Using a $300 car payment, here is the cost difference between my 1996 Ford Contour and a $20,000 new car:
1996 Ford Contour cost-------------------$4500
Repairs for above including new tires $1000
Total cost of ownership, 2 years --------$5500
$300 month car payment times 24 months = $7200
7200 - 5500 = $1700
In just 2 years, my 1996 Ford Contour has been $1700 cheaper than a new car. In the next year, based on experiences with the 1995 Ford Contour, I project that there will be about $100 in repairs required (essentially, replacement of two O2 sensors). With a new car, in the next year I would have spent another $3600 in car payments, bringing the amount of money saved with the Contour to
1700 + ((300 * 12) - 100) = $5200 saved in 3 years.
Since the only way a $300 payment could possibly happen on a $20,000 loan with nothing down is with 6-year financing, taking this to it's logical conclusion and projecting that the Contour will need $1500 in repairs (to include a clutch replacement) during the last 3 years of this comparison:
5200 + ((300 * 36) - 1500) = $14,500 saved in 6 years.
It's hard to put a value on it, but the Contour has another thing going for it in that I know about it--I know what problems it's likely to have, I know where to get parts for it, and I know where to find answers about it. For those repair jobs I don't do myself, I can tell my mechanic things he might not know about it in order that he can fix it quicker and more effectively. With a new car, these things become a concern as soon as the warranty expires.
