"We have three kids and have decided to bite the bullet and buy a minivan this fall. This vehicle will enable us to carpool with another family (also three kids) to and from school, currently impossible with our 5-passenger Camry. I am considering not trading in the old car, keeping it around for my wife to use for non-carpool driving. This will save wear and tear on the van, but it means carrying insurance for an extra car (maybe $500 a year). Your thoughts?"

Wouldn’t pay-at-the-pump auto insurance have been great? On the theory that you can’t be behind the wheel of two cars at the same time, you’d pay primarily based on how much driving you did. In advocating this notion a few years ago, I found that I had the Rare Car Collectors of America (or whatever they’re called) firmly in my camp, wildly enthusiastic. These are the folks who own 12, maybe 15 or 30 cars and motorcycles. There are at least 200 such people — I think Jay Leno is their leader — and I had their full support. On the other side were 50 million insurance agents, the $50 trillion oil industry, 50 million trial lawyers, and Ralph Nader (because pay-at-the-pump was coupled with true no-fault insurance).

So you’ll just have to pay that extra $500 in insurance and not blame me. (The reason insurers charge for liability on the third car in this circumstance is that if it were stolen or borrowed and wound up injuring someone, you, as the owner, could still be sued.)

Now. More to the point:

Does the old car get better mileage than the minivan? If so, that will save some money toward the $500 in insurance along with the wear and tear to the minivan you mentioned. And there’s always value in having a spare for the day the minivan is in the shop, or the week your in-laws are in town.

Then again, if this old car actually has much value, you’d be sitting with three vehicles depreciating day by day rather than two. And you’d have not just the $500 insurance cost, but the opportunity cost of what you could have done with the $3,000 or $7,000 or whatever you would have gotten for the old car. (So: the more valuable the third car, the higher the cost of keeping it.)

One final thought: There’s more to life than money . . . so don’t let what I’m about to say bum you out . . . but from a strictly financial viewpoint, have you considered buying a used minivan? As someone once wrote (well, me, actually): That new-car smell is the most expensive fragrance in the world.

Coming Next Week:
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