What is the sweet spot for used car mileage?
What’s the Best Age & Mileage for a Used Car?
You’re all about saving money, which is why you’re looking to buy a used car instead of a new car. You’re wondering, though… how old is too old? At what age are used cars more of a financial drain than an asset? The answer may surprise you. (Hint: To some degree, age is just a number.)
Vehicle age, mileage & depreciation
How does depreciation work?
Cars depreciate. They lose value. Your goal is to buy a used car that’s already done its bulkload of depreciation. Is it possible? Sure is.
First, you’ve got to understand how depreciation works. Let’s say you buy a new car for $34,968, the estimated average transaction price for light vehicles in the U.S. in 2017, according to Trusted Choice Insurance .
As soon as you drive off the lot, the car is worth $31,121. That’s an 11% decrease in value.
When it’s time to celebrate your car’s first birthday, your car will have decreased in value by 25%. It’s now worth $26,226.
At three years old, your car’s value will have decreased by a whoppin’ 46%. It’s worth $18,882.
And five years later? Your precious ride is worth a mere $12,938. It’s value will have decreased by 63%.
Keep in mind that depreciation isn’t an exact science. Some depreciation factors can’t necessarily be measured in dollars and cents. A brand, color, or vehicle type can unexpectedly fall out of favor with the public, making a car that’s only one or two years old unattractive to many buyers.
Gauge the age. Find your sweet spot.
Buying a used car that’s just the right age can help you beat the biggest slump in depreciation. Let another driver take the biggest hit so you don’t have to. According to various car buying and selling resources, including Edmunds, Consumer Reports, and U.S. News & World Report, the “right age” can vary greatly.
One to two years old – Edmunds recommends buying a car that’s one or two years old, driving it for three years, and then selling it before the next big price slump. This might be a good option for drivers who love having the latest gadgets and don’t mind maintaining a car payment.
Two or three years old – According to Consumer Reports , two- and three- year old used vehicles have already taken the biggest depreciation hit. Continuing ownership expenses, like insurance and taxes, are still a bargain, and you still get to drive a vehicle with most new modern amenities.
Up to 10 years old – After gathering data on depreciation, problems, and repair costs for cars from one to 10 years old, U.S. News & World Report found that even 10-year old cars cost more in depreciation than they absorbed in repair bills.
Whoa, whoa. Read that again. They found that even 10-year old cars cost more in depreciation than they absorbed in repair bills. That means to some degree, you don’t necessarily have to worry about a car’s age being a burden.
Their analysis shows that the best way to find the cheapest used car is to buy the oldest modern car that you can still find running and in good condition. For the best safety features, stick to cars that are 2012 and newer. That’s the year electronic stability control became mandatory for all cars.
In the end, U.S. News & World Report suggests “buying as old a car as you’re comfortable driving that’s in good condition and reflects diligent care form the former owner.”
With most modern, relatively well-maintained cars, age is just a number. Ah, thanks for the wisdom U.S. News & World Report.
Want specifics on a used car you’ve been eyeing? You can actually calculate the depreciation of any car using the car depreciation calculator . Just enter in the purchase price of the vehicle, it’s current age, and the number of years you plan on owning it. The calculator will tell you the annual, total depreciation and estimated value of your vehicle at the end of the ownership.
Consider maintenance over mileage.
If age is just a number, is mileage a big deal when buying a used car?
Most drivers average 12,000 miles per year. If the used car you’re looking to buy has far more average miles/year than that, start asking the owner or dealer questions. How and where was the car driven? Why so many miles? Was the vehicle regularly maintained during this time and do you have the service records to prove it?
Typical used car mileages
- One to two years old: 12,000 to 24,000 miles
- Three to four years old: 36,000 to 48,000 miles
- Five to six years old: 60,000 to 72,000 miles
- Seven to eight years old: 84,000 to 96,000 miles
- Nine to ten years old: 108,000 to 120,000 miles
If the previous owner can show that the car has been continuously well-maintained, a few extra miles here and there doesn’t need to be a deal breaker. Like U.S. News & World Report said, the best way to find the cheapest used car is to buy the oldest modern car that you can still find running and in good condition “and reflects diligent care from the former owner.”
Find your best used car (and your best used car financing)
There is such a thing as the “used-car-buying-sweet-spot.” It’s just different for different drivers. Once you’ve found a used car you feed good about driving, whether it’s two years old or five, apply for a used car loan through myAutoloan. You’ll receive up to four financing offers and can choose the best finance rate for you.
Why There Is No Mileage ‘Sweet Spot’ for Used Cars
Buying used cars can be a great way to save money, but at the same time, used car shopping is a different experience than buying a brand-new car. One of the main considerations when drivers look at used cars has to do with their reliability. Used cars can have more reliability info available than brand-new cars. One indicator of reliability info that car shoppers look at for used cars is their mileage.
This can be an easy way to estimate how much life the car has left, but in reality, there’s no “sweet spot” as far as used car mileage goes.
A recap of what iSeeCars had to say on used car mileage
iSeeCars published an article about the best amount of mileage to find on a used car, and overall, it dispelled some common misconceptions about used car mileage. It may seem rational for drivers to assume that the fewer miles are on a car’s odometer, the longer of a life that car will have. But there is a simple problem with that idea. Not all drivers are the same, and not all drivers will treat their car the same way.
Some drivers are meticulous and keep their car maintained, while others may not even bother with routine maintenance. Despite having the same number of miles on the odometer, those two cars, which have had different maintenance histories, will likely have very different lives down the road. This is not the only wrinkle in the old idea that fewer miles are always better.
There just isn’t a ‘sweet spot’ for used car mileage
Typically speaking, the average American commuter drives somewhere between 12,000 to 15,000 miles a year. That’s the average for someone who commutes though, and it’s entirely possible for used cars to come from owners who simply didn’t drive that much. Those owners could’ve stored their car for a long time over the winter, or they may not even drive often as they work from home or live in a densely populated urban area.
Where the car was driven is another wrinkle to the idea. Urban driving is an entirely different experience than highway driving. Cities may have more potholes, drivers may push their car to their limits just to beat a spotlight, etc. In comparison, used cars that were mostly driven on highways may have more miles on the odometer, but those miles were likely less rough than the miles of a car that’s spent its life in the city.
That being said, this doesn’t mean that drivers should completely ignore used car mileage. The idea that a used car with more miles on its odometer is going to be unreliable can be the case as well. This is especially true if the car’s average annual mileage exceeds the average annual American commuter mileage. That’s often a sign that the car has been overused by the prior owner, and that it has some maintenance issues that will show up soon.
What used car shoppers should look for in a used car
Related
As such, since there are so many different variables to look at, used car shoppers should not simply look at the car’s mileage and base their decision off of that. Instead, used car shoppers should look at their options holistically. This means looking at the mileage, but also take into consideration the car’s maintenance history, accident history, and its usage history.
By taking all of those factors into consideration, drivers can find the used car that is the most likely to last the longest time. It also means that the best used car may not be the one with the lowest mileage, but sometimes that can be the case.
Why you should shop for a newer used car in the ‘sweet spot’
The law of supply and demand is alive and well, which can play to your advantage if you are shopping for a car and are open minded about the model year.
Several factors have made newer used cars better values than older used vehicles, car experts say.
These include:
• Greater demand for SUVs which has resulted in lower demand for cars in general.
• Higher off-lease volumes in recent years that have boosted the supply of newer used cars.
• A “missing generation” of older used cars – because fewer were sold new during the Great Recession – translates to lower supply and higher relative prices now.
And, of course, used vehicles cost less than the same model new, and can be a better value because of lower depreciation costs that owners absorb with a new vehicle.
Demand for SUVs
Sales of pricey new SUVs have surged in recent years – they now outsell cars – so it stands to reason that used models also would be popular among shoppers as long as gas prices remain low.
Demand for new SUVs has pushed average transaction prices to levels that many shoppers can’t afford, with a full-size SUV/crossover now costing $62,437 and popular midsize SUVs, such as the Ford Explorer, Jeep Grand Cherokee and Toyota Highlander, costing around $33,000 MSRP and more. Of course, there also are small SUVs available for about the price of a new car, but you get the idea.
“Healthy sales of pre-owned SUVs and trucks are resulting in … an increase in price,” Edmunds analysts told Auto Remarketing, which reports on the pre-owned-vehicle industry. Median prices for 2015 models of the three examples we cited are: Ford Explorer, $25,750; Toyota Highlander, $30,800, and Jeep Grand Cherokee, almost $34,000, according to Kelley Blue Book.
Off-lease volumes
Almost four million leased vehicles will be returned this year, an increase of more than a quarter-million over last year, a supply increase that should result in lower prices by 2 to 3 percent in 2018, according to the chief economist with KAR Auction Services and reported by Auto Remarketing. And that includes expectations that more shoppers will purchase off-lease vehicles.
As if that wasn’t enough, these vehicles are more attractive because of “new-vehicle prices that are beyond the budgets of many households,” Cox Automotive told Auto Remarketing.
“Consumers will see a widening price difference between a new vehicle and a similarly equipped used or [certified pre-owned] vehicle, and will consider buying used,” said Patrick Manzi, senior economist of the National Automobile Dealers Association, at a recent trade show.
A former dealer put the situation more simply, describing two- to three-year old models as the “sweet spot in terms of absolute value – what you are paying for what you are getting.”
‘Missing generation’
One writer called it the “ghost” of the Great Recession, another, the “missing generation” of used cars. Whatever you call it, the meaning is clear: Fewer used cars from 2009 and 2013 mean higher prices than you might expect for five- through nine-year-old models – if you even can find what you want.
“Thanks to our old friend the law of supply and demand, while the average used-car cost rose by 3.4 percent last year, prices of nine-year-old used cars increased by 8.4 percent, with values of 15-year-old cars jumping by 14.4 percent … for what is otherwise a depreciable asset,” reported Forbes Auto.
“We’ve got ourselves in an oversupply situation,” one expert told Automotive News.
For example, if you were shopping within a 10-mile radius for a vehicle costing under $10,000 with under 100,000 miles, you actually could have more choices from years 2016 and 2015 than any of the eight previous years, based on a search of Kelley Blue Book.
But don’t count on the law of supply and demand working in your favor forever.
Lower demand for SUVs is just a gas-price spike or an economic downturn away, some experts think that lease demand has peaked, and the “missing generation” will be replaced by the off-lease bulge – although rising new-vehicle prices will continue to make newer used vehicles attractive alternatives.
Right now may be the time to take advantage – before the “sweet spot” goes sour.
Mark Macesich is an experienced writer and editor who has written extensively about customer auto finance, car research and shopping, car-purchasing decisions, consumer news and insights, and auto-dealer-related subjects. He has spent more than 20 years in print and online journalism, that includes writing news and feature articles, columns, infographics and special sections.
