Last summer, my wife and I decided it was time to replace our aging sedan. But, instead of buying an actual new car, we decided to shop the used market for something that would be an upgrade for us but at a decent price. Basically, the goal was to find a reliable car that would be comfortable for our many road trips and, if possible, would be a hybrid. While we were initially thinking of a Prius to fit the bill, I stumbled across the now-discontinued-in-the-U.S. Lexus CT200h as a possible alternative as it literally has the same engine as a Prius (being built by Toyota after all) and was surprisingly about the same price. The question then became, which used CT200h do we buy?
Being a discontinued model, we weren’t able to find any in our immediate area but we did have more success on various “car”-named websites like CarGurus, Carmax, and eventual winner Carvana. So, with all of these options at our disposal, how could we compare them objectively to find the one that made the most financial sense? That’s where my “mileage to dollar-cost” spreadsheet came in.
I had actually forgotten about this document until my wife came across it in her Google Drive earlier this week, but I’m kind of proud of it in hindsight. Since we were in search of a car with low miles at a low price, my idea was to take the asking price for each available vehicle and divide that by the number of miles each had on it to find what I’ll call the “cost per mile driven” or CPMD. While I did note other potential factors, such as notable upgrades, car color, model year, etc., this spreadsheet put an emphasis on how much value we were getting from a “miles on the road” perspective.
Surprisingly, the range we found was quite large. On the low end, one vehicle had 28,109 miles and was being sold for $18,491 — amounting to a cost of $0.66 per driven mile. The catch here is that this particular car had been in accidents, which made it a no-go for us. On the other end of things, one dealership we found was asking $17,988 for a car with 72,000 miles. That gives it a CPMD of $0.25. Although the lower dollar figure might instinctively make that seem like a better deal, keep in mind that, in this case, a higher figure actually means a better value.
With all the other vehicle listings falling somewhere in between that spread, I’m excited to say that the one we eventually bought (and named Gwen, for the record) was the second-highest overall, with a $0.55 CPMD. That was thanks in part to its remarkably low 33,712 miles — pretty good for a 2015 model. Plus, since we decided to drive up to Carvana’s car vending machine in Kansas City, we didn’t have to pay any additional fees aside from tax and registration, of course.
Looking even closer into this tool, before making our final decision, we were torn between two vehicles in particular: a) a grey vehicle with 36,072 miles for $18,600 or b) a white vehicle with 33,712 miles for $18,700. If you were paying attention, you already know which we ended up with but, with color not being a huge dealbreaker for us and other specs being comparable, we were left with the question, “Are the fewer miles worth the extra cost?” To determine that, we took the price difference ($100) and divided that by the mileage difference (2,360). This figure comes out to about 4¢ — in other words, we’d be paying 4¢ for every mile not driven on the car. Ultimately, we decided that was a pretty good deal.
Obviously this simplistic spreadsheet might not be right for everyone as there may be certain features you value more than others. Still, as a starting point, we definitely found this method to be helpful — if for no other reason than it helped us keep all the cars we were looking at straight. Thus, if you’re in the market for a new-to-you car, perhaps you should consider drawing up your own Google Sheet for such purpose.
P.S.: Shout out to my dad for helping me make sense of what I calculated as I was super confused about how to explain it for this article.
Originally published at Money@30.