That Old Car May Be Costing More Than You Think

We all know that one person who refuses to give up their old, beat-up vehicle. They don’t seem to care that the engine lets out an ungodly shriek each time it starts up (if its fortunate enough to), alerting everyone within a 3-block radius to clear off the roads or choke on the pungent aroma of rotten eggs and hopeless resignation in its wake. The many problems and daily inconveniences that plague their Prohibition-era relic don’t bother them either — they’re just little quirks that add to the overall charm, just like the faded door trim and drooping headliner. Who needs power windows when you can rely on a window crank that (mostly) still turns? Why have multiple airbags and lane-sensing doodads when you have a perfectly-fine seat belt and semi-decent life insurance policy? When asked to explain why they insist on driving such an old clunker, the answer is invariably: ‘it works, and it’s cheap’.

As automotive reliability has increased in recent years, car owners have grown more reluctant to scrap their existing vehicles. In 2017, the combined average age of cars on the road was 11.6 years, up from 8.5 years less than a decade before. But is keeping an old car really worth it? Is it truly cost-effective to keep maintaining a ride that’s seen a decade or more on the road, instead of switching it out for a newer model? If you live in more rural states, such as Texas, you may not be able to always rely on public transport and need a car you can depend on. 

At first glance, the answer may seem obvious. Why throw money at a new car when the current one is still doing fine? But if you take a moment to really ‘look under the hood’, you may discover that things might not be so simple. Maybe you don’t have to make monthly payments for your clunker, but how is it doing from a fuel efficiency standpoint? What about maintenance costs and safety standards? Sure, your old ride gets you from point A to B just fine. But what if you find yourself in the path of a teen with one hand on the wheel and the other on Snapchat? What if a harried soccer mom in an SUV T-bones your antique on wheels? The potential medical costs for injuries sustained in an older model car could pay for a new vehicle twice over, depending on exactly how far behind the safety curve your rolling deathtrap is.

The automotive industry and its inexhaustible innovation are constantly moving forward, paving the way to a safer, more money- and fuel-efficient experience for car owners. There was a time when sticking with the old, trusted jalopy might have made sense, but given the technological advances of today, that time has long since passed. From insurance costs to safety, maintenance, and even professional and social costs, driving an old car may make less fiscal sense than commonly thought. In fact, splurging on that new model might even save you money in the long run, on top of many other benefits.

Operating Costs Explode With Age

While some brands have a reputation for reliability, nature, physics, and your own driving environment dictate that good engineering can only go so far. Even basic daily use will see the most pampered ride endure heat and pressure tolerances, absorb road impact, and generally experience wear and tear. Every new mile put onto a car after its warranty has expired is another mile closer to a catastrophic breakdown. In fact, with mechanics costing an average of $70-80 per hour for labor alone, a head gasket replacement can cost north of $2,000 depending on the vehicle. That’s not even counting the social, professional, and monetary toll inflicted as a result of temporarily losing the utility of the car and with it, your ride to work, the store, school, and whatever else you had relied on it for.

 

A blown head gasket or a failure are just examples of some the more costly repairs you could be facing. Other smaller repairs and necessary replacements, such as tires, filters, brakes, and pumps, contribute to the maintenance costs of the car on a far more regular and frequent basis. All of these parts have “expiration dates” long before that of the engine and need to be replaced every couple of years, depending on the part’s tolerance period and the mileage accumulated. The make and model of your vehicle play a large part in just how likely you are Toyota’s frequently appear near the top of reliability lists, with average maintenance costs for the first 75,000 miles hovering around $4,300. After 150,000 miles, though, that cost more than doubles, reaching over $11,000 in average repairs.¹  And while that may seem high, the upkeep costs of Asian car brands are relatively low when compared with the average repair and maintenance costs of their American or European counterparts.

 

Luxury vehicles, specifically, stand out in repair costs.  Brands such as Mercedes, BMW, and Audi—commonly purchased due to their high trim levels and ‘better’ engineering—roll off the lot with already high maintenance costs. If you’re still rolling around in an older Merc, you know that each and every part that needs to be replaced has to be special fit for your vehicle, and that your local mechanic will just wave you off to the dealer, where they keep a stable of “specialists” for your specific year model. That cost rises even more as the car ages. Many luxury car owners find out that to keep their cars running at peak performance, costly maintenance is required long after the warranty has run its course.

While maintenance is a given on any vehicle, newer vehicles, with their large upfront investment, come with a trump card; manufacturer’s warranty.  While it won’t cover the cost of an oil change or worn tire treads in some dealerships, it does protect the owner from having to foot the repair bill for a number of issues. Many manufacturers offer a 5-year power train warranty, with some offering up to 10 years. This warranty ensures that all of the parts and labor concerning the most important systems on the vehicle are covered, protecting your investment and ensuring that it runs as it’s supposed to. Repair and maintenance costs are mostly covered under warranty, so no matter what rattling, screeching, bombastic cacophony may be coming from under the hood, you don’t need to worry about the resulting bill. Better still, if your lifestyle is a better fit for leasing, the maintenance, and oil change costs are usually covered by your lease agreement.

For out-of-warranty vehicles, you don’t get that same peace of mind knowing that any day may be your car’s last (unless you’re willing to fork over thousands to pay for repairs).

Safety Features Pay Dividends

For most consumers, most advances in automotive technology are limited to what they can see or touch: heated steering wheels, tailgates opened with foot sensors or Alexa on the dash. However, a lot of less obvious advances are made each year under the hood. Much of this forward progress involves vehicle safety and can be sorted into two main groups: preventative safety, and impact-minimizing safety.

For instance, newer cars have rear view and sometimes even side-view cameras, which help prevent accidents when changing lanes or backing up. Forward collision detection and automatic emergency braking systems work together to try and bring the car to a halt when a crash appears imminent. To minimize the injury to occupants if an accident is unavoidable, many modern cars carry a vast array advanced airbags placed in strategic locations throughout the cabin. While some might feel that the true driving experience is the feel of the rubber road, and a gear shift in hand, rather than some car wrapped in pillows that screams at you every time you pull to close to a bush, there’s no denying that these safety features have had a measurable impact on reducing both the amount and severity of vehicular accidents in the United States.

Prior to 1970, safety on the road relied on size and a mix of aggression and defensiveness. Cars were made heavy. There was little consideration as to what might happen if over sized land yachts with zero crumple zones hit each other. After growing pressure from the general population to increase the safety of the American roadways, the National Highway Traffic Safety Association (NHTSA) was created. This regulatory body has introduced countless safety mandates over the years in its mission to reduce death, injuries, and economic loss caused by accidents. The NHTSA has introduced, among other things, mandatory seat belts and airbags in every car, crash ratings, and rollover tests. These safety standards get stricter every year to match the pace of technological development.

The NHTSA began implementing safety protocols as early as 1978 with the introduction of mandated frontal impact testing, and the advent of the 5-star safety rating system in 1993. Given most people’s desire to stay alive, many started taking safety ratings into consideration when buying a new car or assessing the safety of their current one. Enter capitalism. The safer cars sold better, so car makers started focusing on safety. They paid attention to the results from frontal impact testing and later side-impact testing, and built new cars accordingly, with Volvo famously leading the charge and capturing a fair share of the market in the early 90’s. The NHSTA has also implemented other crash tests and updated their five-star ratings to include side pole impact and even rollover crash data. Automakers took all of that into consideration, creating more strategic frames and body architecture, and adding in all kinds of cameras and sensors (they’re even working on taking human error out of the equation with self-driving cars). Many older vehicles score lower on the scale, unable to compare with newer cars outfitted with the latest in safety technology. For instance, a 1992 Toyota Corolla scores 2 stars out of 5 for the frontal impact testing, whereas the 2018 model scores 5 out of 5 thanks to its myriad sensors, multiple airbags, and seat belt pre-tensioners.

In fact, it’s not just the new gadgets like front sensors and smart seat belt that have drastically improved road safety — the car itself has changed. As time and innovation has marched on, everything from the sheet metal to the design of the interior has evolved. Gone are the days of 2-ton Continentals with doors that weigh more than a Smartcar. Lightweight materials and space-age manufacturing processes have led to all-around safer rides, which present extra savings not often found in an older vehicle. These savings are manifested not only in our safety but in mileage costs./

A 2017 study assessed automobile year, size/weight, and crash fatality data and found that “a reduction in the overall average weight of vehicles on the road may actually result in fewer fatalities as a result of car crashes.” To put this into perspective, let’s imagine a highway with only big, heavy land-yachts. If one of them were to crash into another, there’s a good likelihood both their occupants could be severely injured or killed, especially when you consider the lack of modern safety features at their disposal. Modern vehicles are actually designed to crumple in the event of a collision. This allows them to absorb the force of the impact before it reaches the passenger compartment, whereas the huge road barges of yore would have channeled all that energy to the occupants, impaling the driver on the steering wheel and smashing the riders to the slab-sided dash. In fact, a Consumer Reports crash test that pitted a 1959 Chevy against a modern Malibu shows that “bigger and heavier” isn’t always better, as most people would assume.

Basic construction aside, vehicle safety improvements have come in many forms. While it’s rare to find a car that doesn’t have Anti-Lock Brakes (ABS) these days, constant advancements in technology have led to some amazing safety features that add an almost incalculable value to new vehicles. In fact, if your vehicle is 20 years old, there is a good chance that you don’t enjoy the safety of the NHSTA-mandated dual airbags.  While that might seem like an extreme example, the number of improvements in the last ten years are enough to make even a relatively current car feel devoid of safety features.

Even that oft taken-for-granted safety feature, airbags, have changed since they first appeared in the early ‘60s. While many older cars have them, they were actually not mandatory in the US until 1998. Nowadays, it’s impossible to find a new vehicle without driver and passenger side airbags in the front seats. Newer vehicles are better equipped still, with curtain and torso airbags that shield occupants from window and pillar impacts in the event of a side collision.

In 2007, only 11 years ago (remembering that the average age of vehicles on the road is now 11.5 years), both Electronic Stability control (ESC) and Tire Pressure Monitoring Systems (TPMS) were mandated in new vehicles. ESC monitors the rotation of the tires – it applies brakes to each wheel individually in case you lose traction, handy on wet roads or black ice. TPMS helps prevent accidents caused by under inflated tires, while simultaneously increasing the longevity of your treads and helping the environment (more on that later).

The safety features don’t stop there. In 2013, the NHTSA added rearview cameras to their list of recommended safety features in vehicles. Starting in 2018, this became mandatory for all vehicles to help reduce accidents caused while backing up. Other safety improvements like cross-traffic alarms (designed to alert you if somebody is approaching you from the side while backing up) are not mandatory but are becoming increasingly common in newer vehicles to provide greater situational awareness.

Automatic Emergency Braking (AEB) use radar and other sensors to sound an alarm if you approach something too quickly. It automatically engages the brake, potentially preventing a fatal car or pedestrian accident faster than you can react. An offshoot of AEB is Adaptive Cruise Control, which allows your vehicle to detect and maintain a safe following distance to the car in front of you. Not only is this safer than traditional cruise control, it also assists in fuel economy, as your vehicle’s computer smoothly regulates your acceleration and forward momentum, only touching the brakes when necessary.

No matter how good a driver you may be, you can’t control how bad others are. That’s why having these NHTSA-mandated safety features in newer cars provides a value that old cars just can’t match. In an ideal world, where everybody is capable of driving 100% accident-free all the time, these stringent safety standards like increasingly higher beltlines and six airbags might seem over-the-top, even draconian. But that’s because we don’t live in a perfect world. In reality, the person in the next lane may be busy on Facebook Live, like the Chicago teen who was sentenced to 6 years in jail after live streaming the car crash that left her 14-year-old sister dead. No matter how good of a driver you may be, and how much you think you don’t need the automatic brakes and accident-sensing cameras, there will always be people eating tacos, live streaming their terrible driving, falling asleep, or singing along to Justin Bieber on IG.

#GasGuzzlerProblems

Fuel economy is another area you might be spending more on in an older car versus a newer model. Since 1975, the Environmental Protection Agency (EPA) and the NHTSA have been setting better fuel economy standards nationwide. Despite a few years where the expectations were lowered slightly, there has been a steady decrease in fuel expenditures. If we look at that average age of a vehicle at 11.5 years, even rounding down, the EPA reports that the average 2007-model year car had a fuel economy of only 24.1 miles per gallon. Compare that to the current 2017 average of 30mpg and the data speaks for itself. Fuel economy continues to improve as well, with the NHTSA and EPA having set a goal of 50mpg by 2025.

While it’s well and good to focus on the financial savings of increased fuel economy, there’s an additional benefit to enhanced mpg. As the miles per gallon go up, carbon dioxide emissions go down. This means that not only are you burning your budget maintaining your dented ’98 Dodge, you’re literally burning the ozone layer and damaging the environment. The economic, or social cost of emissions are associated with many different variables; reduced agricultural yields, increased medical costs of people exposed to higher levels of CO2, infrastructure damage and lower worker productivity. While its hard to put an exact dollar figure on the impact of climate change, a 2015 study suggests that the economic cost might be as much as $220 per ton of CO2 released.

We know that a gallon of gasoline releases 20 pounds of carbon dioxide into the air when burned. Looking back at our fuel economy numbers, and using an old Dodge Spirit as an example, with an estimated fuel economy of 23.4MPG, and a nice, rounded down 15,000 miles traveled per year, you’re still looking at 641 gallons of gasoline. That’s over 6 tons of C02 and an extra $1,320 worth of damage to the environment and the economy. If you do the same calculations with a 2017 vehicle with an average fuel economy of 30mpg, you’ve reduced your emissions output by over 1 ton per year.  If you’re really into saving the environment or at least trying to reduce your personal carbon footprint, a modern hybrid car has an average fuel economy of 44MPG, which cuts emissions from that Dodge Spirit in half, with a resultant 3 tons of C02.  Unless you’re a climate change denier, those environmental savings aren’t something to be sneezed at.

Insurance Costs

Another factor to consider is insurance. It’s a common myth that new cars are more expensive to insure. A lot of factors determine the cost of insuring a vehicle, but one of the things to look for are the safety features we’ve discussed. Insurance companies are happy to offer discounts if your vehicle is actively doing things to prevent you from needing to file a claim in the future. Lane departure warnings, adaptive cruise control, and automatic emergency braking all help to prevent accidents, which translates into fewer payouts for Allstate or Geico.

If your car lacks those specific safety features, there is still another opportunity for a safe driver discount. Many insurance companies now offer a discount to drivers who are willing to install a data tracker into their car’s computer. This allows the insurer to measure your driving data over a set period — usually 90 days – to determine your driving habits and consequently, your accident risk. The tracker measures like: the number of fast accelerations and hard brakes, the number of miles driven at night time, your average speed per trip, amount of miles driven in total, etc. The safer your data proves you to be, the greater the discount. The tracker can only be installed in cars with an On-board Diagnostics tool (OBD-II) port, commonly found in 1996 and up year models.

Another factor that insurance companies take into consideration is the risk of theft. Newer vehicles are often harder to steal thanks to features like keyless start and immobilizers. But even if they were easier to steal, newer cars don’t have the same value to a “fencer”. Instead, most thieves intentionally target older vehicles. Not only are they easier to break into, it takes less effort to part them out. For example, the bits and bobs off of a Toyota Tercel will be in higher demand than a bit of kit off of a brand new Subaru Crosstrek.

Once these factors are taken into account, the most important piece of information in the insurance calculation is the cost of replacement. Should you be in an accident in an older car, even a minor fender bender has the potential to total the whole vehicle, and it’s a safe assumption that the payout you’ll receive from the insurance company won’t be that large. This leaves you with a large out-of-pocket expense to either repair your banged up ride, or purchase another junkyard jalopy. In a newer vehicle, your insurance is more likely to provide you with an equivalent modern replacement, with the same safety and fuel economy that saved your behind.

Social Impact

Safety, insurance and the environment aside, there is one final factor to consider. What does your current car say about you as a professional, or even just as a person? Granted, if you rely mostly on public transportation and your car sits in your driveway, unused but for the occasional longer trips, this may not apply to you. But if you use it frequently for social, professional or even just leisure driving, it bears consideration.

If, for example, a real estate agent shows up in a patched-up Oldsmobile, what does that say about her track record selling houses? Is it because she’s a bad realtor, or maybe the houses she generally shows aren’t easy to sell? Either way, it says something about her as a professional and has an impact on her clients. Or what if your Tinder date shows up in a beat-up old Pinto? The spark you felt might actually be the exploding fuel tank of your date’s rolling death mobile… if you even bother getting in. While frugality is important, your ride is as much an extension of who you are as the clothes on your back. Showing the world that you are put together and capable of managing your finances goes a long way in establishing a healthy reputation socially and professionally.

Hard Numbers: Old vs New

With all this being said, can replacing your old ride with a new one actually save you money? While it is hard to put a price on the safety advancements and positive social impacts of ditching the old for the new we’ve created a calculator to give a rough idea of the fuel, maintenance and ecological cost differences. Try it out for yourself.

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There are always reasons to keep an old car around. It’s familiar, it runs, it keeps the rain out… mostly. Cars aren’t horses so it’s a bit harder to determine when it’s time to put them out to pasture. Once you’ve factored in the increasing maintenance, fuel, insurance, and social and ecological impact, keeping that clunker just isn’t worth the cost of your savings, your reputation and your safety.