We aren't car people, so why not let someone else waste $50,000 on depreciation, and use the money saved for more important goals?
I read a study a few years back on when was the optimal mix of value vs. risk for buying a used car. It essentially said if the car cost more than $30,000 new, buy when it's 7-10 years old, and sell before 15. Cars today last a lot longer than they used to, and many of the arguments for needing new ones such as safety don't hold up to close examination. Yes there will be repairs, but usually their cost over time is less than the depreciation on new vehicles.
I recently discussed this with someone who will be living off of Social Security and a small 401k in retirement.
They were planning on leasing cars and using 30% of their Social Security income for life to do so, and to make it worse they aren't even car people. We calculated they were going to spend about $10,000 every three years to do this or $30,000+ for each decade in retirement!
Their conclusion was they could drive their Honda until the wheels fell off, repair or buy a new "used" one as needed, and come out ahead on some important goals like enjoying retirement as much as possible achieved instead.
Thanks for taking a look!
Tom Gartner, MSAPM, CFP®