New car vs. used car.

[stchman]

I have generally bought new as I don't want to have to worry about the maintenance that a previous owner may or may not have done.

With this being said, are there any real savings to buying a used car? The old adage that you lose $5K by driving it off the lot I believe is a myth.

I will go back and detail my car purchases since 2001. I will detail cost from maintenence (not including routine maintenance as ALL cars need this).

2002 Ford Explorer Sport Trac XLT
I bought this vehicle for $23575, traded for $6500 in 2008 with ~95000 miles.
The 4.0L engine in the Sport Tracs from that era had EGR sensor problems(Ford knew about it and did nothing), so I had to replace the EGR sensor every 2 years to pass emissions. I replaced 3 EGR sensors at a cost of $35 each. Had to clear the codes, drive for about 20 miles, take it to the emissions place, and get my 2 year plate renewal. This was a total cost of about $$120.

Rotors got warped and had to replace the rotors, front wheel bearings, and grease seals. This was about $300. I was able to do the work myself. Is this considered normal maintenance?

2008 Silverado LT
I bought this truck for $22500, traded for $18000 in 2012 with ~73000 miles.
$100 maintenance to have passenger seat air bag sensor wiring harness cleaned. Apparently some slight corrosion got into the wiring harness and made the BCM(Body Control Module) go into an Immobilizer Theft Mode.

2013 Silverado LTZ
I bought this truck for $38700, still own.
No maintenance costs besides normal maintenance.

So over the last 14 years I have spent ~$500 in maintenance costs outside normal maintenance. No transmission, engine, drivetrain, computer, oil leaks, steering linkage, shocks, ball joints, interior stuff.

Needless to say the Ford definitely cost me the most money. We won't get into a debate of Ford vs. Chevy, but needless to say my Silverados IMO are 10X the vehicle the Sport Trac ever could be.

All in all, while you do pay more buying a new vehicle, you make up for it by not having to fix stuff that WILL need to be fixed as a vehicle gets to be 100K miles or older.

FYI, I don't keep a vehicle for longer than 100K miles.

 

[Astro14]

You've looked at only one factor in cost: maintenance, without really considering depreciation and other costs...to come up with a cost per mile ( or cost per year). The maintenance on the Explorer was minor...the depreciation, typical...and depreciation was the killer on that car...as it usually is...

How about insurance cost differences? Interest on the loan? Personal property taxes?

I've got no problem with buying a new car, but all the costs, as well as the down time for maintenance, should be considered.

 

[stchman]

Originally Posted By: Astro14
You've looked at only one factor in cost: maintenance, without really considering depreciation and other costs...

How about insurance cost differences? Interest on the loan? Personal property taxes?


Valid points.

Insurance - Insurance costs are mostly a matter of driver liability that vehicle worth. When I bought my 2013, my insurance only went up $20 a year as the 2013 was worth a little more than the 2008.

Interest on loan - New cars generally have FAR lower interest loans than used cars. My highest interest I had on all those cars was 4%.

Personal property taxes - Yes, PP taxes SUCK. Probably at least $400 a year more than a used car.

 

[eljefino]

I bought a 1989 firebird for $1000, put $400 worth of parts on it, drove it for a summer, and sold it for $1400. Drove for free AND looked cool.

 

[Nate1979]

That purchasing used is always a better deal than new is not true and much more complicated. You have to look at all the details and make a decision with all the facts. It really depends on what you are buying, how you plan to use it, how long you plan to keep it.

Go try buying a 1 year old or less car for $4k off the price of a new one. Not going to happen. I agree that is a myth. But, you have to understand the definition of what they mean by $4k off. If they mean off the MSRP then yes. If off the actual sales price then no.

 

[OneEyeJack]

When you buy a used car you have the chance to pick one based on its record of repair and other factors that you would not be able to know with a new car if it's a new model or has been substantially upgraded.

If you live in an area like Southern California you can with some searching find that one owner, well maintained car that just plain looks right. It's more work than going to the dealer but it can really pay off.

I took advantage of both approaches when I purchased my 84 Civic wagon new for cash. I still drive it today as my daily driver and it's definitely a used car now. There's a good feeling that comes with driving around in a car that's paid for without the desire to buy a new one.

 

[stchman]

Originally Posted By: Nate1979
That purchasing used is always a better deal than new is not true and much more complicated. You have to look at all the details and make a decision with all the facts. It really depends on what you are buying, how you plan to use it, how long you plan to keep it.

Go try buying a 1 year old or less car for $4k off the price of a new one. Not going to happen. I agree that is a myth. But, you have to understand the definition of what they mean by $4k off. If they mean off the MSRP then yes. If off the actual sales price then no.


I agree it does depend upon the car. If you are buying a well maintained 2 year old Honda Accord with low mileage from someone that was a stickler for maintenance, then that is a good deal. Problem is people tend to keep a well maintained, low mileage Accords for more than 2 years.

From everything I have read, BMWs and Mercedes are cars that should not be owned without some type of warranty(factory or extended).

 

[Astro14]

So, looking at just the costs you detailed...

Explorer: $17,000 depreciation, $500 maintenance, 95,000 miles

Cost: 0.18/mile

Silverado: $4,500 depreciation, $0 maintenance, 73,000 miles

Cost: 0.06/mile

Wow, the Silverado was one third the cost...but it was the depreciation that made all the difference in those two examples...the brakes and EGR valve were too small a percentage of cost to really be worth considering...

 

[eljefino]

With the age of Internet "good" used cars get branded as such quickly and there aren't as many "sneaky deals" for those "in the know".

There are a bunch of crummy ones you can flip for your advantage, like buying a Corolla for $18k, putting 75k miles on it, and selling it for $16k.

If you live in a state where you can get "permanent" license plates and run them 20 years, good for you!

If you can do the 5 year depreciation thing for your business taxes, have at it!

If your insurance and excise tax punish you for buying new, no way! But if you NEED a loan and can make the same payments (due to lower APR) on a stripper Kia Soul as you would on a questionable used car, boom!

If you're mechanically able and owning a (clunky) car, driving it a year, and then "flipping" it and repeating keeps you occupied, super!

 

[HTSS_TR]

Some makers/models such as Accord, Camry, Civic, Corolla ... 2-3 years used vehicles doesn't make sense because of very high price. For others such as BMW, MB, Audi ... 2-3 years old is a better buy because it depreciates more than 30-40% from MSRP.

I agree with Astro about the actual cost, it should be the total of all items such as insurance, maintenance, repairs, registration, depreciation ...

 

[Rolla07]

I bought used and plan to again. Two types of thinking yours and mine. Think we are opposites but I know people who do the same. Cars last longer today, and as long as you buy a reliable car and get it inspected it doesnt cost much. Im at 205k kms about 130k miles and i spent maybe 800$ to redo front bearings and shocks all around. Havent done anything besides normal maintenance since buying it with 80k kms (45k miles). I have been looking at new camry's that are 3 years old vs new..also 45k miles or less selling for less than half the new cost. So while there is risk of having to repair something, someone else is eating the depreciation for me. I plan to take this car as far as it can go!

 

[Johnny2Bad]

I am firmly in the used camp and don't sweat the maintenance costs. Mu way of thinking is every month you drive without issues is $500 in the black, and usually repair vehicles myself but you could also take it to a shop ... Even the dealer ... That offers Courtesy Cars for zero downtime and still be money ahead.

For those who fear problems, every OEM has a Certified Used program that offers clean examples with warranty.

 

[JHZR2]

Originally Posted By: stchman

All in all, while you do pay more buying a new vehicle, you make up for it by not having to fix stuff that WILL need to be fixed as a vehicle gets to be 100K miles or older.

FYI, I don't keep a vehicle for longer than 100K miles.


I generally share this sentiment. When we bought our odyssey, we took a few simple assumptions of keeping the car to 100k, 150k and 200k, assumptions of repairs needed after the 100k mark, and how that changed amortized costs. We looked at a variety of used vans out on the market, and did the math to see the effects. Of course the used van has fewer miles of life to amortize some of the costs, but at the end of the day, given the used vehicles' pricing structure, the per mile cost for the used vehicles was consistently higher than new.

Perhaps on vehicles that depreciate like crazy it would be more compelling, but even then, since we keep our cars typically for a very long time until very old age, the end value is really low anyway so it doesn't make a big deal other than purchase price, which is also coupled to number of miles you get out of it...

 

[dishdude]

I either buy new or a beater - I just have a hard time finding value and justifying anything in between. I've tried, but after crunching the numbers it just never made sense to me.

 

[cat843]

Some of the website like KBB or Edwards publish total cost of ownership which is a factor. If a car tends to hold its value it may be a not so good buy within the first few years of ownership. Every mile and/or year is just that a mile and/or a year off its warranty. And you can get new car discounts from some insurance companies, and the best financing is going to be a new car.

All that is about a new or a car within its first few years.

A $5000 or $10,000 vehicle is a different story and really cannot be compared against new.

 

[stchman]

I don't want people to take it that I dislike used cars, no, I dislike people in general. People generally don't take care of their car and only do something when the thing won't run.

I know the concept of changing oil when the engine is knocking is a foreign concept to BITOG folks, but working in the quick lube industry when I was younger, I saw it more often then you think. Problem is, people that have an engine whose days are numbered, sell the car, and the next guy has to foot the bill.

Isn't knowing that your vehicle's maintenance is known from day one worth something?

 

[dishdude]

Originally Posted By: stchman
Isn't knowing that your vehicle's maintenance is known from day one worth something?


YES! And the discount in a 2-5 year old car just isn't enough to make up for that.

 

[Leo99]

Originally Posted By: dishdude
I either buy new or a beater - I just have a hard time finding value and justifying anything in between. I've tried, but after crunching the numbers it just never made sense to me.


That's how I see the math. For the past 30 years I've tried to get 10 cents per mile out of my cars. That's the math I use. For my current fleet, I'm way ahead on the Corolla and just meeting it on the Rav4. I hope/expect to get 300,000 miles out of the Camry. I've bought cars for $500 and put 10k miles on them. They didn't look very nice but they drove.

When I looked at used cars, saw many cars selling for $18,000 with 90k miles on them. By my math, I'd need to take the car to 270k miles to get my 10 cents per mile. I'd rather buy new and enjoy the new car smell and give myself a better chance to get my 10 cents per mile by doing the maintenance myself.

 

[javacontour]

I never looked cool in my '78 or '79 Fairmont I got for $100.

I sold it 3 years later for $500. Purchase and service was about $1200 total - $500 for the sale. So let's say about $300/year or $1/day to drive.

I think I spent more (company money) parking it at the airport for travel than I spent on the car during that 3 year span.

Originally Posted By: eljefino
I bought a 1989 firebird for $1000, put $400 worth of parts on it, drove it for a summer, and sold it for $1400. Drove for free AND looked cool.

 

[Brybo86]

all you people are talking about a 2-3 yr old car as a "used" car.
That is never a great deal

New Honda accord 23k base
2 yrs later 24k miles sells for 19k
yes that is crazy and no i would never buy used
but I would also consider that a relatively new car is not really "used" if we only have 2 categories new and used

a 1 yr old car(essentially new) is much closer in price to a new car than a 10 yr old car (used)

now how about a 10 yr old Honda accord 150k miles, needs an oil change maybe a timing belt, new brakes? ok $500 in parts and you buy it for $3000
then procede to drive it for another 100k miles

when a car is 10 yrs old used it will always be a better buy than a $500 a month car payment

how is this even up for debate?

you either buck up and buy a new car or very lightly used car for $$$$$$ big bucks and drive it spending a little on maintenance here and there

or you buy a used car for $ dirt cheap and spend a little on maintenance here and there

the maintenance is going to be the same everything wears out at the same rate, brakes, tire, fluids all degrade at the same pace.

if you want/like a new car go for it, but please don't try to twist it and say it is cheaper in the long run... no way