Lame Cars: Fantastic Transportation Machines that Save Thousands

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Think about your dream car. It may be that sports car you’ve been drooling over since your sixteenth birthday. Or maybe a big truck that wouldn’t have gotten stuck in the mud like your tiny SUV did last summer. For me, it’s a 1965 Ford GT 40. Chances are, the car you are thinking of has a big “cool” factor. The GT 40 sure does for me. But is it a cost effective or practical way to drive? Of course not!

Driving is a luxury. There are far superior methods of transportation to make your hopefully short commute much cheaper. Walking and biking are the ideal. They help you get in better shape (which will definitely boost your “cool” factor), and are basically free. But even if you don’t need to drive regularly, you’ll likely still need a car for the occasional longer distance trip. I drive mine only once or twice per week, but life would be much more difficult for me if I didn’t have it for those one or two trips. And for those occasional excursions, an older, decidedly “lame” car is absolutely perfect.

Right now, I’m driving a 2000 Honda Civic. Yeah, I know that a Honda Civic isn’t a fancy car that is heavily desired and grabs everyone’s attention when you pull up. Quite frankly it does the opposite. However, the amount of money it saves me every time I drive is more than worth it.

The Honda Civic would be classified as a small to medium sized sedan. It doesn’t go fast, doesn’t look flashy, doesn’t hold tons of stuff, and doesn’t show off your wealth. But the Civic, and similar sized cars, save you enough money in other ways that it is more than worth it.

Initial Investment

My Honda Civic, which is owned by my parents, was $4000. It is a 2000 with extremely low miles, and is in excellent shape. $4000 can buy you an excellent Civic, Toyota Corolla, or other foreign sedan. These cars have an initial investment substantially lower than the average car. America’s two top-selling new cars are the Ford F-150 and the Chevy Silverado, both of which carry a starting MSRP of nearly $24,000, and can very easily be double that when you add in the extras everyone wants. The GT 40 I so desperately crave could cost me as much as a couple hundred thousand dollars. There was only 107 of those bad boys produced, so I likely wouldn’t even be able to find one. You can find a cheap sedan for around $2,500 that will last forever if you do enough shopping around, and this will save you huge money just on the initial price.

Gas

When most people think of small cars they think of the money they save on gas. And that’s definitely one of the biggest advantages they have. I get an average of 30 mpg in my Civic. I’ve seen others that get closer to 35. Going back to the Ford F-150, which gets around 20, my fuel costs are 50 percent less than what someone with America’s most popular automobile is. Assuming gas costs me $3.20 a gallon, I can drive places for less than 11 cents a mile in gas. Assuming I drive 10,000 miles a year, which is more than I actually do but close to the US average, I save nearly a thousand dollars EVERY YEAR over that truck owner, just in gas.

Insurance

Another way that my car saves me money that people don’t often think about is in insurance. Do to the fact that my car costs about one sixth of that new truck, my insurance costs substantially less. According to the Allstate ballpark estimator tool online, insuring a new F-150 would cost me nearly $2,700 a year. Using the same tool, insuring my Honda Civic costs only $2,000 a year. I was too scared to even look at what insuring a classic GT 40 would run. That’s an additional savings of $700 a year that could be working for you.

Factoring in Depreciation

One thing that many people don’t figure in when they calculate the cost of a car is depreciation. Cars by nature are a horrible asset to own financially seeing as they depreciate rather rapidly. Let’s say you buy a brand new F-150 for $25,000, which is essentially a base model. But if you look at Kelley Blue Book values for 2003 F-150’s, you’ll see a very different number. If you assume 100,000 miles on the car (10,000 per year, which is even less than average), and a base model, that truck will be worth less than $5,000. Even if you generously assume you sell it for $5,000 at that point, you’ve still lose $2,000 per year to depreciation. Keep in mind too that this happens much more sharply the newer the car is.

When you start to add up all of these costs, you can see why a car viewed as “lame” or “uncool” can actually save you a huge amount of money. Let’s compare the Ford F-150 I described above with a 1998 Toyota Corolla you could buy used off of Craigslist for $3,000. To make it a little bit more fair, we’ll assume that the Corolla dies after ten years, so it depreciates down to zero. It gets 32 mpg on average, and costs the same to insure as my Civic. We’ll assume both cars would be driven 10,000 miles per year, or 100,000 total miles. Let’s take a look at the total amount I save each year.

As you can see, that is a yearly difference of $3,000! I don’t know about anyone else, but I could go for having a spare three grand lying around. And it gets even more insane if you assume that savings will be invested (which it should be). If you are figuring an 8% annual return, that total savings shoots up to $46,936. So if you decide to drive a “lame” car now instead of that huge truck, you’ll have enough money saved after ten years to buy two brand new F-150′s! Of course, it would be decidedly stupid to blow your money like that, but I find it interesting how dramatic of a difference the car you drive can make on your overall spending.