,
for example, would cost you about $42,500 over five years. For about the same five-year cost, you could buy a three-year-old
Porsche Boxster roadster, which is priced at almost $50,000 when new and is a more highly rated, fun-to-drive sports car.
Instead of buying a new Toyota Camry V6, you could own a three-year-old Lexus LS 430 luxury sedan for about $2,000 less
over five years. The Lexus provides a roomy, better equipped cabin and a quieter, more pampering driving experience. Or you
can pass up a new Ford Focus for a three-year-old version of the impressive Infiniti G35 sports sedan.
Using our owner-cost
estimates, our used car savings study compared the five-year costs of several popular models based on purchasing them new
or used, when one, two, and three years old. We found substantial savings with all three ages. For several models, we also
recommended used cars that represent an upgrade in features and performance over a new car but still have similar five-year
Learn more about owner costs in What that car really costs to own.
What that car really costs to own
(Consumer Reports )
Knowing a vehicle's cost over time
can save you thousands in the long haul
less-expensive car can cost you more in the long run than a more-expensive alternative, our new ownership-costs comparisons
At about $17,500, a Mitsubishi Lancer could cost $4,000 less than a base Mini Cooper to drive
home. But when you estimate the total costs of ownership for each car, the Lancer could cost you $5,000 more over five years.
A Toyota Highlander can cost you $3,000 more to purchase than a Ford Explorer V6, but owning the Ford after five years can
cost $6,750 more.
In addition to shopping for a good deal, car buyers should also consider how much a model will
cost them to own. That includes depreciation, fuel costs, interest, insurance, sales tax, and maintenance and repair costs.
To help, Consumer Reports is introducing its new owner-costs estimates, which can help you compare models
and could save you thousands of dollars. The "owner costs" Ratings cover one, three, five, and eight years of ownership
and are based on a comparison of all models within the Consumer Reports database over eight years. Because depreciation
is factored in our estimates, we assume that the vehicle will be traded in at the end of the term.
COSTS VARY AMONG SIMILAR MODELS
In analyzing ownership costs we made some notable
- While Hyundai and Kia models have low
prices and long warranties, the savings are often offset by poor resale values. Hyundai's Accent and Elantra don't
prove any less expensive after five years than Honda's more expensive Fit and Civic.
- Most Lexus models have relatively high maintenance and repair costs (primarily due to maintenance),
despite excellent reliability. The Lexus ES350 racks up an average of $2,300 in maintenance and repair in the first five years,
about twice what you'd pay on a Lincoln MKZ.
- A little sports
car can cost less to own than a family sedan. The Mazda Miata and Mazda6 V6 sell for about the same price. But at the end
of five years, we estimate the Miata owner will be about $7,750 ahead.
Toyota Prius is one of the few hybrids that can save you money. It costs about $7,500 more than a similarly sized Chevrolet
Cobalt to buy but costs almost $3,500 less over five years.
Our cost of ownership Ratings comprise six main factors:
is the largest cost factor by far. On average, it accounts for about 46 percent of total ownership costs over five years.
Depreciation is a vehicle's loss in value over a defined period. To calculate it, we start with the price of a typically
equipped model and factor in the discounts offered off of the manufacturer's suggested retail price on some models. The
average model depreciates about 65 percent over five years. Some vehicles depreciate faster than others because of oversupply,
limited appeal, or rebates on similar new models. When we don't have depreciation data for a new model, we use estimates
based on comparable vehicles.
Fuel costs can really add up, especially for SUVs. For example,
you could pay more than $15,000 to fill up a Dodge Nitro over five years, while a similar-sized but more-efficient RAV4 V6
could save you $4,000 during that time. To calculate fuel costs, we assume the vehicles are driven 12,000 miles a year, the
average reported by respondents to our annual survey. To that we apply the national average price of $4.00 a gallon for regular
gas as of early June 2008. For models that require premium or diesel fuel, we use these costs: $4.20 a gallon for premium,
and $4.80 for diesel. On average, fuel is the second-largest cost of vehicle ownership, at 26 percent over five years.
Interest is tied directly to vehicle price, and accounts for about 12 percent of five-year ownership
costs. We calculate it based on a five-year loan, with a 15 percent down payment, because that is how many people buy cars.
We use the average interest rate of 6.8 percent as reported by Bankrate.com in June 2008.
costs vary depending on many factors, including your age, location, and driving record. And they can dramatically boost the
ownership costs of models that otherwise would seem affordable. For example, if you're looking for a fast car on a budget,
steer clear of the Mitsubishi Lancer Evolution. Insurance can run $2,500 a year or more. Conversely, the similarly priced
Acura TL can cost as little as $900 to insure over a year. Overall, insurance makes up about 11 percent of total ownership
costs over five years. Costs are derived from data from the Insurance Institute for Highway Safety.
and repair costs make up 4 percent of ownership costs over five years on average, according to data from 675,000
Consumer Reports subscribers who responded to the online version of our 2007 Annual Car Reliability Survey.
They gave us their estimated costs for the last year-excluding tires-and their responses provided data for more than 300
models on vehicles up to eight years old. We used estimates based on similar models when data was unavailable. The majority
of the costs are covered by the factory warranty during the first few years. But for some vehicles it can still add up. On
average, we found that the Range Rover is the most expensive vehicle to own for maintenance and repairs, costing about $2,000
in the fifth year alone. But the Toyota Land Cruiser is also luxurious and very capable off-road and costs only $600 in that
Sales tax costs owners about as much as maintenance and repair does. We use the national
average of 4.9 percent.