Ask Stacy: What’s Better – Cheap Car or Great Mileage?

<a href="http://www.shutterstock.com/pic-99951050/stock-photo-farnborough-uk-april-vintage-ford-mustang-muscle-car-on-display-at-the-annual-wheels-day-auto.html?src=01f12454bbd81e78078e09f4d57e103f-1-1">Yellow Mustang by Shutterstock</a>

What’s more important – a car that doesn’t depreciate, one that’s cheap, or one that gets great mileage? That’s what this reader wants to know; maybe you’ve wondered about it as well…

Dear Mr. Johnson,
I have started reading your articles after discovering them while learning about classic cars. I really enjoy your writing as it is very informative. I am a young business owner learning about investing my money.

I have recently bought my first classic car, a 65 Mustang. I realized the many benefits of owning a classic car as opposed to a new car, but there is one thing I am having trouble with in my discussions with others: gas mileage.

These days, everyone wants to know the gas mileage. I can say that my car’s value will remain high, maybe even increase. But some say I will be paying the difference in gas. Does the value purchase of a classic car cover the low gas mileage of a classic car? Will I be paying so much more for gas that the value argument is not worth it?

Thank you.
A.N.A.

While not many people are cruising for classics, I chose this question because it’s about comparing the price of something with the cost to maintain it. A.N.A. is asking whether a car that appreciates is worth it if it costs more to use. But another more common question: Is it better to buy a cheap gas guzzler, or a more expensive car that sips gas?

These are interesting questions, because people are often led to believe that the cost of gas is more important than it really is. Let’s do a little math…

Cheap gas guzzler or expensive high-mileage car?

There are two different reasons to use as little gas as possible. First, to be environmentally responsible. Second, to save money. Since this is a website devoted to money, that’s what I’ll discuss. But that doesn’t mean I don’t care about the environment. Oil is a non-renewable resource as well as a major pollutant and should be regarded as such, budget or no budget.

That being said, let’s look at the numbers. Say you’ve got two choices: a $5,000 car that gets an average of 20 miles per gallon, or a $20,000 car that gets 30. Which is better?

Uncle Sam can provide us with a quick answer. At this page of fueleconomy.gov, there’s a calculator that allows you to input the cost of gas, how long you intend to drive the car, average MPG, and how many miles you drive per year. Here’s the math for driving 12,000 miles per year for five years and paying $4/gallon…

$5,000 Car: $2,400 per year, $12,000 total fuel expense
$20,000 Car: $1,600 per year, $8,000 total fuel expense

So the $20,000 car costs $4,000 less to drive over five years. But since it cost $15,000 more, you’re $11,000 worse off.

Obviously this simplistic example ignores other important factors. The $20,000 car might look better, ride better, and be less prone to mechanical issues. On the other side of the coin, the cheaper car would likely depreciate less and cost less to insure. But based on mileage alone, it’s not worth paying an extra $15,000 to save $4,000.

In short, environmental issues aside, an obsession with gas mileage could be penny-wise and pound foolish – something to keep in mind before using great gas mileage as an excuse to drop a bundle on a new car.

The math behind driving a classic

Now let’s get back to A.N.A., who undoubtedly wrote in after reading and watching 5 Classic Cars for Less Than $15,000. His question: Does the value purchase of a classic car cover the low gas mileage of a classic car?

The answer will obviously depend on things like the number of miles A.N.A. drives and how bad the mileage is on his Mustang. But it’s probably a smart move. Depreciation is the biggest expense of a car, and a classic may avoid it. But there are other considerations when buying an older car…

  • You should always buy a classic for love, not money. Like many non-traditional investments, there’s no guarantee any car will appreciate. So if that’s the only reason you’re buying one, don’t.
  • Most older cars aren’t nearly as comfortable as newer ones, and often need more work to keep them on the road.
  • Depending on the car, finding an experienced mechanic may prove challenging.

Bottom line? Driving a classic is fun, and it can turn a car from an expense into an appreciating asset. But there’s no free lunch. Buy the right car, and it could be one of the best moves you’ve ever made. Buy the wrong one, and you’ll be hating life. Take your time, do tons of research and hire the right help to evaluate potential purchases.

And if you’re interested in doing what you can to save on gas, check out The Single Best Tip to Beat High Gas Prices.

Got a money-related question you’d like answered?

Drop me a line! Just try to make sure your question would be of interest to our other readers – don’t ask for personal or super-specific advice. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.

Got more money questions? Browse lots more Ask Stacy answers here.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
21 Things You Should Always Buy at a Dollar Store
21 Things You Should Always Buy at a Dollar Store

Dollar stores have great bargains on both everyday and occasional purchases.

Drivers Give These 5 Car Insurers the Highest Marks
Drivers Give These 5 Car Insurers the Highest Marks

One company claimed the top ranking in several categories.

My Favorite Amazon Purchases From 22 Years of Shopping There
My Favorite Amazon Purchases From 22 Years of Shopping There

Yes, I’ve been shopping on Amazon since the 1990s. These are among my most beloved buys.

9 Indestructible Products That Are Worth the Price
9 Indestructible Products That Are Worth the Price

If you’re willing to pay a little more for these products, you may never have to shop for another again.

15 Free Streaming Services to Watch While Stuck at Home
15 Free Streaming Services to Watch While Stuck at Home

These free streaming video services offer thousands of movies and TV shows, including recent releases and beloved classics.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

14 Things That Are ‘Free’ With Medicare
14 Things That Are ‘Free’ With Medicare

These services could save you money and help prevent costly health problems.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.