The other day I was thinking -- how much does it cost to own a car? Specifically, was it silly to spend a considerable amount of repairs on my old car when I could buy another?
The first trap is looking at the monthly payment. Irrelevant. The "cost" is the same whether you buy with borrowed money or wish cash.
The true cost is derived by adding depreciation and non-mileage related costs. Non-mileage costs are anything other than gas, oil, tires, fluid changes, etc. These costs are stable with mileage -- you get more for a car if it has good tires. When you buy a new car, you expect perfect tires. So it really only needs to count major repairs, but I tracked them all.
So I developed a spreadsheet: Download car_valuation.xls. And crunched some numbers in Quicken which pretty much cover the running costs of my cars over the past 4 years. I value my cars quarterly using kbb.com by "trade-in value".
My 1996 Jeep Grand Cherokee (the car in question), had been very expensive initially, at a cost of 37c/mile over the first 45,000 miles. This was due to poor resale value. It then turned into an excellent value, at 10c/mile from 45,000 to 119,000 (even with a new transmission, oxygen sensor, brakes, rear wiper, battery, a/c repairs).
My wife's 2004 Jeep Grand Cherokee is still depreciating hard, with a 38.5c/mile cost over the first 30,000 miles.
My 1997 Corvette (purchased used), turned out to be an outstanding value for the original owner, primarily due to excellent resale value. He got the first 35,000 miles at 45c/mile. I got the next 18,000 at the same price. My total ownership cost (from 35,000 to 73,000 miles) has been 38.3c/mile.
So my wife's new car actually has the same cost as my used Corvette. While the old Jeep is coming in at 1/4 of the price. So trading in the old jeep for a new one (I use it in the winter for 4WD) would be very expensive indeed.