Author Topic: Bought a New Car- Do I Deserve a Facepunch?  (Read 6496 times)

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1548
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #50 on: July 31, 2018, 11:11:28 AM »


New or used?  You can't find that car new at that price in the Bay Area.  Truecar says an exceptional price is around $21,600.  I think I could do a couple of hundred better, maybe a little more today or tomorrow, because EOM.  Perhaps you can copy that local online listing here, if it's for a new car.  Then those folks that want to buy one can call that listing.

https://www.cargurus.com/Cars/l-Used-Toyota-Camry-San-Francisco-d292_L2793

In 2 minutes I found a 2016 for $14,600 with 29,011 miles. Cost per mile for the first 2 years of ownership (if purchased at 20k like OP did) was 18.6 cents per mile. Time to find, about 2 minutes.

As a mustachian, I would drive a 2 year old car with 29,000 miles (its a camry, thats not a lot of miles) and pocket the $5,400. This isn't the Bogles website, Facepunches are for people that spend money when it's not necessary. Are you arguing that a 2016 Camry is a bad car? Probably not, its a terrific car still at a lot lower price. Do you really want to have an argument saying a 2016 Camry is old or falling apart, or would you agree a 2016 is practically new for a Camry?

To me, the car hasn't even used up 10% of its life and its 25% cheaper then OP paid.

Cars don't depreciate the way you describe.  Go on your local dealer's lot and see what you will have to pay for a used 2018 with 5k miles, even after haggling.  The price will be very near the new price, because used buyers are a different crowd.
If you're correct, then the same link showed me a 2018 with 6000 miles listed at $19,999...so you're saying new price for a 2018 is roughly $20k, thank you for the support on my original claims.

That's all a 5 minute google search of "Bay Area Toyota Camry" could find.

Another Reader

  • Magnum Stache
  • ******
  • Posts: 4524
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #51 on: July 31, 2018, 04:17:00 PM »


New or used?  You can't find that car new at that price in the Bay Area.  Truecar says an exceptional price is around $21,600.  I think I could do a couple of hundred better, maybe a little more today or tomorrow, because EOM.  Perhaps you can copy that local online listing here, if it's for a new car.  Then those folks that want to buy one can call that listing.

https://www.cargurus.com/Cars/l-Used-Toyota-Camry-San-Francisco-d292_L2793

In 2 minutes I found a 2016 for $14,600 with 29,011 miles. Cost per mile for the first 2 years of ownership (if purchased at 20k like OP did) was 18.6 cents per mile. Time to find, about 2 minutes.

As a mustachian, I would drive a 2 year old car with 29,000 miles (its a camry, thats not a lot of miles) and pocket the $5,400. This isn't the Bogles website, Facepunches are for people that spend money when it's not necessary. Are you arguing that a 2016 Camry is a bad car? Probably not, its a terrific car still at a lot lower price. Do you really want to have an argument saying a 2016 Camry is old or falling apart, or would you agree a 2016 is practically new for a Camry?

To me, the car hasn't even used up 10% of its life and its 25% cheaper then OP paid.

Cars don't depreciate the way you describe.  Go on your local dealer's lot and see what you will have to pay for a used 2018 with 5k miles, even after haggling.  The price will be very near the new price, because used buyers are a different crowd.
If you're correct, then the same link showed me a 2018 with 6000 miles listed at $19,999...so you're saying new price for a 2018 is roughly $20k, thank you for the support on my original claims.

That's all a 5 minute google search of "Bay Area Toyota Camry" could find.

The 2016 was a rental fleet car on it's second owner, looking for a third.  I will pass.  The 2018 at $19,999 is at a Mitsubishi dealer in Hayward.  That's got to be an interesting story...  It says no accident damage.  Maybe it was a repo, bought at auction.  You prove MY point that used is not discounted much from new.  I will gladly pay more for new in perfect condition.  But I don't have to.  I can call the OP's Toyota dealer.

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1548
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #52 on: July 31, 2018, 05:33:42 PM »


New or used?  You can't find that car new at that price in the Bay Area.  Truecar says an exceptional price is around $21,600.  I think I could do a couple of hundred better, maybe a little more today or tomorrow, because EOM.  Perhaps you can copy that local online listing here, if it's for a new car.  Then those folks that want to buy one can call that listing.

https://www.cargurus.com/Cars/l-Used-Toyota-Camry-San-Francisco-d292_L2793

In 2 minutes I found a 2016 for $14,600 with 29,011 miles. Cost per mile for the first 2 years of ownership (if purchased at 20k like OP did) was 18.6 cents per mile. Time to find, about 2 minutes.

As a mustachian, I would drive a 2 year old car with 29,000 miles (its a camry, thats not a lot of miles) and pocket the $5,400. This isn't the Bogles website, Facepunches are for people that spend money when it's not necessary. Are you arguing that a 2016 Camry is a bad car? Probably not, its a terrific car still at a lot lower price. Do you really want to have an argument saying a 2016 Camry is old or falling apart, or would you agree a 2016 is practically new for a Camry?

To me, the car hasn't even used up 10% of its life and its 25% cheaper then OP paid.

Cars don't depreciate the way you describe.  Go on your local dealer's lot and see what you will have to pay for a used 2018 with 5k miles, even after haggling.  The price will be very near the new price, because used buyers are a different crowd.
If you're correct, then the same link showed me a 2018 with 6000 miles listed at $19,999...so you're saying new price for a 2018 is roughly $20k, thank you for the support on my original claims.

That's all a 5 minute google search of "Bay Area Toyota Camry" could find.

The 2016 was a rental fleet car on it's second owner, looking for a third.  I will pass.  The 2018 at $19,999 is at a Mitsubishi dealer in Hayward.  That's got to be an interesting story...  It says no accident damage.  Maybe it was a repo, bought at auction.  You prove MY point that used is not discounted much from new.  I will gladly pay more for new in perfect condition.  But I don't have to.  I can call the OP's Toyota dealer.
I agree that you should buy the new, however you clearly stated that new would equal used for the 2018 models. I bolded the quote for your reference, I believe you, a used 2018 will likely cost the same as a new 2018, therefore by finding the used price we should be able to ascertain if the price paid was a deal or a standard price. You are correct, $20k is a standard price for a new 2018 Camry in July. That's why I said we agreed, a 2018 Camry should only cost $20k. I'm not sure what you're trying to prove to me, that the OP is a better car buyer then you? I disagree and think you are smart enough to get the same price, I believe anyone who wants a camry could get that price.

I'll show you a different site; here is toyota Canada, my country. Front page is a camry for $26k CDN, thats $20k USD. Apparently I can go down to my dealership tomorrow and get the same price as the OP without haggling. Are cars cheaper in Canada? Again, I'm showing that a 2018 Camry is $20k, the OP paid the fair price for a Camry in July.

https://www.toyota.ca/toyota/en/vehicles/camry/overview

I get that you want to believe the OP got a special inside deal, perhaps he has a unique superpower that he gets preferred prices. Or perhaps, he paid the same price you would pay if you walked in tomorow, I believe the latter, you wouldn't pay $21.6 you too would pay $20k. Is anyone that naive that they believe they get special prices on cars? That they magically beat the salesmen who sells 1000's of cars? Do you think the salesmen didn't get a nice fat commission cheque?

So how exactly dd the OP do a good job buying a car when anyone else could have paid the exact same price? Buying something at FMV is hardly impressive to me, I doubt you find it impressive either.

If you want accolades for buying new cars, take it to Facebook, people there will congratulate you. If you want advice on saving money and retiring early, post it on this forum. Pats on the back are saved for people who FIRE.

Hargrove

  • Pencil Stache
  • ****
  • Posts: 706
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #53 on: July 31, 2018, 09:08:10 PM »
The tide of "Whaaaat? Live a little!" has high points and low points here. All the reasons you had to buy a car were not unique to the NEW car.

But financial badassity is partly about not blowing money. MMM might otherwise just be a blog about how retiring early can be nice.

If you can drive both a low-mileage car and a new car the same length of time, the only savings to measure is the discount on the used car. Toyotas have less of a "new penalty" because they retain value, but there's definitely a penalty, and a worthwhile facepunch for throwing away money instead of putting in a few hours' work.

Another Reader

  • Magnum Stache
  • ******
  • Posts: 4524
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #54 on: July 31, 2018, 09:30:34 PM »
$20k is not the standard price today for a 2018 Camry L with zero percent financing in the SF Bay Area.  Come on down and negotiate if you think it is.

You logic is flawed. The asking price for that questionable 2018 with 6k miles in Hayward is less than what you can negotiate for a new one down the block at the Toyota dealer.  Not much, because used buyers are a different animal and many can't buy new and take advantage of all the incentives.  Maybe $1,500 or $2,000 less.  I might have to pay a few bucks more to get the zero percent financing because of the way incentives are structured.  Why would I buy a used car with an unknown past for the incremental difference? 

It would be difficult to buy a car in Canada and import it into the US, so your price comparison there is not relevant.

What you are missing is that prices have not dropped much since last fall when the new model was introduced.  For a month or so, because it was a brand new model, dealers were in a stronger position than usual.  By November, traditionally a very good month to buy a car, I could have negotiated the same price as I could today.  With sales as strong as they are today (17 million annual rate) and the good inventory control practices of the Japanese manufacturers, there is no need to put most models on sale to clear them out.  There is no inventory hangover.  The old model year product naturally exits the lot as the new model year cars show up. 

Where you do see the price drops is in a model changeover.  Last year around this time, the 2017 Camrys were on sale, cheap.  This year it's the RAV-4, although the sale prices are better in the east than in California.  One dealer was offering $6,500 off MSRP near Atlanta for the LE and XLE a couple of months ago.  In each case, the new product is perceived by the market to be an improvement over the old product.  The comparison is not apples to apples. 

ETA:  Auto markets around the US are different.  Different products are popular in Texas than in California or Massachusetts.  People pay more or less.  The distribution channels for new cars are different.  California, the Bay Area in particular, used to be a very competitive market.  In the last couple of years, the dealers have fought back and regained a lot of the negotiating edge.  There is a lot of money to be spent here, and people are less careful about spending it these days.  That makes it harder to get the very best deal here.
« Last Edit: July 31, 2018, 09:38:08 PM by Another Reader »

kenmoremmm

  • Stubble
  • **
  • Posts: 116
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #55 on: July 31, 2018, 11:40:17 PM »
i've always thought the concept of car value was irrelevant if one drives it into the ground. if KBB says my car is $20k or $1k, if the car reliably gets me from A to B, the value is equal. if i have to put in $1k of maintenance every year into the "low-value" car, i have 19 years of maintenance covered until i get to the "value" of the other car.

Hargrove

  • Pencil Stache
  • ****
  • Posts: 706
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #56 on: August 01, 2018, 04:40:29 AM »
i've always thought the concept of car value was irrelevant if one drives it into the ground. if KBB says my car is $20k or $1k, if the car reliably gets me from A to B, the value is equal. if i have to put in $1k of maintenance every year into the "low-value" car, i have 19 years of maintenance covered until i get to the "value" of the other car.

Depreciation is not linear... so the value is about how much money you pay up front for the privilege of depreciating the first few miles. There's no significant extra repair on a car with 15k miles vs 0 miles, but there's a huge difference in price between used and a year or two old vs new. Skipping the most expensive miles (and the new car reg fees etc) always costs you less overall, whether you drive it into the ground or not.

Another Reader

  • Magnum Stache
  • ******
  • Posts: 4524
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #57 on: August 01, 2018, 05:32:44 AM »
Depreciation is not linear... so the value is about how much money you pay up front for the privilege of depreciating the first few miles. There's no significant extra repair on a car with 15k miles vs 0 miles, but there's a huge difference in price between used and a year or two old vs new. Skipping the most expensive miles (and the new car reg fees etc) always costs you less overall, whether you drive it into the ground or not.

The depreciation on a year old Toyota or Honda is not that large, as long as the miles are low and the condition is similar to new.  The depreciation on a Ford or similar product is much higher.  If I can get a new Camry at an excellent price with zero percent financing, that will be my choice.

Hargrove

  • Pencil Stache
  • ****
  • Posts: 706
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #58 on: August 01, 2018, 07:45:10 AM »
So don't limit your choice to just one year old? You're basically holding up a strawman here.

As for your choice - you can buy two brand-new and use one to drive over the other if you want... nobody on the internet can stop you.

But Prairie Stash posted an alternative to buying new, in a late-model (2016) at a 25-30% discount, found in all of 2 minutes. It doesn't matter that buying 2019 now is as bad used as it is new (save maybe reg/delivery fees), because there are better ways to buy a used car than that.

talltexan

  • Handlebar Stache
  • *****
  • Posts: 1917
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #59 on: August 01, 2018, 08:14:13 AM »
Disclosure: I, too, have enjoyed the new Camry once in my life.

I think one reason people buy new cars is that the used car transaction is simply scary. You're worried about why the other person is selling it. You're not exactly sure if that person knows about cars, or maybe you're afraid he knows too much. They're not a business, so you feel as though certain protections are absent.

Instead of facepunches, mustachians who have been through these transactions successfully should offer to meet each other and mentor each other through this process.

dustinst22

  • Bristles
  • ***
  • Posts: 477
  • Age: 40
  • Location: Huntington Beach, CA
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #60 on: August 01, 2018, 08:48:41 AM »


The depreciation on a year old Toyota or Honda is not that large

Large is relative.  Relative to most models, you are correct.  Purchasing a vehicle is one of the worst investments we can make, particularly new (unless its for a business).  If you're dead set on purchasing a new vehicle, relatively speaking the Camry looks like a good choice. According to Edmunds, a new Toyota Camry LE loses 28% of its value in 3 years.  It's up to the consumer if this is a large number.  Personally, I don't like losing 28% of my money in 3 years.  It makes me cringe just thinking about it.  I would like to have someone else take that initial hit.  As a side note, I wonder what the sweet spot is in terms of getting the best bang for your buck and age of the car.  It could be 3 years, as depreciation seems to flatten after that.

https://www.edmunds.com/toyota/camry/2017/st-401647953/cost-to-own/
« Last Edit: August 01, 2018, 08:53:46 AM by dustinst22 »

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1548
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #61 on: August 01, 2018, 09:08:11 AM »
Disclosure: I, too, have enjoyed the new Camry once in my life.

I think one reason people buy new cars is that the used car transaction is simply scary. You're worried about why the other person is selling it. You're not exactly sure if that person knows about cars, or maybe you're afraid he knows too much. They're not a business, so you feel as though certain protections are absent.

Instead of facepunches, mustachians who have been through these transactions successfully should offer to meet each other and mentor each other through this process.
Come on by anytime ;)

A facepunch isn't an insult, its a wake up call. If you receive a facepunch on the forum, its a signal to you that others know a better or more efficient way of completing the task. If you feel that there is simply no choice but to buy a new car, we're here to help. However, sometimes in the midst of the mainstream congratulations like you see on facebook its hard to find the contrarian mustachian opinion that says a new car is never the best valu and you should look past the thrill of a new car and see how it fits in your entire financial picture; including FIRE.

If you're brave enough to receive a face punch, its the greatest thing that can happen to you on this forum. A facepunch is meant to change your life for the better; the recipient becomes wiser, lsees a problem from a new angle and can avoid a mistake next time. If OP reads my facepunch, he will FIRE earlier and has the possibility of spending more time with family instead of more time driving 20,000 miles a year.

Another Reader

  • Magnum Stache
  • ******
  • Posts: 4524
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #62 on: August 01, 2018, 04:02:22 PM »
Efficiency is in the mind of the beholder.  Chasing around a used car to purchase is time consuming.  So is chasing the repairs after you discover you bought someone else's lemon.  For well paid folks whose saving rates are already quite high, the time investment is likely more than they want to or should pay.

I buy new.  An hour at the dealer filling out papers with a well negotiated price and I don't think about it for several years.  My time is expensive so this works for me.

dustinst22

  • Bristles
  • ***
  • Posts: 477
  • Age: 40
  • Location: Huntington Beach, CA
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #63 on: August 01, 2018, 04:32:57 PM »
It's always fascinating to me to see the kind of mental gymnastics people go through to justify poor financial decisions.

DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1287
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #64 on: August 01, 2018, 05:54:01 PM »
It's always fascinating to me to see the kind of mental gymnastics people go through to justify poor financial decisions.

Hahaha  I was thinking the same thing.

mizzourah2006

  • Bristles
  • ***
  • Posts: 398
  • Location: NWA
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #65 on: August 01, 2018, 06:00:48 PM »
I think this whole thing is funny. I mean OP asked for it and all, but this whole itís way better to buy old vs new and if you donít your inefficient is kind of funny when literally every single person on this forum is inefficient. Unless you are eating nothing but beans and rice and living in a tiny home you are inefficient. About the only person that can throw stones is JLF. Itís funny that cars get the wrap here, when I bet almost every person here went on a vacation last year that cost more than the difference in price being referenced when broken down by year. Just think how much closer youíd be if you hadnít made such a stupid decision!

Another Reader

  • Magnum Stache
  • ******
  • Posts: 4524
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #66 on: August 01, 2018, 07:06:58 PM »
It's always fascinating to me to see the kind of mental gymnastics people go through to justify poor financial decisions.

For you it might be a poor financial decision.  For a professional or manager making over $200 an hour, maybe not.

dustinst22

  • Bristles
  • ***
  • Posts: 477
  • Age: 40
  • Location: Huntington Beach, CA
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #67 on: August 01, 2018, 07:13:13 PM »


For you it might be a poor financial decision.  For a professional or manager making over $200 an hour, maybe not.

I earn more than this, and still consider it a piss poor financial decision.  Net worth of over 2M, still wouldnt buy new.  All that said, if you are spending 10% or less of your income on a car purchase, or 2% of your net worth, it's not too egregious.  But I'd never try to justify it as a good financial decision unless it served a business purpose.  It's throwing money away, period.  Saying you're okay with throwing money away because you earn mid 6 figures is contrary to the concepts of this website.
« Last Edit: August 01, 2018, 07:24:37 PM by dustinst22 »

Another Reader

  • Magnum Stache
  • ******
  • Posts: 4524
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #68 on: August 01, 2018, 07:32:03 PM »
Well, I don't see a lot of used cars I would buy.  Recent model year CPO's are priced nearly as high as new.   Buying a previous rental fleet car that is for sale by the second owner as suggested by another poster is not something I would consider.  The other car cited by that poster could have been picked up at an auction or traded in because it was a lemon and it was just under the cost of an identical new car, with the full warranty and the zero percent financing.

If you are car savvy and mechanically inclined, you can probably look around and find something three to five years old at a good price.  For those of us that are not, the risk of an expensive mistake is high.  For me, a couple of thousand dollars extra spent on a car is equivalent to a rounding error.  I'm buying peace of mind and a lack of problems with that money.  Money well spent and thoughtfully so.

Hargrove

  • Pencil Stache
  • ****
  • Posts: 706
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #69 on: August 02, 2018, 06:35:50 AM »
I think this whole thing is funny. I mean OP asked for it and all, but this whole itís way better to buy old vs new and if you donít your inefficient is kind of funny when literally every single person on this forum is inefficient.

Yeah, to some extent... so... what? An ideal is a reminder you/we can do better. Everyone will fall short of what they're trying to do, which is fundamentally different from not trying at all. Ideals are things around which to get support and work hard. The power of consumerism is supported by unlimited advertising, which is probably why "facepunch" was chosen instead of "pillowswipe." It's easy to fall asleep at the wheel and blow gobs of money.

This isn't an unusual situation - it's the regular consumer nonsense many people came here to give up. It's HARD not to feel beaten up when people show up in a group to disagree with you. And... many people joined for support that says "you can do better than that." This post is the opposite. Nobody was nasty about it, which still leaves this one of the most civil places on the internet, but if people took your argument seriously, no one could discuss aspiring to do anything.

mizzourah2006

  • Bristles
  • ***
  • Posts: 398
  • Location: NWA
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #70 on: August 02, 2018, 06:49:48 AM »
I think this whole thing is funny. I mean OP asked for it and all, but this whole itís way better to buy old vs new and if you donít your inefficient is kind of funny when literally every single person on this forum is inefficient.

Yeah, to some extent... so... what? An ideal is a reminder you/we can do better. Everyone will fall short of what they're trying to do, which is fundamentally different from not trying at all. Ideals are things around which to get support and work hard. The power of consumerism is supported by unlimited advertising, which is probably why "facepunch" was chosen instead of "pillowswipe." It's easy to fall asleep at the wheel and blow gobs of money.

This isn't an unusual situation - it's the regular consumer nonsense many people came here to give up. It's HARD not to feel beaten up when people show up in a group to disagree with you. And... many people joined for support that says "you can do better than that." This post is the opposite. Nobody was nasty about it, which still leaves this one of the most civil places on the internet, but if people took your argument seriously, no one could discuss aspiring to do anything.

See I guess I See this whole journey as fundamentally different than you and perhaps most on this forum. I want to spend money on things I value (thatís why I earn it), but I donít want to get lost in consumerism for consumerismís sake. I have identified what I value (good beer, a high quality daycare for my kids, travel) and what I donít (a 3k sq ft home, keeping my home at 72 year round, eating out regularly) and actively try to focus on spending only on what I value. If someone feels spending $1-2k more on a car because itís new as long as they have actively thought about and made that decision go for it. Itís the non-active....just because I could argument that I find lacking.

But then again I donít hate my job like many on this forum do, I actually really enjoy it and would be doing something similar even if I didnít have it (and I already work from home) so perhaps I have a lot more leeway to be inefficient than others do.

Hargrove

  • Pencil Stache
  • ****
  • Posts: 706
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #71 on: August 02, 2018, 07:13:23 AM »
It's tricky when the challenge is unconscious habits. People are exceptionally good at rationalizing poor decisions already made. Many regulars here go to different lengths to counteract the fact that there's little culture elsewhere saying "don't buy everything." Nobody here is in charge of how anybody else spends money, but many find value (literally) in asking if they really need a thing, which is a regular theme here, and even has its own case study forum.

There is an OBJECTIVE waste of money and natural resources when it comes to buying things poorly. People can argue that they pay for the feel-good hit of getting the thing new if they want, and they can spend their money for that anywhere they look... the blog is literally about not paying premiums for that hit, or to avoid an unreasonable fear, with the additional benefit of being better for the planet. Short-term gratification doesn't produce long-term security or happiness, and it produces a ton of waste. You can have enough money to ignore little details about this ideal or many others, but the wastefulness still has an impact. Many struggle on low incomes to conserve financially, too, and the details you may consider small can really matter for them (and the support is really helpful).

At the end of the day, we all can take as much or as little of the forum home as we like. Everyone does! But previous posters mention other sites, like Facebook, because this place is one of comparatively few that are not all about throwing money around, increasing the world's "stuff," and celebrating it.
« Last Edit: August 02, 2018, 07:20:00 AM by Hargrove »

NorthernBlitz

  • Bristles
  • ***
  • Posts: 297
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #72 on: August 02, 2018, 08:20:55 AM »
Disclosure: I, too, have enjoyed the new Camry once in my life.

I think one reason people buy new cars is that the used car transaction is simply scary. You're worried about why the other person is selling it. You're not exactly sure if that person knows about cars, or maybe you're afraid he knows too much. They're not a business, so you feel as though certain protections are absent.

Instead of facepunches, mustachians who have been through these transactions successfully should offer to meet each other and mentor each other through this process.

I think it's also because you can get really good deals on new cars depending on when you buy them.

I've only purchased 4 cars in my life, but one of them was bought new.

We got a 2011 Venza a month or two into the 2012 MY. This was also during the phantom acceleration issue that Toyota was fighting pretty publicly.

We got a factory and dealer incentives totaling something like $7500 off the sticker price. This was basically the same price as buying a 2 year old Venza typical miles on it. Because we rack up about 20k-25k kms per year and live in a place with salt on the road in the winter, I assume that my cars will likely fail due to rusted frames (and not engine failure) so age is more important than mileage to me.

So I think that I generally side with used over new, but I think it's a bit misleading to compare used prices to MRSP of new cars to define depreciation (because I think most of us wouldn't pay MSRP for a new vehicle).

mizzourah2006

  • Bristles
  • ***
  • Posts: 398
  • Location: NWA
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #73 on: August 02, 2018, 08:40:23 AM »
Disclosure: I, too, have enjoyed the new Camry once in my life.

I think one reason people buy new cars is that the used car transaction is simply scary. You're worried about why the other person is selling it. You're not exactly sure if that person knows about cars, or maybe you're afraid he knows too much. They're not a business, so you feel as though certain protections are absent.

Instead of facepunches, mustachians who have been through these transactions successfully should offer to meet each other and mentor each other through this process.

I think it's also because you can get really good deals on new cars depending on when you buy them.

I've only purchased 4 cars in my life, but one of them was bought new.

We got a 2011 Venza a month or two into the 2012 MY. This was also during the phantom acceleration issue that Toyota was fighting pretty publicly.

We got a factory and dealer incentives totaling something like $7500 off the sticker price. This was basically the same price as buying a 2 year old Venza typical miles on it. Because we rack up about 20k-25k kms per year and live in a place with salt on the road in the winter, I assume that my cars will likely fail due to rusted frames (and not engine failure) so age is more important than mileage to me.

So I think that I generally side with used over new, but I think it's a bit misleading to compare used prices to MRSP of new cars to define depreciation (because I think most of us wouldn't pay MSRP for a new vehicle).

clearly not possible. Someone on this forum could have searched for an hour and found you a used car with 20-30k miles on it within an hour or so of your house for 10-15% cheaper. New always deserves a facepunch!!!

/sarcasm.

What people here need to remember is dealers don't need to make money on everyone, they need to make money on most people. Rebates aren't attached to specific cars, they are given for each car. So  a dealership has the discretion to give a buyer 2 rebates and do their best to get someone else to pay full price.

I've typically seen the same thing as far as similar pricing to used, but my best friend since 2nd grade runs a dealership (family owned) and I usually give him about 5-6 months notice that I'm looking for a car (usually say used, to see if he can pick one up at an auction for me) and both times when he's told me what the 2-3 year old one's are going for at auctions (after transport cost) given the mileage, etc. He's been able to get me a deal on a new one that's been within 10-15% of those used one's with 30-50k fewer miles. Only bought two cars in my life as my first was a hand-down I drove into the ground and my wife had bought a car before I met her, but so far that has been my experience. Call it a facepunch if you will, but I just crossed 30k miles on my car that I've owned since 2013...so that 30k miles to me was 5 years of use.

Obviously the efficient thing to do would be to pick up a bike from goodwill or walk/run everywhere though. So just keep that in mind when talking about vehicles in general :)

FIRE47

  • Bristles
  • ***
  • Posts: 313
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #74 on: August 02, 2018, 08:46:56 AM »
The online search is especially misleading - how many times do you call about that car and get the "sorry its sold but please come in to see another car" (meanwhile the posting remains for several days after), or just to let you know its been in an accident but we forgot to put that in the ad. Or that price is before all of these  dealer surcharges.

There are always cherry picked examples of some lowball car a few hundred miles away that really are not a fair representation of the true used price to get the car.

I say this as someone who always buys used (except when the government gave me 14k to buy new).

« Last Edit: August 02, 2018, 08:53:52 AM by FIRE47 »

GuitarStv

  • Senior Mustachian
  • ********
  • Posts: 11830
  • Age: 37
  • Location: Toronto, Ontario, Canada
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #75 on: August 02, 2018, 09:02:27 AM »
My wife's aunt works as an accountant at a Toyota dealership, and we bought our new Corolla at cost.  Not employee pricing, cost.  I did look everywhere I could, but it was cheaper than any similar used 1-2 year old vehicle.  While we could have just paid cash for it, we were also able to finance it with no interest for five years.

You can tell me that it's always cheaper to buy a used car, but I don't believe that was true in our case.

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1548
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #76 on: August 02, 2018, 09:59:58 AM »
It's always fascinating to me to see the kind of mental gymnastics people go through to justify poor financial decisions.

For you it might be a poor financial decision.  For a professional or manager making over $200 an hour, maybe not.
the classic "yes, but". No matter how many objections, the "Yes, but" will come up with a new rationalization, GrimSqueaker did a fantastic post today on this. In this response the OP makes $200/hour - $400,000/year, and is purchasing a $20,000 corolla...that's clearly not the case.

Whats more likely, they bill at $200/hour. I also have a high billing rate, unfortunately I don't pocket all of it


clearly not possible. Someone on this forum could have searched for an hour and found you a used car with 20-30k miles on it within an hour or so of your house for 10-15% cheaper. New always deserves a facepunch!!!

/sarcasm.

What people here need to remember is dealers don't need to make money on everyone, they need to make money on most people. Rebates aren't attached to specific cars, they are given for each car. So  a dealership has the discretion to give a buyer 2 rebates and do their best to get someone else to pay full price.

It wasn't 10-15% cheaper, its 25-50% cheaper. I'm not on here to "argue" (altough its very hard to resist), the goal here is to provide advice for people that works. Try to avoid hyperbole, we should always be trying to give advice to others to make their life better. I don't think your advice transfers, how can I apply that to myself? I honestly also believe you used your old car as a trade in, I bet good money that your friend is selling it and its a good car, I doubt he's reselling lemons...

I can break this down simply. Anyone here is capable of creating a spreadsheet, or downloading one, that allows you to compare cost/mile for any vehicle. Its the exact same process most of us use for predicting house maintenance costs and other future expenses (oI cn't be the only one who predicts fiture costs of FIRE). That will include purchase price,  alloowing any one of us to make an informed decision. The entire process takes about 10 minutes. C'mon people, why are you tracking expenses if you can't be bothered to use that information? I can run numbers, so can you. B

If you can't be bothered to run numbers, thats on you. Education is provided freely here, its your choice to avail yourself or posit arguments. At the end of the day, did the OP advance closer to FIRE or not, thats my litmus test for facepunches (see definitions for facepunches, it has nothing to do with NW or earnings)? When the OP needs another car (drives 20,000 miles/year), are you advocating they repeat the exact same actions or choose a different path?

@GuitarStv do you think that the next car purchase should also be new? The current car purchase is complete, its time to move on. What is your best avice for the next time? I think a used car will be best next time, just like this time. Most of us don't have insider deals, the OP does not.

GuitarStv

  • Senior Mustachian
  • ********
  • Posts: 11830
  • Age: 37
  • Location: Toronto, Ontario, Canada
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #77 on: August 02, 2018, 10:14:39 AM »
@GuitarStv do you think that the next car purchase should also be new? The current car purchase is complete, its time to move on. What is your best avice for the next time? I think a used car will be best next time, just like this time. Most of us don't have insider deals, the OP does not.

I think that the best course of action is to run the numbers, do some research and see what makes the most sense for the person purchasing the car.  A blanket statement of 'This is best' might be a good rule of thumb to follow, but isn't always going to be best.

mizzourah2006

  • Bristles
  • ***
  • Posts: 398
  • Location: NWA
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #78 on: August 02, 2018, 10:29:08 AM »

It wasn't 10-15% cheaper, its 25-50% cheaper. I'm not on here to "argue" (altough its very hard to resist), the goal here is to provide advice for people that works. Try to avoid hyperbole, we should always be trying to give advice to others to make their life better. I don't think your advice transfers, how can I apply that to myself? I honestly also believe you used your old car as a trade in, I bet good money that your friend is selling it and its a good car, I doubt he's reselling lemons...

I can break this down simply. Anyone here is capable of creating a spreadsheet, or downloading one, that allows you to compare cost/mile for any vehicle. Its the exact same process most of us use for predicting house maintenance costs and other future expenses (oI cn't be the only one who predicts fiture costs of FIRE). That will include purchase price,  alloowing any one of us to make an informed decision. The entire process takes about 10 minutes. C'mon people, why are you tracking expenses if you can't be bothered to use that information? I can run numbers, so can you. B

If you can't be bothered to run numbers, thats on you. Education is provided freely here, its your choice to avail yourself or posit arguments. At the end of the day, did the OP advance closer to FIRE or not, thats my litmus test for facepunches (see definitions for facepunches, it has nothing to do with NW or earnings)? When the OP needs another car (drives 20,000 miles/year), are you advocating they repeat the exact same actions or choose a different path?

do you think that the next car purchase should also be new? The current car purchase is complete, its time to move on. What is your best avice for the next time? I think a used car will be best next time, just like this time. Most of us don't have insider deals, the OP does not.

I did use my old car as a trade-in he gave me $1k for it (it had been torched by the Florida sun for 7 years and had 150k miles on it), I didn't count that as part of the price. If I added that I paid $22.5k for a 2015 with 0 miles on it and online and at auctions 2013s with 30-60k miles on them at the time were selling for $18-$20k. A bit of a premium, possibly, but no more than someone deciding to spend 5 nights at a slightly nicer hotel/condo on a couple vacations. So hopefully we are telling people it's a waste of money to not be staying at hostels when traveling through Europe :)


As for best advice, I don't know the person. Given the # of miles per year we put on cars we likely will never be purchasing another car again. I have one car I've owned for a bit over 5 years with 31k miles on it and a second I've owned for just under 3 years with 32k miles on it. My best guess is 10-15 years from now there will be no reason to own a car and services like Uber will dominate with self-driving fleets. So if OP is like me I would say don't buy a car again :)


GuitarStv

  • Senior Mustachian
  • ********
  • Posts: 11830
  • Age: 37
  • Location: Toronto, Ontario, Canada
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #79 on: August 02, 2018, 10:47:27 AM »

It wasn't 10-15% cheaper, its 25-50% cheaper. I'm not on here to "argue" (altough its very hard to resist), the goal here is to provide advice for people that works. Try to avoid hyperbole, we should always be trying to give advice to others to make their life better. I don't think your advice transfers, how can I apply that to myself? I honestly also believe you used your old car as a trade in, I bet good money that your friend is selling it and its a good car, I doubt he's reselling lemons...

I can break this down simply. Anyone here is capable of creating a spreadsheet, or downloading one, that allows you to compare cost/mile for any vehicle. Its the exact same process most of us use for predicting house maintenance costs and other future expenses (oI cn't be the only one who predicts fiture costs of FIRE). That will include purchase price,  alloowing any one of us to make an informed decision. The entire process takes about 10 minutes. C'mon people, why are you tracking expenses if you can't be bothered to use that information? I can run numbers, so can you. B

If you can't be bothered to run numbers, thats on you. Education is provided freely here, its your choice to avail yourself or posit arguments. At the end of the day, did the OP advance closer to FIRE or not, thats my litmus test for facepunches (see definitions for facepunches, it has nothing to do with NW or earnings)? When the OP needs another car (drives 20,000 miles/year), are you advocating they repeat the exact same actions or choose a different path?

do you think that the next car purchase should also be new? The current car purchase is complete, its time to move on. What is your best avice for the next time? I think a used car will be best next time, just like this time. Most of us don't have insider deals, the OP does not.

I did use my old car as a trade-in he gave me $1k for it (it had been torched by the Florida sun for 7 years and had 150k miles on it), I didn't count that as part of the price. If I added that I paid $22.5k for a 2015 with 0 miles on it and online and at auctions 2013s with 30-60k miles on them at the time were selling for $18-$20k. A bit of a premium, possibly, but no more than someone deciding to spend 5 nights at a slightly nicer hotel/condo on a couple vacations. So hopefully we are telling people it's a waste of money to not be staying at hostels when traveling through Europe :)

It's sub-optimal to stay at a hostel let alone a hotel.  Buy a damned tent and sleep in the woods you bourgeois motherfucker.  Or at least, that's the advice I would give if it wasn't sub-optimal to travel at all.  It's always going to be a lot cheaper to stay right where you are and use the internet to look at movies/pictures of other places if you get the hankering for exploring.

jlcnuke

  • Pencil Stache
  • ****
  • Posts: 775
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #80 on: August 02, 2018, 10:59:19 AM »
"The 2019 camry's are coming out in the next 2 months, at which point the 2018 models are worth about $20,000...you didn't get any deal at all.  So you paid full price on last years model. A quick google search will show you got standard finance rates and the standard price for July. That's what my local online listing are; $20,000 and 0.9% financing for 2018 models. "

New or used?  You can't find that car new at that price in the Bay Area.  Truecar says an exceptional price is around $21,600.  I think I could do a couple of hundred better, maybe a little more today or tomorrow, because EOM.  Perhaps you can copy that local online listing here, if it's for a new car.  Then those folks that want to buy one can call that listing.

Cars don't depreciate the way you describe.  Go on your local dealer's lot and see what you will have to pay for a used 2018 with 5k miles, even after haggling.  The price will be very near the new price, because used buyers are a different crowd.

Get out of the ridiculously priced Bay Area... Tru Car's "market average" price here is $21,970 for a new base model Camry. You can get a car under market average so $20k doesn't sound unreasonable (or unreasonably good) to me.

Another Reader

  • Magnum Stache
  • ******
  • Posts: 4524
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #81 on: August 02, 2018, 04:18:33 PM »
"The 2019 camry's are coming out in the next 2 months, at which point the 2018 models are worth about $20,000...you didn't get any deal at all.  So you paid full price on last years model. A quick google search will show you got standard finance rates and the standard price for July. That's what my local online listing are; $20,000 and 0.9% financing for 2018 models. "

New or used?  You can't find that car new at that price in the Bay Area.  Truecar says an exceptional price is around $21,600.  I think I could do a couple of hundred better, maybe a little more today or tomorrow, because EOM.  Perhaps you can copy that local online listing here, if it's for a new car.  Then those folks that want to buy one can call that listing.

Cars don't depreciate the way you describe.  Go on your local dealer's lot and see what you will have to pay for a used 2018 with 5k miles, even after haggling.  The price will be very near the new price, because used buyers are a different crowd.

Get out of the ridiculously priced Bay Area... Tru Car's "market average" price here is $21,970 for a new base model Camry. You can get a car under market average so $20k doesn't sound unreasonable (or unreasonably good) to me.

If you are referring to a car, you are right.  Right now, the Bay Area is not a buyer's market.  Look at the "exceptional" price.  That's higher than what I offer when I'm in the market for a car.  Going to Massachusetts might be a stretch, however.

Debts_of_Despair

  • Pencil Stache
  • ****
  • Posts: 523
  • Location: NY
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #82 on: August 02, 2018, 05:46:19 PM »
Not at all.  I made a similar move last month.  My car buying plan is buy new, try to get 8-9 years out of it then trade it in for ~25% of original cost.  I would hold on to them longer but the problem is everything starts to turn to rust from all the road salt.  Buying slightly used just puts you closer to that 8-9 year mark when the rust starts to take over.

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1548
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #83 on: August 03, 2018, 09:10:28 AM »
Not at all.  I made a similar move last month.  My car buying plan is buy new, try to get 8-9 years out of it then trade it in for ~25% of original cost.  I would hold on to them longer but the problem is everything starts to turn to rust from all the road salt.  Buying slightly used just puts you closer to that 8-9 year mark when the rust starts to take over.
If you graph the cost per year of ownership vs. total cost you come up with two different answers. Purchasing new, then holding a long time, takes the new car cost and averages it across 9 years to hide the fact that the first year is the single most expensive year. Edmunds does the math for you here, for your benefit:

https://www.edmunds.com/toyota/corolla/2018/st-401730787/cost-to-own/

What you can see is Year 1 has the highest cost; depreciation. However, not surprising, year 5 is also higher then average due to maintenance costs (new tires is required after a certain amount of miles, manufacturer recommended transmission flush etc.). Simply by purchasing a vehicle 1-2 years older will save $3000 over the lifetime and not increase cost/mile. Repeatedly doing that with 7 vehicles means you could get the 8th free (compared to buying new each time). 7 new vehicles would last (7*9) - 63 years, whereas 8 vehiclcles (8*8) will last 64 years. But....we neglected the time factor on delaying spending. Total lifetime costs show more back end spending with the used scenario (1 year old) and upfront spending with the new. Because we're smart mustachians, we can calculate the money saved over 64 years and determine the lifetime returns as well. If you do the math, a mustachian can also have car number 7 for free (compound interest is a beautiful thing).

This article below does the math poorly, its meant to demonstrate what I said above (with some poor math, I can already hear the complaints). You'll see your strategy of long term holding really benefits you. They do an okay job demonstrating the diference between purchasing higher and lower priced cars, the big mistake was not applying individual year costs and assuming all years have the same cost (forgiveble, that takes a lot longer and is high level)
https://www.doughroller.net/money-management/surprising-lifetime-cost-car-ownership/

In short, if you buy 7 new cars over your life, I can purchase 6 (investing the difference and using that massive fund to buy the last 2) and get more years and miles by simply purchasing cars 1 year older and selling them at year 9, just like you. Upfront vs. backend costs are hard for the average person to comprehend, in short, delayed spending is better then upfront spending due to compound interest magic.

Note Edmunds assumed a cash price of $20,051 (bay area cash price, take up arguments with Edmunds) and 15,000 miles per year. Don't get fooled into arguing about price, its a red herring. I highly encourage you to keep detailed notes from your car and use that information to guide your next car purchase. If I'm right, you can thank me in 9 years. If I'm wrong, you lose nothing and can tell me so. I have no skin in the game, it doesn't change my behaviour if you spend less or more. Being right isn't important, figuring things out is what makes me happy.

GuitarStv

  • Senior Mustachian
  • ********
  • Posts: 11830
  • Age: 37
  • Location: Toronto, Ontario, Canada
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #84 on: August 03, 2018, 09:35:03 AM »
Not at all.  I made a similar move last month.  My car buying plan is buy new, try to get 8-9 years out of it then trade it in for ~25% of original cost.  I would hold on to them longer but the problem is everything starts to turn to rust from all the road salt.  Buying slightly used just puts you closer to that 8-9 year mark when the rust starts to take over.
If you graph the cost per year of ownership vs. total cost you come up with two different answers. Purchasing new, then holding a long time, takes the new car cost and averages it across 9 years to hide the fact that the first year is the single most expensive year. Edmunds does the math for you here, for your benefit:

https://www.edmunds.com/toyota/corolla/2018/st-401730787/cost-to-own/

What you can see is Year 1 has the highest cost; depreciation. However, not surprising, year 5 is also higher then average due to maintenance costs (new tires is required after a certain amount of miles, manufacturer recommended transmission flush etc.). Simply by purchasing a vehicle 1-2 years older will save $3000 over the lifetime and not increase cost/mile. Repeatedly doing that with 7 vehicles means you could get the 8th free (compared to buying new each time). 7 new vehicles would last (7*9) - 63 years, whereas 8 vehiclcles (8*8) will last 64 years. But....we neglected the time factor on delaying spending. Total lifetime costs show more back end spending with the used scenario (1 year old) and upfront spending with the new. Because we're smart mustachians, we can calculate the money saved over 64 years and determine the lifetime returns as well. If you do the math, a mustachian can also have car number 7 for free (compound interest is a beautiful thing).

This article below does the math poorly, its meant to demonstrate what I said above (with some poor math, I can already hear the complaints). You'll see your strategy of long term holding really benefits you. They do an okay job demonstrating the diference between purchasing higher and lower priced cars, the big mistake was not applying individual year costs and assuming all years have the same cost (forgiveble, that takes a lot longer and is high level)
https://www.doughroller.net/money-management/surprising-lifetime-cost-car-ownership/

In short, if you buy 7 new cars over your life, I can purchase 6 (investing the difference and using that massive fund to buy the last 2) and get more years and miles by simply purchasing cars 1 year older and selling them at year 9, just like you. Upfront vs. backend costs are hard for the average person to comprehend, in short, delayed spending is better then upfront spending due to compound interest magic.

Note Edmunds assumed a cash price of $20,051 (bay area cash price, take up arguments with Edmunds) and 15,000 miles per year. Don't get fooled into arguing about price, its a red herring. I highly encourage you to keep detailed notes from your car and use that information to guide your next car purchase. If I'm right, you can thank me in 9 years. If I'm wrong, you lose nothing and can tell me so. I have no skin in the game, it doesn't change my behaviour if you spend less or more. Being right isn't important, figuring things out is what makes me happy.


When you buy a used car, is financing always an option?  My understanding was that often you need to pay the purchase price of the vehicle to the owner you're buying it from.  Maybe you can take out a loan from a bank, but it's probably not going to be great interest terms.  If I bought a new car tomorrow, I wouldn't pay interest on the car for five years . . . so can invest that new car money risk free.  Is the former really much better than the latter?

A new car should last between 15 - 20 years.  Let's say 17.5 as an average.  You don't typically need to start driving until you're about 18.  By the time you've purchased and worn out 4 cars, you should be 88 years old . . . and probably won't be doing much driving any more.  Nobody buying a new car should need to buy 7 over their life.

bacchi

  • Magnum Stache
  • ******
  • Posts: 3054
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #85 on: August 03, 2018, 09:39:32 AM »
When you buy a used car, is financing always an option?  My understanding was that often you need to pay the purchase price of the vehicle to the owner you're buying it from.  Maybe you can take out a loan from a bank, but it's probably not going to be great interest terms.  If I bought a new car tomorrow, I wouldn't pay interest on the car for five years . . . so can invest that new car money risk free.  Is the former really much better than the latter?

Yes. Our used car financing is 2.0% from a credit union. Not quite 0% but we did save the first 3 years depreciation.

GuitarStv

  • Senior Mustachian
  • ********
  • Posts: 11830
  • Age: 37
  • Location: Toronto, Ontario, Canada
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #86 on: August 03, 2018, 10:06:16 AM »
When you buy a used car, is financing always an option?  My understanding was that often you need to pay the purchase price of the vehicle to the owner you're buying it from.  Maybe you can take out a loan from a bank, but it's probably not going to be great interest terms.  If I bought a new car tomorrow, I wouldn't pay interest on the car for five years . . . so can invest that new car money risk free.  Is the former really much better than the latter?

Yes. Our used car financing is 2.0% from a credit union. Not quite 0% but we did save the first 3 years depreciation.

Depreciation only matters if you're selling your vehicle though, right?  Otherwise it's just a meaningless number.

bacchi

  • Magnum Stache
  • ******
  • Posts: 3054
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #87 on: August 03, 2018, 10:32:20 AM »
When you buy a used car, is financing always an option?  My understanding was that often you need to pay the purchase price of the vehicle to the owner you're buying it from.  Maybe you can take out a loan from a bank, but it's probably not going to be great interest terms.  If I bought a new car tomorrow, I wouldn't pay interest on the car for five years . . . so can invest that new car money risk free.  Is the former really much better than the latter?

Yes. Our used car financing is 2.0% from a credit union. Not quite 0% but we did save the first 3 years depreciation.

Depreciation only matters if you're selling your vehicle though, right?  Otherwise it's just a meaningless number.

It matters when you're comparing buying a new car vs a used car: buy new at $X vs buy used at $Y.

The original owner took the $X-Y depreciation hit. The car has 3 less years of life; depending on the X-Y difference, it's a savings. In our case, the used car was a 15% savings over buying new. We did miss out on the "new car" smell, of course.

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1548
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #88 on: August 03, 2018, 11:05:20 AM »
When you buy a used car, is financing always an option?  My understanding was that often you need to pay the purchase price of the vehicle to the owner you're buying it from.  Maybe you can take out a loan from a bank, but it's probably not going to be great interest terms.  If I bought a new car tomorrow, I wouldn't pay interest on the car for five years . . . so can invest that new car money risk free.  Is the former really much better than the latter?

A new car should last between 15 - 20 years.  Let's say 17.5 as an average.  You don't typically need to start driving until you're about 18.  By the time you've purchased and worn out 4 cars, you should be 88 years old . . . and probably won't be doing much driving any more.  Nobody buying a new car should need to buy 7 over their life.
I think lifetime is relative to miles driven, my cars should last 20+ years. The next person might drive them into the ground sooner. I used 7 because the other person suggested cars last only 10 years, I expected people adjust it themselves.

I can take out a loan from the bank at any time I want, we both have stellar credit and you can too. The worst case is using the HELOC (terrible rates, currently ~4%), but a formal loan is easily obtained, hopefully for less (or I can take out a loan against my house for 3% at anytime). I presume most people can get loans from a bank. A 4% loan will require repayment (with interest) of 16256.91 over 4 years ($15k initial price, 2 year old car), on 17,000 (1 year) its $18,424. A $20k loan (0.9%, 4 year like the OP received) will be $20,369 (monthly payment is $424). The interest on the loan is far under depreciation on year one. This is a case where the individual needs to provide input, I can do it for myself, so can anyone else.

However...I can stretch my payments longer on a private loan and push back the priciple payments! Opportunity cost for the win, I used numbers in the example that were worse them my reality. I can (today) get a 2nd loan on my house, use an investment account as collateral or otherwise secure the loan easily (secure loans get better rates) and put the payments over 10 years. Its an option for mustachians, not for spendthrifts. There are many ways to get loans, my wife (before we met) took out a loan for a used car from the bank, its pretty common. Not everyone has $15,000 for a used car, yet they still sell them, so where do people get the money from?

Side anecdote: The last car I purchased was used from a dealer. I wanted to pay for it on credit card, apparently the limt they would do was $5000. My plan was to pay it off 6 weeks later when the card was due, utilizing the CC grace period. My motive, I wanted my dam points! I still got the 1% cashback on $5000, but I wish it was on the entire amount! I promise the opportunity cost of 6 weeks is inconsequential (verging into silly teritory) and we shouldn't go there.

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1548
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #89 on: August 03, 2018, 11:25:31 AM »
When you buy a used car, is financing always an option?  My understanding was that often you need to pay the purchase price of the vehicle to the owner you're buying it from.  Maybe you can take out a loan from a bank, but it's probably not going to be great interest terms.  If I bought a new car tomorrow, I wouldn't pay interest on the car for five years . . . so can invest that new car money risk free.  Is the former really much better than the latter?

Yes. Our used car financing is 2.0% from a credit union. Not quite 0% but we did save the first 3 years depreciation.

Depreciation only matters if you're selling buying your vehicle though, right?  Otherwise it's just a meaningless number.
Neither of us will get any money selling our cars, we're likeminded that way about driving them a long time. I drive a 2005 Pontiac with 170,000 km, there's no depreciation left.

The entire premise of everything I've written is about capturing the depreciation and keeping it in your pocket. In my world view, you can either earn more or spend less, either way helps my NW climb faster. If you can't figure out how to capture the depreciation value, then buy new. If you're clever, you'll find a way. Or people can just make excuses so they can avoid being clever, no one has posted an excuse and the math behind it though...that's always a telling sign on this forum.

Like I said before, its not my money you're spending. If someone feels they're right and I'm wrong, its their money, at the end of the day people can choose whatever they want. No amount of evidence or math will sway some people, however I thing you're open to listening which I appreciate (that's why I keep responding).

kenmoremmm

  • Stubble
  • **
  • Posts: 116
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #90 on: August 03, 2018, 11:35:08 AM »
most cars have some depreciation left. just sold my 1995 subaru with 195k miles for $1150. it's something at least. bought a 2010 prius for $8400 with 105k miles.

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1548
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #91 on: August 03, 2018, 12:09:28 PM »
most cars have some depreciation left. just sold my 1995 subaru with 195k miles for $1150. it's something at least. bought a 2010 prius for $8400 with 105k miles.
Thats the residual value, not depreciation. Depreciation is the value/time period loss i.e $100/year. Residual value is the $1150 you received for it. Depreciation has to have a time component to it i.e. $x/year or $x/month

In my case I think my car *might* receive $1200 if I sold it this year, next year I expect it would sell for $1100 (fill in your own estimates on my car). Depreciation is $100 this year. The minimum price is $300, that's the scrap yard price, eventually depreciation reaches zero when the cars residual value reaches $300 (the lowest guaranteed price I can currently receive). I agree theres some depreciation left, it becomes really small towards the end; as compared to the $3000+ it received in the first year. In your case, if you had sold the car last year or 3 years ago, what would you have likely received?

A rookie mistake is to do a depreciation amount over a cars lifetime, as opposed to determining the annual depreciation (on old cars the numbers converge, on new cars they don't). For example, on a 20 year old car, did 50% of the depreciation happen in the last 10 years or was it only 20%? A lot of the misconceptions on this thread comes from using arbitrary timespans to justify buying new vs. 3 years old because they'll keep the car for 10 years...Tricky stuff. Watch out for people blustering about lifetime depreciation, its a strategy people employ when they're bluffing about doing the math on this style of thread. They haven't or they're really bad at math comprehension since they're graphically turning a curve into a straight line.

talltexan

  • Handlebar Stache
  • *****
  • Posts: 1917
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #92 on: August 07, 2018, 01:38:31 PM »
Disclosure: I, too, have enjoyed the new Camry once in my life.

I think one reason people buy new cars is that the used car transaction is simply scary. You're worried about why the other person is selling it. You're not exactly sure if that person knows about cars, or maybe you're afraid he knows too much. They're not a business, so you feel as though certain protections are absent.

Instead of facepunches, mustachians who have been through these transactions successfully should offer to meet each other and mentor each other through this process.
Come on by anytime ;)

A facepunch isn't an insult, its a wake up call. If you receive a facepunch on the forum, its a signal to you that others know a better or more efficient way of completing the task. If you feel that there is simply no choice but to buy a new car, we're here to help. However, sometimes in the midst of the mainstream congratulations like you see on facebook its hard to find the contrarian mustachian opinion that says a new car is never the best valu and you should look past the thrill of a new car and see how it fits in your entire financial picture; including FIRE.

If you're brave enough to receive a face punch, its the greatest thing that can happen to you on this forum. A facepunch is meant to change your life for the better; the recipient becomes wiser, lsees a problem from a new angle and can avoid a mistake next time. If OP reads my facepunch, he will FIRE earlier and has the possibility of spending more time with family instead of more time driving 20,000 miles a year.

This is an excellent response. Thank you!

FIRE47

  • Bristles
  • ***
  • Posts: 313
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #93 on: August 10, 2018, 12:10:56 PM »
most cars have some depreciation left. just sold my 1995 subaru with 195k miles for $1150. it's something at least. bought a 2010 prius for $8400 with 105k miles.
Thats the residual value, not depreciation. Depreciation is the value/time period loss i.e $100/year. Residual value is the $1150 you received for it. Depreciation has to have a time component to it i.e. $x/year or $x/month

In my case I think my car *might* receive $1200 if I sold it this year, next year I expect it would sell for $1100 (fill in your own estimates on my car). Depreciation is $100 this year. The minimum price is $300, that's the scrap yard price, eventually depreciation reaches zero when the cars residual value reaches $300 (the lowest guaranteed price I can currently receive). I agree theres some depreciation left, it becomes really small towards the end; as compared to the $3000+ it received in the first year. In your case, if you had sold the car last year or 3 years ago, what would you have likely received?

A rookie mistake is to do a depreciation amount over a cars lifetime, as opposed to determining the annual depreciation (on old cars the numbers converge, on new cars they don't). For example, on a 20 year old car, did 50% of the depreciation happen in the last 10 years or was it only 20%? A lot of the misconceptions on this thread comes from using arbitrary timespans to justify buying new vs. 3 years old because they'll keep the car for 10 years...Tricky stuff. Watch out for people blustering about lifetime depreciation, its a strategy people employ when they're bluffing about doing the math on this style of thread. They haven't or they're really bad at math comprehension since they're graphically turning a curve into a straight line.

What does it really matter though if you turn a curve into a straight line if the end point is the same in this case? I guess your NW statement will be off a bit? At the end of the day cashflows are actually what matter anyways.

If my car is worth $5,000 at the end of 10 years and I plan to keep it for 10 years do you really need a super accurate tracking to say what it is at each point in time along the way, do I really care that the depreciation was more in year 1 vs year 9? At the end of the day the cashflow is all that matters - which is going to happen when you pay for it and in year 10 when you sell it.

TBH if the book value of the car is really that important you are doing something wrong in terms of MMM.
« Last Edit: August 10, 2018, 12:13:27 PM by FIRE47 »

ice_beard

  • 5 O'Clock Shadow
  • *
  • Posts: 52
  • Location: East Bay, CA
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #94 on: August 10, 2018, 05:18:14 PM »
Well, I don't see a lot of used cars I would buy.  Recent model year CPO's are priced nearly as high as new.   Buying a previous rental fleet car that is for sale by the second owner as suggested by another poster is not something I would consider.  The other car cited by that poster could have been picked up at an auction or traded in because it was a lemon and it was just under the cost of an identical new car, with the full warranty and the zero percent financing.

If you are car savvy and mechanically inclined, you can probably look around and find something three to five years old at a good price.  For those of us that are not, the risk of an expensive mistake is high.  For me, a couple of thousand dollars extra spent on a car is equivalent to a rounding error.  I'm buying peace of mind and a lack of problems with that money.  Money well spent and thoughtfully so.

A few thousand dollars might not be a rounding error for me, but otherwise, I agree.  I bought a new Honda Fit about 15 months ago, it was from the prior year, reduced in price and two year old lease return cars with 40k on them were selling for about $2500 less.  The used auto market in the Bay Area was/is tight and I would absolutely not buy a rental fleet car from a Mitsubishi dealer in Hayward.  That is far from buying an under warranty Honda from the dealership down the street in Walnut Creek.  My beater Subaru had left me high and dry more than once and was quickly becoming a cash vacuum.   I have no regrets about buying new given the market I'm dealing with.   

I can find supporting info for essentially any argument, even that the earth is flat, in less than two minutes of googling.  That's kind of a low bar these days. 
« Last Edit: August 10, 2018, 05:22:04 PM by ice_beard »

PDXTabs

  • Pencil Stache
  • ****
  • Posts: 648
  • Age: 35
  • Location: Vancouver, WA, USA
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #95 on: August 10, 2018, 11:44:00 PM »
A few thousand dollars might not be a rounding error for me, but otherwise, I agree.  I bought a new Honda Fit about 15 months ago, it was from the prior year, reduced in price and two year old lease return cars with 40k on them were selling for about $2500 less.  The used auto market in the Bay Area was/is tight and I would absolutely not buy a rental fleet car from a Mitsubishi dealer in Hayward.  That is far from buying an under warranty Honda from the dealership down the street in Walnut Creek.  My beater Subaru had left me high and dry more than once and was quickly becoming a cash vacuum.   I have no regrets about buying new given the market I'm dealing with.   

That's $0.063/mile, which as far as I'm concerned is a good deal. I'm unconvinced that buying a new (practical) car is a bad deal if you are willing to maintain it and keep it for 200K miles.

MrFancypants

  • Pencil Stache
  • ****
  • Posts: 567
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #96 on: August 11, 2018, 10:14:33 PM »
A thing to consider that these conversations rarely do are advancements in safety as new vehicles hit the dealer lots.  Regarding the specific car in question, the Camry, you have to find a top of the range trim level to get features that are standard on the base trim 2018.  A slightly used 2017 XLE Camry is certainly more expensive than a new 2018 Camry L  If you're driving multiple tens of thousands of miles a year, features like lane-departure warning and a forward collision warning system with automatic braking decrease the chances that you'll have a very bad, very expensive day.

Not that the 2017 Camry is an unsafe car, but if the difference in asking price is that the used car is ~15% less I'll probably opt to spend the difference.  That said, if it's 2017 and you're comparing to a used 2016 Camry that's essentially the same exact car....  maybe save the money and get the used car.

CoffeeR

  • Stubble
  • **
  • Posts: 133
  • Location: Southwest
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #97 on: August 12, 2018, 05:56:51 AM »
Cars don't depreciate the way you describe.  Go on your local dealer's lot and see what you will have to pay for a used 2018 with 5k miles, even after haggling.  The price will be very near the new price, because used buyers are a different crowd.
This has been my experience as well. The list price on a new price is substantially higher then the 1 year old car on the lot, but once you figure out the real price (with incentives, etc) the dealer is willing to sell the new car for, the 1 year used car in my experience seldom makes sense. You can (generally) get the new price down to be close to the 1 year used price, while the used price, though negotiable, is not quite has flexible as the new car price.


DreamFIRE

  • Handlebar Stache
  • *****
  • Posts: 1287
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #98 on: August 12, 2018, 10:23:50 AM »

I searched, and the lowest advertised price (which was lower than MSRP) I found listed on the 2018 Camry L "new" was $21,800, not $20,000 as the OP paid.

ender

  • Magnum Stache
  • ******
  • Posts: 4281
Re: Bought a New Car- Do I Deserve a Facepunch?
« Reply #99 on: August 12, 2018, 12:09:37 PM »
This board has gotten so damn soft.

Buying a new car is NEVER the most prudent choice. You probably could have found one 1-3 years old for 5k less with hardly any miles, or even better something with 50k+ miles for barely 10k.

The facepunch is deserved 100% you have failed MMM class today.


Anyway, enjoy your new car. It's too late to bring it back now!

I used to think this. Luckily I can easily go back and look at the spreadsheet we put together when we spent a lot of time looking for a car a few years ago (about 2). We ended up buying a 2017 Ford Escape. We paid $16,490 total for a brand new Escape (plus ~80 in fees to the dealer) that was delivered to our driveway. It had an MSRP of just shy of $25k.

Watching that specific vehicle over several months in a 200 mile radius, the best price on a 3-year old one we could find was $14,950 with around 30k miles. There was also a 4-year old one with 60k miles for $12,700.

Assuming we drove whatever car we bought into the ground and the vehicle made it 150k miles before we get rid of it, buying brand new was very close to the best car cost/mile of any of the options available. This was also assuming that the car we bought used would not have any additional complications and was taken care of just as well as we will take care of our new vehicle for the entire duration of the milage.

While it is true that some vehicles depreciate rapidly, depreciation is really a false metric to compare different brands of cars with. Our Escape "depreciated" nearly 8k the second it was delivered to us - that depreciation is nearly entirely an artifact of Ford often selling vehicles below MSRP. Other manufacturers (Toyota, Subaru, Honda for example) rarely discount vehicles below MSRP. So even if our vehicle now is worth 1/2 of MSRP, it will not have "lost 50% of value" at all.

The way anyone looking at cars should figure this out is put a spreadsheet together and figure out what metric you want to use to compare them and make sure that for your specific model and year(s) that buying used actually is a more cost effective solution.

There are also other considerations too, if you are willing to finance a vehicle you will likely get better incentives/options with new vs used. This can have some impact on cashflow and allow you to invest if you get for example 0%/60 months financing for the new vehicle. That is an opportunity cost you "lose" if you buy used. You also will have to buy vehicles slightly more often, though with a long enough timeframe this isn't really a significant.

In our case, we got a deal that meant buying new was absolutely the obvious choice.