looking for "sweet spot" for buying a used car

[wn1998]

I would love to buy new but also know new cars depreciate so much just by driving them off the lot. When looking at a car that is 1-3 years old, is there a mileage I should be looking for to get the "best" possible deal?

I would like the reliability of a new car with the price of a used car. I have been looking for quite some time and it seems that even with 20-30k the price is only a few thousand less than new.

 

[abycat]

I dont know what kinda deal you got on your versa but I got mine for 6 grand less than new and it only had 30,000 km and its a 2011. Mint inside and out and has had 0 problems. Id say that was a good deal. I find the best deal is when they are very unused and the same or one model year old. Thats when the price drops but after that it seems to taper off. I dont understand it but its what ive noticed around here.

 

[dave1251]

My current value on my 3 year old truck is 26 grand or there abouts. I paid 32K when I bought it new. 6 or so grand depreciation over 3 years has is about 2K per year. So unless you are paying with cash or can get a loan with interest rates that is comparable to new, I would go with a new vehicle. I have bought new, newly used, used POS, used good condition. If I can get new within the price range of used, I will go with new.

 

[JHZR2]

Do they really always depreciate so much? Maybe if youre selling to a retail dealer, orherwise not necessarily Look at the price of say a used Camry or accord, or the post above. Selling a recent car is for suckers and for vanity, and those are willing to pay the price.

IMO the sweet spot is a car with around 170k miles and all receipts. It will be cheap, well maintained, and the cost of repairs built into the cost of the car. With all the receipts, you know what to expect and when.

Any used car will need $2k worth of work to be roadworthy and safe. Chalk it up to tires, brakes, baselining all fluids, safety parts like brake line parts, etc.

I don't find the amortized per mile cost/discount of a used car to be a good value. Say you will have to do some decent service, plus brakes and tires around the 100k point. Even if I get a 60% discount versus new on a car with 50k miles, I'm 50k closer to the need for repairs, 50k closer to the scenario where even if it doesn't scare me, I still need to think about An unforeseen reliability issue causing a stranding breakdown. Newer cars are evermore reliable as a whole, I get that, but mechanical systems will still need work around that point, let alone good PM around that point.

So the per mile amortized cost is higher for all that work.

To me it isn't a compellingly good deal.

The biggest issue is that we've convinced ourselves that we deserve filet mignon levels of gadgets, engine power, etc, when we are on a rump roast diet. Better off moving down in car, IMO.

 

[bxd20]

Originally Posted By: dave1251
My current value on my 3 year old truck is 26 grand or there abouts. I paid 32K when I bought it new. 6 or so grand depreciation over 3 years has is about 2K per year. So unless you are paying with cash or can get a loan with interest rates that is comparable to new, I would go with a new vehicle. I have bought new, newly used, used POS, used good condition. If I can get new within the price range of used, I will go with new.


What kind of truck? Current mileage?

 

[bxd20]

Originally Posted By: JHZR2
I don't find the amortized per mile cost/discount of a used car to be a good value. Say you will have to do some decent service, plus brakes and tires around the 100k point. Even if I get a 60% discount versus new on a car with 50k miles, I'm 50k closer to the need for repairs, 50k closer to the scenario where even if it doesn't scare me, I still need to think about An unforeseen reliability issue causing a stranding breakdown.


Assuming you hold your vehicles for the long haul, then I agree with your reasoning.

If you turn over vehicles every 2-3 years, I think a 1-2 year old car is a great value. You will save the big initial hit, and you will most likely not have any repairs if you own it from around 20k to 50k miles on the odometer. You may have to do tires or brakes but that is easily covered with the initial savings. Today's batteries last 5 years usually (have personally gotten over 9 on an original battery), shocks aren't a problem at 50k, etc etc.

 

[nitehawk55]

My oldest son got a 2011 Taurus SEL loaded for $24500 with only 21000km on it . List price was $35400 so buying 1-2 years old with as low of milage as possible is the smart way to go .

 

[fisher83]

My "sweet spot" for cars is about 6 years old. I buy them with around 80k miles or so. My last couple of cars I have bought that way and I do my preventative maintenance right off the bat. Most newer cars don't require much major service before 100k miles so I'm getting them before they have been long neglected. I change out transmission fluid,antifreeze,plugs and wires, and unless it is pretty new I also change the battery and I do all this right away when I get the car. I also change the oil and if needed, the brakes. It usually costs me about a couple hundred bucks or less to do all this and it saves me a lot of surprises down the road. Doing it this way, I usually can pick up a car for $5k or so and most of the depreciation is done for, insurance is cheap, and in 5 years I can still get at least half my money back.

 

[Kestas]

I noticed that once they come out with the new body style, the price of old ones drops like a rock. So, don't be looking for a 6-year-old model if the old style is still the same as the new ones.

Also, I can't figure out if it's better to get a newer car that's racked up a lot of fast miles, or an older car that's got low miles - especially for a person like me who doesn't put many miles on a car. Probably the former.

 

[abycat]

Originally Posted By: nitehawk55
My oldest son got a 2011 Taurus SEL loaded for $24500 with only 21000km on it . List price was $35400 so buying 1-2 years old with as low of milage as possible is the smart way to go .


Must be the norm for up here. Sounds like my deal. My buddy got a subaru suv thing that a lady bought but in 1200 km realised it really hurt her back driving it. So she traded it in and he bought it for 11,000$ less than brand new which was darn close to what he got.

 

[JOD]

I think it's a moving target, and depends on the brand and the model. I bought my '05 2 year old Freestyle AWD Limited in '07 for 16K. That's about half of the new purchase price. It had 18K miles and had more of a warranty than if I bought it new (since it was CPO and I negotiated that the Ford extended warranty with it). It also had 4 dealer-documented oil changes on it, which was the only service due. It literally looked like a brand new car when I picked it up.

I paid cash, so I don't know if there are financing disincentives for buying used--but besides that I would have been insane to buy a new loaded '07 Freestyle for 34K when I could buy that car for 16K. That said, I was also lucky to want a car which depreciated significantly. The depreciation of the FS is probably the reason I'm driving that versus a Highlander. 5 years and 110K later, I don't regret the decision.

So, like most things I think the answer to your question is "it depends".

 

[PandaBear]

First of all, how much do you want to spend and what kind of vehicle / condition can you tolerate. Even if high mileage old used cars are great deals not everyone can stand being in a free stale old car.

Second of all, how good is your skill at maintaining and minor repair, and do you go to mechanics every time the check engine light is on or a new noise and vibration comes up. Used car takes effort to maintain regardless of how reliable it is. You can save money by doing the work yourself or you can pay someone to do it. Do you have the time or money, and are you afraid of getting stuck or your hands dirty?

Personally if I were to buy a used car I would try to buy something that is the last year of the warranty, so I know based on user review whether there's known reliability problem and I have time to uncover all the little things to be fixed at no cost before warranty expire. I also buy new on cars that I like but with ridiculously high resell value, because I don't think it make sense to have only 25% depreciation after 5 years and 50k miles.

I'd look up both new and used cars that you like, and do the math on a case by case basis, rather than ruling out either side.

 

[dave1251]

Originally Posted By: bxd20
Originally Posted By: dave1251
My current value on my 3 year old truck is 26 grand or there abouts. I paid 32K when I bought it new. 6 or so grand depreciation over 3 years has is about 2K per year. So unless you are paying with cash or can get a loan with interest rates that is comparable to new, I would go with a new vehicle. I have bought new, newly used, used POS, used good condition. If I can get new within the price range of used, I will go with new.


What kind of truck? Current mileage?


2009 FX4 30K miles 61/2foot bed step side. Dealer retail right now is almost 31,000 dollars. Private party is 28,300. Not bad for a truck I paid 32K for.

 

[Artem]

Because by 20-30k, the car is just now broken in and ready for life on the road.

At around 60k most cars require some maintenance. For some it might be little things for others its a timing belt change, etc etc and that might run up to thousands in repairs / maintenance.

For cars like my 07 Honda Civic EX has 140k on it and I haven't touched a thing other then oils.

 

[Cujet]

Cost per mile is really what you want to know. It's stunningly clear, once the numbers are crunched, that cost per mile varies little between a new car, purchased at a discount, and a used car of the same class. The difference is always less than 5 cents per mile. Often, there is no difference.

Yes, driving can be done more cheaply. But there is an absolute here too. It requires a much older, cheaper and often less desirable car. And, minimal insurance. And a willingness to put up with the endless list of potential failures.

The Capital cost of a car is pro rated by miles. New v used, It's almost not worthy of discussion. The other costs will often far exceed the capitol costs. And they are unchanged new or used. Fuel, for example, will cost very much the same per mile in a 2008 Camry or a 2012 Camry, with similar engine choice. insurance too. Tires, brakes, maintenance and other costs are always initially higher on a used car. In fact, the loan interest rate on new is generally lower too.

Unless someone gives you a nice, late model used car, you will pay a specific dollar figure per mile, per class of car.

 

[supton]

That's been my idea: look at cost per mile, and then take into account the cost of my time to keep it going. I drive enough that 10 years is probably a go0d time to dump something: lots of wear and tear at over 20kmiles/year. Since I drive that much, and can't/won't repair it myself, I'm not likely to buy 2-3 year old car -- the extra up-front cost buys me that much more time when it won't need something. That has a value to me that won't exist to those who are willing to work on their cars.

If I drove much less, then used would become more palatable.

I will say this: it's pretty important to figure out maintance costs on a vehicle. I can easily shrug off a $700 timing belt every 80k, or a fuel filter every 20k, etc. Why? Because I knew that going in, and took that into account when buying. Talking to my coworkers I'm shocked that they are shocked when they find out what a brake job costs, or even just routine service.

 

[bxd20]

Originally Posted By: Cujet
The difference is always less than 5 cents per mile. Often, there is no difference.


You say "less than 5 cents per mile" as if that were insignificant. I bought my 2005 GTO in 2009, with 2,300 miles on it. Based on current value should I sell it, and monthly driving mileage of 1,200 miles, I am paying about 9 cents a mile to drive the car. 9 cents versus 14 cents is a huge difference, over 50% more per mile. Your 5 cents a mile figure is pretty accurate for my car.

I admit the GTO has held its value much better than the average car, but I don't agree that "often, there is no difference". I would say that on average there is probably a 25% difference per mile for run of the mill cars. 10 cents a mile for 15,000 miles a year is $1500. 7.5 cents a mile for 15,000 miles a year is $1125.

This gets back to my post above. If you are going to hold onto the car for a long time, you might as well go new. The costs do converge over time, there is far less stress as you said, you know who drove it, how it was maintained. All huge pluses and I prefer the "buy new - hold long" plan.

But if you're the person that gets bored with cars and flips them often (I have a cousin who has never kept anything over 3 years and usually its more like 20 months) then it makes much more economic sense to buy a car between 1 and 2 years old.

The other scenario for example is where you have a 15 and 17 year old at home, and still need a big vehicle for family trips but you realize in 3 years you may have an empty nest and want to downsize from that minivan.

That 1-2 year old car will still have warranty when you buy it. It will only have 20-something thousand miles on it, perhaps about 50k by the time you are getting rid of it. The chances of needing anything besides brakes and tires in that period is very low and the chances of it happening after the 36k warranty ends (or 48k for some brands like Buick) is VERY low. Also, a 20-something thousand mile car often will have already had its tires replaced as a selling point. If it's on the dealer lot, they probably threw some new brake pads and turned the rotors.

The short of it: there is no hard and fast rule, it depends on your lifestyle, future plans, current cash situation, etc etc etc.

 

[eljefino]

If you're paying cash and have the stones a private party sale might do you all right. Dealers mark used cars up to nearly new, and banks finance those. Private parties get ripped off on the trade because there's an assumption that they won't find someone with $8-12k in cash.

But you have to do your due diligence b/c there's a profit motive to rebuild wrecks, floods, lemons, etc.

A junkier used car will IMO be safer b/c it's not profitable to weld two half-wrecks together. You can also more reasonably guess someone's motives (it has 100k and they're scared of repairs.)

New cars take more expensive low profile tires. Don't just guess at tire costs, go to tire rack and price stuff out! Take into account faster wear too. I find new cars aggravating in many ways: blind spots, throttle-by-wire, and would rather buy a new 1995 model year! IMO reliability also includes a proven track record; a pristine low use example of something that sees a lot of high use, like a work truck, taxi, or prius, that has proven itself, is a better buy.

But like said above it's a moving target as the masses flock to "known good" so you have to have above average knowledge, or faith, in the market. Don't just blindly buy a camry/accord as there are those who have been doing this for 25+ years.

 

[Astro14]

Originally Posted By: Cujet
Cost per mile is really what you want to know. It's stunningly clear, once the numbers are crunched, that cost per mile varies little between a new car, purchased at a discount, and a used car of the same class. The difference is always less than 5 cents per mile. Often, there is no difference.

Yes, driving can be done more cheaply. But there is an absolute here too. It requires a much older, cheaper and often less desirable car. And, minimal insurance. And a willingness to put up with the endless list of potential failures.

The Capital cost of a car is pro rated by miles. New v used, It's almost not worthy of discussion. The other costs will often far exceed the capitol costs. And they are unchanged new or used. Fuel, for example, will cost very much the same per mile in a 2008 Camry or a 2012 Camry, with similar engine choice. insurance too. Tires, brakes, maintenance and other costs are always initially higher on a used car. In fact, the loan interest rate on new is generally lower too.

Unless someone gives you a nice, late model used car, you will pay a specific dollar figure per mile, per class of car.


I'm going to have to see your math on that claim.

Here's mine. New 2002 Volvo V70 T5 - $42,000 sticker. Guy trades it in at 5 years for about $10,000. Pays $32,000 in depreciation, higher insurance, higher property tax. We'll give him a break and say he paid cash (otherwise, there was interest on that loan).

I buy the car for $13,000 from dealer, pay cash, drive it for 5 years. It's worth about $7,000. I paid $6,000 in depreciation, as well as lower insurance, lower tax.

All models of cars need gas, oil, brakes, tires at the same rate whether new or used, the difference of course, is the condition of those things on a new car, but they're wearing at the same rate, new or used.

So, even with a few repairs (tops, $1,000, I think it was less), I spent at least $25,000 less to drive this car the same number of years and miles as the guy that owned it new. Take the interest, insurance and tax into account, and it was a great difference.

I get the same heated leather seats, turbo engine, etc...but for a fraction of his cost.

So, new vs. used in the same model car yields the same cost per mile?

I don't see it...

 

[supton]

Try doing that with something that doesn't depreciate like a rock. Toyota/etc. I think you picked an extreme case.