Used car vs. new bike? The scale just tipped more.

Biking Skills

November 9th 2018

Years ago, buying a used car was a great way to keep your expenses low, get out from under a loan early, and start saving serious money. Then, with new car prices going up, auto makers started spiffing up the used car market.

Now we have fancy terms like pre-owned or pre-certified, along with ever-longer car loans.

According to a recent USA Today Article, the average cost of a used car is now over $20,000. Including interest, that’s $400 a month for 66.9 months.

To build your bank account, you’ve got to slow this going someplace else.

Yes, that’s less expensive than buying a new car, but you still have to wait over half a decade before that magical moment when your car is paid off and you can bank the loan payment in your own name. And even then, you’ll still be paying car insurance, gas, and possibly even parking at work and/or home. How’s a person supposed to get ahead?

Used car payments vs. Metro.

According to carinsurance.com, the average annual cost of car insurance for a 25-year old driver is $1,745/year, or $145/month. Add in $30/month for gas (5-mile commute each way, 25 mpg, $3/gallon gas cost), plus your used-car payment, and assume free parking everywhere and miraculously no oil changes, and the absolute minimum monthly cost of your car ownership is this:

$400 + $145 + 30 = $575.

Using the Washington DC metro as an example, a trip costs between between $2.40 (off-peak) and $3.85 (rush hour) per trip. Let’s say all your trips, both ways, are at rush hour, and you go someplace randomly both days of the weekend at off-peak times. Estimating at four weeks/month, your monthly costs would be approximately:

4 weeks * (5 weekdays of $7.70 round-trips and 2 weekend days of $4.80 round-trips) = $192.40/month.

Your savings? $575 – $192.40 = $382.60, every month, right to your bank account. And that’s a minimum, because we dropped lots of car costs and assumed maximums for Metro.

Used car payments vs. a good commuting bike.

The CHANGE 702 folding commuter bike retails for $1,180. And if you’re really going to commute year-round, let’s be realistic–you’re going to need some cold/wet weather clothing. So let’s add another one-time purchase of $400 for that.

Now let’s assume you had only your $575 monthly car costs available to pay for it. So this is a major, major purchase decision. Still, even with credit card interest, you’d have the $1,580 completely paid off after three months.

Buying a commuting bike with your commuting money is the same money you were going to shell out anyway; you just paid it to yourself to build a long-term asset.

Let’s look at Month 4 and beyond. With a good bike, your maintenance cost is at or near zero. For expenses, so there’s something, let’s assume you buy yourself cool goodies that are now useful–lights, rack, pannier bag, etc–at a rate that’s completely optional. Maybe $50/month.

You are now banking at least $525 in your name, every month, even after optional monthly spending to get more cool stuff.

So why a CHANGE bike?

You can get a good commuting bikes anywhere, including great deals on Amazon. So why a CHANGE bike?

Two words: Convenience and Reliability.

It’s convenient because, at both ends of your commute, it folds out of the way. So it can join you in the elevator on the way to your office, and fit comfortably in the corner of a cubicle. At home, it can live safe from theft in a hallway or closet. Your discounted transportation becomes a built-in part of your life.

Super-safe bike storage at work.

It’s reliable because it’s an investment you can bring inside easily. Even on a lightweight aluminum bike, there are a lot of steel components, from the chain and gears to the cables, that are susceptible to rust.

With an outside bike, exposure to the rain, snow, and condensation eventually makes these rust and require replacement to work properly–and there you are with no transportation.
With an inside bike, it gets wet during a sloppy commute, then dries off nicely by itself in a low-humidity office or apartment. Why aren’t all bikes like this?

So really, the only question is…which CHANGE bike is best for you?