Do you have commitment issues when it comes to vehicles, or do you take the phrase “drive it til’ the wheels fall off” too literally? Whichever end of the spectrum you find yourself on when it comes to your relationship with cars, there might actually be a sweet spot for you.
The average American seems to keep their car for about 8 years or so with a little range on both sides depending on the type of vehicle it is. The right amount of time to keep a vehicle is something so personal though that it’s impossible to pin down, but there are some key points that can help determine the right age to let go.
- The average new car will depreciate 20-30% in the first year alone, and about 15-18% per year from ages 2-6, ultimately losing about 60% of its sticker price within 5 years of ownership.
- Every car is different. A used car depreciates differently (and on rare occasions may actually appreciate) than a new one, and different makes hold their value differently.
- A Ford F-150 depreciates at an average of about 11% per year and a Toyota Tacoma holds, on average, about 71% of its original value after 5 years. That Kia Optima though, is worth 52% of its original cost after 5 years.
Your unique situation is everything
The amount of time you should aim for keeping a car is entirely different for every vehicle and every situation. Deciding how long to keep it will require you to consider a few important things: your investment, outstanding loans (if any), your financial situation, vehicle age, and the anticipated future value of the vehicle. Cars almost always depreciate in value and every one of them does so at a different rate.
If you're financially stable and don't care about the depreciating value because its utility is so high or you simply love the car, keep it for however long you please. If you want to recoup as much value as possible, it’s probably time to be looking for the right time to get out as soon as you get in.
The sweet spot?
There are hardly any quantitative studies to give us hard numbers on this, but it’s generally accepted that if you want to avoid sinking money into cyclical repairs that come with age on a vehicle, the sweet spot to offload it would be from about 90K to 120K miles.
However, every situation is unique and will require considering all of your finances and preferences to make that choice. If you don’t even want to think about it or know nothing about cars, you could always just buy a Toyota Tacoma, change the oil every 200,000 miles and forget about it.
📚 Are you looking to buy a car but not sure if you should go new or used?