Do any of you have a calculation that you have come up with for a personal preference that I will buy a used car if I can save x% versus a new car.
New Versus Used Calculation
- Thread starter linuxology
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I usually try to figure out if I want to spend a lot of money up front--or not. There are various numbers tossed around for depreciation, but in order to really gauge that, you have to figure out how many miles you will drive, and what you think it will be worth after driving that. Depreciation is the big number, although fuel cost per mile can be right up there. Repair and maintenance tends not to be, assuming you don't buy a problem vehicle. Finally, sales tax and then yearly registration comes into play.
But I tend to buy either new or really really used. New I'll keep for 10yr and over 200k, so I'm probably not a typical case study.
But I tend to buy either new or really really used. New I'll keep for 10yr and over 200k, so I'm probably not a typical case study.
FWIW, I've never bought a new car and probably won't for many years to come and I am 45. The market is very different today than it was in 2017 the last time I bought a vehicle. I have had good luck at keep cars until they become unreliable or cost more to repair than replace.
Our last van 2014 Chrysler T&C Touring L bought in 2017 is paid off and has cost me $1,566.14 to maintain since purchased. I think this is well worth the $20K I paid for a high end van with leather, heated seats, sun roof etc... The MSRP new was ~$40K so 50%.
Just my $0.02
Our last van 2014 Chrysler T&C Touring L bought in 2017 is paid off and has cost me $1,566.14 to maintain since purchased. I think this is well worth the $20K I paid for a high end van with leather, heated seats, sun roof etc... The MSRP new was ~$40K so 50%.
Just my $0.02
Eh sort of, I need to work on it more. Its hard to estimate repair costs on used vehicles vs newer vs new. I try to calculate yearly costs including fuel and repairs which tend to be higher on older vehicles.
I think, in general, if you pick a simple car and can do parts swapping level mechanics, a well used car is way cheaper than new one, if you don't count your time. Cars in your area don't rust out too often I assume?
If the car goes to a shop for everything, then going new and trading in at 5-6 years is better.
If you don't drive a lot, I don't think you could lose money buying a new RAM Classic when they go on sale next time.
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There is a wrinkle to this new v used equation that I discovered. A year ago I bought a 2014 Ford vehicle with 68k miles on it. I did a few minutes of research and discovered that Ford motor company will sell me a 5 year/48k miles bumper to bumper warranty. (If it had fewer than 50k miles they would extend the warranty out to 7 years!). Cost was about $400/year for the best plan which is what I purchased.
Everything is covered, powertrain, electrical, radio gps system. If it is in the car it is covered, including exterior xenon headlights and all light bulbs. In fact, the key FOB with remote start is covered for one replacement FOB per year. The warranty is actually better than a new car warranty. And it is accepted at every Ford dealer. There were lesser levels of coverage than I bought, including a 7 year just power train warranty. Only Ford parts are used and it is transferable to a new owner if I sell it.
So I bought the warranty and now have a 2014 used Ford car that has Ford factory warranty coverage out to 116k miles. I know the aftermarket warranty business has a well deserved bad reputation but this offering from Ford is the real deal. I took my car in to Ford for a HVAC issue and the guy put the VIN in the system and the service writer smiled at me. He said I’m covered for anything that goes wrong, no question asked. No submission of invoices or claims required.
So do some research when reviewing used cars, you might be able to get factory warranty coverage from the company that made the car. This might alter the new v used calculation.
Everything is covered, powertrain, electrical, radio gps system. If it is in the car it is covered, including exterior xenon headlights and all light bulbs. In fact, the key FOB with remote start is covered for one replacement FOB per year. The warranty is actually better than a new car warranty. And it is accepted at every Ford dealer. There were lesser levels of coverage than I bought, including a 7 year just power train warranty. Only Ford parts are used and it is transferable to a new owner if I sell it.
So I bought the warranty and now have a 2014 used Ford car that has Ford factory warranty coverage out to 116k miles. I know the aftermarket warranty business has a well deserved bad reputation but this offering from Ford is the real deal. I took my car in to Ford for a HVAC issue and the guy put the VIN in the system and the service writer smiled at me. He said I’m covered for anything that goes wrong, no question asked. No submission of invoices or claims required.
So do some research when reviewing used cars, you might be able to get factory warranty coverage from the company that made the car. This might alter the new v used calculation.
back years ago used vehicles if found in good condition were a bargain, BUT these days with everyone wanting a lot of unnecessary trinkets + all the complicated tech its buyer beware but its pretty EZE to search + learn about issues that cost $$$ + NOT buy those models !!
It likely depends somewhat on the person. I am the type that keeps my cars forever, so I have determined it makes more sense for me to buy exactly what I want brand new and then just plan to drive it until its no longer economical for me to fix - which is a long time. But I am also now in the financial position to do so. I you can't afford a new car - well you just don't. Or if your needs are going to change in 2 years, then new makes no sense.
If you can estimate the life expectancy of the car to when it is likely to start having significant problems - and then figure out where you are on that timeline - you should be getting a significant deal the further down you get as based on remaining life expectancy. ie if you expect it to be at half finished, you should be paying significantly less than half of new to take the end risk and maintenance.
I don't see any used cars on the market right now that are worth buying with the crazy pricing - if you truly can afford either.
If you can estimate the life expectancy of the car to when it is likely to start having significant problems - and then figure out where you are on that timeline - you should be getting a significant deal the further down you get as based on remaining life expectancy. ie if you expect it to be at half finished, you should be paying significantly less than half of new to take the end risk and maintenance.
I don't see any used cars on the market right now that are worth buying with the crazy pricing - if you truly can afford either.
New car = upfront payment or monthly payments over "X" miles/years relatively trouble/repair free.
Used car = upfront payment or monthly payments over "Y" miles/years, with some level of repairs required, costing both money and time.
Other things to consider: time value of money, mpg, miles/year driven, insurance, value of time spent on repairs, impact of down time for a repair, how long the car will meet your needs, etc.
I'm also in either extreme camp - brand new or pretty well worn, though i don't have much of a desire right now to go through the headache of something that is up there in miles/years.
Odd thing for me right now is I could certainly benefit from a bigger vehicle but have a hard time justifying the price tag for new (especially if it is whats available versus what I want), and don't have a desire to burn $$$ for a vehicle that doesn't see many miles.
Used car = upfront payment or monthly payments over "Y" miles/years, with some level of repairs required, costing both money and time.
Other things to consider: time value of money, mpg, miles/year driven, insurance, value of time spent on repairs, impact of down time for a repair, how long the car will meet your needs, etc.
I'm also in either extreme camp - brand new or pretty well worn, though i don't have much of a desire right now to go through the headache of something that is up there in miles/years.
Odd thing for me right now is I could certainly benefit from a bigger vehicle but have a hard time justifying the price tag for new (especially if it is whats available versus what I want), and don't have a desire to burn $$$ for a vehicle that doesn't see many miles.
I was 58 when I bought my first used car and it was a second car/beater. Prior to that I always bought new. There's no calculation there, I just like new cars.
My dad was the same way. He always said he would rather just drive his own used car than someone else's. People who talk about new cars being a waste of money are totally ignoring the value of those first few years of ownership.
My dad was the same way. He always said he would rather just drive his own used car than someone else's. People who talk about new cars being a waste of money are totally ignoring the value of those first few years of ownership.
Yes!
And with today's typical depreciation of common cars/SUV's, the cost per mile means there is likely zero savings.
Unless you purchase a car known for crazy depreciation, I can easily show that a well purchased new car will not cost you more per mile, over it's lifespan.
Cost per mile may include:
Capital costs
Fuel
insurance
upgrades
maintenance
accidents
value at sale
For Example: One can concentrate on purchase price and omit all of the other expenses. But if you drive 10K per year and insurance costs $2,500, that cost is 25c per mile. Strangely, a new car may cost less to insure!
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My used cars have been a SIGNIFICANT cost per mile savings over my new ones.
For example, I owned a 2011 Crown Victoria and 2009 Chevy Malibu alongside each other for 10 years and 100k miles.
ROUGH numbers:
2011 was purchased 1 year old used with 30k miles
2009 brand new.
Both of these are run of the mill cars with similar cheap maintenance and insurance costs. A slight fuel savings to the Malibu.
I could try to tally those tiny differences. But, the most impactful difference between them was the depreciation hit. I sold both last year:
I lost $6k in depreciation on the 2011.
I lost $19k in depreciation on the 2009.
A 13k difference over 10 years, an extra $0.13 per mile cost.
Though, as mentioned, the market is a very different place right now. The types of vehicles being shopped will sway things, as well as the term you will keep the car for, and that's just the surface.
For example, I owned a 2011 Crown Victoria and 2009 Chevy Malibu alongside each other for 10 years and 100k miles.
ROUGH numbers:
2011 was purchased 1 year old used with 30k miles
2009 brand new.
Both of these are run of the mill cars with similar cheap maintenance and insurance costs. A slight fuel savings to the Malibu.
I could try to tally those tiny differences. But, the most impactful difference between them was the depreciation hit. I sold both last year:
I lost $6k in depreciation on the 2011.
I lost $19k in depreciation on the 2009.
A 13k difference over 10 years, an extra $0.13 per mile cost.
Though, as mentioned, the market is a very different place right now. The types of vehicles being shopped will sway things, as well as the term you will keep the car for, and that's just the surface.
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I do love them! There really is something nice about driving one that is well setup. But the MPG is pretty poor by today's standards. I could get 22mpg highway by driving 65mph, and maybe as high as 17 around town by going really easy. In the actual city, I got no more than 15.
But you can take the wheels off of a KTM 380EXC, loosen the handlebars and put the entire bike in the trunk with room to spare!
HOWEVER, times have changed, and used cars are stupidly expensive. From a pro-rated point of view, there is no savings today. You can still purchase a new vehicle at MSRP or under if you look.
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I mean, financially, you would nearly always be money ahead buying a quality used vehicle in good condition that has already fully depreciated.
For instance, I purchased an 01 suburban 3 years ago for $1500. I do all the maintenance and repairs on it and have spent maybe $800? which includes $500 worth of tires. So, rounding up we can say I spent $2,500 in 36 months or $69/month. Compared to a $400-$800 car payment. Invest the difference and come out way ahead. ($400/month at 9% interest is $250k in 20 years)
Even if the trans goes out and needs replaced I would only spend $2k or so. Similar with the engine . Barring frame issues the vehicle would be good for many more years after that.
I also spend like $30/year to insure it and registering it is also very cheap.
Caveats abound:
1. Many folks don't want to spend more than the vehicle is worth for a repair should the engine or trans break.
2. I work on my own cars 99% of the time which saves me money
3. Creature comforts and showing off your new ride aren't part of this plan
4. Things break on older vehicles a lot more often
5. Choosing a good model of vehicle and finding one that has been taken care of can be challenging.
https://www.calculator.net/investme...end&ciadditionat1=monthly&printit=0&x=95&y=14
For instance, I purchased an 01 suburban 3 years ago for $1500. I do all the maintenance and repairs on it and have spent maybe $800? which includes $500 worth of tires. So, rounding up we can say I spent $2,500 in 36 months or $69/month. Compared to a $400-$800 car payment. Invest the difference and come out way ahead. ($400/month at 9% interest is $250k in 20 years)
Even if the trans goes out and needs replaced I would only spend $2k or so. Similar with the engine . Barring frame issues the vehicle would be good for many more years after that.
I also spend like $30/year to insure it and registering it is also very cheap.
Caveats abound:
1. Many folks don't want to spend more than the vehicle is worth for a repair should the engine or trans break.
2. I work on my own cars 99% of the time which saves me money
3. Creature comforts and showing off your new ride aren't part of this plan
4. Things break on older vehicles a lot more often
5. Choosing a good model of vehicle and finding one that has been taken care of can be challenging.
https://www.calculator.net/investme...end&ciadditionat1=monthly&printit=0&x=95&y=14
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My anecdote is as follows.
In 2016, we bought oilBabe's RAV4 for 30k OTD and she's driven about 125k miles in the past 6 years.
Of course it doesn't have zero value, but the cashflow basis cost to drive so far just for the purchase is $0.24/mile.
My 2012 Mazda3 I purchased in 2017 with 68k miles for just under 10k OTD and I've driven just under 100k miles in the past 5 years all in save insurance has been $0.21 mile.
That's purchase, fuel, maintenance, repair and TTL.
The new RAV4 is still more costly than the 5 year old Mazda3 as just the vehicle cost before a drop of fuel is purchased is more than the all-in cost of the Mazda.
Of course, YMMV.
We would probably keep the RAV4 not more than another 125k miles, and the Mazda another 80k miles give or take. By then, the costs to run either will increase as more repairs would be needed.
That extra ~70k miles in the RAV4 cost about $20k before M&R, so it's hard to financially justify the new car over the 5 year old used car that has depreciated 50-60% of it's new value in 5 years.
But that's just me. I'm also in a place where I can take a hit and shoulder a major repair, rent a car while the used car is being fixed, etc.
In 2016, we bought oilBabe's RAV4 for 30k OTD and she's driven about 125k miles in the past 6 years.
Of course it doesn't have zero value, but the cashflow basis cost to drive so far just for the purchase is $0.24/mile.
My 2012 Mazda3 I purchased in 2017 with 68k miles for just under 10k OTD and I've driven just under 100k miles in the past 5 years all in save insurance has been $0.21 mile.
That's purchase, fuel, maintenance, repair and TTL.
The new RAV4 is still more costly than the 5 year old Mazda3 as just the vehicle cost before a drop of fuel is purchased is more than the all-in cost of the Mazda.
Of course, YMMV.
We would probably keep the RAV4 not more than another 125k miles, and the Mazda another 80k miles give or take. By then, the costs to run either will increase as more repairs would be needed.
That extra ~70k miles in the RAV4 cost about $20k before M&R, so it's hard to financially justify the new car over the 5 year old used car that has depreciated 50-60% of it's new value in 5 years.
But that's just me. I'm also in a place where I can take a hit and shoulder a major repair, rent a car while the used car is being fixed, etc.
I think it's more about where you are in life and your financial status. I drove used Toyota 4 banger pickups and such until important purchases like housing were well under control. Timing is only everything.
It normal times 2-3 years used was always a substantial savings. C word-19 really messed everything up. Now new cars are sometimes cheaper than used if you can wait. It makes no sense. I'm hoping my wife's Nissan lasts until the market gets back to normal or else we will probably buy new for the first time.
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It all depends on how long you will keep the car and the anticipated total cost of ownership. Once you have these two variables figured out then you can make a determination based on specific models. Most of the times you will be better off with a used vehicle - 2-3 years old and well maintained.
I myself have never bought a new car and I tend to keep my cars for a very long time. My current fleet is 20, 16 and 8 year old cars - these are German cars, higher end models so that as they age they don't look ruggedy and out of place. After 5-6 years of ownership it doesn't really matter whether you bought it new or used if you maintain your vehicles.
If you miss the new car smell, you can buy some toxic smelling perfume for your car like the Chemical Guys AIR_300 New Car Scent.
