As you prepare to sell and/or buy a car, you’ll no doubt be considering the issue of used car mileage, from how it affects what the buyer will pay, to the implications for actually owning the car, to the investment value over the longer term.
It’s useful to think about this in terms of “mileage thresholds,” or mileage benchmarks that make a car more or less valuable, based on several important facts. Below, we give the most common breakdown of mileage thresholds, and explain what each one means for buying and selling.
The most common mileage thresholds are as follows:
New Car Mileage
Some people like their cars brand-spanking-new and rolled out of the showroom with less than 20 miles on the meter. “New” can include a car with some test drives in its history, because “new” legally means it’s never had an owner or a title.
The main benefits of buying a brand new car are that you know for sure that it hasn’t been owned and potentially misused by anyone else, you have a fresh warranty on it, and you can potentially order a package of features that suits your needs and wants.
The main drawback? It loses an average of 20% of its value the second you drive it off the lot.
“Just off the lot”
This phrase is used to describe cars that are effectively brand new (see above) EXCEPT they’ve been driven off the lot and owned for a short time—let’s say a car that’s been owned for less than two months and driven less than 200 miles, on the outside.
The main benefit of buying an almost-brand-new car is that it’s 20% less expensive than it was just a month ago—with almost no wear and tear. Often the reason people sell cars so quickly in cases like this is that they find they can’t afford the brand new car they purchased, so they go for a quick sale—that can be a big gain for you.
On the other hand, there’s also a chance the car is a lemon, and that’s why the buyer is selling. In this case, the proximity to it being brand new can be used to pull the wool over a buyer’s eyes about problems with the car that make it not such a great deal after all.
Another down side of “just off the lot” is that a car loses a total of 25-35% of its value after a year, so you could be better off buying a car that already has at least a year under its belt, when the value depreciation curve levels out.
Used Car Mileage: Under 20,000
A car with less than 20,000 miles is still fairly new, which typically means there’s some reason for selling—again, there could be problems with the car, maybe the owner can’t afford it, or maybe they just like updating their car every year or two. It’s not that common to find cars being sold with less than 20,000 miles without some compelling reason.
For buying, this matters because around 20,000 the car may no longer be under warranty, and you’re going to have to be wary concerning potential defects (especially because, if it’s not under warranty, you’ll have to pay to fix them).
Used Car Mileage: Under 100,000
All other things being equal, buying a car with between 40,000 and 100,000 miles is likely to be the most strategic thing to do from an economic standpoint.
The car’s value depreciation will have stabilized, it will have been owned and driven a good wholesome amount that doesn’t ring any alarm bells, and if you want to sell the car before you hit the 100k mark, you can still get a good price for it, provided it’s well looked after.
Once you reach that 100k mark, however, you’ll hit another value drop that will make it less worth your while to sell the car. Even though the number itself is somewhat arbitrary, 100k miles has a certain stigma attached to it—a car becomes “old” at 10 years and 100,000 miles.
Even while mileage thresholds are useful to have in mind, there are plenty of exceptions to the rules. As you search for your next car, keep an open mind and don’t you’re your expectations on mileage alone–it’s really about finding the right fit for you.