Which costs less money, driving an old beater or buying a 2-3 year old used car? Having driven older cars for a while, I think I know the answer--it's always cheaper to drive an older, paid for car than making car payments. But I've never kept track of exactly how much I saved.
So now I'm going to perform an experiment.
I am buying my Grandma Ruby's 1997 Cutlass. After driving it for two months, I've found it to be a solid, reliable car. It only has 78,000 miles on it and everything works. And I can buy it for the about the same amount as a down payment on a 2-3 year old Honda Accord. I'm picking the Honda because many people consider it the benchmark four door family sedan and it has one of the lowest total ownership costs based on insurance, repairs and depreciation.
To compare cost, I'll weigh the monthly car payment against any repair bills incurred on the Cutlass. The payment on the Honda will be set at $400, which is on the low side of what you would pay if you financed a $15-$16K car for 36 months. To keep it simple, I will not figure in taxes, insurance, or depreciation. I will also not count oil changes or tires in the equation, since you would expect to incur those costs on both cars.
Using those calculations, I estimate it cost me $7500 to drive my Infiniti for three years, which is about half of what it would have cost to drive the benchmark Honda. I'm curious to see if I can do better with the Cutlass.