How Little it Costs to Not Buy In

Guest Post by Eric Peters

As you have probably heard or already know, the average price paid for a new vehicle is now about $50,000. You may have also heard or read that almost 20 percent of new car loans exceed $1,000 per month. It pays not to buy into that.

But how much does it actually cost?

I decided to see – using my ’02 Nissan Frontier (which I intend to keep for as long as possible) as the basis for the estimate. Right now, the truck is in great mechanical shape and so it costs me next-to-nothing to not buy into a loan on a new truck, – which would cost me a minimum of $31,900 (plus interest) for the least expensive new truck on the market, the Chevy Colorado.

With only about 150,000 miles on the clock, I’ll likely get another 100,000 miles out of my truck before it even needs a major repair – such as a new or rebuilt engine.

Well, how much would that cost? Right now, according to a search online, I could buy a rebuilt engine for my truck for about $3,400. Used ones with low miles and many miles to go are available all over eBay (or at your local salvage yard) for $2,000 or so. Either way, it’d be less than four months of payments on a new truck to buy a new/good used engine for my truck – and the payments on the new truck don’t end after four months. Even adding in all-new accessories – e.g., water pump, alternator, power steering pump and fuel injectors, etc. – the grand-slam total for a replacement engine for my truck would still not cost as much as one year’s payments on a new truck.

Even if I had to pay someone to do the install. 

Of course, there’s still the transmission to think about. My truck’s got a manual five-speed. It will need a clutch at some point but with careful driving and attentive service, the transmission could easily last another 20-plus years. But if not, what would it cost to replace/rebuild it? eBay had several available for about $1,000 or so. If you had to pay a shop to do the install – which is not difficult, by the way – it might cost another $1,500. Pocket change relative to what it costs to make seven years of $1,000-per-month payments.

Pocket  change relative to making those payments every month for just one year. Think about it – as the weirdo owner of the military surplus store told Michael Douglass in Falling Down.

Eventually, at some point, the truck will need suspension work – but there’s not much work to do because my truck’s suspension is simple, which used to be typical for trucks because that’s one of the reasons why people used to buy trucks. Simple often correlates with durable and durable equates to not having to spend much or very often.

The truck has a cast-iron solid rear axle, which has no moving external parts. Inside the pumpkin, there’s a ring and pinion and some races and bearings that may, at some point, need attention. But if you change the lube out every 30,000 miles or so (as I do) the internals will usually not cause you any headaches for at least 300,000 miles of service. Even if they do, a rebuild of everything ought not to cost you more than about $1,500.

You will at some point (maybe after 30 years) need new leaf springs in back and coils up front, plus the shocks and a rebuild kit for the steering linkages and some new bushings/ball joints for the A-arms. Budget another $2,000 for all of that, plus the labor, if you have to pay for that.

Are we over $10,000 yet?

Keep in mind that most of the above almost never has to be paid for all at once.

This is a really important thing to understandUnlike that new car payment, which you’ll have to make every month for years until – at last! – the thing is finally aid off. By which time, of course, it’s no longer new or covered by warranty and has accrued miles and wear-and-tear and likely will soon need repairs, just as if you’d kept (and kept up) your old vehicle.

It is true the old car (or truck, in my case) will inevitably need this – or that – but only irregularly and occasionally and if you plan ahead for the need you can avoid having to finance any of it.

Most of these irregular and occasional expenses will be trivial in relation to the $1,000 per month that almost 20 percent of new car buyers are making and if you aren’t spending $1,000 every month on a car payment, how much could you save up over as little as three or four years? Putting aside even $300 each month for three years would allow you to save up nearly $11,000 in cash – enough to pay for a new engine for my truck, plus a rebuilt transmission and most of the rest of whatever might go wrong over a lot longer span than three years. The odds are very high that most of the things that might go wrong won’t – which means you’ll probably still have most of the money you saved – as opposed to the absolute certainty of having to make that monthly payment.

Meanwhile, I’d have a new truck – mechanically – that’s probably not going to cost me much beyond the usual incidentals (oil and filter changes, brakes and tires, coolant flushes and so on every now and then) for another 20-plus years, which is how long my truck has already lasted with almost all of its original parts still in good working order.

And the best part is it won’t nag me or spy on me or try to “assist” me, either! I was able to add a modern stereo without glitching the computer. I removed one of the two catalytic converters and the “check engine” light didn’t even come on. There’s a throttle cable instead of drive-by-wire. And there isn’t an LCD display in the house.

Of course, it’d be nice if we were able to buy new vehicles that didn’t cost twice (or even three times) what something similar used to cost. But until we’re allowed that option again, keeping what you’ve got going seems like the best option.