What my cars really cost after 11 years and 100k miles

How I learned all this (I’ve done the tedious work for you)

Growing up, I hated cars, and here’s why: my first car was a 1973 lemon, purchased for $300 as a non-running clunker. It took 4 years to restore to running condition, but it was what my family could afford back then. Driving that car for 10 years made me realize just how crucial it is to have a reliable, practical vehicle. Every purchase I’ve made since then has been focused on getting a vehicle that just works. 

This search for automotive dependability, now into its third decade, has given me a ton of anecdotes and funny/terrifying experiences, but I also have actual tabulated financial data from all the cars I’ve owned in the past two decades. So, using all this knowledge, I’ll try my best to answer these questions for you:

• Are American cars less dependable than Japanese or Korean cars?
• Do I need an SUV or a sedan or a minivan? What about sports cars? What features should I look for?
• How much does it cost to own a car for 5 years or 10 years? How much does it cost per mile? Does spending more money on a car mean that it’s always better?
• What’s the biggest expense when owning a car, and should I lease a car instead of buying?
• Can I afford to own a car at all? How much should I spend to buy a car in the United States?
• Bonus: Should you only look at electric or hybrid cars? Are gasoline cars dead? I bought a new gasoline car in 2023 and helped my son buy one as well–I’ll summarize why we didn’t choose a hybrid or electric car, but also explain why you should definitely consider buying one. I made a decision scorecard you can download as well.

I’ve meticulously recorded all my car expenses for almost 25 years now, since that first $300 model, and I want to help answer these questions by sharing with you all that data from my most recent two purchases.

For this article, we’ll focus on just the last 11.5 years for two very different cars: a small Korean sedan vs. a full-size American minivan. I documented every oil change, fender bender, and technician screwup in a chart, table or photo, and I’ll explain each insight. 

We’ll compare my data to the assertion Elon Musk just made that his Tesla brand of cars is the lowest to maintain, costing under $600 for the first five years. Is that realistic? What other brands could say the same?

If you just want quick answers, please use the table of contents below to skip around, or just jump to the conclusion. There’s a lot of automotive insights here, so let’s start unpacking!

What We Spent to Buy Two Cars: Initial Purchase Price, Tax and an Optional Warranty

In 2012 I bought a brand new 2012 Dodge Grand Caravan so that my wife and I could drive our four kids around, and one year later I bought a new 2013 Hyundai Elantra for my commute to work. After trading in the Grand Caravan a few months ago, I can now give you a complete picture of how much it cost to own this dark blue bastion of Americana and compare with the first 11.5 years for my ruby red metallic Elantra, powered by Korean ingenuity (with final assembly in Alabama—Forrest Gump would be so proud). 

Up-Front Costs for my 2012 Dodge Grand Caravan, the American minivan

With my focus on reliability, I was very hesitant to buy an American-made model. I love this country, but we haven’t focused enough on quality and dependability. I had owned two Japanese and two American cars after getting rid of that first 1973 euro-clunker, so with the knowledge from those two experiences I really wanted to buy a Honda or Toyota minivan when we outgrew our Honda Accord (4 kids just couldn’t fit).

So after all that, why the heck did I buy a Dodge? It’s one of the lowest-rated American brands for reliability. We just couldn’t realistically afford a fancier Japanese minivan with their vaunted reputations and inflated prices. I could have “afforded” more than that by borrowing more and paying longer, but I wanted to tackle a loan amount I knew I could pay off in 12 to 18 months.

The foreign minivans I was considering would statistically cost less to maintain, but they also cost $10,000 more up front, so I made a compromise: I decided to buy a 7-year, 100,000-mile extended warranty for about $2,500, which is what I would have paid in extra interest over 5 years on a $35k Honda minivan. Plus, for my little mind’s comfort, I was really attracted to that sub-$20k price tag for a brand new vehicle. Here’s how it all breaks down:

The “out the door” price (which included all the fees and taxes and that warranty) put me under $25,000, or still about $10,000 less than the nearest Japanese equivalent, and around $5,000 less than a similar Kia/Hyundai. I sacrificed some conveniences like rear climate controls, but at the time it felt like a good trade-off.

Purchase Price for the 2013 Hyundai Elantra, a compact Korean sedan 

After buying the minivan and selling its predecessor (the 2004 Honda Accord), one year later I bought a second car to give me more options than commuting only by bus. I looked at lots of small cars and the awards for that previous year were focusing on the newly redesigned Hyundai Elantra, which won the 2012 Detroit Auto Show’s Best Car of North America. The 2013 Elantra was the 3rd model year of the redesign, and that’s my sweet-spot for reliability: the 3rd year of production means they have most of the design and manufacturing problems worked out, but (hopefully) haven’t yet started to aggressively reduce costs through so-called “value engineering,” which potentially weakens reliability.

Despite being much smaller (and an engine producing half the horsepower), the Elantra sedan cost nearly as much as the Grand Caravan–$16k vs $20k (base prices). The biggest advantage in the Elantra came in the form of the much better warranty. Hyundai includes a 5-year/60,000-mile bumper-to-bumper warranty, and a 10-year/100,000-mile powertrain warranty. While this isn’t quite as good as the comprehensive and transferable extended warranty I purchased for the Grand Caravan, it was completely free.

I’ll be writing a whole separate article just on extended warranties, but if you want a sneak peek I’ll let you know right now that I never made a single claim against either the Grand Caravan’s extra-cost warranty, nor the Elantra’s included powertrain warranty, which is exactly what the manufacturer intended, I’m sure!

Routine maintenance, repairs, tires, and brakes costs for 100,000 miles

OK, here’s the chart you’ve been waiting for. I tallied up the total amount spent on each car in 5 categories of maintenance or repair: 

• Routine maintenance, not optional, and this is where I included battery changes
• Cautionary maintenance (listed as “recommended”, like fluid flushes)
• Consumables, broken out into:
  • Tires, and
  • Brakes
• Repairs (non-consumable stuff that just broke and wasn’t covered by any warranty)

The top chart is for the 2012 Dodge Grand Caravan, and the bottom is the 2013 Hyundai Elantra. I aligned the bars so that you can see the first ownership year of the Hyundai lines up with the first ownership year of the Dodge, even though they represent different calendar years:

New (Still Young) Car Maintenance Costs

OK, let’s take this huge chart piece by piece. Those first few years of the Grand Caravan’s repair life were sweet bliss, with only inexpensive oil changes needed. See the red outlined box that calls out these low expenses for 2012 to 2015. So when Mr. Musk Claims that a Tesla can go for 5 years with just $600 of total maintenance, that’s easy to believe because even an American gasoline car can do the same thing. My Grand Caravan maintenance costs for these first four years totalled up to just $105!

This picture mostly holds true for the first 4 years for the Hyundai Elantra as well (see chart below), still coming in at less than $100 per year, for a total of $382. These overall costs, while still objectively low, were about quadruple the Grand Caravan because of a bad decision and some bad luck.

My bad decision was taking the Elantra to the Hyundai dealer for oil changes, which were 2X the price of the oil changes at the Dodge dealer, who had a 6-changes-in-3-years special discount booklet. Hyundai just charged for each change, no discount program available. I was so busy during those early years that a few times I ended up getting the Elantra serviced at places even more expensive than the dealer, just out of convenience. I should have just taken both cars to the Dodge dealer, in retrospect.

My bad luck was getting a flat tire in 2015, but that was pretty inexpensive. A second flat tire in 2017 was unrepairable and led to two new tires, but I’ll cover that in the next section.

Key takeaway for new (young) car maintenance:

1. All new, non-exotic vehicles should be inexpensive to maintain, but your luck and decisions play an important role. Costs for even routine maintenance vary widely, depending on where you go, so pick your mechanic wisely.  Ask friends who’ve lived in the area a while, read garage reviews online, check out prices before you get in an emergency situation.
2. The other biggest influence goes back to the make and model you purchased, whether mainstream or fancy: even the dealer will admit that luxury or exotic brands, like Porsche, can charge $300 to $400 per visit for simple things like routine oil changes or checkups, so your decision about model and mechanic will drive the bulk of the changes in costs. Mileage plays a role, too, as we’ll see for middle-aged cars.
3. Back to our Tesla low maintenance cost assertion: there’s no free lunch. For the US, car dealers make a disproportionate share of their profits from their service department, often subsidizing the actual new car sales. If this revenue stream goes away because these dealers begin selling low-maintenance models, like a fully electric vehicle (EV), it means that dealers will have to make more profit on the initial sale of the car. The old adage “Pay me now or may be later” is alive and well.

Old-ish (Middle-Aged) Cars Maintenance Costs 

High miles can prematurely age your cars, at least for tires and brakes. If you don’t drive a lot, your costs will be super low and that’s why most publications estimate your driving costs as a per-mile rate–it’s not just because of the obvious consumable, gasoline.

Writing from my family’s experience, we drove both of these vehicles about 10,000 miles per year. It’s during these next four years (what I’m calling middle-aged with 4-6 years and 50k miles) that the differences in design really start to show up.

Now you can probably see that the “honeymoon is over” for the minivan–just look at those new spikes in the bar chart for 2016 and 2017. After a very mild 2012-2015—the first 4 years of ownership—costs started to explode for the Grand Caravan. These are mileage related costs, mostly tires and brakes, with one the important exception of fluid flushing, as you can read in the sidebar below.

First, the tires and brakes will be dependent on how you drive and how much tread the OEM tires came with. These Grand Caravan factory tires weren’t the greatest, so I had to replace them at just 35,000 miles. We weren’t doing burnouts or anything abusive–these tires just didn’t last. However, the brakes were way worse! We replaced the brake pads/shoes at just 30,000 miles and again at 60,000 miles. That’s horrible, as you’ll see from the Elantra data. This is definitely one area where hybrids and electric vehicles really shine: with regenerative braking helping to slow the cars down, brake pads can routinely last 100,000 miles.

For all of the above, I’ve found that there are subreddits on Reddit.com for many brands and specific models of car, and if you search thoroughly there or on YouTube you’ll likely find someone who has advice on a variety of maintenance questions for your specific model, even your precise model year.

These second four years were pretty expensive for the Elantra too, but not to the same degree as the Grand Caravan. And to highlight the differences in manufacturers, the Elantra had very different things that needed fixing or replacing.

A second flat tire in the Elantra’s short life, but unrepairable this time, meant two new tires at just 29,000 miles in mid-2017. I chose really cheap ones since replacing just two tires of the four isn’t ideal. This meant unmatched front and rear tires, so I did normal rotations but the original two tires had to be finally replaced in early 2019 at 42,000 miles, discarding the two newest ones with only 13,000 miles of wear. Add in a 4-wheel alignment at just over $100 to make sure those new tires wear evenly, and that’s a running total of around $900 in tires costs for those first 42k miles / 5.5 years.

The “cautionary maintenance” for the Elantra wasn’t nearly as bad as the Grand Caravan—just $207 in 2018. This was a fuel filter replacement, and I honestly can’t remember why I did it. I may have fallen victim to pressure from the dealer, since I can’t find this recommendation in any of the factory maintenance schedules. Probably a bad decision!

I did start making better decisions around routine maintenance, though, and brought down the costs of oil changes drastically. The big spike for routine stuff in 2018 was mainly a battery (only 5 years old at that point, but not ridiculous) and then two bad decisions–I let the dealer pressure me into replacing air filters for the engine and the cabin. On the Elantra these are super easy and cheap to replace yourself–even big box stores like Walmart carry the replacements, so you don’t even have to go to an auto parts store. I paid the dealer about $100 to do those, but since that initial cave-in to the dealer’s huge markup, I’ve been replacing these filters myself. For the engine filter on the Elantra specifically, it’s tough enough to be washed under the faucet at least once, so with $20 and 10 minutes of your time, you can probably replace these at home.

Finally, in 2019 we saw the first true repair, and (of course!) it was beyond the bumper-to-bumper mileage limit of the warranty at this point. The Elantra’s PCV valve needed replacing for $77, including labor. I’m told that this is a typical item to go bad, especially depending on fuel quality, so you may experience the same issue. It’s not a scheduled maintenance/consumable item, though, but neither was it covered by the Hyundai factory 100,000-mile powertrain warranty. I’m not sure if a 3rd-party extended warranty purchased separately would have covered it. That’s the lethal detail of extended warranties: there’s a ton of fine print about what’s covered, and you usually have extreme time pressure from the dealer to try and understand all the limitations and caveats.

Key Takeaways for “middle-aged” car maintenance: These second four years are where the poor design and factory recommendations of the Dodge Grand Caravan propel costs to be almost 2x more expensive than the Hyundai Elantra (8-year running total of $1900 for the Elantra vs. $3300 for the Grand Caravan). 

1. The Grand Caravan’s “cautionary maintenance” items really start to add up as major expenses. Before you buy a new car, look into the recommended maintenance items and consider how those costs will affect your overall investment.
2. The Dodge OEM tires lasted only about 80% as long as the Elantra’s OEM tires as well. This is with the same driving patterns; if anything the Dodge had more highway (easy) miles vs. the Hyundai. This wear was probably related to the weight of the vehicle, if I had to guess, which is also a big concern with heavy electric vehicles. The quality of the factory tires could have been responsible as well.
3. Finally, in the Elantra history, did you notice what’s missing compared to the Grand Caravan? Brakes! The brakes on the Elantra were still totally fine after 8 years, compared to two complete brake system (front and rear) replacements on the Grand Caravan. The heavier weight of the minivan no doubt plays a role, but surely the poor design of the Dodge can be blamed as well. Routine brake pad and rotor replacement at 30,000 miles for brakes is just ridiculous. These were not low-cost jobs, either. Even the independent mechanics charged a significant amount of money, and brakes just aren’t a procedure I wanted to tackle myself.

Old Car Maintenance Costs: 100,000 Miles and Beyond

Will these trends continue as the cars age? Will the American-designed minivan continue to exceed the costs of the Korean small sedan? This first chart isn’t looking good!

Starting with the routine maintenance category this time—the blue bars at the bottom of the stacked bars—the scheduled maintenance costs are still fairly low. This is aided by my efforts to decrease costs by buying big bottles of Costco full-synthetic oil and changing it myself. The biggest jump came right before I sold the van in 2023: at 100,000 miles the spark plugs were scheduled to be replaced, so I had those changed mid-way through the year, before trading it in December. That was a huge mistake! In retrospect, had I known that I would sell the van, I would have skipped this routine maintenance and the cautionary maintenance in 2022, which was another round of full fluid flushing. This second round could be argued as “routine” maintenance if it were the first time, since 10 years seems like a more reasonable interval for changing these fluids.

One piece of happy news is that 2020 was the first “repair” bill for the van–something broke that wasn’t a normal consumable or maintenance item. It took 8 years, which is great! The van showed a check-engine light, which the mechanic decoded as a thermostat staying open too long. In retrospect, I should have just ignored this–it might have happened only once and I could have just cleared the computer’s code. I didn’t know that this would set off an emoji-filled chain of events as follows:

1. The dealer wants to replace the radiator thermostat 🌡️ after the “too long to warm up” code
2. Sadly, they replace that thermostat with a crappy 💩 plastic version to save what, maybe 3 bucks over the metal one?
3. A few months later, I notice coolant leaking 💦 on my garage floor, but at that time I didn’t connect it to the thermostat
4. I take the van to a highly-rated independent mechanic 🧑‍🔧
5. This new mechanic diagnoses it as a water-pump leaking and replace the water pump ✅
6. Two weeks later, more leaking (!), so I take it back to that independent mechanic ❌
7. This mechanic now realizes that the original water pump was actually fine all along (oops! 🤦) and replace the plastic thermostat—the actual source of the leak—with a metal one, for free (well, I paid for a much costlier service, the water pump 💸)

All that being said, $616 total for repairs (even accounting for technician screwups) during 11.5 years in the vehicle’s life isn’t bad at all!

What is bad is the new tires I installed in 2020 and the brake system overhaul again in 2023. I bought expensive, long-life tires in 2020 and they probably still had half their tread remaining when I traded it in, so again there’s a lesson about planning ahead for the end of your vehicle’s life. 

At the end of 2023, I traded in the Grand Caravan because it had developed a ticking noise in the engine. The mechanic at my local garage didn’t know what it was for sure, but spending a few thousand dollars to tear apart the engine and investigate it without a guaranteed fix didn’t make any sense for a base-model van with over 100k miles. I had the local Toyota dealer evaluate it for trade-in value and they didn’t know what the tick was either, but offered me $2,500 because it was otherwise in good condition. Since this offer was more or less on par with values from major publications like Kelley Blue Book, I took the credit and bought a new Toyota Camry (non-hybrid), since we no longer needed the 7-passenger capacity of the minivan.

For the next 4 years of the 2013 Elantra, the ending is very different. That car, in late 2024, has 124k miles and is still going strong. Let’s look at these latest years of expenses and compare them to the American minivan.

We started driving the Elantra more in 2021, so costs for this little car soared due to the higher annual mileage. Moving to a new city meant that I lost my special pricing coupon book from the local Hyundai dealer, so oil change costs more than doubled for each visit. Then I made the mistake of spending almost $200 on a battery (which seems to be needed pretty often on this model, but should still be “routine” in most calculations) at an auto parts store when Home Depot (weirdly) sells them for literally half as much. Finally, I made another blunder by letting the mechanic change tail light bulbs to pass the state safety inspection, spending $80 instead of $10.

Brakes far outshadowed everything else, though, at nearly $900. This occurred at the worst of the 2021 supply chain crisis and the Elantra needed 4 new discs/rotors. Since this was the first brake job in the car’s history, it’s still far better off than the Caravan, even without correcting for supply chain issues.

2022 was very routine in terms of oil changes only, but the high mileage that year meant a trip to get new tires. Like on the Grand Caravan, I bought very nice, long-life versions, hoping to keep this care for many more years. Unlike the Grand Caravan, I don’t recall ever replacing the TPMS sensors, so I don’t know if they haven’t gone bad or if the tire shop (Sam’s Club) builds it into the cost of the tires? It’s possible someone along the line just disabled the entire tire pressure management system—I haven’t tested it.

The first really major repair expense, something truly broken, came in 2023 with a cracked radiator overflow coolant tank. Routine maintenance that year was also quite expensive, mostly due to the required maintenance item of spark plug replacement. Hyundai recommended 105,000 miles as the replacement interval, which is conspicuously just outside their warranty for the powertrain (10 years/100,000 miles). Regardless, it would have been much more expensive if I hadn’t caught a billing error–the mechanic tried to charge me for replacing 7 spark plugs! Even not knowing what model car this is, it would be incredibly rare to have any car running on 7 cylinders, but since I knew this Elantra is an inline 4-cylinder, I clawed back about $83 by asking him to refund the over-billed amount. Check your bills, even if you trust your mechanic!

Key Takeaways for “old” car maintenance: Repair costs now start to be a real concern, and by their very nature are quite unpredictable. However, the biggest expenses were still mileage related in tires and brakes, so overall these cars are still very cheap to run, especially given the high up-front cost of purchasing a newer model.

In contrast, I imagine the repair costs could have been much higher if there were gaps in the maintenance. Even with my meticulous maintenance, however, the Dodge Grand Caravan did develop that worrisome ticking noise. I don’t know if the van would have lasted another 500 miles or 5,000 or 50,000, so that is one huge benefit of buying a new car; you know you are getting something fresh from the factory with a comprehensive warranty. That’s the privilege and the price of a new model, and you have to be very committed to pay that price up front because as we’ll see in the “total cost of ownership” section, interest can be an exorbitant portion of the overall cost if you don’t pay off your loan quickly.

Fuel, Insurance and Taxes Costs for a Small Sedan vs. Minivan

Fuel, insurance, and taxes are going to vary widely depending on where you live and how you drive, and they’ll have much less to do with the precise model of car. In contrast, the overall type or class of car definitely matters for all of these costs, though, so obviously fuel costs will be higher for bigger vehicles. Insurance based on size is harder to define, but minivans might be the cheapest overall if you compare them to vehicles of the same price, assuming the driver is the same.

Insurance is a Major Driver of Car Costs

In my case, the minivan was very slightly cheaper to insure than the Elantra, but I don’t have exact figures over the last 11 years since I changed insurance companies fairly frequently to continually lower my payment. I do have good estimates, though, and again this will vary wildly depending on where you live and your overall accident history. Surprisingly, your credit score and other unintuitive factors such as how far ahead you write a policy have an impact on the amount you pay for insurance, but that’s a whole separate topic.

Minivans and SUVs Consume a lot of Gasoline

For fuel costs, I did some estimates based on mileage and the average gas price where I lived over the last 11 years (there is an energy information administration in the US, and they track this kind of information on their website). Gas prices vary depending on where you are in the world as well, partially driven by supply and demand, local taxes, and proximity to refineries or other location-based factors, maybe even the political climate and lobby interests in your region. The minivan ended up using about 50% more fuel for the same amount of miles, based on typical MPG figures I recorded from the onboard computers of each car, so that ended up being a $5,000 difference over these first 100,000 miles for each vehicle.

An Un-intuitive Trend in Car Taxes

Finally, taxes are highly dependent on the value of your vehicle, so older cars definitely bear less of a tax burden than newer, more expensive cars. States find many novel ways to tax cars, so you could get hit with separate property tax bills, registration fees, mileage fees, gasoline taxes, gas guzzler taxes, or rebates for fuel efficient models. Here in my current state of Virginia, fuel efficient cars can actually pay more in annual government fees based on the theory that they are paying less gasoline taxes at the pump and therefore don’t contribute as much to the revenue stream for roads and infrastructure that gasoline taxes provide. Since the Elantra gets better gas mileage, it did get charged slightly higher fees than the minivan in Virginia, but in the other states it was usually about the same amount each year.

Summary Table for Car Insurance, Fuel Costs, and Taxes

Here’s a table that breaks down all of these types of costs for my particular models. Before you purchase your own car, this is one area where you can do a lot of research on the particular make and model you want to drive. By doing this deep dive into the numbers, you’ll get a great idea of how much it will actually cost, instead of just the simple car payment numbers the dealer shows you. The key element here is that the up-front price is less than half your total spend over the car’s life, so please budget accordingly. I talk to a lot of friends who spend weeks agonizing over paint color and seat upholstery for their new car, but they don’t even think about doing a 10-year cost projection. You can do better!

Researching Insurance Costs When Buying a Car

For insurance premiums specifically, call your insurance agent and do a mock-up or model quote on the precise vehicle, with options, that you wish to purchase. Your agent should be able to tell you exactly how much it will cost to insure. Sometimes they ask for a VIN to identify the precise features, but that should be easy to find as an example, at least, if you don’t know your actual future VIN. A lot of car dealership websites will list the VINs for the actual cars they have in stock, so find one of those example VINs and use it to model how much you’ll need to budget for future insurance premiums. 

Comparison of Total Cost of Ownership for the American Minivan vs Foreign Sedan

When I purchased both of these vehicles, I assumed that the American model would have higher maintenance costs and lower reliability. Looking at more than a decade of my actual experience, here’s what I can now conclude:

1. New cars less than 5 years old require very little maintenance. You can safely budget $100 to $200 per year. If you have a factory maintenance plan, you can plan on spending almost nothing before the first set of tires (see below).
2. The reliability of the foreign model was indeed superior. It’s still going strong when the American model is probably being used for parts somewhere. This is just one data point, but it certainly enforces the narrative being pushed by major magazines like Consumer Reports, who collect data from thousands of car owners.
3. What you should do is budget for consumables, based on your mileage. Brakes and tires quickly get expensive, but they are really easily to plan for, so track your wear on these items and make sure they are part of your “Predict” budget pillar.
4. As you would expect, gasoline costs were much higher for the minivan. Please see the bonus section on hybrids vs. EVs vs. gas cars below for some helpful tools to decide whether to completely eliminate gasoline costs with your next car purchase.
5. They only times I got “stranded” in these cars was because of a dead battery, and that didn’t happen until they were 4 years old (for the Elantra) or almost 10 years (Grand Caravan). Since you’ll likely have factory-provided roadside assistance when the car is new anyway, don’t waste your money on plans from AAA or your insurance company. If you really get nervous about needing a jump start, buy a jump starter for less than $100 and keep it in your car.
6. Depreciation is not an “expense.” A lot of car budgeting calculators get confusing on this point. You can basically ignore depreciation if you keep the car for 10 to 15 years–just assume it’s worth nothing at the end of its life. The actual expenses you’re budgeting for are the up front purchasing costs and the maintenance, repairs, gas, insurance and taxes along the way.
7. The labels “foreign” and “domestic” are essentially worthless now. My “Korean” Elantra had final assembly in Alabama. Thousands of “American” Teslas are made in China for the Asian market. Honda’s new EV, the Prologue—which should be “Japanese”—is made in a GM plant in Mexico. Sadly this means that the rules of thumb about quality and dependability we’ve relied on in the past are out the window as well. You’ll need to do research on where your new car will be made and how that model is projected to do on the metrics you care about.

How much car can I afford? Cash vs. loans vs. leases explained

The “average” (median) new car in the US right now is over $40,000. When you’re getting a top trim in a luxury brand, you can very easily hit $100k for the sticker price. Check out this Cadillac Escalade pricing below:

How much should I pay for a new car?

So $40,000+ as the median cost is definitely bad news. The good news is that you don’t have to buy a “median” car. You can pay a lot less. A small, reliable car like Toyota Corolla, Honda Civic, or Mazda 3 is significantly less that the median price but will still get you where you need to go, safely and without worrying about getting stranded. If you’re just starting out, don’t spend more than $30k for a gas or hybrid vehicle, or maybe $40k if you really want an EV (see our decision tools below) and can qualify for a tax credit to bring the price back down closer to $35k.

Remember to plan ahead for your needs in 5-10 years because you lose the most money when you sell a car early in its life. Holding a new car for 10-15 years means that you enjoy the reliability and initial period of low maintenance. Then for what the car is worth, those last 5 years of the 15 where the value drops only a few hundred dollars per year means that after the initial cliff of value loss, you’re now benefitting from a still reliable car that’s only declining in value very slightly each year.

If you want to upgrade because you’re planning for kids, keep your small starter car as a second option for you or your partner’s commute. I made the mistake of selling my reliable, well-maintained Honda Accord and then buying a new car to replace it just a year later. Don’t fall into that trap if you’ve taken good care of that inexpensive starter model.

How much can I afford with a loan? Or should I lease instead of buy?

A lot of advisers will tell you to only pay cash for any asset that depreciates, with cars being the primary example. However, that’s not realistic if you’re just starting out on your Sage Journey and don’t have enough savings built up. So here’s my compromise: on your first car in the journey, it’s OK to get a loan as long as it’s got a short term (just 3 to 4 years) and you can get a decent interest rate. Let’s flesh out this idea with my top-ten tips, below. Pay special attention to tip seven if you’re feeling tempted to lease:

BONUS: Which Type of Car Should I Buy? Electric (EV) vs. Plug-In Hybrid vs. Hybrid. vs. Gas, New and Used!

Our family bought two new cars at the end of 2023. First, we bought a new 2024 Toyota Camry (gasoline, non-hybrid) to replace the 11.5-year-old Dodge Grand caravan. In retrospect, this was a mistake and if I was buying now, I would get the hybrid Camry (more below). Learn from my experience!

The second car was purchased by my son, who lives with us while attending college. He bought a 2024 Toyota Corolla, also a non-hybrid. At the time it made sense to buy the model he did, but that’s because in late 2023 it was impossible to get a hybrid Corolla without a long wait due to shortages. Now he could get one with the same features at basically the same price, so that would be a no-brainer to go for the Corolla hybrid. Back then we estimated that he wouldn’t be driving much (and indeed he’s clocked only 8,000 miles in the first 12 months), but for such a small price difference the hybrid would have been entirely worth it.

For our Camry purchase decision, I made two dumb mistakes.

1. First, I underestimated how many miles it would be driven! We are on-track to drive the new Camry 18,000 miles during the first 12 months. My family’s driving totalled up to that in the previous year, but it was split between several cars and drivers, so I didn’t really understand that at the time. I should have done better preparation.
2. Second, I knew that the cost of the hybrid was going to be about $5,000 more for the same features. I did the payback calculations (which was wrong based on my bad assumption for mileage, above), but what I forgot to do was think about resale value of a hybrid. I was assuming that the $5,000 would just be lost an I should think about it on fuel savings alone, but in reality the $5,000 extra now will help the car’s resale value in the future. Normally you’d take depreciation off that, but as I’ve been writing this article I now realize that pure gasoline cars may have significantly lower resale values in the future and that $5,000 extra may not get discounted much at all, or only a little.
   • For example, let’s say that in 8 years the used gasoline Camry will be worth $10,000 (I paid about $32,000 new) with 100,000 miles. This is just rough math because I didn’t look up any official projections on this model. I was assuming that the hybrid version would also be worth $10,000, and this was a silly mistake. Proportionally it should be worth $12,000 or so, discounting the $5,000 by about as much as the overall car’s decrease. However, it could end up that the gasoline car is totally out of favor in 10 years and the hybrid is worth a lot more! The gas version may only be worth $7,000 and the hybrid is still at $12,000, meaning the initial $5,000 difference was preserved the whole time.

Please learn from my mistakes and make a better decision about which type of car to buy! Here are two tools to help. First, there’s a very simplified flow chart to help you quickly decide what direction to take. Bottom line: you’re safest with a hybrid or plug-in hybrid in most cases. If you can’t pay for it with a short-term loan (3 years or less at a low interest rate), that you can pay-off in just 1-2 years, then consider a much less expensive used car that you can afford.

If you can get a new car, why are hybrids the best bet? I love fully electric cars, but right now the charging infrastructure still hasn’t caught up, especially if electricians in your area will charge $10k to install a fast charger in your old home (friends I know on the west coast are paying even more than this). Hybrids are also cheaper, can do no-hassle long-distance trips, and are available in a much wider variety of vehicle types like trucks, minivans and even sports cars.

%%{init: {'theme':'neutral'}}%%
flowchart TD
    %% Style block for all nodes and links
    classDef default fill:#3D7345,stroke:#FFFFFF,color:#FFFFFF
    classDef terminal fill:#247BA0,stroke:#FFFFFF,color:#FFFFFF
    linkStyle default background:#FFFFFF,stroke:#777777,stroke-width:5px,color:#000000

    %% Flowchart nodes and connections
    AffordNew["Afford new w/short loan?"]
    DriveDist["Drive >10k mi/yr?"]
    Charging["Can you get fast charging?"]
    EV(["Consider an EV"])
    Budget["Tight budget?"]
    Gas(["Consider a gas car"])
    Hybrid(["Consider a hybrid"])
    UsedGas(["Consider a used gas car"])

    %% Assign terminal blocks to the 'terminal' class
    class EV,Gas,Hybrid,UsedGas terminal


    AffordNew --> |"Yes"| DriveDist
    AffordNew --> |"No"| UsedGas

    DriveDist --> |"Yes"| Charging
    DriveDist --> |"No"| Budget

    Charging --> |"Yes"| EV
    Charging --> |"No"| Budget 

    Budget --> |"No"| Hybrid
    Budget --> |"Yes"| Gas

If you want to go deeper, my second tool is a 15-question quiz (“inventory” or “assessment” if you’re being fancy) that helps you figure out if an EV, plug-in hybrid, regular hybrid, or traditional gasoline vehicle is best for you. Whichever point total that’s the highest after you tap the “Show Results” button is the car type you should consider first.

You may also take the quiz as a printable PDF (below) or use my free Notion template. Just write a check mark in the “✔️ for yes” column on each row where you agree with the question being asked. Then when you’ve answered all 15 questions, simply use the bottom row total up the number of points for each column where the row has a check mark.

Conclusion

1. Cars are expensive, so drive them as long and as little as possible.
   • We definitely saw that the mileage related expenses added up quickly, so reduce your overall mileage wherever you can. Try to combine trips so that you’ll save gasoline and reduce wear and tear. This is especially important if you live in a rural area where everything is a long way away. If you’re in an urban area, you may be able to use mass transit and eliminate an entire car from your portfolio, downsizing from three cars to two, or from two to one. We managed to go 5 years with just one car (with two working adults and two young kids) and it was totally worth the sacrifice.
   • As you’re keeping your miles low, keep that car for a long time. Don’t be tempted to sell a car until it’s at least 10 years old, but hopefully 15 or 20 years old. If you’ve purchased a new car from a practical, reliable brand and do the regular maintenance, those last years can still provide strong reliability and the depreciation curve at that point is basically flat. Keeping the car this long ensures that you’ll have plenty of time to save for it to replacement as well, so don’t be tempted to seek out a new vehicle as soon as your loan on the first one is paid off. Just pretend that you are still making payments and put that monthly sum into a bank account or low-risk investment that will allow you to pay cash for your next car purchase.
2. Use cars as tools, not toys.
   • I talk a lot about this “toys versus tools” concept on this site, but it’s particularly applicable to cars. This is a huge area of temptation for me personally because I love beautiful, shiny automobiles and especially ones that go very quickly, like sport cars or an AWD low-slung German crossover (Audi RS Q3 or Porsche Macan GTS ❤️). However, buying a car based on looks, speed, or prestige means that you’re spending at least 2X more than you would if you had just purchased a practical, reliable model like a midsize sedan or family minivan. And the reality is that this poor car will probably be sitting outside in the harsh elements, quickly deteriorating while you don’t see it 99% of the time. Unless you work in your garage and gaze lovingly at your car all day, buy for practicality, not aesthetics! There are so many areas in life where you can overspend, but shoveling out money for a depreciating asset is especially dangerous. Unlike a house, for example, it will not only lose value over time, but it’s literally going 80 miles an hour on highways alongside other cars who may end up destroying it.
   • In contrast, if you think of a car as a tool that takes you to your job, church, classes or to visit friends and family, you will make sage purchase decisions that allow you to see a return on your investment instead of a fancy display piece that will turn turn heads for the first six months and then be ignored as just another grimy used car.
3. Buying a new car means paying a lot up front but enjoying reliability.
   • Somehow the phrase “new car smell” has entered the English lexicon. There’s just a mystique of buying a brand new vehicle that can’t be replicated. However, you’re going to pay a lot for this privilege of owning a new car. Across all categories, car prices have risen dramatically in the last five years, even outpacing inflation in many categories.
   • The interesting thing to consider, however, is that a new car is a commodity. This definition means that you can shop around and find the best deal, knowing that all the offers should be substantially identical. In contrast, each used car is unique and requires a ton of sleuthing to uncover its past. You don’t know the maintenance history or the accidents that have occurred. Maybe the seller is even trying to defraud you after a catastrophic event like a flood or a total loss! You’ll spend a lot more time doing research and trying to compare apples to oranges when you look at different used car offerings. The exception is buying a car from a trusted relative or friend where you know they’ve taken care of it; let them upgrade to the newer, flashier model and take their old car for yourself as a great deal.
   • After you purchase, the reliability of that used car may be much lower and you’ll need to spend time on unpredictable maintenance or repair events. If you have more money than time at this point in your life, my advice is to buy a new car and keep it well maintained and avoid the temptation to purchase a newer model until your current one is really starting to pile up expenses from maintenance and repair. Buying new gets you a predictable experience when shopping and a predictable warranty if problems should arise. I realize that this is a very philosophical decision, and a lot of other financial geniuses swear by their advice to “only buy used.” I’m definitely advocating frugality, so I believe that the best way to be frugal is buying a new car to minimize your expenditures on money, time, and stress.
4. Maintenance is a hassle even if you don’t do it yourself.
   • Cars that you drive frequently are going to need maintenance at least a few times per year. Since mechanics are rarely open on weekends, plan to take time off from work, up to half a day each visit. The exception to this is electric vehicles, which don’t need regular maintenance as long as there are no recalls or factory defects to worry about (but the sad part is that the low maintenance requirements of EVs doesn’t mean they are more reliable).
   • If you are a super busy with more money than time—you never want to waste your vacation days on errands—consider one of the luxury brands like Hyundai Genesis that will come and pick up your vehicle for you.
   • On the opposite end of the spectrum, if you have more time than money, there are a lot of procedures that you can do yourself. Buy a used car that’s out of warranty and learn to change the oil yourself, maybe even do a brake job with an experienced friend’s help. Now that oil changes routinely cost $100 or more, it’s worth spending a few hours and just a little bit of money on tools to do these types of tasks yourself.
   • Tires are the last remaining predictable maintenance item you’ll do frequently, so here’s my hack: if you’re a warehouse club member, like Costco/Sam’s/BJ’s in the US, get your tires installed while you shop in the store. These clubs often have the best prices anyway, so combine trips and stock-up on bulk discounted groceries and supplies while they mount the new treads.
5. Ask your friends or relatives to recommend trusted, local mechanics.
   • I had a professor in college that was a resolute atheist, but he made a comment about God and car repair that has stuck with me for decades. He said that he took his car to a mechanic he trusted solely because the mechanic was a Christian who had solid integrity because of his faith in God. This is probably one of the strongest endorsements for living out the gospel and hope in Christ that I have ever seen. If someone notices that your faith affects your actions and shapes your integrity, then you are doing very well in both your words and deeds.
   • The bottom line for this article is that you need to find a trustworthy mechanic whom your friends or family members have had good experiences with in the past. Ask them about the mechanic’s honesty and competency; if either one of these qualities are lacking in your mechanic, don’t go there. Don’t worry about the price because a competent, honest mechanic is worth any additional money they charge. In the long run, their higher fees help them retain good technicians and invest in training and tools to stay current on the increasing complexity of today’s cars.