Tuesday, April 3, 2007

Car cost saving tip

I had written before about buying a new car Vs an old one. There are a couple of cost savings measures that I did not mention in my car buying strategy. The first has to do with collision insurance. I do not carry any - this saves me quite a bit of money each year. Even when I was forced to carry collision in the days that I used car loans, I always had a $1000 deductible. This can pay for itself quite quickly. Many people look at $1000 as a large sum, but it is the incremental $500 that you should be thinking about. You often pay quite a premium for that extra $500 of coverage. But it is better to avoid collision insurance altogether. If you are a really bad driver and get into lots of accidents, your insurance rates are going to be jacked up anyway, so you will be paying twice for this coverage. Since I buy cars that cost less than $4000, collision insurance makes no sense economically.

The other cost savings thing I do with cars is use synthetic motor oil. As a chemical engineer, I'm quite familiar with synthetics and lots of myths about them. I have my oil changed about every 12-15k miles at a quick change shop. I buy a 5 qt container at Walmart for under $20, so it costs me $37 per year for an oil change Vs ~$100 using conventional change intervals. In addition to the obvious cost savings Vs changing oil every 3500 miles, I get about 10% better gas mileage, better cold starts, less engine wear and reduce my environmental footprint. I've driven every one of my 12 cars over 200k miles and never had an engine problem.

Synthetic oil is used exclusively in high performance applications and has the following benefits:
  • better low and high temperature properties
  • better fuel economy
  • resistance to build up of sludge and engine deposits
  • there are no "natural" compounds (like sulfur which breaks down into sulfuric acid) to damage your engine
  • extended change intervals
I've bought used cars with 100k miles and switched to synthetics and driven the cars another 100k miles, so I see no reason to think you shouldn't do this.


Melisa said...

Thanks! Great article - I just bought a used car and opted out of the collision insurance for exactly these reasons.

Anonymous said...

If you're leasing or financing a vehicle through a loan, the bank usually requires collision insurance on the vehicle until it is paid off (at least in my state it does). However, on our old pontiac, we only have comprehensive and liability insurance.

With regards to synthetic, I used to work for the oil company whose product you may be buying and I truly believe in the benefits of synthetic oil. I change my own oil (3 cars) about twice per year on each car. It helps during those cold, cold winter days when you don't want to be lying outside under your car with oil spilling everywhere cause you can't feel your fingers.