For some, buying a high-mileage car — in particular, a car with over 100k miles — might seem like a risky purchase. But, if you are saving to pay cash for your next set of wheels, you might not have many other options. So, the question stands, is buying a car with 100k miles a bad idea?
No, in most cases, buying a car with 100K miles is not a bad idea. In fact, there are a number of benefits to buying a high-mileage car. For example, cars with 100K miles cost less to purchase, register, and insure, all while depreciating slower than low-mileage cars.
In the rest of this article we will dive deeper into the 5 main reasons you should consider buying a car with 100K miles or more.
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1. Lower Purchase Price
According to Kelley Blue Book, the average cost of a new car, as of January 2019, was $37,149? (source)
Let’s be honest, the price of a brand new car has reached a level that almost forces the average American to take on debt to purchase it. In other words, if you want to save to buy a brand new car in cash, it will take an extremely long time. Too long.
That’s why a car with 100K miles can be so appealing; they are much less expensive. Sure, you might not get the latest technology that comes with new cars these days, but do you really need that. I mean, if a car can get you from point-a to point-b without breaking your bank, or causing you to go into debt, isn’t that better anyway?
Since cars with 100K miles or more cost significantly less money, it’s reasonable to save up and pay cash for them outright. That means you won’t have any debt, you won’t have to pay any interest, and you’ll have the freedom of debt-free cash-flow.
The lower purchase price of a high-mileage car is a wonderful choice when it comes to your financial life, plain and simple.
2. Minimal Depreciation
Did you know that the value of a brand new car will decrease by 20% – 30% in its first year? (source)
That means that if you purchase a car for $40,000, 12 months later, it might only be worth $28,000. I don’t know about you, but in the world of personal finance, (and common sense), investing in something that loses $1,000 per month is a bad decision.
You wouldn’t invest in a mutual fund that loses 30% per year. So, why is it acceptable to buy a car that does?
The second benefit to purchasing a car with over 100K miles, is that its rate of depreciation is significantly slower than a new car. For example, if you buy a 10-year old car with 100K miles on it for $8,000, you may only see it depreciate a thousand dollars per year; maybe even less.
Honestly, when a car reaches a certain amount of mileage, the value is more determined by what somebody is willing to pay for it, rather than the going rate.
For example, my wife and I bought a used car with 104,000 miles on it, a little over a year ago for $6,600. (We paid cash, so we were able to negotiate a pretty awesome deal.) As an experiment, I decided to look up the going price for our same car, with the same amount of mileage. Guess what, they are selling for a little over $7,000.
So, because we decided to purchase a car with over 100K miles on it, we have a car that didn’t depreciate at all. In fact, we could likely sell it for a slight profit.
I guess that’s just another reason to buy a high-mileage car.
3. Cheaper Insurance
Before my wife and I learned to live on a budget, debt-free, and within our means, we each drove cars with a purchase price we couldn’t afford. And with their high purchase prices, came the added hit of expensive insurance.
It makes sense. I mean, a newer car that is worth a lot of money is a greater risk for an insurance company. Therefore, they have to charge a monthly premium that reflects that risk.
All told, my wife and I were paying close to $500 per month on car insurance. Ouch.
Fast forward to now, my wife and I pay a total of $160 for car insurance because we have a truck with 50,000 miles on it, and a sedan with over 100K miles. So, we have reduced our annual car insurance cost by more than $4,000. Yeah, baby!
We may never buy a low-mileage car again for that reason, alone.
4. Lower Registration Costs
I know that car registration costs vary from state to state, but in Colorado, older, high-mileage cars carry a significantly lower registration cost.
AS an example, the cost of registration for a brand new car, worth $30,000 in Colorado would end up somewhere around $600. Compare that to a car worth $8,000, and the price drops below $100.
These savings are really starting to add up. Between the lower purchase price, cheaper insurance, minimal depreciation, and low cost of registration, I’m having a hard time finding a reason not to buy a car with over 100K miles.
One of the best reasons to buy a car with 100K miles or more, is that cars have become more and more reliable. It has gotten to the point where it’s common to see cars running well past the 200,000-mile mark.
That means a car with 100,000 miles on it, would last you more than 6 years if you drive 15,000 miles per year.
Now, I think it’s pretty obvious that some cars are more reliable than others. In fact, it’s one of the main selling points for certain cars these days.
I mean, how many times have you heard a car commercial say something like, “the longest lasting S.U.V. on the market”?
Now, I’m no expert in the longevity of every car on the road, but when I think of reliable cars I picture a Toyota Camry, a Honda Civic, a Nissan Altima, a Subaru Legacy, and numerous others.
The reliability of vehicles these days should ease a lot of your worries when it comes to purchasing a car with 100K miles on it.
If you are of the mindset that you want to buy a car with cash, you should not hesitate to look at cars with more than 100K miles. While you might not get that new car smell, you will enjoy a number of other benefits.
- High-mileage cars come with a lower purchase price, which will allow you to save, pay cash, and avoid debt.
- Older cars with more mileage depreciate at a much slower rate, whereas new cars will lose more than half their value in the first five years.
- Insurance for high-mileage cars tends to be much cheaper. So, if you want to protect your monthly cash-flow and make the most out of your income, a car with 100K miles or might be perfect for you.
- Depending upon the state in which you live, the registration costs for a car with 100K miles or more will be significantly less than a low-mileage car.
- The reliability of cars these days is getting better and better. This means that higher mileage cars are more likely to last you a long time.
Have you ever purchased a car with over 100K miles on it? Or, are you considering buying one? We would love to hear your thoughts on purchasing high-mileage cars, so be sure to comment below.