For the better part of 4 years, my family has been a two-car family, but have been saving money for a different car. We have done this by having one nice, reliable family car and one older “throw away” car. In fact, in these four years, I have had three such cars.
One lasted a little over a year, but I only paid $800 for it, so we feel like we got that out of it. I lost the second car in an accident. That one cost $1,150, but I got over $1,700 from it in insurance payouts (have to love that!). The one I have had now for almost two years cost $1750.
Yes, sometimes people make fun of my cars. I am currently driving a 1998 Grand Prix, and it is easily (and I mean easily) the nicest of the three older cars I have had during this time (the other two were a Taurus Wagon and a Delta 88 with a vinal top). It has over 175,000 miles on it, but runs very well.
Each of these three cars have been bought with cash, and buying inexpensive cars has helped us stay out of debt and build up money for purchasing a nicer family car when that time comes. We have considered each of these “throw away” cars, because my plan was and is to drive them until they cannot be driven any more, then to just sell them for parts or scrap. The $800 car brought almost $300 in parts, so we only lost a few hundreds dollars in over a year.
The second car actually made money, due to the insurance payout, but had held its value well anyway. The car I am driving now would probably still bring over $1000, and I have driven it for nearly two years. When you buy cars this cheaply, there isn’t much less to depreciate!
Some people do not want to drive older cars (especially when they are not nice looking), but I am content to do so, especially while we are working so hard on building a financial foundation. If you want to look for a “throw away” car, here are some things to keep in mind.
1. Be Patient.
Trust me, you are not the only person looking for this type of car. It is easy to overpay just to be the first person “in” on a deal. When I bought the Grand Prix, I shopped for almost a month and we lived with one car for all that time. That patience, though, led to a good car at a decent price, and we could not be more happy.
2. Don’t shop for bells and whistles.
I have driven in Nashville, Tennessee, for a couple of summers now with no air conditioning. Another car had a heater that didn’t work. If you are willing to go without a thumping stereo or keyless entry, you can buy a much less expensive car that is still reliable.
3. Listen carefully during a test drive.
Turn off the radio (if the car has one) and really listen. Those “little” knocks might not be so little. You want a car that is reliable. Miles matter, but not as much as you might think. My car has only been in the shop one time in two years, and it has nearly 180,000 miles on it. When I test drove it, I noticed that famous “purring like a kitten,” and I knew this car would be okay.
4. Remember you are saving money in the long run.
If you buy a car for $1200 and it only lasts one year, you have only paid $100 per month for the car (and you can still sell it for scrap or parts, so it is really less than that)! That is far less expensive than nearly any car payment, and the car you are driving has lost nearly all the value it can lose. My $1700 car has lasted almost two years. That’s under $75 per month (minus what I could sell it for). I’ll take that over a $300 car payment on a depreciating asset anytime.
5. Don’t focus on looks.
Unless you absolutely are forced to have a nicer looking car for your job, swallow your pride and buy a car that may not look so nice. When I am going to preach at a funeral, I take our nice car. When I am visiting someone in a hospital, or just driving to my office, I really do not care what my car looks like on the outside. People will pay a small premium just for looks, when that does not factor into a car’s performance at all.
6. Shop everywhere.
I have had great luck on Craigslist, but you can look in the classifieds, estate sales, yard sales, or just by asking around. The more places you look, the more likely you are to get a deal.
What tips would you give for buying “throw away” cars that aren’t so “throw away”? Meet us in the comments and let us know!
Old car image from Shutterstock
{ 18 comments… read them below or add one }
Good tips Adam. I’ve had cars that didn’t have air conditioning, but I wouldn’t go without a heater – especially in the Midwest. It can be dangerous, especially if you have a heavy freeze.
But I think you’re right about the ‘bells and whistles.’ The more stuff your car has, the higher the chance that you’ll be paying to fix things as they break.
I think this is great advice. I have one question…when a car stops running and you sell it for parts, to whom do you sell it, and how do you get it there?
I have only had to sell one car for parts, and I sold it on Craigslist. I was very clear about the condition of the car, and a local mechanic bought it because he specialized in Ford cars from that era.
I agree on the heater issue. We’ve had several cars like this, but sometimes have had to put tires on them, which ups the cost and if they die in less than a year, that cost isn’t recouped. We haven’t bought the fancy brands, but have bought new for safety, especially in winter or wet roads. What do you recommend here?
I once asked a friend for a chance to price-match what a dealership would give for trade-in. He was offered $800, which is what I paid – the car lasted about 2 years with nothing more than oil changes. Another time I “paid” a case of beer to get a working-condition car out of someone’s driveway – it appeased both his wife and him, and the car lasted me more than a year!
Currently both of our vehicles are ‘beater’ vehicles. We only paid $1500 for my husband’s truck and we paid more for our car when we bought it but have driven it (a lot) for 6 years. We have been saving up to replace the car with a more reliable family vehicle (we feel like we need something bigger now that we have a kid in tow) and we still think we might be able to get $1500 for the car when we sell it. I’ve been blogging about all the ways we’ve been making extra money to save up for the new vehicle.
You’re right on about all this. I’ve done this with, well, pretty much every car I’ve ever bought (except one, and my wife drives that.) I’ve had fantastic success with $2-5K cars, getting 4-5 years out of them and then selling them for near the same price I bought for them. Never had a car payment.
I attribute a good chunk of my rapidly growing portfolio to this habit.
You aren’t what you drive.
Great advice – my first car (in the very distant future) will probably be a throw away.
Please don’t skimp on Safety. Some older cars are fine, but some are far in-superior in terms of crash tests and safety features. You might save a couple thousand up-front, but if in an accident you’ll pay that back 10-fold for hospital bills. Putting your wife and kids in an unsafe clunker is not being a good steward.
Great advice – I don’t think I could bring myself to that extreme, but it is well worth it to many people. I prefer to find a balance by buying a car that will last a long time, but isn’t that expensive.
Adam, you didn’t address gas use. Let’s say your Grand Prix gets 15 miles to the gallon average. Now let’s say a $3,500 Honda Accord 4 banger gets 25 miles to the gallon average. That’s 10 miles better for the Accord. Now let’s say that you drive 12,000 miles a year, and that gas costs $3.70 per gallon. The Grand Prix will cost $2,960 per year in gas. The Honda will cost $1,776 in gas per year, a savings of almost $1,200 per year. If you drive it more miles, more savings. Looks to me like if you keep the car two years or more the higher price Honda wins out!
You’re right, but only if you can truly “predict” those numbers. I get more than 15mpg with my Grand Prix…usually close to 20. But, as far as your example goes, that is surely something to consider.
When I left for Afghanistan with the Army National Guard last year, I sold my car, so I knew I would need to buy a new one when I got back. Some wise older sergeants warned me about buying a new car with the money you make on deployment. I also ready Dave Ramsey’s book within the first month of me being gone. Long story short, I ended up buying a car that is over ten years old for less than 5K and it was wonderful! I paid cash for it, and was able to save almost all of the money I made over in Afghanistan and put it in a roth IRA. Good advice! I wish more young people would follow it.
Adam, thanks very much for your post.
My mother and I have driven “throw-away” cars for a number of years. In 1988 she bought a Plymouth Horizon new. It was reliable and lasted 18 years and over 150,000 miles. In 2000 she bought a 1994 Chevy wagon which we are still using. Our situation is such that we think it’s a good idea to have 2 cars, so when we sold the Plymouth to the junk man (hated to do but it was rusting out badly underneath) I bought a two-year old Chevy Cavalier which I am still using and plan to keep until I can’t use it anymore. I have no problem driving older cars so long as they start when I want them to and stop when I want them to. I don’t have to have air conditioning but living in the Northeast would not want a car that didn’t have a working heater. It’s just not a good idea here in the winter.
There is another thing you can do. Just take really good care of the car you have and it will do the same thing with our the hassle of looking for another car. We have a 12 Honda CRV that looks almost as good as the day we bought it. It costs almost nothing to keep and operate and maintenance is exceptionally low. It is reliable and provides all that we could ask for in a second car. Don’t get me wrong. It’s not a road trip car but boy does it do the job for all the errands and hauling needs we may have. Just saying ….
,Susan Cooper
I bought several cars like this, especially when I was living overseas while stationed in the military. When you know you can’t take a car with you to your next assignment, it makes it easy to focus on buying an inexpensive and reliable car. The two vehicles I bought while I was stationed in the UK cost me $1,800, which I sold for $1,750 when I had to leave the country for a year on a special duty assignment. I was only in country for a few months after my special duty assignment, so I bought a very inexpensive car for $600 and sold it for around the same price when I left.
When you compare this to the average car payment of around $300-$400 per month, it makes a lot of sense to buy an inexpensive car and junk it if the repairs cost more than the car is worth (or sell it for parts very cheaply on Craigslist). This is a great way to increase your cash flow while focusing on other financial goals.
Good post – We have the exact same situation – one ‘throw-away’ car and one (slightly) more reliable and expensive car. You make a very good point on the milage – A lot of people get scared seeing 90k miles on a car and avoid; when really it is potentially only half-way through its life!
Both of our cars would be considered “throwaways”. We got rid of our gas guzzler with the high monthly payment and an old landcruiser that sucked the gas too. Now we have two cars that get over 25 miles per gallon and only cost us $2500 for both (cash of course). It only costs $40 a month to insure them (instead of $100 for full coverage), and we are saving a bunch on gas. I really like this way of doing it–even when we become financially stable, I don’t think we will ever get a loan for a car again–like you said–it’s a depreciating “asset”.