CarMax ROI Problem

Land Rover Range Rover
Land Rover Range Rover

Thesis

The total cost of ownership for buying a new Land Rover Range Rover is higher than buying a 2-year old car from CarMax. The new car was $96,725, and the four-year car was $57,306.

The difference is the result of the older car being 60% the initial purchase cost. The older car’s higher maintenance balances the higher interest of the newer car.

Second Car

Method

Total cost of ownership included the following variables:

  • Initial car purchase price
  • Financing cost ($5,000 downpayment, 9% APR)
  • Estimated annual maintenance

Limitations

Purchase cost was pulled from Carmax and dealer websites. Annual maintenance estimated from personal experience.