Driving a bunch of junk cars sometimes doesn't save much money. They can nickel and dime you to death. $300 here. $400 there. $1000 for a tranny rebuild. Having to pay tow bills or AAA membership costs (most new cars have free towing/roadside service). plus the decreased fuel mileage of older cars. The inconvienence/loss of pay of not being able to get to work when your car's dead. Worrying about potentially being stranded. On and on. It adds up.
Case study/some math: person A bought an '04 Kia Rio 4 door sedan with a 10 year powertrain warranty for $9740. If you put $500 down, at 6% and finance the balance for 60 months, your payment will only be $189/month. It averages 30mpg in a combo city/highway scenario. person B owns a '92 Cavalier that gets maybe 20mpg.
Gas cost: if both people average 1200 miles a month, person B will pay $40 more per month for gas (assuming $2/gallon).
Repairs/AAA membership cost: AAA costs about $20/month? Repairs for the '92 Cavalier will run, per year, averaged out, maybe $1000? could be a lot higher or lower. But $1000, or about $83/month.
Resale value: person B's car after 5 years will be worth next to nothing, maybe a few hundred, but person A's car will probably be worth about $2500 or so (after 5 years when it's paid off). So person A will have $2500 in equity built up. extropalted out over the 5 year ownership period, that's worth $42/month.
Analysis: person A is out $189/month but has a nice, clean, dependable, under warranty car to drive and has no worries about it breaking down. and will have about $2500 in equity when the car is 5 years old (or $42/month in value). person B is out $143 a month (when you add up increased fuel costs, AAA, and repairs).........so person B only saves a few bucks a month and has to drive an old car.
Conclusion: brand new economy cars are almost as cheap to own as used cars. Especially if the used car is a larger car that gets a lot less fuel mielage than the new economy car.
what is best ? Used Or New