Buying Cars Like Financial Gecko

So far in 2025, I’ve bought two cars and sold two cars. Naturally, that got me thinking about car money math.

They say a car is the second most expensive thing most Americans will ever buy in their lives. That’s why it’s so important to understand the financial factors behind car ownership. When I buy a car, I always try to think about it based on four categories, which I remember using the acronym DIOO:

Depreciation, Interest, Operational Costs, and Opportunity Costs.

Let’s break each one down, and then I’ll show you how I try to minimize all four.

Depreciation

This is the big one, and the one people talk about the most. Depreciation is the loss in value your car experiences over time—typically measured by comparing what you paid for it versus what it’s worth when you sell it.

Right now in the U.S., luxury vehicles and EVs are depreciating faster than anything else.

By definition, depreciation means your car is worth less over time. But if you start with a car that’s already inexpensive, there’s not much value left to lose. The smart move is to buy cars that are older and have already hit the bottom of the depreciation curve.

Source: CarEdge depreciation calculator

Unfortunately, many people in their early to mid-20s buy expensive new (or nearly new) vehicles, which lose a huge chunk of value fast. This comes back into play when we discuss opportunity cost later.

My Depreciation Strategy

I bought my very first car nine years ago, and since then, I’ve owned a total of seven vehicles. I still have three of them today. If you look at the four cars I’ve sold, I’ve only lost about $1,500 total to depreciation across all of them. If I sold my remaining three cars today, I’d likely break even or even come out slightly ahead.

How’s that possible? By buying older cars at the right price.

I have a slight obsession with 2005–2009 Mustangs. That obsession has worked in my favor—I’ve studied the values of these models so closely that I can tell instantly if one is underpriced, fairly priced, or overpriced. And I stick to the first two.

Want to replicate this?

Find an older model of car you genuinely love.

Look for models that are at least 5 years old.

Study listings and sales regularly. Over time, you’ll know a good deal when you see one.

Bonus: At 10–15 years old, value mostly depends on condition and mileage, making the best deals easier to spot.

My best purchase was my first car that I bought at age 16 for $2,800. I sold it six years later for only $200 less than I paid.

Interest

This one only applies if you finance the car—and it can be brutal.

Depending on your loan amount, term, and interest rate, you could end up paying thousands in extra costs just for the privilege of driving today.

The simplest way to avoid this is to buy in cash. If that’s not possible, aim for a $5,000–$8,000 used car. You can find reliable, older vehicles in this range that will last at least a few years if you choose wisely.

I drove my $2,800 car for 6 years with zero breakdowns.

I also drove a $7,000 car for two years without issues. The deals exist, you just have to look.

Operational Costs

Every car comes with expenses: gas, insurance, maintenance, and repairs. While you can’t avoid these entirely, you can reduce them with smart choices.

Older Japanese models like Toyota Corollas, Camrys, Honda Civics, or Accords are the cars everyone recommends. I personally haven’t owned one but my aunt has a 2001 Camry that has been excellent for her. I have had good experiences so far with older Fords but can’t recommend that for everyone.

I do know to avoid luxury cars unless you’re ready for higher repair bills.

Insurance is cheaper on older cars, too.

For me, Mustangs are reliable enough, and parts are cheap and easy to replace. I pay less than $50/month for full coverage. Gas isn’t cheap when you daily drive a V8, but it’s worth it to me.

Your operational costs depend a lot on what you drive.

Opportunity Costs

This is the big kahuna. Most people don’t even think about it.

Opportunity cost asks: “What could I have done with this money instead?” The answer, especially when you’re young, could be life-changing.

Buying an older, cheaper car instead of a new one can free up thousands of dollars every year—money that could be invested.

If you’re under 40 (and especially under 30), that money has decades to grow. Even one good decision could add hundreds of thousands of dollars to your retirement.

I’m not saying you can’t enjoy cars—I love them. But if you aren’t already saving and investing enough, buying a fancy new car is one of the worst financial decisions you can make.

Real-World Examples

Example #1 – Mary

Age: 24

Car: Brand new 2024 Ford Bronco Sport

Purchase Price: $37,500 (financed)

Depreciation

One year later, the same model is selling for $8,000 less due to dealer incentives—and her used version is worth about $10,000 less overall.

Interest

She financed it for 72 months, so she’s paying thousands in interest over the life of the loan.

Ownership Costs

Insurance is higher on new cars. Maintenance is low—for now—but that won’t last forever.

Opportunity Costs

All in, Mary has lost or spent/lost at least $12,000 in her first year of ownership. Let’s see what this cost her after the next example.

Example #2 – Financial Gecko

Age: 24

Car: 2007 Ford Mustang V6

Depreciation

I track value monthly, and over the past year it lost $1,100 in value.

Interest

Paid in cash—so $0 in interest.

Ownership Costs

I tracked every penny: $3,626.76 in total for the year.

Opportunity Costs

My total cost was around $4,726 for the year. That’s actually one of my worst years! Most years, I’m closer to $2,500–$3,250 total.

The difference between what I spent and what Mary spent—$7,274—if invested for 40 years, could become $362,000.

TL;DR – Key Takeaways

Depreciation can be greatly reduced by buying older cars.

Interest is avoidable if you buy in cash.

Operational costs are lower with the right models.

Opportunity costs are enormous either way—especially when young. But can be reduced by following the first three rules.

Smart car decisions today can translate into hundreds of thousands (or even millions) in the future.

Final Thoughts

Cars are awesome. I love them. But they can also wreck your financial future if you’re not careful.

Being mindful when buying your next car could save you thousands—and that money, wisely invested, can turn into a fortune.

Buying old, cheap, reliable cars can turn you into a millionaire over time, if you invest the savings.