I read about people downsizing their home all the time to save money. Maybe the kids have grown up and moved out, or maybe you’re just looking to reduce your monthly expenses by getting into something smaller.
But what about car downsizing to save money? Here’s how I went from a Camry to a Corolla and ended up saving more than $750 a year while getting a model that was 10 years newer!
Money Saving Breakdown – Car Downsizing to a Corolla
- Difficulty (Super Easy/Easy/Medium/Hard/Expert): Hard
- Average Savings per Year ($/year): 1,043
- Time Required (mins): 1,200
- Savings for your time ($/hr): 52
The Method – Use the Frugal Guide for Buying a Used Car
Well, my current car is ~16 years old, and I figured it was time for a change. There are a couple of cosmetic things wrong with it that will prevent it from passing inspection (cracked windshield on worn tires). I figured now would be a good time to switch into a vehicle that gets much better gas mileage. My current 1997 Toyota Camry V6 gets about 21mpg on the average. If determined that if I could switch to a Corolla I’d save ~$750 a year in gas.
If you’ve been following along with my monthly reports, you’ll know that I’ve been looking for a used Corolla since May 2013. Finding a good used car at a decent price is a real challenge. I estimate that it’s taken about 20 hours of my time. There definitely isn’t anything easy about this process. After looking at four cars and scouring hundreds of Craislist posts, I finally ran across one and made the jump to purchase it (shown in pics above and below)!
I followed much of the advice that I put into the Frugal Guide for Buying a Used Car that I developed a while back. I was able to find a great deal on a car and eventually bargained to get it at $2,200 less than Kelley Blue Book ($9,100 – $6,900)! Here are a couple of interesting points on the car/negotiation:
- The 2007 Corolla car had been in two low speed accidents. Because of this, the seller posted the price at $7,600. I knew this info from Craigslist going in – I really appreciated that the seller was honest about this and priced the car appropriately. There is absolutely no cosmetic damage, and the repairs used all new parts – so that is in some ways a bonus.
- The seller put this in the posting: “Moving and must sell this week.” This was a huge flag that they were motivated to sell, and I could get a good deal.
- The seller also added this: ‘Asking $7600, negotiable.” Again, another clue that they were open to accepting a lower offer.
- The front tires needed to be replaced. I used this to help get a lower price.
- I used other negotiating tactics such as asking what is the lowest price they would be willing to accept, pointing out the shortcomings of the car, and using plain-old silence at key points to get the better deal on this car downsizing project.
Car Downsizing – The Detailed Calculations
Here is a detailed table on how car downsizing can save you a ton of money! Here are the assumptions I made when preparing this cost/savings table:
- The Camry repairs would total $490 to pass inspection (cracked windshield, worn windshield wipers, new tires, replace two internal door handles).
- The price of the 2007 Corolla was $6,900 + $190 for new front tires.
- I can sell the Camry for $1,000 on Craigslist. I subtracted this from the Corolla price ($6,900 + $190 – $1,000 = $6,090).
- Prices for Camry repairs would be $100 over and above the Corolla for first five years, then repairs would be $200 over and above the Corolla for years 6-11.
- Assume price of gas is $3.30 and increases 3% each year.
- Assume that I get $250 deductible comprehensive/collision car insurance for the first 5 years and that the price goes up 3% each year.
- Assume Camry gets 21mpg on average and the Corolla gets 31mpg on average.
- Assume I drive 16,000 miles a year. This means I’ll get to 250,000 (assumed life of vehicle) with the Corolla in ~11 years.
|Year||Camry Repairs||Camry Fuel||Total Camry||Corolla Purchase||Corolla Fuel||Addn. Insurance||Total Corolla||Yearly Savings|
At the end of the 11 years, I’ll come out having an additional $5,880.83 in my pocket! This basically means that I get the Corolla for free and stash an extra fifty eight hundred dollars over the next 11 years. Put another way, I’m getting a 12.6% rate of return on my money for no risk! Not too shabby!
I calculated that the cash investment to upgrade to the Corolla is costing me ~$547 a year. Because I’m saving $750+ a year on gas, it’s like I’m getting paid to drive a nicer, newer car 🙂 I’m not sure why I ever waited this long to explore car downsizing, but I’m glad I finally made the switch.
If it’s nearing the time for you to get a new vehicle or if you’re driving around town in something that doesn’t get 30+mpg, you should really consider car downsizing! You can save yourself a ton of money over the long run, and it’s better for the environment 🙂 Has anyone here taken the car downsizing leap?? If not, what are you waiting for?