Why You Should Drive a Clunker

Before you buy your next car, consider the advantages of a rundown one.

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Next to a house, a car is probably most people's largest purchase and spending category. That makes it one of the best opportunities to save money. I think the best way to save money on a car, besides not having one at all, is to drive a clunker.

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There are several advantages to having a clunker. The first is you won't lose much to depreciation. New cars often depreciate 20 40 percent in the first couple years. A clunker won't depreciate much because it is already so cheap. I plan to drive my clunker until it only has salvage value so I'm not worried about depreciation at all.

Another advantage is that I was able to buy my car with cash. This allowed me to avoid paying interest on a loan. Also, since I didn't have a loan I was able to get liability insurance only. This is a significant savings over comprehensive insurance. My liability insurance runs just under $30 a month and that is for more than the state required minimum coverage.

Still another advantage is I don't have to worry about the appearance of my car. This car has picked up various door dings and other minor dents and scrapes. Since this car is a clunker they don't bother me at all. If I had a new car, these would have upset me and possibly required expensive repair. Also, besides washing the car to remove road salt there isn't really any point in washing and detailing the car which reduces that expense.

Some clunkers also have the advantage of being green. My car gets about 32 mpg on the highway. That is better than most new cars. It is estimated that production of a car contributes 10 to 20 percent of its total lifetime CO2 emissions. By keeping the car on the road longer, that percentage is reduced.

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Many people think that all of these advantages are wiped out by the need for repairs. The need and cost of repairs can be reduced by buying a car known for reliability. Knowing an honest, good, and inexpensive mechanic is also extremely helpful. My car has needed several repairs but has always started for me. Even if you buy a new car there is a chance of being stuck with a lemon. With a new car you have a warranty but that lasts for a limited time. If you trade your car in every time the warranty is about to expire you drive up your cost of ownership even more.

Even with the added cost of repair the cost of my clunker compares very favorably to a new car. The current cost per mile for my car is 35.6 cents per mile if I value my car at $0. Using a more realistic figure for depreciation my cost per mile is 16.9 cents. If you buy a new car for $20,000 you'll have to drive it hundreds of thousand of miles without any added repair expense to come close to that figure.

I know that clunkers aren't for everybody, but if you can put aside your vanity this is one of the best ways to reduce your expenses.

Andy Hough writes about frugality and living well on a small income at TightFistedMiser.com.