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#3319636 - 03/22/14 10:00 AM Is it economical to buy new?
7055 Offline


Registered: 01/10/08
Posts: 273
Loc: KS
I want to get a crossover SUV but I'm not sure if I'll buy used or new. If you get new, you to put on the most reliable of the vehicles miles, you get a warranty and you get better gas mileage. I can buy a brand new 2014 crossover for between 20 - 25k. Or I could buy a used 2004ish crossover with say 60k on the clock for maybe around 12k.

I put about 8 thousand miles on the odometer per year making almost exclusively short trips. I want to get a car that will last me with minimal maintenance for 7 - 10 years and it has to be reliable enough for me to trust it on long trips when I go traveling as well as be my only vehicle.

Any recommendations?


Edited by 7055 (03/22/14 10:04 AM)
_________________________
2004 Neon SRT 376whp 437wtq - stage3, exhaust port, 6 puck, water injection...
http://www.cardomain.com/ride/3143812/1

Sold for more important ambitions

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#3319640 - 03/22/14 10:03 AM Re: Is it economical to buy new? [Re: 7055]
dparm Offline


Registered: 04/19/10
Posts: 12503
Loc: Chicago, IL
Why not get something that's only a year or two old? Let someone else take the initial depreciation hit and you can save 20-30%. Many one or two-year old cars will be available as a certified pre-owned, which can give you a better warranty than what the original owner got.

Most modern cars will easily tick past 150k without needing any significant repairs, save for some very high end European ones.
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#3319646 - 03/22/14 10:10 AM Re: Is it economical to buy new? [Re: dparm]
7055 Offline


Registered: 01/10/08
Posts: 273
Loc: KS
Originally Posted By: dparm
Why not get something that's only a year or two old? Let someone else take the initial depreciation hit and you can save 20-30%. Many one or two-year old cars will be available as a certified pre-owned, which can give you a better warranty than what the original owner got.

Most modern cars will easily tick past 150k without needing any significant repairs, save for some very high end European ones.


I thought about that but the price doesn't seem to drop that much when you buy those cars. They might have 15,000 miles on it which is almost 2 years of driving for me. So for just a little extra I can get brand new and put those 15,000 miles on myself. I feel like those lightly used vehicles aren't that great of a deal.


Edited by 7055 (03/22/14 10:13 AM)
_________________________
2004 Neon SRT 376whp 437wtq - stage3, exhaust port, 6 puck, water injection...
http://www.cardomain.com/ride/3143812/1

Sold for more important ambitions

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#3319648 - 03/22/14 10:11 AM Re: Is it economical to buy new? [Re: 7055]
buster Offline


Registered: 11/16/02
Posts: 29145
Loc: NJ
Depends. There are advantages to new.
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2014 Mazda 3 S GT AT - OE oil
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#3319652 - 03/22/14 10:20 AM Re: Is it economical to buy new? [Re: 7055]
whip Offline


Registered: 03/03/05
Posts: 1533
Loc: ohio
If you drive 8,000 miles a year, and vehicle bought with 50,000 will last you 10 years. That's less than 150,000.

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#3319654 - 03/22/14 10:23 AM Re: Is it economical to buy new? [Re: 7055]
johnachak Offline


Registered: 12/08/10
Posts: 1588
Loc: L.I. NY USA
Our last 2 vehicles were bought new with 0% financing. That made them cheaper than the 2-3 year olds with 4-6% financing charges. My Ford is used exactly as you described and is going on 8 years old. I still use it daily and as our vacation mobile. It had a few minor warranty issues the first year or so, it outlived the extended warranty with no use on it. The Caddy (our fun car) is going on 5. I still see some 0% financing out there and it makes buying new a lot closer to the price of a 2-3 year old. The newer GM's all carry 5 yr 100,000 mile power train warranties. I am a fanatic for breaking in a car right (enter the flamers) and maintaining it properly with the best fluids and filters, brakes, tires, etc. I can buy. I keep my cars a long time so the first part of it's life is important to me. Good luck on whatever you decide.


Edited by johnachak (03/22/14 10:27 AM)
Edit Reason: typos
_________________________
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#3319657 - 03/22/14 10:27 AM Re: Is it economical to buy new? [Re: 7055]
Brule Offline


Registered: 11/12/12
Posts: 422
Loc: St. Louis, Mo
If you plan to keep the car for long term like you say, buying new is a good choice. You might want to get an extended warranty like I did for 5 years and 100K. They will try to overcharge you on the ext warranty however. Act like you're not interested until the price of the warranty gets down closer to $1000.
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2014 Camry V6 SE (QSUD 5w20)
2003 Civic Si [sold]
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#3319658 - 03/22/14 10:27 AM Re: Is it economical to buy new? [Re: 7055]
Tdbo Offline


Registered: 08/18/09
Posts: 1705
Loc: Ohio
Wait until November-December of 2014 and purchase a leftover 2014 when the 2015's are out.
Use used book for a 2014 as your pricing target.
Get a new year old car with no miles and full warranty for the same price (or less) than a year old used one.
Best of both worlds.
_________________________
2012 Honda Accord LX-P 52K
2008 Ford Mustang Pony Package Convertible 12K
2006 Honda Odyssey EX-L 65K
2003 Ford Ranger 3.0 Supercab 82K

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#3319659 - 03/22/14 10:28 AM Re: Is it economical to buy new? [Re: 7055]
dparm Offline


Registered: 04/19/10
Posts: 12503
Loc: Chicago, IL
Cars also deteriorate with age. There are maintenance items and things that wear out after X months, not just with mileage. Don't assume that because you drive very little, you'll have less maintenance to do.
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2011.5 BMW M3 saloon ZCP
der stärkste buchstabe der welt
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#3319665 - 03/22/14 10:39 AM Re: Is it economical to buy new? [Re: 7055]
JTK Online   content


Registered: 08/14/03
Posts: 7264
Loc: Buffalo, NY
There's a lot of factors at play such as demand for the specific vehicle you want, resale values, if you can pay cash or if you have/want to finance.

Paying cash for a ~3yr old vehicle is pretty much always going to be a wiser financial move.

OTOH, if you want to finance and your credit is good, current car loan rates are 1-3% up to 72mo these days.
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2014 Subaru XV Crosstek 2.0L, 5spd, 2013 Dodge Grand Caravan SE (Babe magnet III)

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#3319668 - 03/22/14 10:40 AM Re: Is it economical to buy new? [Re: 7055]
gregk24 Offline


Registered: 04/13/13
Posts: 2713
Loc: FL, USA
I would go with a newer certified pre owned.
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#3319669 - 03/22/14 10:40 AM Re: Is it economical to buy new? [Re: 7055]
Papa Bear Offline


Registered: 08/11/05
Posts: 6062
Loc: Leamington, ON, Canada ..... r...
Can you comfortably afford a new SUV? If you can then get one.

The new vehicles are getting better mileage and are more comfortable.

I was looking at the new Chrysler 200 with the 3.6 and a 9 speed trans ... I did some rodding in the 60's and this thing would have left me in the dust.

Today's vehicles were not available 10 yrs ago and if you are going to keep it for a while I would start off as curent as possible.
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#3319691 - 03/22/14 11:00 AM Re: Is it economical to buy new? [Re: 7055]
eljefino Offline


Registered: 06/15/03
Posts: 23908
Loc: ME
Crossovers are booming. The Saturn VUE popularized the premise in 2002 and I was shopping a year ago for one and could not find a deal. The "buy here pay here" lots get top dollar. Because of the "population explosion" there are more options new or a couple-years old than there are used.

The flipside is if you want a 90's body-on-frame SUV they're dirt cheap. LOL

PS I bought a chevy HHR instead as that fad has passed. LOL

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#3319705 - 03/22/14 11:12 AM Re: Is it economical to buy new? [Re: 7055]
Mykl Offline


Registered: 02/08/13
Posts: 1257
Loc: Texas
If you put 200k miles on it the price per mile should even out between a new car and a used car. It ends up depending on the car though, if you're cross shopping something like a five year old Altima versus a new one the fuel savings alone will make it worth going for a new car in a shorter period of time.
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#3319711 - 03/22/14 11:16 AM Re: Is it economical to buy new? [Re: 7055]
hattaresguy Offline


Registered: 06/01/11
Posts: 5053
Loc: CT
Buy new and keep until its shot. With some high end cars buying off lease makes a lot of sense but not with anything under $30k or $40k.


New only costs more if you play musical cars every couple of years.


Edited by hattaresguy (03/22/14 11:16 AM)

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#3319740 - 03/22/14 11:55 AM Re: Is it economical to buy new? [Re: hattaresguy]
fdcg27 Online   content


Registered: 09/25/09
Posts: 9254
Loc: OH
Originally Posted By: hattaresguy
Buy new and keep until its shot. With some high end cars buying off lease makes a lot of sense but not with anything under $30k or $40k.


New only costs more if you play musical cars every couple of years.


+1
I've had lower costs with used cars that we've driven many miles, but buying new and keeping a car is by no means financially foolish.
You'll also have the car's history from day one, with no unreported accidents, repos, skipped maintenance or 20K on the FF oil.
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02 Accord 127K G-Oil 5W-30
01 Focus ZX3 98K Synpower 10W-30
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#3319746 - 03/22/14 12:03 PM Re: Is it economical to buy new? [Re: johnachak]
wallyuwl Offline


Registered: 06/02/09
Posts: 1461
Loc: Lexington, KY
Originally Posted By: johnachak
Our last 2 vehicles were bought new with 0% financing. That made them cheaper than the 2-3 year olds with 4-6% financing charges.


This. Either go used 5+ years old or go new.

We are looking to get a new Explorer in a few months. They are doing a "refresh" for 2015 models so the 2014s will be pretty cheap. The same is happening with the CX-9 (only a total redesign, not just refresh). But even the CX-5, now a few years old, can be had new for a pretty good price, as can the Escape.

I like to think of it cost per year. I you buy new it is about $2500 or so cost per year (for 10 years), vs. used would be maybe $1500, but then add in the likely $300 or so a year in extra repairs over new. So is it worth $700 a year for a new vehicle? Then if you are looking at financing it, you need to consider interest costs since new can be had with 0%.

And although you don't drive much, since you're looking at a crossover you need to consider gas mileage differences. Crossovers haven't started getting good mileage until the current "generation" of vehicles. 8000 miles a year at 19 mpg (realistic for an older crossover in mixed driving) is 421 gallons of fuel a year. At $3.50 a gallon that is $1473. At 25 mpg (realistic for a new 4 cyl. crossover, in mixed driving) for a newer crossover is 320 gallons, at $3.50 a gallon is $1120 a year. A newer vehicle with a V6 will bring that down a few mpg, but still not down to the mileage you'll get with an older vehicle.

If you go new be sure to check out Truecar.com for pricing. They also have a dealer network where it is no haggle and you're going to get at least a good price.

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#3319751 - 03/22/14 12:07 PM Re: Is it economical to buy new? [Re: 7055]
Miller88 Offline


Registered: 04/09/08
Posts: 6498
Loc: Onondaga County
Around here used cars are more expensive than new cars.

Example: 2011 Aveo new $10000. 2011 Aveo with 50K miles $12000.

2011 focuses are selling for MORE than I paid for my 2011 focus new.
_________________________
'11 Focus PYB 45K
'00 Cherokee PYB 125K

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#3319773 - 03/22/14 12:47 PM Re: Is it economical to buy new? [Re: 7055]
rjundi Offline


Registered: 03/16/04
Posts: 6222
Loc: New England
Fuel economy was the pits in 2004 compared to 2014. Fuel will either remain stable optimally or rise. I would consider that.

My hesitation on replacing our 07 MDX that is quite thirsty is the jump in MPG is not great given pricing on new stuff with better room.

Look for something recent enough that MPG is decent. For example Subaru Forester in 2004 was 19 and 25 and now is 24 and 32.
_________________________
2005 Legacy GT wagon 5mt - 172k - Mobil 5000/OEM Subie filter

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#3319774 - 03/22/14 12:48 PM Re: Is it economical to buy new? [Re: wallyuwl]
7055 Offline


Registered: 01/10/08
Posts: 273
Loc: KS
Originally Posted By: wallyuwl
Originally Posted By: johnachak
Our last 2 vehicles were bought new with 0% financing. That made them cheaper than the 2-3 year olds with 4-6% financing charges.


I like to think of it cost per year. I you buy new it is about $2500 or so cost per year (for 10 years), vs. used would be maybe $1500, but then add in the likely $300 or so a year in extra repairs over new. So is it worth $700 a year for a new vehicle? Then if you are looking at financing it, you need to consider interest costs since new can be had with 0%.



Does this take into account resale value when you're done driving it? The new car will be able to be sold for more money than a used car when it's time to move on
_________________________
2004 Neon SRT 376whp 437wtq - stage3, exhaust port, 6 puck, water injection...
http://www.cardomain.com/ride/3143812/1

Sold for more important ambitions

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#3319777 - 03/22/14 12:51 PM Re: Is it economical to buy new? [Re: Miller88]
rjundi Offline


Registered: 03/16/04
Posts: 6222
Loc: New England
Originally Posted By: Miller88
Around here used cars are more expensive than new cars.

Example: 2011 Aveo new $10000. 2011 Aveo with 50K miles $12000.

2011 focuses are selling for MORE than I paid for my 2011 focus new.


Aveo's are for suckers and sad to say won't appeal to car savvy and likely get snatched up by someone who does know better. GM embarrassment that affixed their badge on that thing(rolling poo).

My guess they end up on buy here pay here lots were you go to get a car that works.
_________________________
2005 Legacy GT wagon 5mt - 172k - Mobil 5000/OEM Subie filter

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#3319789 - 03/22/14 01:15 PM Re: Is it economical to buy new? [Re: 7055]
datech Offline


Registered: 01/14/14
Posts: 409
Loc: KS
I think you end up paying about the same in the long run, but new has some advantages and with the economy and jobs situation there is more competition for used cars and new cars have better financing. I would recommend new if you can afford it. Used if you can't but you will be nickeled and dimed over the years.

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#3319791 - 03/22/14 01:18 PM Re: Is it economical to buy new? [Re: 7055]
dishdude Offline


Registered: 11/14/08
Posts: 3274
Loc: Phoenix
Personally I feel that used cars are overpriced right now. A 20% savings to take a 2 year old car with 40k on it? Not worth it for me.

People will then add on an extended warranty because it is used, taking the savings down to 10%. They are probably paying a higher interest rate, and at that point they paid new car price for a used car.

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#3320093 - 03/22/14 06:43 PM Re: Is it economical to buy new? [Re: johnachak]
ls973800 Offline


Registered: 01/30/13
Posts: 7
Loc: Dallas, TX
Originally Posted By: johnachak
The newer GM's all carry 5 yr 100,000 mile power train warranties.


Not all GM's come with the 5 year 100000 mile powertrain warranty any more. Cadillac and Buick have lengthen the years to 6, but have reduced the miles to 70000. In your case that would be more beneficial driving only 8000 miles per year.

Chevrolet, GMC, etc still have the 5 year 100000 mile powertrain warranty.

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#3320104 - 03/22/14 06:56 PM Re: Is it economical to buy new? [Re: 7055]
7055 Offline


Registered: 01/10/08
Posts: 273
Loc: KS
If I buy a new 2015 Forester for 24,500 in cash and drive it for 10 years then sell it with 80,000 miles for $11,000 without ever having to make a single repair other than basic maintenance then it cost me 1360 per year including additional maintenance charges.

If I buy a 2005 Forester with 50,000 miles on it for 12,000 and drive it for 10 years selling it at 130,000 miles for 5,000 and make 1,200 in additional repairs, that's 820 per year.

But if you factor in the getting 13mpg instead of 17 mpg (I get poor mileage due to short trips in cold weather) it makes a difference of $463/year. This increases the used car price to 1283.35 per year.

Of course this is very general and assumes very good luck from either choice in terms of reliability.

Of course there's all ways the third option in which you gamble with an old high mileage vehicle for a few years then sell it for virtually the same price you bought it for.
_________________________
2004 Neon SRT 376whp 437wtq - stage3, exhaust port, 6 puck, water injection...
http://www.cardomain.com/ride/3143812/1

Sold for more important ambitions

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#3320226 - 03/22/14 08:43 PM Re: Is it economical to buy new? [Re: 7055]
99Saturn Offline


Registered: 02/25/13
Posts: 982
Loc: NY
What's the peace of mind/lack of down time on repairs worth to you with a new car?

It sounds like either of the choices will last the miles and time frame you want - probably somewhat of a toss up since random repairs might be needed that drive savings for either situation.

Personally, I like the "worry free" miles with our (now not so) new car, especially since it sees 100 mile round trip a day. As others have said, nice to know the history, and it's a safer assumption you're not going to have an issue. But I look at the monthly car payment and it's a frustrating comparison in cost given what we paid for the other two cars we have.

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#3320281 - 03/22/14 09:21 PM Re: Is it economical to buy new? [Re: 99Saturn]
Doog Offline


Registered: 10/24/11
Posts: 3450
Loc: Ohio
I'm looking at getting the wife a CPO Lexus. You can get a 2011 with 30k on the clock for about $15k less than a new one.

Do the math on the cost of those first 30,000 miles. Then we will drive it to 200k and trade it in for about $6000. So the cost for 170,000 miles will be about $20,000.

Chase auto finance just approved me for 2.13% if I need financing.
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The difference between a beer and your opinion is that I asked for a beer...

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#3320430 - 03/22/14 11:53 PM Re: Is it economical to buy new? [Re: Tdbo]
johnachak Offline


Registered: 12/08/10
Posts: 1588
Loc: L.I. NY USA
Originally Posted By: Tdbo
Wait until November-December of 2014 and purchase a leftover 2014 when the 2015's are out.
Use used book for a 2014 as your pricing target.
Get a new year old car with no miles and full warranty for the same price (or less) than a year old used one.
Best of both worlds.


+1, sounds like a good idea.
_________________________
06 Ford Freestyle, MC / kendall syn 5w20 MC filter
09 CTS 3.6 D.I. AWD, M1 5w30 Delco filter
Every so often Penzoil Platinum in both.
JMH

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#3320446 - 03/23/14 12:29 AM Re: Is it economical to buy new? [Re: 7055]
jimbrewer Offline


Registered: 12/30/12
Posts: 844
Loc: New Mexico, USA
Assuming you have the means and intend to keep the car for awhile: Buy new. Lower trim level is almost always the better value. I don't think its even particularly a close call. New car gets cheaper financing (even without the dealer come-ons) and gets bette mileage.

Before the bust it was completely different. You could buy 5-6 year old luxury cars for a song. Those days are over for the time being.

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#3320578 - 03/23/14 07:25 AM Re: Is it economical to buy new? [Re: whip]
KitaCam Offline


Registered: 11/16/12
Posts: 1509
Loc: SunnySouthFlorida
Originally Posted By: whip
If you drive 8,000 miles a year, and vehicle bought with 50,000 will last you 10 years. That's less than 150,000.


This century's cars with 100k miles are last century's 50k car...
...and I agree that if you drive few miles a year, say 10k miles, then buying a 6-7 yr old car with 90-100k (~ 3-4yr/50k from last century) will last another 7-10 years to 200k miles with care and cost far less after 15 years than the same car bought new...if you can stand a to look at a 15yr old car for so long...you better like it!

I will admit that this is less possible up north where the body and suspension parts are more vulnerable to winter-induced damage...but south of the Tennessee-Kentucky border is Shangri-la for cars...
_________________________
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#3320598 - 03/23/14 07:53 AM Re: Is it economical to buy new? [Re: 7055]
Pop_Rivit Offline


Registered: 02/09/08
Posts: 3508
Loc: Midwest
Buy that which you can afford to pay cash for, either new or used. Financing (or worse yet, leasing) is for those who live outside their means and don't have the self discipline to live without perpetual monthly payments.

And that "zero percent financing"? It's used to bring buyers into dealerships, and they often buy more vehicle than they originally planned, or the price isn't as low with zero percent financing. The reality is that there's no such thing as "free" financing; you'll pay for it in different ways, but make no mistake-you will pay for it.

To top it off, if you can't afford a vehicle without making payments on it, ask yourself if you really want to be a slave to years of payments just to have that new shiny bauble.

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#3320599 - 03/23/14 07:54 AM Re: Is it economical to buy new? [Re: johnachak]
fdcg27 Online   content


Registered: 09/25/09
Posts: 9254
Loc: OH
Originally Posted By: johnachak
Originally Posted By: Tdbo
Wait until November-December of 2014 and purchase a leftover 2014 when the 2015's are out.
Use used book for a 2014 as your pricing target.
Get a new year old car with no miles and full warranty for the same price (or less) than a year old used one.
Best of both worlds.


+1, sounds like a good idea.


Tdbo and I both did this in November 2012 and we both ended up with screaming deals on new '12 Accords.
Honda even offered .9% financing, which was just too good to pass up. Why should I give up cash when I can finance for almost nothing?
That the '12 was the last year of that generation Accord certainly helped.
_________________________
12 Accord LX 22K HGMO 0W-20
09 Forester 64K PU 5W-30
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#3320600 - 03/23/14 07:56 AM Re: Is it economical to buy new? [Re: 7055]
sciphi Offline


Registered: 03/24/07
Posts: 8429
Loc: Upstate NY
It depends on what you do with it, and your financial situation. We bought ours both new since they got better MPG than anything else in their classes at the time, used cars were astronomically priced in our area, we got great financing terms, and we could afford the monthly cashflow. Now we're planning on keeping them for 10+ years, maybe longer.
_________________________
2009 Honda Fit Sport
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#3320687 - 03/23/14 09:35 AM Re: Is it economical to buy new? [Re: Pop_Rivit]
99Saturn Offline


Registered: 02/25/13
Posts: 982
Loc: NY
Originally Posted By: Pop_Rivit
Financing (or worse yet, leasing) is for those who live outside their means and don't have the self discipline to live without perpetual monthly payments.

crackmeup

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#3320702 - 03/23/14 10:02 AM Re: Is it economical to buy new? [Re: 7055]
SevenBizzos Offline


Registered: 12/10/06
Posts: 445
Loc: The IL
"Economical"? It's pretty rare that any type of vehicle purchase could be considered "economical".

That being said, I seem to do just fine on finding ~ 2 year old cars with < 20k on them at $10k - $12 off original pricing. I will never reach a point where I even put half that into additional maintenance on the cars.

My last used car loan was 2.74%, so it was only a few hundred dollars of interest.

But again, it's a bad financial decision almost every time.

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#3320725 - 03/23/14 10:25 AM Re: Is it economical to buy new? [Re: 99Saturn]
Doog Offline


Registered: 10/24/11
Posts: 3450
Loc: Ohio
Originally Posted By: 99Saturn
Originally Posted By: Pop_Rivit
Financing (or worse yet, leasing) is for those who live outside their means and don't have the self discipline to live without perpetual monthly payments.

crackmeup


+2 crackmeup
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#3320765 - 03/23/14 11:02 AM Re: Is it economical to buy new? [Re: Pop_Rivit]
Tdbo Offline


Registered: 08/18/09
Posts: 1705
Loc: Ohio
Originally Posted By: Pop_Rivit
Buy that which you can afford to pay cash for, either new or used. Financing (or worse yet, leasing) is for those who live outside their means and don't have the self discipline to live without perpetual monthly payments.

And that "zero percent financing"? It's used to bring buyers into dealerships, and they often buy more vehicle than they originally planned, or the price isn't as low with zero percent financing. The reality is that there's no such thing as "free" financing; you'll pay for it in different ways, but make no mistake-you will pay for it.

To top it off, if you can't afford a vehicle without making payments on it, ask yourself if you really want to be a slave to years of payments just to have that new shiny bauble.


Have we had our anti-pompous pills today or not? I'm guessing not.
You say "buy what you can afford," I'll agree with that.
However, you can buy a car that you can afford, and not pay cash. As FDCG outlined in the response after your diatribe both he and myself both bought new 2012 Honda Accord LX-P's within in a month of each other. I know what he paid because I got a quote from the same Cincinnati dealership where he bought his. My price is posted on these very forums. I bought mine from a Honda dealership in Northeastern Ohio and I got the color that I wanted, and a Spoiler, Mudflaps, and side moldings for $150. more because the dealer had them already on the car. Both were stellar deals, FDCG's deal was minimum profit, on mine the dealership took a loss because of the add ons on the car.
There was ABSOLUTELY NO WAY that either of us were going to walk away with a better deal on our respective vehicles (I crunched numbers on both deals.)

Honda, as a factory to dealer incentive offered $1750. on any leftover '12 Accord. WE BOTH GOT ALL THAT $$ TO GET THE CAR FOR PRICES THAT WE PAID. To sweeten the deal, Honda offered .9 financing on any new '12 Accord. There was NO MORE MONEY thrown on the hood of these cars had we declined the incentive. Therefore, IMO that is basically free money. FDCG can explain his rationale for financing if he wants to; however, I will explain mine. I keep six months income liquid, and have the rest invested. To avoid depleting my contingency fund and to save capital (that made 16.8% in the past year), I put enough downstroke on the car that I could very comfortably cash flow the purchase out of salary. The cost for four years for borrowing this money is $275.00. For that sum, I have saved 13.4K in investment capital that is yielding 15.9% (16.8%-.9%= 15.9%)

I'll toss you a bone however. Leasing CAN be a bad deal if used improperly. It is a tool that can be useful in certain circumstances (business, etc.) However it can be a poor deal if utilized as a means to purchase a car that one cannot afford otherwise.

Financially irresponsible people make poor decisions and amass debt that is beyond their means. Using credit in a responsible manner to achieve solid financial objectives is prudent. Go gnaw on that for awhile.
_________________________
2012 Honda Accord LX-P 52K
2008 Ford Mustang Pony Package Convertible 12K
2006 Honda Odyssey EX-L 65K
2003 Ford Ranger 3.0 Supercab 82K

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#3320805 - 03/23/14 11:51 AM Re: Is it economical to buy new? [Re: 7055]
Mykl Offline


Registered: 02/08/13
Posts: 1257
Loc: Texas
I generally agree with the sentiment that if you can not afford to pay cash for a car you simply can't afford it. This doesn't mean that it isn't smart to finance anyway, assuming you can get fair terms. But if you save such a small amount of your paycheck that you couldn't cover the purchase of a vehicle if financing was not an option, maybe you shouldn't be purchasing that new vehicle.
_________________________
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'07 Toyota Camry XLE V-6

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#3320874 - 03/23/14 01:31 PM Re: Is it economical to buy new? [Re: SevenBizzos]
Doog Offline


Registered: 10/24/11
Posts: 3450
Loc: Ohio
Originally Posted By: SevenBizzos
"Economical"? It's pretty rare that any type of vehicle purchase could be considered "economical".

That being said, I seem to do just fine on finding ~ 2 year old cars with < 20k on them at $10k - $12 off original pricing. I will never reach a point where I even put half that into additional maintenance on the cars.

My last used car loan was 2.74%, so it was only a few hundred dollars of interest.

But again, it's a bad financial decision almost every time.


+1 But understand that most of the people who think that any vehicle is an "investment" do not understand the difference between depreciating assets and real property. Lots of people on here have not had that level of education or life experience to understand the difference. They also don't understand that financing is a tool and not just a burden or any indication of how much someone can "afford".


Edited by Doog (03/23/14 01:33 PM)
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The difference between a beer and your opinion is that I asked for a beer...

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#3320875 - 03/23/14 01:34 PM Re: Is it economical to buy new? [Re: Mykl]
Doog Offline


Registered: 10/24/11
Posts: 3450
Loc: Ohio
Originally Posted By: Mykl
I generally agree with the sentiment that if you can not afford to pay cash for a car you simply can't afford it.


You really need to change your thinking.
_________________________
The difference between a beer and your opinion is that I asked for a beer...

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#3320883 - 03/23/14 01:41 PM Re: Is it economical to buy new? [Re: Doog]
Mykl Offline


Registered: 02/08/13
Posts: 1257
Loc: Texas
Originally Posted By: Doog
Originally Posted By: Mykl
I generally agree with the sentiment that if you can not afford to pay cash for a car you simply can't afford it.


You really need to change your thinking.


If you're going to quote me, use the entire post. Giving others the impression that my argument ends exactly there is unfair.

My "thinking" has me in line to retire at 45 years old. I'm not interested in changing it unless you can show me how doing so will allow me to retire at 40 years old instead.
_________________________
'10 Volkswagen GTI
'07 Toyota Camry XLE V-6

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#3320934 - 03/23/14 02:22 PM Re: Is it economical to buy new? [Re: 7055]
wallyuwl Offline


Registered: 06/02/09
Posts: 1461
Loc: Lexington, KY
What is being lost in this discussion is income. If you don't have a high enough income to save up enough money quickly to pay cash, but have enough to afford monthly payments (especially at low or 0% interest), then you have to finance. If you can afford the car on a monthly basis, you can afford it.

I laugh when I hear people whose family income is $100k or more talk down about those that can't pay cash for their assets. I'd like to know how many of these people paid cash for their house. If they didn't, they are hypocrites. If they rent yet talk badly of people that choose to lease, they are also hypocrites because it is the exact same thing. BTW: my family income is over $100k.

And another thing being lost is inflation and just price increases. We bought our 2010 Equinox for $23,500 (sticker $26,000). That was without incentives, it was just the price. Today that same vehicle (just 2014 model) is about $5000 more. If we would have saved for five years to pay cash we'd be out $5000 plus not had a vehicle that had the utility of the Equinox which was necessary. Plus a dollar today is wroth more (i.e.: more buying power) than it will be 5 years from now. If you can finance at 0%, it is a tool to use to beat inflation.

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#3320943 - 03/23/14 02:27 PM Re: Is it economical to buy new? [Re: wallyuwl]
Mykl Offline


Registered: 02/08/13
Posts: 1257
Loc: Texas
Originally Posted By: wallyuwl
What is being lost in this discussion is income. If you don't have a high enough income to save up enough money quickly to pay cash, but have enough to afford monthly payments (especially at low or 0% interest), then you have to finance. If you can afford the car on a monthly basis, you can afford it.

I laugh when I hear people whose family income is $100k or more talk down about those that can't pay cash for their assets. I'd like to know how many of these people paid cash for their house. If they didn't, they are hypocrites. If they rent yet talk badly of people that choose to lease, they are also hypocrites because it is the exact same thing. BTW: my family income is over $100k.

And another thing being lost is inflation and just price increases. We bought our 2010 Equinox for $23,500 (sticker $26,000). That was without incentives, it was just the price. Today that same vehicle (just 2014 model) is about $5000 more. If we would have saved for five years to pay cash we'd be out $5000 plus not had a vehicle that had the utility of the Equinox which was necessary. Plus a dollar today is wroth more (i.e.: more buying power) than it will be 5 years from now. If you can finance at 0%, it is a tool to use to beat inflation.


So you're a hypocrite if you think it's a bad idea to buy a depreciating asset that you can't pay cash for, but feel that it's a good idea to buy a historically appreciating asset that you can't afford to pay cash for?

If taking out a loan to buy a $5000 vehicle to get yourself to work so you can continue to put food on the table is what you have to do, then it's what you have to do. But saying you can afford a $50k truck or BMW just because you can cover the payments is financially insane.
_________________________
'10 Volkswagen GTI
'07 Toyota Camry XLE V-6

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#3320954 - 03/23/14 02:36 PM Re: Is it economical to buy new? [Re: Mykl]
wallyuwl Offline


Registered: 06/02/09
Posts: 1461
Loc: Lexington, KY
Originally Posted By: Mykl
So you're a hypocrite if you think it's a bad idea to buy a depreciating asset that you can't pay cash for, but feel that it's a good idea to buy a historically appreciating asset that you can't afford to pay cash for?



So you took out a loan for your house are likely going to pay tens of thousands of dollars in interest, but talk down to those that do the same thing, only with a car and a few thousand interest (or even NO interest). But you are trying to make yourself feel better about your hypocritical decision. Got it. I especially liked the term "historically appreciating." Cute. Of course don't include inflation in that. Also see: Bubble, Housing, 2008.

Bottom line: everyone has their own decisions to make. Everyone can also have their own opinion. But get off your high horse and stop acting like your perspective is the "correct" one and everyone else who doesn't: 1) agree with that, or 2) can't do what you do/did, or 3) chooses to not do what you do/did, is an idiot.

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#3321048 - 03/23/14 04:16 PM Re: Is it economical to buy new? [Re: wallyuwl]
Mykl Offline


Registered: 02/08/13
Posts: 1257
Loc: Texas
Originally Posted By: wallyuwl
So you took out a loan for your house are likely going to pay tens of thousands of dollars in interest, but talk down to those that do the same thing, only with a car and a few thousand interest (or even NO interest). But you are trying to make yourself feel better about your hypocritical decision. Got it. I especially liked the term "historically appreciating." Cute. Of course don't include inflation in that. Also see: Bubble, Housing, 2008.

Bottom line: everyone has their own decisions to make. Everyone can also have their own opinion. But get off your high horse and stop acting like your perspective is the "correct" one and everyone else who doesn't: 1) agree with that, or 2) can't do what you do/did, or 3) chooses to not do what you do/did, is an idiot.


I'm not talking down to anybody. You seem awfully sensitive here. Is it because you're not making the best financial decisions in your life and you don't like being made to feel like it?

Believing that financing a historically appreciating asset that provides utility (somewhere to live) and/or that could provide profit (through renting) is in no way the same as financing a depreciating asset.

If you choose to not recognize this distinction and continue to consider those who can recognize it as hypocrites, then you're an idiot.

What you do with your money is your business. But I will not be insulted when giving what is generally considered to be solid financial advice. I'll be happy to hit the reset button on our dialogue and move forward, but if you want to continue calling me names I'll be happy to continue throwing them back.
_________________________
'10 Volkswagen GTI
'07 Toyota Camry XLE V-6

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#3321070 - 03/23/14 04:40 PM Re: Is it economical to buy new? [Re: 7055]
Mykl Offline


Registered: 02/08/13
Posts: 1257
Loc: Texas
^ and in regards to the housing bubble and inflation... over the last 100 years houses have been shown to appreciate at roughly 1% per year.

Less than inflation, but it's still a better deal than any car that you don't treat like a work of art and attempt to preserve for future profits. Yeah, you're still paying interest to the bank.... but the alternative is renting, at least with paying a mortgage some of that money goes towards principle which can end up back in your pocket. With a financed vehicle there is rarely ever any hope of positive equity unless you made a pretty big down payment.

I'll state again that there are times where it is still a good move to finance the vehicle you're purchasing. But my opinion is still that if you don't have the assets elsewhere to cover that debt you probably can't afford the car.

Calling me a hypocrite because I consider a home to be a pretty big pillar to use to build your net worth isn't going to change that, you need to present something other than pointed words to get me to change my thoughts on this.
_________________________
'10 Volkswagen GTI
'07 Toyota Camry XLE V-6

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#3321078 - 03/23/14 04:47 PM Re: Is it economical to buy new? [Re: Tdbo]
fdcg27 Online   content


Registered: 09/25/09
Posts: 9254
Loc: OH
I think part of the problem is that Pop appears not to understand the difference between being able to pay cash for a car and actually laying down all of that cash.
He appears to have no grasp of the concept of financial leverage.
You clearly have a good grasp of it.
Put simply, if I avoid the opportunity cost of laying down 20K on a new Accord and can invest that cash at a rate of greater than .9% (which any fool can do while asleep) then it would be financially ignorant to pay cash for the car, even though one could well afford to do so.
When I was younger and dumber, I thought and spoke as Pop does in these forums.
As I grew older and wiser and came to appreciate the concept that money is a tool, not an end in itself, I became more receptive to the idea of using financial leverage when it would result in a more efficient use of liquidity than would paying cash.
In short, if I can put more money in my accounts over the next few years by taking cut-rate financing, I'll just say thanks to Honda Motor Credit.
_________________________
12 Accord LX 22K HGMO 0W-20
09 Forester 64K PU 5W-30
02 Accord 127K G-Oil 5W-30
01 Focus ZX3 98K Synpower 10W-30
95 BMW 318iC 146K Defy 10W-40

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#3321079 - 03/23/14 04:48 PM Re: Is it economical to buy new? [Re: 7055]
Mykl Offline


Registered: 02/08/13
Posts: 1257
Loc: Texas
^ amen, sir
_________________________
'10 Volkswagen GTI
'07 Toyota Camry XLE V-6

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#3321080 - 03/23/14 04:49 PM Re: Is it economical to buy new? [Re: Mykl]
wallyuwl Offline


Registered: 06/02/09
Posts: 1461
Loc: Lexington, KY
Originally Posted By: Mykl
I'm not talking down to anybody. You seem awfully sensitive here. Is it because you're not making the best financial decisions in your life and you don't like being made to feel like it?

Believing that financing a historically appreciating asset that provides utility (somewhere to live) and/or that could provide profit (through renting) is in no way the same as financing a depreciating asset.

If you choose to not recognize this distinction and continue to consider those who can recognize it as hypocrites, then you're an idiot.

What you do with your money is your business. But I will not be insulted when giving what is generally considered to be solid financial advice. I'll be happy to hit the reset button on our dialogue and move forward, but if you want to continue calling me names I'll be happy to continue throwing them back.


I'm doing pretty well, thank you. But you're the one that has resorted to making degrading personal assumptions (questioning my financial decisions without knowing ANYTHING about me) about others and name calling (you called me an "idiot" and I never called you anything of the sort), so you are obviously the sensitive one. There are other things you said that would be worth having a discussion with toward a respectable individual, but your diction has shown you are not that. You should actually have your account suspended for a couple weeks for the statements you've made in the post quoted above. Good day.

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#3321087 - 03/23/14 04:52 PM Re: Is it economical to buy new? [Re: wallyuwl]
Mykl Offline


Registered: 02/08/13
Posts: 1257
Loc: Texas
Originally Posted By: wallyuwl
Originally Posted By: Mykl
I'm not talking down to anybody. You seem awfully sensitive here. Is it because you're not making the best financial decisions in your life and you don't like being made to feel like it?

Believing that financing a historically appreciating asset that provides utility (somewhere to live) and/or that could provide profit (through renting) is in no way the same as financing a depreciating asset.

If you choose to not recognize this distinction and continue to consider those who can recognize it as hypocrites, then you're an idiot.

What you do with your money is your business. But I will not be insulted when giving what is generally considered to be solid financial advice. I'll be happy to hit the reset button on our dialogue and move forward, but if you want to continue calling me names I'll be happy to continue throwing them back.


I'm doing pretty well, thank you. But you're the one that has resorted to making degrading personal assumptions (questioning my financial decisions without knowing ANYTHING about me) about others and name calling (you called me an "idiot" and I never called you anything of the sort), so you are obviously the sensitive one. There are other things you said that would be worth having a discussion with toward a respectable individual, but your diction has shown you are not that. You should actually have your account suspended for a couple weeks for the statements you've made in the post quoted above. Good day.


Insist that I am a hypocrite and I'm happy to take the gloves off, I'm sorry if you couldn't handle the dialogue you created.

Report me and have me suspended. If there's any justice here you'll be put away as well.
_________________________
'10 Volkswagen GTI
'07 Toyota Camry XLE V-6

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#3321104 - 03/23/14 05:06 PM Re: Is it economical to buy new? [Re: fdcg27]
wallyuwl Offline


Registered: 06/02/09
Posts: 1461
Loc: Lexington, KY
Originally Posted By: fdcg27
I think part of the problem is that Pop appears not to understand the difference between being able to pay cash for a car and actually laying down all of that cash.
He appears to have no grasp of the concept of financial leverage.
You clearly have a good grasp of it.
Put simply, if I avoid the opportunity cost of laying down 20K on a new Accord and can invest that cash at a rate of greater than .9% (which any fool can do while asleep) then it would be financially ignorant to pay cash for the car, even though one could well afford to do so.
When I was younger and dumber, I thought and spoke as Pop does in these forums.
As I grew older and wiser and came to appreciate the concept that money is a tool, not an end in itself, I became more receptive to the idea of using financial leverage when it would result in a more efficient use of liquidity than would paying cash.
In short, if I can put more money in my accounts over the next few years by taking cut-rate financing, I'll just say thanks to Honda Motor Credit.


Without referring to any particular individual, you are absolutely correct about using money as a tool and the concept of financial leverage. I think Dave Ramsey has made this pay for everything in cash concept popular. For most people, it is not possible or a smart financial move to do so. I'd actually say that it makes a lot more sense to pay as much cash for a house as you can than it does for an auto, because even with a low rate the absolute dollar amount you pay in interest on a house is HUGE by comparison (and with autos you can get 0% often). Also, you are paying the interest down first according to a traditional amortization schedule.

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#3321110 - 03/23/14 05:12 PM Re: Is it economical to buy new? [Re: 7055]
antiqueshell Offline


Registered: 03/02/12
Posts: 4094
Loc: chicago, Illinois
@wallyuwl &Mykl:


Why let things go to the point of having the mods ban you?

Just agree to disagree and move on. One of the things that have improved over the past few months is that moderation has relaxed a bit so discussions can be more frank and serious. Please don't spoil it for the rest of us by making the mods go back to a more heavy hand.

Thanks!


Edited by antiqueshell (03/23/14 05:12 PM)

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#3321137 - 03/23/14 05:36 PM Re: Is it economical to buy new? [Re: fdcg27]
hattaresguy Offline


Registered: 06/01/11
Posts: 5053
Loc: CT
Originally Posted By: fdcg27
I think part of the problem is that Pop appears not to understand the difference between being able to pay cash for a car and actually laying down all of that cash.
He appears to have no grasp of the concept of financial leverage.
You clearly have a good grasp of it.
Put simply, if I avoid the opportunity cost of laying down 20K on a new Accord and can invest that cash at a rate of greater than .9% (which any fool can do while asleep) then it would be financially ignorant to pay cash for the car, even though one could well afford to do so.
When I was younger and dumber, I thought and spoke as Pop does in these forums.
As I grew older and wiser and came to appreciate the concept that money is a tool, not an end in itself, I became more receptive to the idea of using financial leverage when it would result in a more efficient use of liquidity than would paying cash.
In short, if I can put more money in my accounts over the next few years by taking cut-rate financing, I'll just say thanks to Honda Motor Credit.


Exactly why tie up a productive tool in a dead hole?

Having said that in a high interest rate environment that will change, when your paying 10% on a car than paying cash makes much more sense.

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#3321154 - 03/23/14 05:57 PM Re: Is it economical to buy new? [Re: fdcg27]
jimbrewer Offline


Registered: 12/30/12
Posts: 844
Loc: New Mexico, USA
Originally Posted By: fdcg27
I think part of the problem is that Pop appears not to understand the difference between being able to pay cash for a car and actually laying down all of that cash.
He appears to have no grasp of the concept of financial leverage.
You clearly have a good grasp of it.
Put simply, if I avoid the opportunity cost of laying down 20K on a new Accord and can invest that cash at a rate of greater than .9% (which any fool can do while asleep) then it would be financially ignorant to pay cash for the car, even though one could well afford to do so.
When I was younger and dumber, I thought and spoke as Pop does in these forums.
As I grew older and wiser and came to appreciate the concept that money is a tool, not an end in itself, I became more receptive to the idea of using financial leverage when it would result in a more efficient use of liquidity than would paying cash.
In short, if I can put more money in my accounts over the next few years by taking cut-rate financing, I'll just say thanks to Honda Motor Credit.


Absolutely. .9% is a come-on rate that is captured in an inflated purchase price, but 4% or less is easily doable at any credit union for a person with decent credit. Financing a vehicle for its expected term of use, assuming you use it to get to work, is A-OK. I would not finance a hobby car. In the interest of financial conservatism, I would strive to make a downpayment equal to the first year's depreciation. Beyond that, paying cash at the moment is fussbudget stuff.

I disagree that a used car is always a better deal. If Edmunds is to be believed, my 2.25 year old car is worth $4,000 less than what I paid for it on a person-to-person sale. That's $154 per month for my transportation all that time. On a car with a warranty.

To be absolutely honest, i paid cash for my car. I have a college-age kid and they don't give you a break in assessing your personal situation because of personal loans--only mortgage loan. They naturally reduce your aid because of money in the bank. But that's kind of a special case.


Edited by jimbrewer (03/23/14 06:02 PM)

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#3321159 - 03/23/14 06:02 PM Re: Is it economical to buy new? [Re: jimbrewer]
Clevy Offline


Registered: 11/11/10
Posts: 7207
Loc: Saskatoon canada
Originally Posted By: jimbrewer
Originally Posted By: fdcg27
I think part of the problem is that Pop appears not to understand the difference between being able to pay cash for a car and actually laying down all of that cash.
He appears to have no grasp of the concept of financial leverage.
You clearly have a good grasp of it.
Put simply, if I avoid the opportunity cost of laying down 20K on a new Accord and can invest that cash at a rate of greater than .9% (which any fool can do while asleep) then it would be financially ignorant to pay cash for the car, even though one could well afford to do so.
When I was younger and dumber, I thought and spoke as Pop does in these forums.
As I grew older and wiser and came to appreciate the concept that money is a tool, not an end in itself, I became more receptive to the idea of using financial leverage when it would result in a more efficient use of liquidity than would paying cash.
In short, if I can put more money in my accounts over the next few years by taking cut-rate financing, I'll just say thanks to Honda Motor Credit.


Absolutely. .9% is a come-on rate that is captured in an inflated purchase price, but 4% or less is easily doable at any credit union for a person with decent credit. Financing a vehicle for its expected term of use, assuming you use it to get to work, is A-OK. I would not finance a hobby car. In the interest of financial conservatism, I would strive to make a downpayment equal to the first year's depreciation. Beyond that, paying cash at the moment is fussbudget stuff.

I disagree that a used car is always a better deal. If Edmunds is to be believed, my 2.5 year old car is worth $4,000 less than what I paid for it on a person-to-person sale. That's $134 per month for my transportation all that time.


I remember 0% financing. Only an idiot says no to free money. Especially when a person can use the cash they would have spent on a vehicle to make more money and thereby being further ahead in the long run
_________________________
2006 Charger RT
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#3321174 - 03/23/14 06:19 PM Re: Is it economical to buy new? [Re: Clevy]
jimbrewer Offline


Registered: 12/30/12
Posts: 844
Loc: New Mexico, USA
Usually if you have a choice between a cash discount or subsidized financing you are better off choosing the cash discount.

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#3321176 - 03/23/14 06:20 PM Re: Is it economical to buy new? [Re: hattaresguy]
wallyuwl Offline


Registered: 06/02/09
Posts: 1461
Loc: Lexington, KY
Originally Posted By: hattaresguy

Having said that in a high interest rate environment that will change, when your paying 10% on a car than paying cash makes much more sense.


It depends if you could get more than a 10% return on investing the money you would have used to pay cash.

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#3321178 - 03/23/14 06:21 PM Re: Is it economical to buy new? [Re: jimbrewer]
wallyuwl Offline


Registered: 06/02/09
Posts: 1461
Loc: Lexington, KY
Originally Posted By: jimbrewer
Usually if you have a choice between a cash discount or subsidized financing you are better off choosing the cash discount.


It depends on what the financing rate is that you would get, the amount of the cash discount, and the price of the car. The higher the price of the vehicle, the more likely the financing is the better deal. That is of course if it is either/or. During holidays (Memorial Day, Labor Day, etc.) or when clearing our an old model, mfgrs will often do some cash back plus financing deals that can be combined.

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#3321200 - 03/23/14 06:38 PM Re: Is it economical to buy new? [Re: jimbrewer]
fdcg27 Online   content


Registered: 09/25/09
Posts: 9254
Loc: OH
The wise buyer never sets foot in a dealership without knowing exactly what he's going to pay for the car he's already deceided he's going to buy.
Cheap financing is just icing on the cake, which I got only after I had beaten the selling price down to what I thought was a steal.
Beat $19.095.00 on a new Accord and show me that I'm mistaken.
Heck, we paid $16,800.00 for our '99 Accord, which I also thought was a deal at the time.
We did write a check for it, since there were no attractive financing options at the time.
My point is that the educated buyer can come out well in buying a new car and that an informed approach to the whole transaction, including financing (checkbook or payments) will yield a good outcome.
Walking into a dealership having done no homework is an invitation to getting bent.
_________________________
12 Accord LX 22K HGMO 0W-20
09 Forester 64K PU 5W-30
02 Accord 127K G-Oil 5W-30
01 Focus ZX3 98K Synpower 10W-30
95 BMW 318iC 146K Defy 10W-40

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#3321234 - 03/23/14 07:05 PM Re: Is it economical to buy new? [Re: fdcg27]
wallyuwl Offline


Registered: 06/02/09
Posts: 1461
Loc: Lexington, KY
Originally Posted By: fdcg27
The wise buyer never sets foot in a dealership without knowing exactly what he's going to pay for the car he's already deceided he's going to buy.


Well said. There is too much information out there about what a good price is. And all modern dealerships have internet departments where you'll get a better deal than walking onto the lot blind and trying to negotiate. You can also put dealer against dealer through the internet departments, or through a site like Truecar.com. Heck, even Sams Club has a negotiating service as part of your membership there. The only wiggle room for the dealer then is if they try to low ball your trade, but if they do that you can still walk away. Any negotiating should be based up on price BEFORE any incentives or trade. The worse thing a person can do is walk onto the lot, fall in love with a car, and give the salesperson a number when they say "how much do you want your payment to be?". Price (new car price minus trade-in price) should dictate payment, not the other way around.

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#3321328 - 03/23/14 08:39 PM Re: Is it economical to buy new? [Re: 7055]
hattaresguy Offline


Registered: 06/01/11
Posts: 5053
Loc: CT
If I get financing threw Chase the dealer gets a check so they don't care either way if its from me or Chase.

So no you don't pay more for low interest rate financing that's simply factually incorrect.

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#3321475 - 03/23/14 10:21 PM Re: Is it economical to buy new? [Re: 7055]
johnachak Offline


Registered: 12/08/10
Posts: 1588
Loc: L.I. NY USA
As I posted earlier, I got my cars with 0% financing so our money stayed invested where it was. I have since retired and have one car paid off, 2 months to go on the second and my money is still earning interest. My wife is an accountant and she said if someone is going to give us free money so we can leave ours earning, it's an easy decision to make. I agree with the statement that you should only buy what you can afford for sure, but I also believe there are some conditions where financing is beneficial.
_________________________
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Every so often Penzoil Platinum in both.
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#3321527 - 03/23/14 11:32 PM Re: Is it economical to buy new? [Re: johnachak]
wallyuwl Offline


Registered: 06/02/09
Posts: 1461
Loc: Lexington, KY
Originally Posted By: johnachak
As I posted earlier, I got my cars with 0% financing so our money stayed invested where it was. I have since retired and have one car paid off, 2 months to go on the second and my money is still earning interest. My wife is an accountant and she said if someone is going to give us free money so we can leave ours earning, it's an easy decision to make. I agree with the statement that you should only buy what you can afford for sure, but I also believe there are some conditions where financing is beneficial.


Compound interest. Never take money out of an account earning compound interest at 7-8% or whatever, to buy something that you could get a loan for at 0-4%. This of course considering that your cash flow would allow for making the payments. Also true that "afford" doesn't have to equal "pay cash."

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#3321890 - 03/24/14 11:17 AM Re: Is it economical to buy new? [Re: 7055]
rjundi Offline


Registered: 03/16/04
Posts: 6222
Loc: New England
On 0% financing many times they offer an discount in lieu of a loan from them. So you did pay likely for 0%.
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#3322262 - 03/24/14 05:18 PM Re: Is it economical to buy new? [Re: rjundi]
fdcg27 Online   content


Registered: 09/25/09
Posts: 9254
Loc: OH
Originally Posted By: rjundi
On 0% financing many times they offer an discount in lieu of a loan from them. So you did pay likely for 0%.


Sometimes this is the case and sometimes it isn't.
The educated buyer already knows this before walking into the lion's den.
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#3322306 - 03/24/14 06:05 PM Re: Is it economical to buy new? [Re: rjundi]
Tdbo Offline


Registered: 08/18/09
Posts: 1705
Loc: Ohio
Originally Posted By: rjundi
On 0% financing many times they offer an discount in lieu of a loan from them. So you did pay likely for 0%.



There really is no such animal as 0% financing.

It is incumbent upon the manufacturer in question to decide whether or not they will buy down a finance rate (by themselves or in conjunction with the dealer) or offer a cash incentive in lieu of 0% to neutralize it as a choice. Sometimes they will offer a mix of both. Sometimes manufacturers just offer it as a take it or leave it move, and deal with it by building it in the price or do so as a business or promotional cost (such as Honda did in Dec 2012 on leftover 2012's.)

$500 probably doesn't provide much motivation. $3,500 presents an interesting conundrum.

However, if one has procured the vehicle at the lowest possible cost, and 1% or less is on the table, why not take it?
_________________________
2012 Honda Accord LX-P 52K
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#3322446 - 03/24/14 08:24 PM Re: Is it economical to buy new? [Re: 7055]
turtlevette Offline


Registered: 12/24/13
Posts: 685
Loc: Massachusetts
Originally Posted By: 7055
I want to get a crossover SUV but I'm not sure if I'll buy used or new.


Try going for last years model leftovers in new inventory. I got 25% off on my stang by doing that. It's a new car at almost used pricing.

You know all the dirt in there is your dirt. Know what I mean? That was important to the wife.

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#3322512 - 03/24/14 09:20 PM Re: Is it economical to buy new? [Re: turtlevette]
wallyuwl Offline


Registered: 06/02/09
Posts: 1461
Loc: Lexington, KY
Originally Posted By: turtlevette
Originally Posted By: 7055
I want to get a crossover SUV but I'm not sure if I'll buy used or new.


Try going for last years model leftovers in new inventory. I got 25% off on my stang by doing that. It's a new car at almost used pricing.



When in the year did you buy yours? We are looking at the same type of situation and are in no hurry. Plus there is a refresh (not total redesign) coming on the vehicle for 2015 model year for what we're interested in (Explorer).

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#3323022 - 03/25/14 11:35 AM Re: Is it economical to buy new? [Re: 7055]
hattaresguy Offline


Registered: 06/01/11
Posts: 5053
Loc: CT
I echo the above statement. I'm waiting until the 2015 F150's and Silverado's come out to even start looking for a late production 14.

If you have a choice the best time to buy a new vehicle is after Thanksgiving, that's when all the pressure is on to meet the end of the year sales goals.


Edited by hattaresguy (03/25/14 11:36 AM)

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#3323040 - 03/25/14 11:49 AM Re: Is it economical to buy new? [Re: hattaresguy]
7055 Offline


Registered: 01/10/08
Posts: 273
Loc: KS
Originally Posted By: hattaresguy
I echo the above statement. I'm waiting until the 2015 F150's and Silverado's come out to even start looking for a late production 14.

If you have a choice the best time to buy a new vehicle is after Thanksgiving, that's when all the pressure is on to meet the end of the year sales goals.


How much of a discount can you get by doing that?
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2004 Neon SRT 376whp 437wtq - stage3, exhaust port, 6 puck, water injection...
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Sold for more important ambitions

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#3323112 - 03/25/14 12:39 PM Re: Is it economical to buy new? [Re: 7055]
IndyIan Offline


Registered: 09/23/08
Posts: 5532
Loc: Ontario, Canada
Originally Posted By: 7055
Originally Posted By: hattaresguy
I echo the above statement. I'm waiting until the 2015 F150's and Silverado's come out to even start looking for a late production 14.

If you have a choice the best time to buy a new vehicle is after Thanksgiving, that's when all the pressure is on to meet the end of the year sales goals.


How much of a discount can you get by doing that?

Off of MSRP of a 2014, maybe 25% or more. Depends what the manufacturer is offering as incentives right now. All the crazy low prices for the Dodge and RAM vehicles are from manufacturer rebates off of MSRP, so you aren't going to see the rebates get much bigger, but the dealer still might be more interested in selling for less at the end of the model year, but the $19.5k minivan isn't going to drop too much lower. A 2014 $40k GM half ton probably will get alot cheaper in the fall since RAM is selling the same thing for $26-28k right now. Plus on a $40k vehicle the dealers do have some room to move, even if GM is giving you $10k in rebates.
For example, our Tracker had a MSRP of $23k, but with all the rebates and programs offered, we were out the door including 13% sales tax for $17k.
_________________________
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#3323180 - 03/25/14 01:31 PM Re: Is it economical to buy new? [Re: IndyIan]
7055 Offline


Registered: 01/10/08
Posts: 273
Loc: KS
Originally Posted By: IndyIan
Originally Posted By: 7055
Originally Posted By: hattaresguy
I echo the above statement. I'm waiting until the 2015 F150's and Silverado's come out to even start looking for a late production 14.

If you have a choice the best time to buy a new vehicle is after Thanksgiving, that's when all the pressure is on to meet the end of the year sales goals.


How much of a discount can you get by doing that?

Off of MSRP of a 2014, maybe 25% or more. Depends what the manufacturer is offering as incentives right now. All the crazy low prices for the Dodge and RAM vehicles are from manufacturer rebates off of MSRP, so you aren't going to see the rebates get much bigger, but the dealer still might be more interested in selling for less at the end of the model year, but the $19.5k minivan isn't going to drop too much lower. A 2014 $40k GM half ton probably will get alot cheaper in the fall since RAM is selling the same thing for $26-28k right now. Plus on a $40k vehicle the dealers do have some room to move, even if GM is giving you $10k in rebates.
For example, our Tracker had a MSRP of $23k, but with all the rebates and programs offered, we were out the door including 13% sales tax for $17k.


I had no idea they could discount them that much, that's crazy. I was thinking like a grand tops.

How much profit are the dealerships making on these cars?
_________________________
2004 Neon SRT 376whp 437wtq - stage3, exhaust port, 6 puck, water injection...
http://www.cardomain.com/ride/3143812/1

Sold for more important ambitions

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#3323195 - 03/25/14 01:48 PM Re: Is it economical to buy new? [Re: 7055]
surfstar Offline


Registered: 09/16/04
Posts: 4333
Loc: Santa Barbara, CA
Originally Posted By: 7055
Originally Posted By: IndyIan
Originally Posted By: 7055
Originally Posted By: hattaresguy
I echo the above statement. I'm waiting until the 2015 F150's and Silverado's come out to even start looking for a late production 14.

If you have a choice the best time to buy a new vehicle is after Thanksgiving, that's when all the pressure is on to meet the end of the year sales goals.


How much of a discount can you get by doing that?

Off of MSRP of a 2014, maybe 25% or more. Depends what the manufacturer is offering as incentives right now. All the crazy low prices for the Dodge and RAM vehicles are from manufacturer rebates off of MSRP, so you aren't going to see the rebates get much bigger, but the dealer still might be more interested in selling for less at the end of the model year, but the $19.5k minivan isn't going to drop too much lower. A 2014 $40k GM half ton probably will get alot cheaper in the fall since RAM is selling the same thing for $26-28k right now. Plus on a $40k vehicle the dealers do have some room to move, even if GM is giving you $10k in rebates.
For example, our Tracker had a MSRP of $23k, but with all the rebates and programs offered, we were out the door including 13% sales tax for $17k.


I had no idea they could discount them that much, that's crazy. I was thinking like a grand tops.

How much profit are the dealerships making on these cars?


American vehicles and trucks seem to magically get discounted thousands under MSRP. Seems to me the same as raising the prices before a 30% off sale. Leads me to believe they are simply overpriced to begin with. If they were TRULY worth MSRP, then the dealer/manufacturer wouldn't have to discount them as they would sell at full sticker.


And for the OP - you can make the numbers up anyway you'd like to skew it. New can be a better value than used, all depending on your priorities. Figure out your price range and vehicle, then find the best new/used deal on it. Or get lectured on BITOG laugh


Edited by surfstar (03/25/14 01:50 PM)
_________________________
2000 Civic HX 1.6L MTX ~42mpg
2005 Saturn Vue 2.2L MTX ~27mpg
--My 'new' car will be an early retirement--

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#3323220 - 03/25/14 02:12 PM Re: Is it economical to buy new? [Re: surfstar]
SteveSRT8 Offline


Registered: 10/10/08
Posts: 14751
Loc: Sunny Florida
Originally Posted By: surfstar

American vehicles and trucks seem to magically get discounted thousands under MSRP. Seems to me the same as raising the prices before a 30% off sale. Leads me to believe they are simply overpriced to begin with. If they were TRULY worth MSRP, then the dealer/manufacturer wouldn't have to discount them as they would sell at full sticker.


Many lower volume cars do indeed command full sticker or even a premium over sticker. When I bought my SRT8 I was offered 5 grand cash to allow someone else to buy it. Many fools paid 10 grand over sticker!

New models, low volume, high performance, hard to get, all these command more moolah. Simple demand. The only models that get huge discounts are trucks. I buy a few every other year or so and the 3500 one ton vans are discounted very little as they are low volume pieces.

I have bought brand new pickups for nearly 40% off sticker price. All depends on your timing...


Edited by SteveSRT8 (03/25/14 02:12 PM)
_________________________
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#3323241 - 03/25/14 02:36 PM Re: Is it economical to buy new? [Re: 7055]
dishdude Offline


Registered: 11/14/08
Posts: 3274
Loc: Phoenix
At one time people were paying $5k-$10k over sticker for PT Cruisers. crackmeup

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#3323264 - 03/25/14 02:52 PM Re: Is it economical to buy new? [Re: 7055]
Tdbo Offline


Registered: 08/18/09
Posts: 1705
Loc: Ohio
Originally Posted By: 7055
Originally Posted By: hattaresguy
I echo the above statement. I'm waiting until the 2015 F150's and Silverado's come out to even start looking for a late production 14.

If you have a choice the best time to buy a new vehicle is after Thanksgiving, that's when all the pressure is on to meet the end of the year sales goals.


How much of a discount can you get by doing that?


Some examples over the years:

The Accord in my signature: Sticker 24,070. Price: 19,300 (purchased 12/1/12)
Included in deal: Spoiler, Mudflaps, Side moldings (they were already on car.)
The Mustang in my signature: Sticker: 31,170. Price: 24,900. (purchased mid-September 2008)
What I feel is my personal best: 2004 Ranger Supercab: Sticker 23,000. Price 13,700. (purchased March 2005.) They threw a bedliner in when I acted like I was heading for the door.

Prices do not include tax/title. They include all rebates + factory incentives + dealer incentives. If they have it after the new models come out, they will throw everything and anything in their arsenal to move it IMO.
_________________________
2012 Honda Accord LX-P 52K
2008 Ford Mustang Pony Package Convertible 12K
2006 Honda Odyssey EX-L 65K
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#3323291 - 03/25/14 03:10 PM Re: Is it economical to buy new? [Re: 7055]
Smokescreen Online   content


Registered: 05/25/05
Posts: 2307
Loc: Alberta, Canada
Economy at the time really has a say. When I bought my Corolla, gas was $$$, small used fuel efficient cars were selling like hotcakes and it was a sellers paradise, a 3-4 year old Corolla was $2-3K within new. It was reasonable to buy new. Fast forward to today, it could go either way.
_________________________
09 Corolla 1.8L-212Kkms(133Kmi)-PP,Denso
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03 Sierra 2500 6.0L-186Kkms(116Kmi)-PYB,Baldwin

All with mpg > EPA

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#3323342 - 03/25/14 04:01 PM Re: Is it economical to buy new? [Re: dishdude]
SteveSRT8 Offline


Registered: 10/10/08
Posts: 14751
Loc: Sunny Florida
Originally Posted By: dishdude
At one time people were paying $5k-$10k over sticker for PT Cruisers. crackmeup


It is so true.

It happens all the time with odd models and special editions. There are some really funny folks who will spend a lot more than they probably should to to get a car they really want.
_________________________
"In a democracy, dissent is an act of faith."
J. William Fulbright
Best ET-12.79 @ 111 mph
4340 pounds, Street tires
Just like we go to Publix

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#3323348 - 03/25/14 04:06 PM Re: Is it economical to buy new? [Re: 7055]
hattaresguy Offline


Registered: 06/01/11
Posts: 5053
Loc: CT
Originally Posted By: 7055
Originally Posted By: hattaresguy
I echo the above statement. I'm waiting until the 2015 F150's and Silverado's come out to even start looking for a late production 14.

If you have a choice the best time to buy a new vehicle is after Thanksgiving, that's when all the pressure is on to meet the end of the year sales goals.


How much of a discount can you get by doing that?


Right now they are $7k-$8k off I want at least $10k.

The truck I want stickers for around $43k I want to pay $32k, or less. Right now I can get it for $35k-$37k.

GM is going to want to hit sales volume numbers to keep up with Ford and Dodge, so they will discount heavily.


Edited by hattaresguy (03/25/14 04:08 PM)

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#3323440 - 03/25/14 06:01 PM Re: Is it economical to buy new? [Re: 7055]
wallyuwl Offline


Registered: 06/02/09
Posts: 1461
Loc: Lexington, KY
Is GM coming out with redesigned pickups for 2015 model year? I know Ford is. My dad might be looking for a new truck in the next year or less.

Just for the heck of it I checked out a 2014 Highlander today. They are expensive and actually not that nice. Materials and technology felt cheap. The third row MIGHT fit a 4 year old. Incredibly small. And pricey for what you get.

Still down to the Explorer and CX-9 I think. I do like the Durango (except for the cheap feeling cloth seats - I'm sure the leather are better), but Dodge reliability and depreciation make me very hesitant. Will almost for sure wait until the redesigned 2015s are out in both to get the best possible deal on a 2014.

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#3323722 - 03/25/14 10:36 PM Re: Is it economical to buy new? [Re: 7055]
hattaresguy Offline


Registered: 06/01/11
Posts: 5053
Loc: CT
GM is coming out with the new 3/4 and 1 ton's, the 1/2 tons were all new for 2014.

Ford is new for 2015, and Ram better get the lead out...literally!

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#3323756 - 03/25/14 11:23 PM Re: Is it economical to buy new? [Re: hattaresguy]
turtlevette Offline


Registered: 12/24/13
Posts: 685
Loc: Massachusetts
If you are buying a Ford, ask around as they have a friends and family plan that can get you extra discounts. You have to know someone who works for Ford and they have to give you their assigned pin number.

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#3324238 - 03/26/14 01:28 PM Re: Is it economical to buy new? [Re: 7055]
hattaresguy Offline


Registered: 06/01/11
Posts: 5053
Loc: CT
My grandmothers new husband worked for Ford for over 30 years and as part of his package he can buy one vehicle a year at Ford cost, not dealer cost, Ford's.

So if I want I could get a 2015 F150 for what it cost Ford to build.

He bought his last Lincoln for like $26k, I think sticker was over $40k. Traded after two years for $28k lol!

So that might be a possibility, but I'm a Chevy guy.




Edited by hattaresguy (03/26/14 01:30 PM)

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#3324637 - 03/26/14 07:15 PM Re: Is it economical to buy new? [Re: hattaresguy]
turtlevette Offline


Registered: 12/24/13
Posts: 685
Loc: Massachusetts
Originally Posted By: hattaresguy
So that might be a possibility, but I'm a Chevy guy.


If you can get his pin, I wouldn't be that much of a chevy guy. Not 10-15 grand worth.

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#3324639 - 03/26/14 07:16 PM Re: Is it economical to buy new? [Re: 7055]
7055 Offline


Registered: 01/10/08
Posts: 273
Loc: KS
Neither would I, having a different emblem on the grill is not worth that kind of money
_________________________
2004 Neon SRT 376whp 437wtq - stage3, exhaust port, 6 puck, water injection...
http://www.cardomain.com/ride/3143812/1

Sold for more important ambitions

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#3324664 - 03/26/14 07:43 PM Re: Is it economical to buy new? [Re: 7055]
99Saturn Offline


Registered: 02/25/13
Posts: 982
Loc: NY
Just a thought - might also be worth looking in a GM credit card. From time to time the rewards are topped up to some higher cap.

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#3325214 - 03/27/14 10:40 AM Re: Is it economical to buy new? [Re: turtlevette]
hattaresguy Offline


Registered: 06/01/11
Posts: 5053
Loc: CT
Originally Posted By: turtlevette
Originally Posted By: hattaresguy
So that might be a possibility, but I'm a Chevy guy.


If you can get his pin, I wouldn't be that much of a chevy guy. Not 10-15 grand worth.



He will give me his pin, he offered it. He just bought a new 2014 CTS actually because he doesn't like Lincolns current offerings.

I'll see how much it actually saves, I'm not that much of a Chevy guy if I can get a Ford for say $27k that stickers for over $40k!

The best part is that it doesn't matter what deals they are running or if the 15 models are hot or what dealer I go to. He said you put it in, get it for Ford's cost and they reimburse the dealer.


Edited by hattaresguy (03/27/14 10:41 AM)

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