Having worked previously in the automotive industry, I have an intense interest in vehicles that has remained even today.
As an Accountant, one of the things that I always find fascinating is mileage. Not all used car mileage is alike. This is one of those areas where people have to balance the qualitative information with the quantitative information.
Look beyond the mileage
When you examine the listing for a used vehicle, it will give you the following information:
- Year of car
That’s the information provided. This can be deceptive. You might think that a vehicle with say, 100,000 km (about 60,000 miles) would be far closer to the end of its life than say, one with 70,000 km (about 44,000 miles). This drives other factors, such as oil changes. We are told to change our oil and get scheduled maintenance on our vehicles based on the mileage. Actually, maintenance schedules often clearly state that they are a guideline only and that in more intensive driving, regular maintenance should be performed more frequently.
Often people feel that it does not apply to them. They may feel that is extreme temperatures or perhaps pulling a very heavy load.
The reason why is because vehicles that spend lots of time on the highway cruising is quite different than say, a vehicle dealing with rush hour traffic or pure city driving. That is more stressful on the vehicle because city driving requires constant acceleration and deceleration, which stresses both the engine, along with the breaks.
With personal sales, when you can talk to the seller, you might be able to get some information about their driving habits. The dealer might also have information if you are buying from a dealer that knew the buyer. Ask the dealer for more information about this.
So what does this all mean?
Mileage is only one of many factors that you should use when buying the vehicle.
Sometimes, as I will elaborate below, the fluids in the car like to be run to be at optimal shape. There are other aspects, such as the state of the battery, which need a regular charge when the car is operational. Hybrid vehicles with lithium ion batteries too should not be left to deplete.
There is always the risk of a car even with low mileage being in trouble.
Look for trouble signs
So I’ve found a vehicle with low mileage, that is quite cheap. So what might be the potential catches that I should look for?
Cars with low mileage can also degrade over time, even when not driven intensively. The first thing to do is to check the maintenance history. This is not a comprehensive list by any means, but some general thoughts:
- A vehicle that was not well maintained or if this information is not available should be an immediate “no”.
- Cars that went for extremely long periods without oil change can be a problem, even with low mileage. The reason why is because during the combustion process, moisture is produced. When the engine is hot, the moisture will disperse. When it is not hot, it can remain in the engine or the catalytic converter. This can dilute the engine oil or hurt the catalytic converter over time.
- Was the coolant flushed at an appropriate time?
- Sometimes seals, hoses, and other lines can wear down over time, even if the vehicle was not driven.
- Check fluid levels to ensure that nothing is leaking.
- No metal flakes in the oil or fluid (walk away if you see this).
- Is the battery in good shape?
- Check tires. They are from a reputable brand, in good shape, and all of the same make.
- Research the parts of the car known for problems. Look at those areas very carefully.
The very newest vehicles (ex: 1-2 years old), you may not need to worry about wearing apart hoses (the notable exceptions being of course performance vehicles and very high mileage vehicles), but in most cases it is best to do your due diligence. There is always an element of risk involved in buying a used car.
It may be best to book an inspection with a local mechanic that you trust to put the vehicle on a hoist to see if there are any costly repairs.
Dealers in general have stringent checklists so there is quite a bit less risk there, although there are always ethically questionable dealers. However, the price of buying is quite a bit higher than it would be compared to a private sale.
Never be afraid to walk away. Even a low mileage car can be deceptive if it is not in a good shape. A well maintained older car is better than a newer, lower mileage, but poorly maintained vehicle.
Consider the general depreciation curve
In general, the perception is always that lower mileage and newer car is better. A typical depreciation curve will look like this:
- Upon leaving the dealership, around 10% of the vehicle’s value is gone
- By the end of the first year, around 25% of the vehicle’s value is lost
- By year 3, about 45-50% of all the vehicle’s value is lost
- By year 5, 60-65% of the vehicle’s value is lost, so it is only worth about 30-35% as much
Different depreciation curves will be different for each car. You need to research the curve for that specific car.
These curves of course don’t take into account mileage. New vehicles driven less will be worth a bit more and newer vehicles with very high mileage will depreciate accordingly. You need to consider as well if given the facts (and not just from the internet guidelines), is this car overpriced? An example, a car aggressively driven and well maintained might not be the best of deals, if the car has seen accelerated wear.
The question then becomes, if you are buying a car with low mileage for its age, have you stumbled on an exceptional deal, or a lemon in disguise? That is only a question you can answer when you inspect the car for the first time.
A used car with low mileage can be a great value. People can have many reasons why they sold their vehicle, such as upgrading, needing another model for their life, buying a new car, etc.
The problem is that even though a used car is cheaper and with low mileages, it may not be a great buy. It is only with close inspection that you’ll know. There is always some element of risk involved in buying a used vehicle, but with strict inspections, it can be done with a low probability of getting a lemon.
You can save a lot of money buying a used car with low mileage. Just make sure you do your diligence and you will be far better off.