Just because you’ve finally paid off your car doesn’t mean it’s time to run out and get a new one. Many of today’s vehicles are built to run for more than a decade and well over 100,000 miles.
It’s hard to resist the temptation and smell of a new car but getting the longest life out of your current vehicle can have a major impact on your bottom line and future finances.
Experts say by carefully maintaining your vehicle and driving it as long as possible, you can save tens of thousands of dollars.
Most modern cars should last well over 100,000 miles
Jason Kavanagh, Engineering Editor for Edmunds.com, says manufacturers have become better at designing and building vehicles to last longer. He says most “modern” cars and trucks, those built within the past decade, are designed with parts and components made to last 150,000 to 200,000 miles.
While any vehicle will certainly require maintenance and some repairs within that time, it’s unlikely that the vehicle will require something major like an engine rebuild. He says, “100,000 miles is really just getting started nowadays. I wouldn’t have any qualms about driving a modern car to go 200,000 miles relatively incident-free today.”
Despite that, many Americans trade in their vehicles within 5 years and with well less than 100,000 miles on the odometer. A new car is always exciting but driving your vehicle as long as possible can have a major impact on your financial future and ability to save for other things. Just behind a rent or mortgage payment, a car note is typically a person’s biggest expense, so going without one can free up a lot of money.
Save more by avoiding a car note
Danny Kofke, author of A Simple Book of Financial Wisdom, says you can save a tremendous amount of money when you pay off a car then continue to “pay yourself” the car note.
If you are paying a $400 car note and are able to pay off the vehicle. You should then continue to drive that car and put the money in the bank. You’ll find yourself socking away an extra $4,800 per year. If you hang onto the vehicle and bank that payment for another 5 years, you’ll have put away almost $25,000.
“It can have a huge impact on your finances. And when it’s time to buy a new car, you’ll probably be able to pay cash or at least need to borrow very little,” he says.
Kofke says the biggest problem with buying a new vehicle every few years is that you’re constantly losing thousands of dollars in depreciation. Unlike a home, stocks, bonds or some other asset, vehicles are guaranteed to rapidly lose their vehicle with every year you drive it.
If you borrow and don’t make a sizeable down payment on the vehicle, you risk falling into “negative equity” (also known as being “upside down”) within a short period of time. This is when you owe more than the vehicle is worth.
The biggest problem is that when you fall into negative equity and keep buying new vehicles, the hole just gets deeper and deeper. The worst is when you roll that negative equity into a new car loan. Do that a few times and you could end up owing $20,000 on a vehicle that’s only worth $12,000.
“Every month you drive your vehicle after you pay it off is another month you can “get ahead financially,” says Kofke.
Maintenance and driving habits key to longevity
Kavanagh says the key to running your vehicle for 150,000 miles or more is keeping an eye on the maintenance schedule and how you drive it. One of the most important duties is to change the oil as recommended by the manufacturer in the maintenance schedule. This used to be every 3,000 miles but Kavanagh says most modern vehicle can go longer between oil changes.
Once a vehicle reaches the 100,000-mile mark, there could be bigger things like the replacement of the clutch, timing chain, belts, batteries, spark plugs, water pump or a radiator. While these things may not come cheap, they can still be much cheaper than buying a new vehicle.
Kavanagh also says having a look under the hood once in a while can help you spot small problems before they grow into big ones. You don’t have to be a mechanic to spot a hose that’s coming loose, a belt that’s dry-rotted or a pump that’s leaking fluids. Kavanagh said even if you’re not sure what you’re looking at, simply take a peek at the engine compartment once every few months.
“Clips break, hoses come loose, and things leak. Little issues can become big issues. It’s a snowball effect and you want to try to catch things before they become big,” he says.
Finally, Kavanagh said the life of a vehicle is highly dependent upon the driving style and attitude of the owner. Driving a vehicle fast and aggressively can heavily contribute to wear and tear.
“The way you drive can significantly impact how long the car lasts. A moderate driving style, accelerating and braking gently, will decrease wear on the vehicle,” he says.
Craig Guillot is a business and personal finance writer from New Orleans. He covers insurance, investing, real estate, retirement and debt. His work has appeared in such publications and web sites as Entrepreneur, CNNMoney.com, CNBC.com, Bankrate.com and Investor’s Business Daily. He is the author of “Stuff About Money: No BS Financial Advice for Regular People.”