Money Expert: Here's How Long You Should Keep Your Car Before Getting a New One
Most American households own at least one car. According to the latest U.S. Census data, just 8.4% of households don't. Approximately one in three (36.6%) households have two vehicles.
Those are some impressive statistics, but how long should you actually own a vehicle before switching out? How do you know when it's worth the cost of buying a new one?
Here’s what money expert Humphrey Yang says — and whether he’s right.
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Own Your Car As Long As Possible
In a recent TikTok video, Yang gave the following advice: Buy a vehicle and "drive it into the ground."
According to him, you'll save the most money that way. Why? It mostly comes down to vehicle depreciation (loss of value) rates.
According to Kelley Blue Book (KBB), new vehicles typically lose around 30% of their initial value in the first two years. From there, they lose between 8% and 12% of their value each year.
CarFax experts suggest slightly different percentages, though they're not far off. According to them, new vehicles lose around 20% of their value in the first year. They then lose around 15% over each of the following four years. By the fifth year, the average new vehicle is worth roughly 40% of its original value.
Yang shared his own estimates:
20% lost as soon as you drive off the lot
15% lost in the first year
About 50% of value remaining by Year 3
While the exact percentages vary, there’s broad consensus that vehicles lose the most value within the first five years. By then, your car may be worth only 40% to 50% of what you originally paid.
Yang added that the longer you keep your vehicle, the lower your annual cost becomes. Based on an average new car price of $52,627 (per Kelley Blue Book), here’s how that cost breaks down over time — excluding depreciation:
1 year: $52,627
3 years: $17,542 per year
5 years: $10,525 per year
10 years: $5,263 per year
Note that Yang used slightly different numbers ($50,326 for a new vehicle), but the point remains. Owning a vehicle for a short time is the most expensive option.
What's the Total Cost To Own a New Vehicle?
Yang doesn’t go deeper in his video, but there are other important factors to consider. Looking at the five-year cost of ownership can help you make a smarter financial decision.
According to Kelley Blue Book, key factors include:
Depreciation
Out-of-pocket costs such as insurance, financing, maintenance, repairs, state fees and fuel
A lower sticker price doesn’t always mean a lower total cost. In some cases, a slightly more expensive vehicle may cost less over time. For example:
2025 Toyota RAV4: $47,139 five-year cost to own ($31,310 MSRP)
2025 Honda CR-V: $47,876 five-year cost to own ($31,495 MSRP)
How Long Do New Vehicles Usually Last?
According to Consumer Reports, a new car can last at least 200,000 miles. This is assuming regular maintenance. It also depends on the make and model.
Now, consider that the average person drives 13,476 miles a year. That's nearly 15 years' worth of driving. If you break this down into per-year costs, that $52,627 vehicle would end up costing about $3,509 annually. Again, this only accounts for the sticker price, but it's still the most overall savings.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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