The "savings" from giving up your Tesla (under Loan) for a Cheap, old car, paid off

[RonKorakas]

So, I bought a brand new '19 (July Build) Model 3, Standard Plus, Autopilot, White on White. LOVED the car. However, I got it under a Car Loan. The total of the Monthly Payment, including Insurance, was $663.00.
So, after a year and a half of owning it, I thought my lack of driving and lack of actual need for this "extra car" was not worth the price tag. So I decided to sell in March of '21, at a small profit, so that I wouldn't have to pay so much monthly for a car. I thought I would just buy a cheap old car, cash, to not have a car payment, and insurance would be much much lower.
I'm very familiar with BMWs, so I decided to get a 2012 e92 from a "corner" dealership. Unbeknownst to be (and supposedly to them), the car had deep-rooted issues that ended up costing me a lot to fix. I decided to sell the car, and get an even older car, which would be cheaper to repair, and had several inspections done on. I went with my favorite chassis - e46, 2004. But I shipped it from 4 states away (it was the only reasonable one I found).
This car was perfect for a while, but eventually it did need a couple of things.

Almost a year after selling the Model 3, I decided to run the numbers of how much I had "saved" by owning a car that I bought outright, and having no car monthly payment.
Here is the ACTUAL breakdown of what it came down to

-GAS Between March 21, and Jan 22:
= $1100
-Repairs:
= $170 - smoke test
= $270 - O2s
= $20 - Oil and O2 adapter
= $285 - Touchscreen
= $459 - Drive shaft Work
= $ 515 - Drive Shaft
= $302 - Fuel Filter
= $411 - 05/19
= $175 - BMW Dealer Diag
= $878 - E92 repairs
= $120 - Misc Repairs
= $170 - Misc Repairs
= $1400 -E92 Repair
= $350 - Insurance, total for the year

Total cost for "owning an old, gas car, no car payment"
$6625.00
-----------------
Tesla = Sold for $3214 net profit
e92 = bought for $8579 - $3214 = $5365
e92 Sold (after all the repairs, and deciding not to keep it)
for = $8500-$5365 = $3135
Bought e46 for $3012+$2500 (shipping)= $5512-$400 (rebate) - $3135

Total spent on "acquiring" e46 - $1977.00

GRAND TOTAL going from Tesla in March to Jan '22 (Total of owning old car) - 6625+1977 (acquisition)= $8602
------------------

- How much have I "saved " by having crappy cars, in 10 months, after selling Tesla

= Tesla Monthly Payment, $663 x 10 = $6630.00

GRAND TOTAL going from Tesla in March to Jan '22 = $8602 MINUS $6630
= $1972

-----

So, Too Long; Didn't Read:

I didn't save a Cent....it actually COST me $1972 to trade my brand new Model 3 for a "cheap old car" with no car payment.

Now, I know this whole anecdote is riddled with mistakes. (not to mention that people will say "well, you got a bmw - they're super expensive to fix). But they're not uncommon mistakes. And the decisions are decisions that I have seen friends and family make, attempting to accomplish the same thing. So, if anything, this is a cautionary tale. I'm pretty old. I've never had the "fluid cash" to buy a $45000 car, cash, outright.
I do today.
But regardless of whether I did or not, I will never, because of this experience, try to go from a "high monthly payment" to a crappy old car just to avoid paying that car payment.
In fact, I don't think I'll ever get a used car ever again. I don't think the stress is worth it.

-Ron

 

[drummermike58]

Man, I have contemplated this exact process many many times. Thank you for the solid process description and findings. I wonder if I cheaper new car would have netted the desired result. Maybe if you decide to run this experiment another year, find a new $30k car and see what happens?

 

[RonKorakas]

Thanks.
What's depressing is that even if you mitigate all the "obvious" mistakes from my personal anecdote (like not having to buy 2 cars, and repairs on those cars) and just use the Maintenance, Gas, Repairs, and Insurance, it STILL comes out to $4347. This minus the Tesla cost of $6630 comes out to ONLY $2283 - This is what you'd pay, as an "extra premium", to own a beautiful, brand new Tesla, over an 18 year old, gas car. (at least in my exact situation). In my opinion, that's definitely worth it. Especially since that $2283 will pay for itself within at least 2 years, because of the Gas savings. So, it gave me a lot of clarity.

 

[RonKorakas]

Man, I have contemplated this exact process many many times. Thank you for the solid process description and findings. I wonder if I cheaper new car would have netted the desired result. Maybe if you decide to run this experiment another year, find a new $30k car and see what happens?

Well, at first I ran the numbers on getting a new cheap car. Like a new Honda or Toyota. But I didn't like that it was a "sad middle ground" - you get the crappiness of no-a-tesla, but without the rock bottom price of a $4000 car. So, I decided to go for this latter route. I'm sure I would have saved all the repairs I had to do, but that would have evened out with the extra $12- $15k the "new" car would have cost. Not to mention the Gas would have been about the same, and the insurance would have been a little higher. I think the only way it would have been much much more financially beneficial is if I would have bought Hyundai Elantra Hybrid, which starts at $25,000. (but you also have to psychologically be ok with driving a Hyundai).

 

[Andy7]

I hate to rub dirt in your wound, or more than you yourself have already, but for others I feel I shopuld point out that you ended up with a much less safe car as well since it lacks a lot of modern safety features. And who knows how well old air bags work (even ones not from Takata)-Oh, I bet someone here knows and will tell us (me). You also got a car likely to be less reliable than the Tesla. I hope you can get back in a Tesla. Thanks for the interesting analysis. And good luck with whatever vehicles you have.

 

[RonKorakas]

I hate to rub dirt in your wound, or more than you yourself have already, but for others I feel I shopuld point out that you ended up with a much less safe car as well since it lacks a lot of modern safety features. And who knows how well old air bags work (even ones not from Takata)-Oh, I bet someone here knows and will tell us (me). You also got a car likely to be less reliable than the Tesla. I hope you can get back in a Tesla. Thanks for the interesting analysis. And good luck with whatever vehicles you have.

Of course.

Fortunately I wasn't as stupid as to buy a car that hasn't gotten diagnosed and inspected (regardless of how stupid I was elsewhere) . One of the first things I did when I got the e46 was call BMW for recalls. The car was fine... Until it wasn't. I could have left some things as they were, but I hate driving a car with blatant issues.
To answer the big question, yes, I put in a deposit for a new Model 3 just a couple of days ago. That car was my "forever" car, so I'm getting it back to make up for these mistakes for the past year.
Thanks for the good wishes.

 

[Xdama]

Of course.

Fortunately I wasn't as stupid as to buy a car that hasn't gotten diagnosed and inspected (regardless of how stupid I was elsewhere) . One of the first things I did when I got the e46 was call BMW for recalls. The car was fine... Until it wasn't. I could have left some things as they were, but I hate driving a car with blatant issues.
To answer the big question, yes, I put in a deposit for a new Model 3 just a couple of days ago. That car was my "forever" car, so I'm getting it back to make up for these mistakes for the past year.
Thanks for the good wishes.

But those costs were only over a 10mth period not the actual time you would have owned a Tesla surely? Correct me if I’m wrong but you would aim to own a car for more like 3yrs in which case apart from fuel & (hopefully not much maintenance) then the costs would stack the other way. The old car costs you no more purchase costs whereas the Tesla still costs you $663 per month plus deposit or $45000 in the first place.
After 2months in the Tesla I’d go back to my 3yr old BMW in a heartbeat just for it’s no nonsense non moving controls

 

[RonKorakas]

But those costs were only over a 10mth period not the actual time you would have owned a Tesla surely? Correct me if I’m wrong but you would aim to own a car for more like 3yrs in which case apart from fuel & (hopefully not much maintenance) then the costs would stack the other way. The old car costs you no more purchase costs whereas the Tesla still costs you $663 per month plus deposit or $45000 in the first place.
After 2months in the Tesla I’d go back to my 3yr old BMW in a heartbeat just for it’s no nonsense non moving controls

You're absolutely right. The thing about my situation was that I sold the Tesla purely for the "savings". But for the past 10 months, it didn't work out that way. But yes, if I would have kept the Beemer for longer, it would have been more financially beneficial to have it. $1100 of gas plus $350 insurance. $160 for oil changes annually . And say it has no more repairs. That's $1600 annually to own the beemer versus $8010 for the Tesla until it's paid off. However, things completely go in the Tesla's direction once the car is paid off.

 

[kpinthebay]

Wow. I'm a CPA and even that was hard to read. Life is too short my friend. If you can comfortably afford it, go have some fun. YOLO

Also one flaw in your analysis. The monthly payment on the Tesla isn't a straightforward expense as you're building some equity in it.

 

[dmurphy]

Thanks for the cautionary tale. Really is the definition of "penny wise, pound foolish."

Sometimes, saving money can be very expensive. Sadly, that's a lesson learned the hard way. Goodness knows I've learned that lesson enough times in my life!

 

[tbcboo]

I'm not going to knock your post too much, but in reality this is more specific data to your situation with a poor condition BMW. I've mostly owned Honda's and Subaru's before ordering the Tesla. The most expensive "repair" I've done on any of those cars in my 20+ years of driving has probably been the standard timing belt/chain and water pump along with the other services at that time. I've even owned a BMW which I quickly sold after simple issues that they wanted $$. Several of my friends are in the same boat coming from cars with just regular maintenance.

I'd like to think I'm saving money by having my $70k Tesla so I feel better, but in reality, my paid off Subaru even with gas cost is a much better financial decision. But I didn't buy a Tesla purely for the financial decision

 

[valaeyron]

I'm not going to knock your post too much, but in reality this is more specific data to your situation with a poor condition BMW.

I have to agree. Financial savings WAS there if you were willing to drive something like a reasonably priced Honda or Toyota, which have solid reputations for long term reliability. Yes, every make and model have lemons but the reputations are built over large numbers.

My prior was a 2015 Cx-5. It was great. Over a 10 year period, it would have cost me $2500/yr plus gas and oil changes. Nothing more really needed (excluding tires - Teslas also need those). Insurance was cheaper too. The SR+ starts out at a $2000/yr deficit on just the car price alone.

Not knocking your choice but…not a strong attempt either.

 

[moyang_mm]

I'm not going to knock your post too much, but in reality this is more specific data to your situation with a poor condition BMW. I've mostly owned Honda's and Subaru's before ordering the Tesla. The most expensive "repair" I've done on any of those cars in my 20+ years of driving has probably been the standard timing belt/chain and water pump along with the other services at that time. I've even owned a BMW which I quickly sold after simple issues that they wanted $$. Several of my friends are in the same boat coming from cars with just regular maintenance.

I'd like to think I'm saving money by having my $70k Tesla so I feel better, but in reality, my paid off Subaru even with gas cost is a much better financial decision. But I didn't buy a Tesla purely for the financial decision

Totally agreed. Old BMW are cheap for a reason. I personally would not own another BMW in my life. I would only consider lease a new one and return it. They have so many issues after a few years and very costly to repair.

 

[URBAN LEGEND]

No one should go through this.

 

[Xdama]

Totally agreed. Old BMW are cheap for a reason. I personally would not own another BMW in my life. I would only consider lease a new one and return it. They have so many issues after a few years and very costly to repair.

Best car financially for me was a 12yr old Volvo C70 T5, bought with 90000miles on the clock. Paid £1200 for it cash, put 20000 miles on it over a year or so with only outlay being fresh brake pads & a minor service. Traded it in the following year for £2500 against a new Mercedes.

 

[TexaCali]

Reminds me of an old TV commercial (for FRAM Oil Filters), the tag line was "You can pay me now, or you can pay me later". Another saying from that same era - "you pay for a new car whether you drive one or not".

 

[dmurphy]

Best car financially for me was a 12yr old Volvo C70 T5, bought with 90000miles on the clock. Paid £1200 for it cash, put 20000 miles on it over a year or so with only outlay being fresh brake pads & a minor service. Traded it in the following year for £2500 against a new Mercedes.

I mean, if we want to get into “best car financially”, that’d have to be my ‘86 Grand Am. Paid $1000 for it with 130,000 miles on it, and then beat the snot out of it until it was junkyard material. I want to say it ended up just shy of 200k miles. Lots was wrong with it, but the dang car never left me on the side of the road.

 

[valaeyron]

Now, I know this whole anecdote is riddled with mistakes. (not to mention that people will say "well, you got a bmw - they're super expensive to fix). But they're not uncommon mistakes. And the decisions are decisions that I have seen friends and family make, attempting to accomplish the same thing. So, if anything, this is a cautionary tale. I'm pretty old. I've never had the "fluid cash" to buy a $45000 car, cash, outright.
I do today.

To be clear, the OP did acknowledge that “cash fluidity” is not a state they are used to and whatever their decisions were, the intent WAS to try to lower their total cost of ownership. It also seems that, for their situation and risk outlook, buying a car and wrenching on it to keep it running was not weird.

I would not have chosen the same risks, but OP, I do think that was a good goal. Hindsight is always 20/20…

 

[RonKorakas]

Thanks for all the posts so far.
I TOTALLY get where you guys are coming from about "owning a BMW with its reliability issues". My reasoning was simple : I've owned BMWs for over 20 years, I've had 11 of them, and I'm very comfortable fixing a lot of things myself. The O2 Sensors, for example, notice I didn't have an "installation cost" because I replaced them myself. So I thought I would buy a cheap-0 e46, which I've owned 4 out of the 11 time Las-and if it needed repairs, I would do them myself and "save" the mechanic costs.

Honestly, what went specifically wrong with this was the Drive Shaft as well as the fuel filter,which went bad AFTER I had already driven the car for about 8000 miles. If I didn't have those two issues, which I could not perform myself at home, I would have saved 760. As well as a couple of diagnostics that ran me $350. So just these two things alone would have deducted 1100 from the debacle.

I do agree as well that this situation is a little TOO specific to the crappy car I got. But again, the choice I made was not ONLY about saving money, it was also because I'm a BMW enthusiasts. So, if i hadn't given up the Tesla to run this experiment, and purely got the car as a hobby car, I wouldn't have minded all the cost in speaking of.

About the cash fluidity, I'm not saying I haven't had enough cash to get a good car before. I hope I wasn't misunderstood. I'm saying I haven't had, before this year, $50,000 just collecting dust in one of my accounts, to casually but a Tesla.

I've always liked experimenting with how i use my liquid and other cash, to accomplish something. After all these years, it finally worked where I was able to not only finish the race, but finish it in first place. This whole experiment was a result of that curiosity - especially hearing the whole "Teslas won't cost you any maintenance and the gas savings will end up saving you money in the end".

I've owned 3 Teslas, and I just ordered my 4th. I love the cars. This whole 10 month experience was my way of cementing, with concrete empirical proof, the faith I have in the reliability of these cars and dispel, for my personal perspective and situation, that getting a cheapo car saves you money in the end.

Ron.

 

[valaeyron]

About the cash fluidity, I'm not saying I haven't had enough cash to get a good car before. I hope I wasn't misunderstood. I'm saying I haven't had, before this year, $50,000 just collecting dust in one of my accounts, to casually but a Tesla.

No assumptions. I get that having $50k lying around waiting to casually buy a car isn’t “normal” and no judgement there either, believe me!