Why Buying High Mileage Cars is a Great Idea
Most people shy away from high mileage cars because they are “riskier” because they assume that with higher kilometers corresponds with things going wrong.
That’s true to an extent but in general the fears are over blown; cars are designed to last a long time especially in this day and age. This is an area that is ripe for finding a great deal on a late model car that you wouldn’t be able to afford otherwise, and maybe even drive it for free!
This works especially well if you are the type of person to buy and sell cars often. This is because at higher mileage, the depreciation curve of the car flattens out and you can put extra kilometers on the car without losing too much in value. There is only so low a car goes in value.
In general, buying a higher mileage newer is better than buying an older car with less miles. The reason for this is simple: parts in a car, especially the rubber components deteriorate over time, regardless of mileage. It’s entropy at work. On top of that, cars are meant to be driven so cars with higher mileage tend to last longer because car tends of lubricate itself more often and burns carbon build up which are all helpful for a long lasting engine.
On top of that, when cars aren’t driven much then fluid changes are also few and far in between. When looking at service intervals people look at kilometers driven, not how long since the last change. The fluids deteriorate overtime as well so it’s important that they are changed.
In terms of resale value, there isn’t much difference between a car that has 90,000 miles to a car that has 120,000 miles given that everything else is equal. After a while a car is considered high mileage and the depreciation curve flattens out, so technically you can get 30,000 miles from a car for free. Especially considering the fact that major repair bills (engine/transmission) for cars with under 120,000 miles is rare.
Which brings up the risks involved in this method of buying cars. The first one is, because it’s easier to buy higher mileage cars it’s conversely harder to sell them as well. Even though you might get a great deal when buying the car, it can be hard to get rid of the car afterwards especially if it’s a luxury car both domestic and import.
This is especially true for high performance cars which even though are well built and technically can last a long time, most people who buy these cars would rather pay more for a better car than less for a higher mileage version.
The best way to look at this situation is to break it down into a cost per mile calculation.
Take a look at the following example:
We have a 2007 Pontiac G5 with 119,000 miles for $6,000 and the same car with 69,000 miles for $11,000.
After 25,000 miles, the first car has a 144,000 miles and sells for $4600 which is a depreciation of $1400. The car with less miles goes from 69,000 miles to 94,000 miles and sells for $7500 which is a depreciation of $4600.
So you can see per mile, it’s clearly cheaper to buy the car with higher miles and then sell it versus buying the lower mileage car. Now let’s add the price of a new engine or new transmission, two very rare failures but they can still happen.
A quick google search shows that a replacement engine (used) will be about $500 dollars including shipping. With labour that should come out to $1500. A new transmission will come out to about the same as well. If you look at these costs, when buying the car with lower mileage you are paying for a new engine and a new transmission 100% of the time! With a higher mileage car you are a paying for a new engine or transmission maybe 2–3% of the time.
All you have to do is change your fluids properly and the chances are even less.
Speaking of changing fluids though, when playing out this strategy you’ll find that the best spot for riding the flat depreciation curve is a car with 80,000 to 100,000 miles and then putting on 20,000 to 30,000 miles before sell the car.
Also, at this particular spot you’ll learn that most cars have their major service interval here. To make sure your car lasts you need to do the major service here yourself or preferably buy a car which already has it done.
Doing your services on time will go a long way to a smooth ownership experience with any car.
You should also get an inspection performed on your vehicle before buying it — especially if it’s high mileage. instaMek provides detailed used car inspections to our clients in Western Canada.