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General Discussion => Welcome and General Discussion => Topic started by: skp on March 19, 2017, 06:03:53 PM

Title: New vs Old Cars
Post by: skp on March 19, 2017, 06:03:53 PM
Mustachians promote used over new cars.  Can someone explain why?

We've always bought new cars and drive them 10 plus years and replace.   The reason I buy new-
I've looked to purchase used cars in the past, but don't understand how they are really a cost savings.   If you figure I buy a new van, pay 30,000 for it (we pay cash) drive it for 10 years that figures out to $3000 a year for the car.  If I buy a 4 year old van, pay 20,000  for it, drive it 6 years, that's over 3,000 a year.

Am I missing something?
Title: Re: New vs Old Cars
Post by: mires on March 19, 2017, 06:10:53 PM
Most people here aren't condoning 4 year old used cars but much older cars that are more like $5-6K cars that still have many years left in them. The savings becomes obvious then.
Title: Re: New vs Old Cars
Post by: chemistk on March 19, 2017, 06:47:42 PM
The most basic answer? Depreciation. Depending on the car, you can lose between 15%-25% of its value just by driving it off the lot.

You can also buy used cars off of Craigslist, avoiding the nightmare of a dealership and allowing you to pay the true value for a car or even get a deal on one.

If you're handy, know someone who is, or have a trusted mechanic, you can easily save money on maintenance.

You can get a great car for little money. Some cars suffer from an accelerated depreciation curve, meaning you get a lot of bang for your buck.

There are a litany of arguments for buying used. Buying new isn't a crime, and it makes sense in a number of situations, but frugality dictates you should find ways to live more efficiently and used cars are simply more efficient.
Title: Re: New vs Old Cars
Post by: Notasoccermom on March 19, 2017, 06:48:25 PM
First of all, the depreciation on a new vehicle is insane. Most vehicles should last you longer than 10 years. We just bought a 99 Camry and a 2005 pilot that run great.
Title: Re: New vs Old Cars
Post by: Paul der Krake on March 19, 2017, 06:58:36 PM
What happens if you replace 10 with 15?
Title: Re: New vs Old Cars
Post by: tarheeldan on March 19, 2017, 07:39:05 PM
According to Edmunds, cars typically lose 50% of their value in 4 years.

ETA: See also:
https://forum.mrmoneymustache.com/index.php?topic=13489.0
Title: Re: New vs Old Cars
Post by: Dora the Homebody on March 19, 2017, 07:57:52 PM
I'm a new-car buyer.

My last Corolla lasted 14 years and it still ran just fine... but it rusted out because (stupid) me didn't keep it rustproofed.  In the land of 6-month-winter the salt will really take a toll.

They also hold their value really well.  If you want one for less than $5000 you would be getting a 10 year old model at least.
Title: Re: New vs Old Cars
Post by: aceyou on March 19, 2017, 08:40:50 PM
Mustachians promote used over new cars.  Can someone explain why?

We've always bought new cars and drive them 10 plus years and replace.   The reason I buy new-
I've looked to purchase used cars in the past, but don't understand how they are really a cost savings.   If you figure I buy a new van, pay 30,000 for it (we pay cash) drive it for 10 years that figures out to $3000 a year for the car.  If I buy a 4 year old van, pay 20,000  for it, drive it 6 years, that's over 3,000 a year.

Am I missing something?

I can explain why. 

- I buy 2007 Prius for 5000.  Drive it for 5 years, then sell it for 2500.  That's 500/year depreciation.
- Because the car is so cheap, I can easily justify PLPD insurance, which is 360/year.
- I spend 300/year on gas roughly. 
- Figure 500/year for maintenance, even though it's been averaging me less than that. 

Those four things add up to $1,660 per year, which is approximately the total cost of car ownership for me. 

Now let's take it a step further.  Because I only paid 5000 out of my 30,000 number that you threw out there, I have $25,000 sitting in VTSAX for 5 years that you don't.  I leave 25,000 earning 7% continuous interest for 5 years, and I end up with $35,477 when it's time to buy my next $5000 vehicle. 

I'm making more off the interest from my extra 25k than it costs me in total to own and operate the Prius.  That is what you are missing. 

If you just like owning a new car more than all the money you are losing, that's fine.  But if you think it's a wash financially, then no way.  People who buy used cars correctly are coming out tens of thousands of dollars ahead of you each decade from this one decision. 
Title: Re: New vs Old Cars
Post by: Dora the Homebody on March 20, 2017, 06:19:57 AM
Another factor: availability of used cars.  When you live in a smallish city your options are a lot more limited!  Especially in a very northern city where mostly everyone drives a truck/suv with 4 wheel drive to get through the snow in the winter.

Title: Re: New vs Old Cars
Post by: beastykato on March 20, 2017, 07:43:02 AM
Nothing wrong with buying a new car if you keep it.   Question is can you drive the same car for 15 to 20 years without wanting to blow your brains out?    I'm 6 years into mine.  I'll go at least 10 years with it, but I don't  know if I can drive the same thing until I'm 44. 
Title: Re: New vs Old Cars
Post by: MayDay on March 20, 2017, 08:21:25 AM
I got my 03 civic new.

I'm sooooooo sick of it. But it just won't die!

I'm curious how long it will last. Ultimately if you drive a car 15-20 years, then buying new isn't a huge deal. But almost no one keeps cars that long.
Title: Re: New vs Old Cars
Post by: StarBright on March 20, 2017, 08:25:41 AM
I got my 03 civic new.

I'm sooooooo sick of it. But it just won't die!

I'm curious how long it will last. Ultimately if you drive a car 15-20 years, then buying new isn't a huge deal. But almost no one keeps cars that long.

I laughed at this because this morning I was driving my CR-V that I bought new in 2002 (my first car) and thinking - I hope this car never dies, I love it so much!
Title: Re: New vs Old Cars
Post by: ketchup on March 20, 2017, 08:32:41 AM
As long as you figure out cost per mile and per year properly, those are the figures to compare.

Depreciation is the main difference between new and used.

Assuming for example you get 250,000 out of your car (all hand-waved numbers):

A new car for $20,000 gets you $0.08/mile depreciation.
A 50k car for $12,000 gets you  $0.06/mile deprecation.
A 100k car for $5,000 gets you  $0.03/mile depreciation.
A 150k car for $1,000 gets you  $0.01/mile depreciation.

Buy as far down the curve as you're comfortable with. 

Maintenance cost per mile will average out pretty much the same on any similar car, repairs will be slightly more when you start hitting the 150k-200k range, but probably not as much on a per mile basis as one would think.  Gas cost will be basically the same as long as everything is running right.

Insurance is way fucking cheaper on an older car, especially if you're young or have a reason to be high-risk.
Title: Re: New vs Old Cars
Post by: RWD on March 20, 2017, 08:51:58 AM
If you figure I buy a new van, pay 30,000 for it (we pay cash) drive it for 10 years that figures out to $3000 a year for the car.  If I buy a 4 year old van, pay 20,000  for it, drive it 6 years, that's over 3,000 a year.

Your math is wrong because it assumes your vehicles will be worth $0 when you get rid of them. As posted above, vehicles lose about 50% of their value every four years. So a vehicle that was $30k new would be $15k once it's four years old. I think this can be represented with the formula <used value> = <new value> * (0.5)^(age*0.25).

Let's compare:
$30k vehicle new would be worth ~$5,300 when 10 years old. $2,470/year in depreciation.
$15k used vehicle (bought when 4 years old) would also be worth ~$5,300 when 10 years old. This works out to $1,620/year in depreciation.

As you can see, that's $850/year in savings and we haven't even calculated the possible sales tax, higher registration fees/tax, and higher insurance. And the numbers only get better as you go older.

Let's say you buy that 10 year old vehicle $5,300. Then you sell in five years when it's 15 years old for $2,230 (again, using the same assumed rate of depreciation). That works out to about $615/year in depreciation.
Title: Re: New vs Old Cars
Post by: Laserjet3051 on March 20, 2017, 09:10:28 AM
As the above responders  point out, the financial arguments for buying a used car are extremely compelling. I fully agree. However, what is not discussed are the associated increased RISKS with buying a used car. These risks can vary in a number of ways but must be factored into the final calculus. What a new (or nearly) car does is reduce those risks, sometimes bringing them down to ZERO. Some folks are willing to shell out the extra cash (a lot!) to reduce those risks.

Not me, however. I will buy the used but try to minimize risk buy having a qualified mechanic I trust go over the vehicle from bumper to bumper. I also do my research on car model longevity, average yearly maintenance, safety recalls, etc. This doesnt guarantee the used car I buy will pay off mathematically over the decade or longer I use it, but it does increase the probability that it will. Over the last 20 years, the 2 used vehicles I purchased did work out to be great investments. Luck? Maybe. New vehicle owners may just not want to roll those dice.
Title: Re: New vs Old Cars
Post by: Just Joe on March 20, 2017, 09:29:10 AM
I laughed at this because this morning I was driving my CR-V that I bought new in 2002 (my first car) and thinking - I hope this car never dies, I love it so much!

We feel the same way! ('99 5MT AWD EX getting a new engine soon). Right size/right configuration for our needs - still after 18 years.
Title: Re: New vs Old Cars
Post by: PJC74 on March 20, 2017, 09:45:08 AM
Excise tax is a killer those first few years. Also insurance is more. Those two factors can tilt it out of favor for new over used.

Sent from my SM-G930V using Tapatalk

Title: Re: New vs Old Cars
Post by: Paul der Krake on March 20, 2017, 01:14:44 PM
As the above responders  point out, the financial arguments for buying a used car are extremely compelling. I fully agree. However, what is not discussed are the associated increased RISKS with buying a used car. These risks can vary in a number of ways but must be factored into the final calculus. What a new (or nearly) car does is reduce those risks, sometimes bringing them down to ZERO. Some folks are willing to shell out the extra cash (a lot!) to reduce those risks.

Not me, however. I will buy the used but try to minimize risk buy having a qualified mechanic I trust go over the vehicle from bumper to bumper. I also do my research on car model longevity, average yearly maintenance, safety recalls, etc. This doesnt guarantee the used car I buy will pay off mathematically over the decade or longer I use it, but it does increase the probability that it will. Over the last 20 years, the 2 used vehicles I purchased did work out to be great investments. Luck? Maybe. New vehicle owners may just not want to roll those dice.
You also have no idea how reliable a car is going to be when you buy it new, because there are no data points.

If I buy a 10 year old model, a couple minutes of research will reveal all the common pitfalls that new buyers have discovered for me. I can then take that into consideration.
Title: Re: New vs Old Cars
Post by: ketchup on March 20, 2017, 01:39:50 PM
You also have no idea how reliable a car is going to be when you buy it new, because there are no data points.
Related: https://en.wikipedia.org/wiki/Bathtub_curve  The only major (fundamental) problem my parents ever had with a car was one they bought new in 2003 (transmission issues at 50k miles, nearly unusable by 90k, sold for a song).  If they had been car shopping five years later for five year old cars, they would have known to avoid that model.
Title: Re: New vs Old Cars
Post by: Mustache ride on March 20, 2017, 01:45:40 PM
Aren't we forgetting that taking out extremely low interest loans, which is pretty normal on new cars, allows us more freedom to spend/invest elsewhere? I know it's not the same thing as paying off a mortgage since houses don't depreciate like cars, but it is definitely a "perk" i would say.

Wouldn't the same be true for leasing depending on the numbers? If you had enough money to buy a brand new car in cash, couldn't it potentially be better to instead invest that cash and lease the car. That way your investment gains are paying the monthly payments, and you get a new car every few years without worrying about repairs/maintenance?

Title: Re: New vs Old Cars
Post by: ketchup on March 20, 2017, 01:54:58 PM
Aren't we forgetting that taking out extremely low interest loans, which is pretty normal on new cars, allows us more freedom to spend/invest elsewhere? I know it's not the same thing as paying off a mortgage since houses don't depreciate like cars, but it is definitely a "perk" i would say.

Wouldn't the same be true for leasing depending on the numbers? If you had enough money to buy a brand new car in cash, couldn't it potentially be better to instead invest that cash and lease the car. That way your investment gains are paying the monthly payments, and you get a new car every few years without worrying about repairs/maintenance?
Whether to finance a car or not, and which car to get, are entirely different conversations.   No car I've ever bought is even eligible for a low-interest loan.  Also, a loan requiring full coverage collision insurance will probably negate any gains.
Title: Re: New vs Old Cars
Post by: RWD on March 20, 2017, 02:15:34 PM
Aren't we forgetting that taking out extremely low interest loans, which is pretty normal on new cars, allows us more freedom to spend/invest elsewhere? I know it's not the same thing as paying off a mortgage since houses don't depreciate like cars, but it is definitely a "perk" i would say.

Wouldn't the same be true for leasing depending on the numbers? If you had enough money to buy a brand new car in cash, couldn't it potentially be better to instead invest that cash and lease the car. That way your investment gains are paying the monthly payments, and you get a new car every few years without worrying about repairs/maintenance?

For someone that is spending $30k on a car anyway then it does make sense to finance it (assuming a low interest rate) and invest instead of paying outright. However, you can just as easily get a low interest loan for a used car. And once the car becomes cheap enough then getting a loan makes a negligible difference.

Here's a couple example scenarios where you have $30k to spend/invest:

Option 1: Buy new car for $30k, financed at 0.9% for 120 months (excellent terms for someone that wants to invest). Invest the $30k in the stock market, assuming 10% annual returns. Your monthly car payment of $261.51 is taken from your investment amount. After 10 years you sell the car for $5,303.30 (see my post above). Your investment account is now at $27,903.63. Add the car sale price and you now have $33,206.93. Wow, not only was the car free but you increased your starting money by $3,206.93!

Option 2: Buy a five year old car for $12,613.44 with cash. Invest the remaining $17,386.56. Sell the car after five years for $5,303.30. Buy another car for $14,622.44 (3% annual inflation) with the proceeds of your previous car's sale and from your investments. Sell that one after another five years for $6,147.98. Your investment account is now at $31,733.29 plus the $6,147.98 from the second car sale. You increased your starting money by $7,881.27! This is more than twice as much money without even resorting to financing leverage.

In both these scenarios you never own a car older than 10 years. You'll do even better with older/cheaper cars. And I didn't even try to calculate the increased insurance cost required with financing or the higher taxes that come with a new car.
Title: Re: New vs Old Cars
Post by: thenextguy on March 20, 2017, 02:52:12 PM
One thing that bothers me is having so much equity trapped in an depreciating asset. I'm going to be in the market for a "new" car soon and i'm starting to think I'd rather buy 1 used car every 6 years instead of one new car every 12 years.
Title: Re: New vs Old Cars
Post by: WhiteTrashCash on March 20, 2017, 03:07:38 PM
I bought my car new for cash, which probably wasn't the most Mustachian thing to do, but that gave me the advantage of controlling the car's maintenance from "birth". I have records for absolutely everything and I've never needed to do any repairs on this car in over six years of ownership (knock on wood), other than needing to replace one side mirror that was taken out by a neighbor. They paid for replacement, though, so that was no big deal.
Title: Re: New vs Old Cars
Post by: Dora the Homebody on March 20, 2017, 03:27:17 PM
When I bought new I sure wasn't going to take all that cash out of savings when I could finance it for 0.49%. 
Title: Re: New vs Old Cars
Post by: inline five on March 20, 2017, 03:50:37 PM
I'm 35 and still driving the first car I ever drove, the one I learned in. A 1995 Volvo w/ ~200k. Two years ago replaced the entire front and rear suspension and steering components. Four years ago replaced the transmission with a used one from a donor car I bought for $150. My parents donated it to me after college in 2003.

We've been looking at newer cars but I can't bring myself to get rid of this car. I've become addicted to the cheap ownership costs of it. Plus I know dang near every nut and bolt on the car, and the systems inside and out.
Title: Re: New vs Old Cars
Post by: Spork on March 20, 2017, 03:58:36 PM
Mustachians promote used over new cars.  Can someone explain why?

We've always bought new cars and drive them 10 plus years and replace.   The reason I buy new-
I've looked to purchase used cars in the past, but don't understand how they are really a cost savings.   If you figure I buy a new van, pay 30,000 for it (we pay cash) drive it for 10 years that figures out to $3000 a year for the car.  If I buy a 4 year old van, pay 20,000  for it, drive it 6 years, that's over 3,000 a year.

Am I missing something?

What if I buy a $7000 car I drive for 10 years?  ;)
Or a $25 truck I drive for 10 years?  :)   <---  $25 is not a typo

There's your savings in a nutshell.
Title: Re: New vs Old Cars
Post by: mm1970 on March 20, 2017, 04:34:08 PM
I'm a new-car buyer.

My last Corolla lasted 14 years and it still ran just fine... but it rusted out because (stupid) me didn't keep it rustproofed.  In the land of 6-month-winter the salt will really take a toll.

They also hold their value really well.  If you want one for less than $5000 you would be getting a 10 year old model at least.
8-9 year old Civics come up at about $5k
Title: Re: New vs Old Cars
Post by: daschtick on March 20, 2017, 05:03:39 PM
Mustachians promote used over new cars.  Can someone explain why?

We've always bought new cars and drive them 10 plus years and replace.   The reason I buy new-
I've looked to purchase used cars in the past, but don't understand how they are really a cost savings.   If you figure I buy a new van, pay 30,000 for it (we pay cash) drive it for 10 years that figures out to $3000 a year for the car.  If I buy a 4 year old van, pay 20,000  for it, drive it 6 years, that's over 3,000 a year.

Am I missing something?

While I agree that long term ownership is the best way to make the most of your purchase, the cost of ownership is vastly improved by paying less for the initial purchase in the first place.

What is a 4 year old van really worth?  I guarantee that if you buy a new van for $30k, absolutely no one is going to give you $20k for it after 4 years.  That said, if you are paying $20k for a 4 year old van, you are paying way too much.  Private sale is maybe $15k, and if it was traded to a dealer, it would probably fetch only $12k.

Another factor you have not considered is what is the van worth after 10 years?  We can agree that a running van is still worth something, and if you take halfway decent care of your vehicles, you can probably get at least $5k for it on a private sale.  So for 10 years of use, you really have spent $25k ($2500/yr), while if you would have bought used for $15k, you would have only spent $10k $1667/yr) not including interest, additional insurance, and taxes.

One more issue that is not considered is what if you need to get out of the van due to a life event?  Let's you need to trade 2 years in.   The $30k van might fetch $20k after 2 years, but the $15k used van will probably fetch at least $10k.

That said, buying new, and keeping longterm is a good way to reduce your vehicle costs, however buying used in this same case is a far better choice.

Title: Re: New vs Old Cars
Post by: GetItRight on March 20, 2017, 06:51:32 PM
You're only looking at new cars. I only drive 30+ year old vehicles that are fairly desirable so there's no depreciation and the possibility of appreciation. I also don't change vehicle every few years, I get what I want with the intent to keep it indefinitely barring any significant change in my needs or circumstances. $3k-$5k gets you a very nice and outright luxurious vehicle, though if patient for the right deal you can spend as little as a grand and be money ahead right off the bat if you flipped it. Figure up to $500-$1000 to catch up on maintenance and fix previous owners hackjobs then maybe an average of a couple hundred a year in maintenance. Some years may be nothing more than oil changes, others you may have larger items but everything will be cheap, fast, and easy with a simple reliable older vehicle that will never leave you stranded needing a tow.

Be sure to consider insurance savings too. I'll self insure $10k or less against theft or other total loss with nobody to compensate me, $20k+ though is a tough pill to swallow and the insurance alone would easily cost another $1000/yr give or take depending on the vehicle. No way I could justify the cost to purchase, maintain, and insure a newer vehicle that's less reliable than my simple old stuff.
Title: Re: New vs Old Cars
Post by: inline five on March 20, 2017, 07:24:05 PM
I would personally at least drive a safe car with multiple air bag systems, ESC and anti lock brakes.. Mine has front and side impact bags but must admit I am considering updating to a newer model with more safety and newer engineered crash protection. Volvo, Mercedes, Audi/VW, Subaru etc are all heavy into safety features. In fact IIRC there hasn't been a single fatality in an XC90 for several years.

It's not my driving I'm so much concerned about it's others. Maybe a drunk driver, text answering teen, or mechanical failure on the highway that prompts the crash. Doesn't matter - we save our money so we want to be around to enjoy it. IMO.   

Here is a recent list with good starting points.

http://www.iihs.org/iihs/news/desktopnews/iihs-issues-recommendations-on-used-vehicles-for-teens-after-research-finds-many-arent-driving-the-safest-ones

It's the depreciation that gets you on buying newer cars. Buy a cheaper one that has taken most of the hits. Also I would suggest buying a simple tool set and looking at online fix it forums. Both Subaru and VW/Audi have a pretty good following for DIYers (good for VW, because you'll need it!). 
Title: Re: New vs Old Cars
Post by: Cranky on March 21, 2017, 05:15:19 AM
We buy new cars because we've had terrible luck with used cars - we've always been a one car family, and when that one car doesn't run it spreads a lot of inconvenience and expense around. I'm happy with spending a little more to get those quality, trouble free years, and I don't care if the car depreciates because I'm never selling it anyway.

If you live someplace with great public transit, or you love working on cars, your equation will be different.
Title: Re: New vs Old Cars
Post by: sam on March 21, 2017, 05:23:41 AM
Mustachians promote used over new cars.  Can someone explain why?

We've always bought new cars and drive them 10 plus years and replace.   The reason I buy new-
I've looked to purchase used cars in the past, but don't understand how they are really a cost savings.   If you figure I buy a new van, pay 30,000 for it (we pay cash) drive it for 10 years that figures out to $3000 a year for the car.  If I buy a 4 year old van, pay 20,000  for it, drive it 6 years, that's over 3,000 a year.

Am I missing something?

I buy a car for 2.5k drive it for 4 years and sell it for 500-1k that's around 750 per year. The problem with financing for me is that it conditions you to think you can afford a much more expensive car so you end up spending say 10k rather than a 2-5k second hand car.

Sam
Title: Re: New vs Old Cars
Post by: BAMxi on March 21, 2017, 12:20:44 PM
Example of what you're driving/have driven? I've always thought about taking this approach as well (bit of a car guy), maybe with an older porsche/Merc/BMW. Had a 3 series for over 6 years with no major problems, only sold it recently because I got $3k more than book value because of its condition and i was going months between driving it.

You're only looking at new cars. I only drive 30+ year old vehicles that are fairly desirable so there's no depreciation and the possibility of appreciation. I also don't change vehicle every few years, I get what I want with the intent to keep it indefinitely barring any significant change in my needs or circumstances. $3k-$5k gets you a very nice and outright luxurious vehicle, though if patient for the right deal you can spend as little as a grand and be money ahead right off the bat if you flipped it. Figure up to $500-$1000 to catch up on maintenance and fix previous owners hackjobs then maybe an average of a couple hundred a year in maintenance. Some years may be nothing more than oil changes, others you may have larger items but everything will be cheap, fast, and easy with a simple reliable older vehicle that will never leave you stranded needing a tow.

Be sure to consider insurance savings too. I'll self insure $10k or less against theft or other total loss with nobody to compensate me, $20k+ though is a tough pill to swallow and the insurance alone would easily cost another $1000/yr give or take depending on the vehicle. No way I could justify the cost to purchase, maintain, and insure a newer vehicle that's less reliable than my simple old stuff.
Title: Re: New vs Old Cars
Post by: tralfamadorian on March 21, 2017, 12:56:50 PM
You're only looking at new cars. I only drive 30+ year old vehicles that are fairly desirable so there's no depreciation and the possibility of appreciation. I also don't change vehicle every few years, I get what I want with the intent to keep it indefinitely barring any significant change in my needs or circumstances. $3k-$5k gets you a very nice and outright luxurious vehicle, though if patient for the right deal you can spend as little as a grand and be money ahead right off the bat if you flipped it. Figure up to $500-$1000 to catch up on maintenance and fix previous owners hackjobs then maybe an average of a couple hundred a year in maintenance. Some years may be nothing more than oil changes, others you may have larger items but everything will be cheap, fast, and easy with a simple reliable older vehicle that will never leave you stranded needing a tow.

Be sure to consider insurance savings too. I'll self insure $10k or less against theft or other total loss with nobody to compensate me, $20k+ though is a tough pill to swallow and the insurance alone would easily cost another $1000/yr give or take depending on the vehicle. No way I could justify the cost to purchase, maintain, and insure a newer vehicle that's less reliable than my simple old stuff.

Could you expand on this a little more? 

I've been thinking that for my next vehicle that I would like an older car that has nearly bottomed out its depreciation.  But I'm not a car person and I'm not sure where to start.  What car manufacturers do you recommend?  Any tips for how to spot a car that would be a good candidate?
Title: Re: New vs Old Cars
Post by: Optimiser on March 21, 2017, 01:36:55 PM
If you figure I buy a new van, pay 30,000 for it (we pay cash) drive it for 10 years that figures out to $3000 a year for the car.  If I buy a 4 year old van, pay 20,000  for it, drive it 6 years, that's over 3,000 a year.

Am I missing something?

I bought an 18 year old car for $2,500 cash. 9 years later I'm still driving it, and it's still worth $2,500 (probably more). That's $0 per year. Maintenance costs have been the same as a newer car, occasional belts, tires, brakes, and oil changes. I did replace the shocks which a newer car might not need, but it hasn't needed any needed repairs.

I've never owned a car that was newer than 10 years old. That's the expensive time to own them. Low mile old cars is where it's at. Japanese cars from the 90s and 2000s run forever.
Title: Re: New vs Old Cars
Post by: alsoknownasDean on March 22, 2017, 12:49:09 AM
Because the market value of cars reduces by 40-70% in the first five years of ownership. A car in a normal environment should be good for 15 years or longer.

It just makes sense to buy when the value of the car is lower compared to the remaining useful life. A car with 67% of the useful life selling for 40% of it's new price? Sounds good.

Not to mention the opportunity cost of the extra money spent. If I go and spend $30000 on a new car instead of $12000 on a second-hand car, that $18000 is no longer able to be invested. Any forgone future investment returns is an opportunity cost of buying the new car, and oftentimes that amount is greater than any additional maintenance requirements.

That's assuming that the disposal value of either car is zero at the end of its useful life. It doesn't take into account insurance or similar either.

The other advantage is if you buy a used car that's a few years old, any of the common problems that occur with the car (like with all cars) are usually already known.

There's also something freeing about owning a car that you don't give much of a fuck if it gets scratched, and can replace with cash on hand.
Title: Re: New vs Old Cars
Post by: joonifloofeefloo on March 22, 2017, 01:10:26 AM
We buy new cars because we've had terrible luck with used cars - we've always been a one car family, and when that one car doesn't run it spreads a lot of inconvenience and expense around. I'm happy with spending a little more to get those quality, trouble free years...

+1.

After my first two experiences with used, and the shady folks doing "repairs" on them, I was done.

For me, there would be a cost (money, time, energy) of learning vehicle repair on top of everything I already do, and I factor that in to overall "expenses."

However, my kid shows a strong leaning toward the mechanical, and that's where he likes putting most of his energy. If/when he becomes a new resource in that area, our family math will look different. By then the car will be 12 years old and ready for his mechanical wisdom, his purchase from me, or a straight-up sale with no concern from me over the annual costs incurred in the meantime on this fantastic life tool. (I can see trading the car out IF we become homeless and need to move into an RV, but short of that no.)
Title: Re: New vs Old Cars
Post by: GetItRight on March 23, 2017, 06:43:23 PM
Example of what you're driving/have driven? I've always thought about taking this approach as well (bit of a car guy), maybe with an older porsche/Merc/BMW. Had a 3 series for over 6 years with no major problems, only sold it recently because I got $3k more than book value because of its condition and i was going months between driving it.

Could you expand on this a little more? 

I've been thinking that for my next vehicle that I would like an older car that has nearly bottomed out its depreciation.  But I'm not a car person and I'm not sure where to start.  What car manufacturers do you recommend?  Any tips for how to spot a car that would be a good candidate?

Most of my vehicles have been 60s Fords, compact or full size. I've had several 80s trucks, though 80-96 are all essentially the same. My current daily driver for my 3-4 miles commute is an 80s Ford pickup. If I had a long commute I'd be driving a 60s or maybe 70s car, but as it is my truck averages mid-high teens for MPG mostly around town. Fuel costs are irrelevant for me, a truck is justified for for practical reasons and required to do what I enjoy, and in the warmer months I mostly ride my nearly 50 year old motorcycle which gets 40-50 MPG, so no mustachian thumbing of noses.

To drive a 30-50 year old vehicle you need to have a little mechanical aptitude and a willingness to learn. You can't drop it at a shady mechanic any time there's a minor issue and pay $500+ for the luxury of not having to deal with replacing a $20 part that's 30+ years old. When you first buy a 30+ year old vehicle it'll need things that the previous owners have neglected or hacked together to keep it going. The first months are an adventure in getting caught up on maintenance unless you got a real gem. Once you've gone over all the basic wear items and typically neglected or hacked things these simple old vehicle are much more reliable than new vehicles. No complex electronics to fail, you'll never be stuck walking when your engine that's in perfect mechanical health quits because an $80 electrical sensor let the smoke out. I've only been left walking once in over a decade and it was the electronic ignition (notoriously reliable, stange) that failed. It ended up being a fun adventure of a day.

I like old Fords, I found them aesthetically appealing when I was young and learned them in and out but any other brand will all be more or less the same with minor differences. If I wanted a fun and cheap commuter car I'd be looking for a mid-late 60s Falcon or a 70s Maverick. A Falcon with a small six gets 30+ MPG highway, with an overdrive transmission and some tuning I believe 40 MPG is possible. Around town expect 20+ MPG. Some Mavericks came with overdrive transmissions (4 speed SROD) and already have the foundation to be efficient. I would also consider an 80s or early 90s fox body Mustang. They're cheap and came from the factory with a 302 and 5 speed overdrive transmission. Easy 30+ MPG fun car and they're cheap all day while a Falcon or Maverick may require patience to find the right car. Any of these should be possible for not more than a few grand, and under $1k if you're patient.

For foreign stuff, the only thing that comes to mind I might consider is 70s or 80s Mercedes or Volvo diesel but I know nothing about them other than they're very simple mechanically speaking. If you don't mind a starting a hobby filtering fuel, you can run them on vegetable oil, waste motor oil, or just about any oil.
Title: Re: New vs Old Cars
Post by: thunderball on March 23, 2017, 07:59:44 PM
I'm wrestling with old vs. older right now.  Currently own an '07 Toyota FJ Cruiser, bought pre-mustacian, though I have driven it 10 years now.  Unfortunately New England weather has taken its tool on the undercarriage, even though the rest looks and runs great.  My dilemma is selling it now while it's worth ~$13,000 and buying something newer to give to my daughter in 4+ years, vs. keeping and putting money into timing belt, new tires, additional items failing with rust, etc..  I'm eying a '14 Camry with 60k mileage for just over the value of the FJ, which should last another 100,000 - 200,000 miles.
Title: Re: New vs Old Cars
Post by: tralfamadorian on March 23, 2017, 08:08:13 PM
Most of my vehicles...

Thank you!
Title: Re: New vs Old Cars
Post by: BAMxi on March 23, 2017, 08:19:43 PM

Most of my vehicles have been 60s Fords....

This is awesome. I love seeing old trucks being daily driven and used. It's pretty common in Missouri where I live, and certainly where i grew up (small town of about 700). I've tossed around the idea of getting a cool old truck in good shape. I like Fords too, though my knowledge of them quickly cuts off prior to late 80s/early 90s. My dad had an 89 (i think) thunderbird with the 5.0. He inherited it when my grandpa died in I think 2010, had 35k on it. That was a cool car, I used to borrow it sometimes. Didn't really feel all that fast and definitely didn't corner well, but it was a sweet highway car and quite comfortable. I grew up wrenching on old cars with my dad, but now I have a bit of a hookup with Fords, my wife's stepdad is a Ford Senior Master Tech. We drive two oldish Fords currently, a 2002 Taurus with 196k and a 2002 Explorer with 140k. Just picked up the Explorer around the time i sold my 3 series. We have a baby and needed to be able to haul her stuff around plus we do a lot of hiking and camping and legitimately use the space for hauling, so i justified it. plus my commute is a walking commute, so it mostly sits parked until it is needed. It's got a bit of a timing chain rattle, so we'll see if it destroys itself. I've got maybe $4k into it and am hoping to take it to 200k miles like the Taurus. Wife's stepdad seems to think we could throw a used or reman engine in there for a reasonable cost if it came to it.
Title: Re: New vs Old Cars
Post by: Exflyboy on March 23, 2017, 09:26:04 PM
Depends on the mdel but I have been seeing huge depreciations in the first year. Like 40% for a Dodge Charger and 37% on a Chrysler 300 I fancied.

My Wife's 2 year old Chevvy Cruze was $12k.. which if I recall was about 50% depreciation in 2 years.

So depreciation is definitely front end loaded. Add to that I have never taken a car to a mechanic and always pay cash.

Savings for us have been substantial.
Title: Re: New vs Old Cars
Post by: Awka on March 24, 2017, 07:11:19 AM
Consider life can throw curveballs.  In 2007, I bought a brand new Honda with my ex, planning to baby it + run it into the ground. We could easily afford it, no interest, and affordable payments.

Long story short: went from well off to losing everything, including the affordable new car, in a couple years.

The now 15 yo used car, I bought for under $3k more than 5 years ago? Mine. Paid for. Yes, it might not pass inspection this year. But if I figure it cost about $700/800 a year to own, insure, and repair? Good start.  If I have to replace it, I'm going pre 1995 Volvo (no emissions in my state if that yr or older), if  I can find one. Hopefully under a grand, decent body.

I'm not picky though. And I only drive abt 2,000 miles a year, so repairing my beater may also be an option if the numbers make sense.

For the once or twice a year I might truly need a newer car, I can always rent one.  Enterprise has a $9.99 a day weekend deal, as an example.

Title: Re: New vs Old Cars
Post by: skp on March 24, 2017, 07:33:23 AM
I'm not being super picky about the model but I've just not seen the depreciation everyone is talking about. 
I would just fix my 10 year old Dodge Caravan.  It's pretty rusted, but that doesn't bother me.  (that's the problem w caravans they rust pretty early in their lives).  I actually prefer to drive older cars just because it's freeing not to care if it gets dinged.   My husband  is the one that wants to get rid of it.  1) He doesn't  work on cars.  His philosophy is that newer cars are difficult to work on because you need a computer and even if you could diagnose the problem the cost of all the equipment you'd  need to work on them is not worth the price.  And then also complains about the hassle of taking it to the mechanics.  2) He fels it's unsafe to drive an unrealiable car.  IMO any car can be unreliable.
Title: Re: New vs Old Cars
Post by: Awka on March 24, 2017, 08:35:06 AM
Does your husband drive the van too?

I guess it really comes down to what works best for your lifestyle, and how much of an issue new vs used is in your marriage. If you're saving $1-3k a year buying used, and fight about the "crappy old car" all the time? Probably not worth it, in the scheme of things. I'm not remarried, and no one else drives my ugly Chevy, so I can slap a piece of duct tape on a rust spot, and happily tool around town. If it dies, it dies.  I'm not out at 2am on deserted roads.  I have a car kit, a cellphone, etc. No biggie.

My new SUV? Was hit twice, neither my fault.  The second time a fire truck swiped it while it was parked, two days after I'd gotten it back after an uninsured, unlicensed idiot hit me.  In both cases, I was out the deductible. $$$.

Stuff happens with cars, new or used. For me, car payments are more stressful than older car quirks.  If I could pay cash for a new vehicle? I probably still wouldn't buy brand new again, but I can understand how it makes sense for others.
Title: Re: New vs Old Cars
Post by: Exflyboy on March 24, 2017, 09:18:42 AM
I'm not being super picky about the model but I've just not seen the depreciation everyone is talking about. 
I would just fix my 10 year old Dodge Caravan.  It's pretty rusted, but that doesn't bother me.  (that's the problem w caravans they rust pretty early in their lives).  I actually prefer to drive older cars just because it's freeing not to care if it gets dinged.   My husband  is the one that wants to get rid of it.  1) He doesn't  work on cars.  His philosophy is that newer cars are difficult to work on because you need a computer and even if you could diagnose the problem the cost of all the equipment you'd  need to work on them is not worth the price.  And then also complains about the hassle of taking it to the mechanics.  2) He fels it's unsafe to drive an unrealiable car.  IMO any car can be unreliable.

His philosophy in my experience is not correct, I have heard this "new cars can't be worked on" numerous times but in reality they are generally more reliable in the first place and therefore need much less fixing. Secondly there has never been a problem my $21 code reader could not figure out, I may well have been lucky with the problems I have had perhaps.

The fixing has always been with pretty much standard tools.

I have never been to a mechanic.. I don't trust them "we clear the code for $85 and then we go from there". That was the one and ONLY conversation I had with the stealership mechanic... :)
Title: Re: New vs Old Cars
Post by: Clean Shaven on March 24, 2017, 09:43:50 AM
Agree with the above. New cars have the same wear and maintenance items as old - things like brakes, spark plugs, filters, oil changes, etc, are all the same in a 2017 car as they were in a 1975 car.

I've worked on some older cars with carburetors, points ignition, and drum brakes, and I am quite happy not having to deal with any of those technologies anymore. Fuel injection and OBD-II, with a code scanner and Google, and I'm good.
Title: Re: New vs Old Cars
Post by: Exflyboy on March 24, 2017, 10:19:47 AM
Exactly, I often think its a fear of anything "computuerised", when in reality things either work or they don't. Plug in the code reader and it tells you where the problem is.. Sure it could be bad wiring going to a sensor but at least you are zoned into the problem.

I'll take that over hours of fiddling and adgusting... Plug in the sensors and the computuer figures it out.. Done!

Of course some people just don't want to work on cars.. Thats cool but the whole "you CAN't fix them" is pretty nonsensical IMHO.
Title: Re: New vs Old Cars
Post by: ketchup on March 24, 2017, 10:25:27 AM
Exactly, I often think its a fear of anything "computuerised", when in reality things either work or they don't. Plug in the code reader and it tells you where the problem is.. Sure it could be bad wiring going to a sensor but at least you are zoned into the problem.

I'll take that over hours of fiddling and adgusting... Plug in the sensors and the computuer figures it out.. Done!

Of course some people just don't want to work on cars.. Thats cool but the whole "you CAN't fix them" is pretty nonsensical IMHO.
People could be thinking of scarier things like airbag systems etc.  Like if you bork up reconnecting the airbag system after removing a connection to get it out of the way, you can get an ABS light in the dash that costs $200 to turn off at the dealer.  I ran into the possibility of that happening (turns out I didn't bork it up despite my paranoia) on my '09 Hyundai when I swapped out the heater core last fall.

But even then, I'd probably rather have the airbags and have to pay $200 if I mess up than drive a 60s car without airbags.
Title: Re: New vs Old Cars
Post by: Exflyboy on March 24, 2017, 10:51:19 AM
True.. When I remove an airbag I disconnect the battery and leave it overnight (in case there are capacitors that need leakdown a charge etc). I've reconnected a few and not had a problem so far at least..:)
Title: Re: New vs Old Cars
Post by: ketchup on March 24, 2017, 12:34:47 PM
True.. When I remove an airbag I disconnect the battery and leave it overnight (in case there are capacitors that need leakdown a charge etc). I've reconnected a few and not had a problem so far at least..:)
Yeah, that was my tactic too with my car and I didn't have any issue.  But the plugs are in tight enough that I felt like I was breaking it when removing it or reinstalling it, so I was still sweating a bit when I reconnected the battery after everything.
Title: Re: New vs Old Cars
Post by: spokey doke on March 24, 2017, 01:57:35 PM
I'm not being super picky about the model but I've just not seen the depreciation everyone is talking about. 

Me neither...try shopping for used Toyota Tacomas...not a lot of bargains in my neck of the woods.

I also wonder what information resources there are combining a look at depreciation/reliability/life-span/cost across makes/models/years...
Title: Re: New vs Old Cars
Post by: Just Joe on March 24, 2017, 02:10:57 PM
Why, just go to JD Powers of course... j/k

I don't put much stock in their advertisements -errrr, stats.
Title: Re: New vs Old Cars
Post by: Chris22 on March 24, 2017, 02:27:36 PM
I'm not being super picky about the model but I've just not seen the depreciation everyone is talking about. 

Me neither...try shopping for used Toyota Tacomas...not a lot of bargains in my neck of the woods.

I also wonder what information resources there are combining a look at depreciation/reliability/life-span/cost across makes/models/years...

Depreciation is somewhat silly to talk about in general terms, for a couple of reasons.  Really, it all depends on the actual model/models of cars you are considering. 

1.  I can use an example to make an "average depreciation statistic" look silly, from either direction.  On one hand, you've got vehicles like the Toyota Tacoma and Toyota 4Runner which hold an absurd amount of value, and on the other you have vehicles like a Dodge Journey which basically see the retained value of a used condom.  It's like asking what average appreciation for a single stock is.  What stock?  Enron?  Pets.com?  Apple?  GE? 

2.  Depreciation is calculated based on MSRP.  Some cars tend to sell pretty close to MSRP, like most Hondas and Toyotas which you might be lucky to get a few percent off.  Other cars like most American models, can be bought at substantial discount up front, so what seems like incredible depreciation might actually be lower versus what the consumer spent; if a car lost $15k in the first year, but the average selling price of that car is $10k off of sticker, that $15k suddenly means something very different.  And even relatively in demand vehicles can be purchased cheaply in certain circumstances; I bought my 2011 Japanese 4cyl sedan in October of 2011 when the 2012s were already hitting the lot; I got about 15% off sticker purely because I bought a "leftover" model.  Again, my theoretical depreciation will be very different than the actual depreciation I have experienced since I bought at a much lower base. 


It's all case by case.  I've bought used cars and I've bought new cars, every time I am ready to buy I understand the market conditions affecting the specific models I'm looking at and base my decision on what I can actually save, not on trite one-size-fits-all rules of thumb.
Title: Re: New vs Old Cars
Post by: spokey doke on March 24, 2017, 05:07:43 PM
I'm not being super picky about the model but I've just not seen the depreciation everyone is talking about. 

Me neither...try shopping for used Toyota Tacomas...not a lot of bargains in my neck of the woods.

I also wonder what information resources there are combining a look at depreciation/reliability/life-span/cost across makes/models/years...

Depreciation is somewhat silly to talk about in general terms, for a couple of reasons.  Really, it all depends on the actual model/models of cars you are considering. 

1.  I can use an example to make an "average depreciation statistic" look silly, from either direction.  On one hand, you've got vehicles like the Toyota Tacoma and Toyota 4Runner which hold an absurd amount of value, and on the other you have vehicles like a Dodge Journey which basically see the retained value of a used condom.  It's like asking what average appreciation for a single stock is.  What stock?  Enron?  Pets.com?  Apple?  GE? 

2.  Depreciation is calculated based on MSRP.  Some cars tend to sell pretty close to MSRP, like most Hondas and Toyotas which you might be lucky to get a few percent off.  Other cars like most American models, can be bought at substantial discount up front, so what seems like incredible depreciation might actually be lower versus what the consumer spent; if a car lost $15k in the first year, but the average selling price of that car is $10k off of sticker, that $15k suddenly means something very different.  And even relatively in demand vehicles can be purchased cheaply in certain circumstances; I bought my 2011 Japanese 4cyl sedan in October of 2011 when the 2012s were already hitting the lot; I got about 15% off sticker purely because I bought a "leftover" model.  Again, my theoretical depreciation will be very different than the actual depreciation I have experienced since I bought at a much lower base. 


It's all case by case.  I've bought used cars and I've bought new cars, every time I am ready to buy I understand the market conditions affecting the specific models I'm looking at and base my decision on what I can actually save, not on trite one-size-fits-all rules of thumb.

Yep, a good explanation of the basic point...so how do we make the use of depreciation into a quasi-science, to maximize the bang for the buck on cars that are reliable/good quality?
Title: Re: New vs Old Cars
Post by: joonifloofeefloo on March 24, 2017, 05:55:28 PM
Awesome post, Chris22! Thanks for that!
Title: Re: New vs Old Cars
Post by: FiftyIsTheNewTwenty on March 24, 2017, 06:52:59 PM
Depreciation is somewhat silly to talk about in general terms, for a couple of reasons.  Really, it all depends on the actual model/models of cars you are considering. 

1.  I can use an example to make an "average depreciation statistic" look silly, from either direction.  On one hand, you've got vehicles like the Toyota Tacoma and Toyota 4Runner which hold an absurd amount of value, and on the other you have vehicles like a Dodge Journey which basically see the retained value of a used condom.  It's like asking what average appreciation for a single stock is.  What stock?  Enron?  Pets.com?  Apple?  GE? 

2.  Depreciation is calculated based on MSRP.  Some cars tend to sell pretty close to MSRP, like most Hondas and Toyotas which you might be lucky to get a few percent off.  Other cars like most American models, can be bought at substantial discount up front, so what seems like incredible depreciation might actually be lower versus what the consumer spent; if a car lost $15k in the first year, but the average selling price of that car is $10k off of sticker, that $15k suddenly means something very different.  And even relatively in demand vehicles can be purchased cheaply in certain circumstances; I bought my 2011 Japanese 4cyl sedan in October of 2011 when the 2012s were already hitting the lot; I got about 15% off sticker purely because I bought a "leftover" model.  Again, my theoretical depreciation will be very different than the actual depreciation I have experienced since I bought at a much lower base. 


It's all case by case.  I've bought used cars and I've bought new cars, every time I am ready to buy I understand the market conditions affecting the specific models I'm looking at and base my decision on what I can actually save, not on trite one-size-fits-all rules of thumb.

Yep, a good explanation of the basic point...so how do we make the use of depreciation into a quasi-science, to maximize the bang for the buck on cars that are reliable/good quality?

Great explanation, Chris22.

I've always bought older used cars, where the market value is easier to know.  You can use Edmunds, Kelly Blue Book, etc., and also Auto Trader classifieds, to get a good idea.

I've also bought cars with some kind of cachet about them, if not actual classics.  BMW 3 Series, old Porsches, 60s Mustangs, etc.  Others might be Subaru Outbacks, Honda Civics, or F150s.   People always want these.  The market is more active, and there are a lot more private party sales.  So it's easier to figure the value, for both buying and selling.  And when it's time to sell, someone will want it.  Repair is easier and cheaper too, with a big aftermarket of both parts and information. 

Also -- cars like this have a higher terminal depreciation, as long as they're still looking good.
Title: Re: New vs Old Cars
Post by: TomTX on March 24, 2017, 08:37:38 PM
Mustachians promote used over new cars.  Can someone explain why?

We've always bought new cars and drive them 10 plus years and replace.   The reason I buy new-
I've looked to purchase used cars in the past, but don't understand how they are really a cost savings.   If you figure I buy a new van, pay 30,000 for it (we pay cash) drive it for 10 years that figures out to $3000 a year for the car.  If I buy a 4 year old van, pay 20,000  for it, drive it 6 years, that's over 3,000 a year.

Am I missing something?

Well, I'm driving a 2009 I bought 1 year ago for $2200. Using your metrics, if I sell it at 10 years old, I will have gotten 3 years out of it, for ~$750/year.

Except I'm very likely to get at least $1,000 out of it in 2 years (I sold a 21 year old Saturn SL1 with an oil leak, various body dings and no AC in Texas last year for $550) - So, that gets me down to $400/year.

Yes, getting back to luxury AC was a big reason for me to upgrade cars.
Title: Re: New vs Old Cars
Post by: Arktinkerer on March 25, 2017, 09:46:37 AM
Learning to do many of your own repairs can also be a big part of owning an older car and a huge cost savings.  We have purchased all of our cars used.  For most, I assumed I would be investing a weekend and up to $1000 right off the bat going over the vehicle and replacing fluids, brakes, maybe suspension items, taking a trip to the pick-n-pull for all the little plastic pieces that might have broken, etc.  Yes, I've invested in my tools over the years to be able to do all this.  But now, I've been able to do repairs that would cost over $1000 in labor to replace a $50 part.  I've done an engine swap for <$450 in a weekend.  When I need a brake job its not that big of a deal and I can often replace pads, rotors, wheel bearings (if needed) for less than the shops want for doing just the pads.  I feel confident enough in my understanding of the general condition of my vehicles that I know when to sell them for $1000 because they are on their last legs and buy an inexpensive vehicle with a good understanding of its condition.  Even if you screw up a repair its usually cheaper doing it twice than paying a shop.  I view it as an investment in your most important tool--your brain.  That investment keeps paying benefits for life.
Title: Re: New vs Old Cars
Post by: use2betrix on March 25, 2017, 11:48:38 AM
My wife and I bought a 99 Camry around 3 years ago with 88k miles for about 5k. It's been a great car for the 40k miles we've had it, but due to the age and maintenance there's a lot of expensive maintenance items coming up that if you don't care to do them yourselves, your gonna be in for some $. We typically live on a gravel driveway in an RV park in the southern heat and sorry but I'm not going to spend my only day off messing with the car.

It's needed the whole, timing belt, water pump, starter, front and rear struts/control arm type stuff, battery, etc etc. it's always ran good and never left us stranded, but we've probably dumped around 4-5k into it over 3 years. Figure $1500/yr is still wayyyy better than a new car. Plus, now that virtually every possible wear and tear item is replaced, we should have a few good years moving forward.
Title: Re: New vs Old Cars
Post by: risky4me on March 25, 2017, 12:43:42 PM
I drive a 2004 Tacoma I bought new and hope it is the last vehicle I ever buy for myself.

My wife has always loved Subaru's( they are amazing on snow and ice here in Alaska).
She bought her first new car- a 2010 Outback. Great car BUT- instead of removing boot and twisting out the headlight to replace, you have to raise the car, remove front wheel, remove inside panel, and try to reach up and replace the lamp.
this was not something we thought of when purchasing this car- I now cringe every time I hear the ad" Love, It's what ..."
Believe me- Love is not what I feel when I see we have a lamp out.

Warming up the car at -40F it decided that it would automatically lock the doors for my safety(?). Had to drive 20 miles to get a key to open the door. No Love felt that night.

I actually enjoy the Outback, but all the spiffy conveniences on newer cars come with some irritations. I will stick with my Tacoma with manual windows and quick change headlights as long as I can.
Title: Re: New vs Old Cars
Post by: GetItRight on March 25, 2017, 01:38:36 PM
Learning to do many of your own repairs can also be a big part of owning an older car and a huge cost savings.  We have purchased all of our cars used.  ... I view it as an investment in your most important tool--your brain.  That investment keeps paying benefits for life.

Good point. I don't do it as much anymore but I do repairs for people now and again as a side job, it's easy money. Occasionally I'll rebuild a transmission or do a performance engine build, all the fun of doing it for yourself but it makes money instead of costing money. I also have a skill I can fall back on if I ever find myself out of work, doing favors for family and close friends is money in the bank with them if I'm ever in need, and I can monetize a hobby once I'm RE.

Somewhere along the line I picked up the mentality of not paying someone to do something I can do myself. Eventually I figured out I can do just about anything, it's just a matter of taking the time to learn it the first time around. I can't fathom paying someone for the luxury of maintaining or improving my vehicles and my house so I can sit around and be lazy doing nothing instead.
Title: Re: New vs Old Cars
Post by: Much Fishing to Do on March 25, 2017, 01:57:00 PM
So I've done both and if you buy a car that lasts and keep them for long enough, I can't say one is an obvious advantage over another.

For those that say a car depreciates 25% when you drive it off the lot, please tell me where I can buy a $25k car for $19k with 100 miles on it, I haven't found it.  When I look around at 1-2 year old cars they seem to generally cost close to what they do new minus about what the years life driven out of it would be worth.  It does seem like once you start looking at 4-5 year old cars you can get them for a good deal less...and if they have another 10 years of fairly maintenance free life in them it turns into a great deal (which many cars do now).
Title: Re: New vs Old Cars
Post by: use2betrix on March 26, 2017, 05:06:14 PM
Depends on the mdel but I have been seeing huge depreciations in the first year. Like 40% for a Dodge Charger and 37% on a Chrysler 300 I fancied.

My Wife's 2 year old Chevvy Cruze was $12k.. which if I recall was about 50% depreciation in 2 years.

So depreciation is definitely front end loaded. Add to that I have never taken a car to a mechanic and always pay cash.

Savings for us have been substantial.

My 2013 F250 is worth about 75% of what I paid for it brand new, and now it's 4 years old with 75k miles.. that's barely over 6% depreciation per year.
Title: Re: New vs Old Cars
Post by: JLee on March 26, 2017, 05:09:48 PM
Aren't we forgetting that taking out extremely low interest loans, which is pretty normal on new cars, allows us more freedom to spend/invest elsewhere? I know it's not the same thing as paying off a mortgage since houses don't depreciate like cars, but it is definitely a "perk" i would say.

Wouldn't the same be true for leasing depending on the numbers? If you had enough money to buy a brand new car in cash, couldn't it potentially be better to instead invest that cash and lease the car. That way your investment gains are paying the monthly payments, and you get a new car every few years without worrying about repairs/maintenance?

I have a 1.99% loan on a 2005 vehicle - low interest financing is not limited to new cars.
Title: Re: New vs Old Cars
Post by: GreatLaker on March 26, 2017, 06:40:50 PM
I got my 03 civic new.

I'm sooooooo sick of it. But it just won't die!

I'm curious how long it will last. Ultimately if you drive a car 15-20 years, then buying new isn't a huge deal. But almost no one keeps cars that long.
I had a 1994 Civic hatchback that I bought new and kept for 18 years. It is now 23 years old and still on the road. When I sold it, it still had the original clutch, rear shocks and rear brake pads. In total I only spent a couple hundred dollars on repairs (as opposed to normal maintenance).

The reason I sold it is the check engine light was always on due to a fault in a speed sensor that would have been very expensive to fix so I would never know if something serious went wrong. I live in a big city and almost all my driving is either stuck in traffic or on freeways, where a breakdown means a big hassle, blocked traffic and enduring honking horns and rude gestures waiting for a tow truck. If not for that I might still be driving it.

I doubt if I will ever have another car that economical. 
Title: Re: New vs Old Cars
Post by: spokey doke on March 27, 2017, 08:06:08 AM
For those that say a car depreciates 25% when you drive it off the lot, please tell me where I can buy a $25k car for $19k with 100 miles on it, I haven't found it.  When I look around at 1-2 year old cars they seem to generally cost close to what they do new minus about what the years life driven out of it would be worth.  It does seem like once you start looking at 4-5 year old cars you can get them for a good deal less...and if they have another 10 years of fairly maintenance free life in them it turns into a great deal (which many cars do now).

That has been my experience too, I'm calling BS...
Title: Re: New vs Old Cars
Post by: Drifterrider on April 05, 2017, 07:41:24 AM
Mustachians promote used over new cars.  Can someone explain why?

We've always bought new cars and drive them 10 plus years and replace.   The reason I buy new-
I've looked to purchase used cars in the past, but don't understand how they are really a cost savings.   If you figure I buy a new van, pay 30,000 for it (we pay cash) drive it for 10 years that figures out to $3000 a year for the car.  If I buy a 4 year old van, pay 20,000  for it, drive it 6 years, that's over 3,000 a year.

Am I missing something?

Yes.  What you are missing is that most people don't keep a car that long so they plan to pay less and buy more frequently.

Also, you can buy a car that is only a few years old, still under warranty, for a substantially lesser percentage of new (people love to use the word depreciation).  New cars lose value in large percentages in the first few years, then at lower percentages each year thereafter.  They are usually always worth something (even if it is scrap value and more if operable).

I bought a new car last fall.  I financed it because the interest rate is ZERO.  The new vehicle I bought before that was in 2004.  I still have it.

Title: Re: New vs Old Cars
Post by: Xlar on April 05, 2017, 11:32:13 AM
For those that say a car depreciates 25% when you drive it off the lot, please tell me where I can buy a $25k car for $19k with 100 miles on it, I haven't found it.  When I look around at 1-2 year old cars they seem to generally cost close to what they do new minus about what the years life driven out of it would be worth.  It does seem like once you start looking at 4-5 year old cars you can get them for a good deal less...and if they have another 10 years of fairly maintenance free life in them it turns into a great deal (which many cars do now).

That has been my experience too, I'm calling BS...

As Chris22 said, this is highly make and model dependent but here is an example.

This is a 2017 Camry LE with 404 miles on it. Fairly common car that lots of people buy. Here is it for sale at $16,995 https://cargur.us/g8rMX (https://cargur.us/g8rMX) or http://www.toyotaofnorthcharlotte.com/new/Toyota/2017-Toyota-Camry-7918d5330a0e0a171812578ad09eb216.htm (http://www.toyotaofnorthcharlotte.com/new/Toyota/2017-Toyota-Camry-7918d5330a0e0a171812578ad09eb216.htm)

New it looks like they cost $21-22k (MRSP ~24k) so 20% off seems like a pretty good discount for a basically new car! https://www.kbb.com/toyota/camry/2017/le/?vehicleid=419859&intent=buy-new&options= (https://www.kbb.com/toyota/camry/2017/le/?vehicleid=419859&intent=buy-new&options=)

*fingers crossed that the links work*
Title: Re: New vs Old Cars
Post by: use2betrix on April 05, 2017, 12:46:46 PM
For those that say a car depreciates 25% when you drive it off the lot, please tell me where I can buy a $25k car for $19k with 100 miles on it, I haven't found it.  When I look around at 1-2 year old cars they seem to generally cost close to what they do new minus about what the years life driven out of it would be worth.  It does seem like once you start looking at 4-5 year old cars you can get them for a good deal less...and if they have another 10 years of fairly maintenance free life in them it turns into a great deal (which many cars do now).

That has been my experience too, I'm calling BS...

As Chris22 said, this is highly make and model dependent but here is an example.

This is a 2017 Camry LE with 404 miles on it. Fairly common car that lots of people buy. Here is it for sale at $16,995 https://cargur.us/g8rMX (https://cargur.us/g8rMX) or http://www.toyotaofnorthcharlotte.com/new/Toyota/2017-Toyota-Camry-7918d5330a0e0a171812578ad09eb216.htm (http://www.toyotaofnorthcharlotte.com/new/Toyota/2017-Toyota-Camry-7918d5330a0e0a171812578ad09eb216.htm)

New it looks like they cost $21-22k (MRSP ~24k) so 20% off seems like a pretty good discount for a basically new car! https://www.kbb.com/toyota/camry/2017/le/?vehicleid=419859&intent=buy-new&options= (https://www.kbb.com/toyota/camry/2017/le/?vehicleid=419859&intent=buy-new&options=)

*fingers crossed that the links work*

Except for some specialty vehicles, most people don't pay MSRP on standard new vehicles.

On my 2013 truck I bought in February of 2013, I paid 90% of MSRP..
Title: Re: New vs Old Cars
Post by: Xlar on April 05, 2017, 01:15:56 PM
For those that say a car depreciates 25% when you drive it off the lot, please tell me where I can buy a $25k car for $19k with 100 miles on it, I haven't found it.  When I look around at 1-2 year old cars they seem to generally cost close to what they do new minus about what the years life driven out of it would be worth.  It does seem like once you start looking at 4-5 year old cars you can get them for a good deal less...and if they have another 10 years of fairly maintenance free life in them it turns into a great deal (which many cars do now).

That has been my experience too, I'm calling BS...

As Chris22 said, this is highly make and model dependent but here is an example.

This is a 2017 Camry LE with 404 miles on it. Fairly common car that lots of people buy. Here is it for sale at $16,995 https://cargur.us/g8rMX (https://cargur.us/g8rMX) or http://www.toyotaofnorthcharlotte.com/new/Toyota/2017-Toyota-Camry-7918d5330a0e0a171812578ad09eb216.htm (http://www.toyotaofnorthcharlotte.com/new/Toyota/2017-Toyota-Camry-7918d5330a0e0a171812578ad09eb216.htm)

New it looks like they cost $21-22k (MRSP ~24k) so 20% off seems like a pretty good discount for a basically new car! https://www.kbb.com/toyota/camry/2017/le/?vehicleid=419859&intent=buy-new&options= (https://www.kbb.com/toyota/camry/2017/le/?vehicleid=419859&intent=buy-new&options=)

*fingers crossed that the links work*

Except for some specialty vehicles, most people don't pay MSRP on standard new vehicles.

On my 2013 truck I bought in February of 2013, I paid 90% of MSRP..

Oh, agreed. 20% off is from $21k down to $17k. 17k is only 70% of the original MRSP of $24k.
Title: Re: New vs Old Cars
Post by: Valhalla on April 06, 2017, 04:49:46 PM
We buy new cars because we've had terrible luck with used cars - we've always been a one car family, and when that one car doesn't run it spreads a lot of inconvenience and expense around. I'm happy with spending a little more to get those quality, trouble free years...

+1.

After my first two experiences with used, and the shady folks doing "repairs" on them, I was done.

For me, there would be a cost (money, time, energy) of learning vehicle repair on top of everything I already do, and I factor that in to overall "expenses."

However, my kid shows a strong leaning toward the mechanical, and that's where he likes putting most of his energy. If/when he becomes a new resource in that area, our family math will look different. By then the car will be 12 years old and ready for his mechanical wisdom, his purchase from me, or a straight-up sale with no concern from me over the annual costs incurred in the meantime on this fantastic life tool. (I can see trading the car out IF we become homeless and need to move into an RV, but short of that no.)
Ironically, the most troublesome car I've had for a while was a brand new car I purchased.  Trouble with GPS system, electronic mirrors, steering, heated seats issues.  It was all covered under warranty, but still, what a hassle!

The least troublesome cars have been used cars I've purchased.  Change oil / tires / battery and keep on ticking.  Just because something is new does not = better.  I won't be buying a new car again, that's for damn sure.
Title: Re: New vs Old Cars
Post by: Valhalla on April 06, 2017, 04:59:02 PM
For those that say a car depreciates 25% when you drive it off the lot, please tell me where I can buy a $25k car for $19k with 100 miles on it, I haven't found it.  When I look around at 1-2 year old cars they seem to generally cost close to what they do new minus about what the years life driven out of it would be worth.  It does seem like once you start looking at 4-5 year old cars you can get them for a good deal less...and if they have another 10 years of fairly maintenance free life in them it turns into a great deal (which many cars do now).

That has been my experience too, I'm calling BS...
Looked on Craigslist, and search for used cars that are current year models.  Search for 2017 XXXX.  I bought a few months old car from the original owner, saved myself 20% off the sales price.  He was in a rush to sell due to a personal emergency, and had few takers.  I gave him a low ball offer and he took it. 

Call BS all you want, it's true.
Title: Re: New vs Old Cars
Post by: joonifloofeefloo on April 06, 2017, 05:03:43 PM
Ironically, the most troublesome car I've had for a while was a brand new car I purchased.  Trouble with GPS system, electronic mirrors, steering, heated seats issues.  It was all covered under warranty, but still, what a hassle!

The least troublesome cars have been used cars I've purchased.  Change oil / tires / battery and keep on ticking.  Just because something is new does not = better.  I won't be buying a new car again, that's for damn sure.

ha! Fair enough :)

After posting my first account, I remembered all the other used vehicles in my life that were always breaking down. Too frustrating for me. Whereas my dad bought ONE new car, and we had that puppy for 23 years -still going strong (though a gas guzzler)- before finally handing it off to another family. That particular mix of experiences probably factored in for me. I was definitely very researchy before buying mine. Went 17 years without while reading, observing, assessing before buying the one I was most confident in.
Title: Re: New vs Old Cars
Post by: spokey doke on April 07, 2017, 09:03:14 AM
For those that say a car depreciates 25% when you drive it off the lot, please tell me where I can buy a $25k car for $19k with 100 miles on it, I haven't found it.  When I look around at 1-2 year old cars they seem to generally cost close to what they do new minus about what the years life driven out of it would be worth.  It does seem like once you start looking at 4-5 year old cars you can get them for a good deal less...and if they have another 10 years of fairly maintenance free life in them it turns into a great deal (which many cars do now).

That has been my experience too, I'm calling BS...
Looked on Craigslist, and search for used cars that are current year models.  Search for 2017 XXXX.  I bought a few months old car from the original owner, saved myself 20% off the sales price.  He was in a rush to sell due to a personal emergency, and had few takers.  I gave him a low ball offer and he took it. 

Call BS all you want, it's true.

Sure, true in this case, and some others...I'm not saying you can't find examples of the idea, but that it isn't as prevalent as it is often made out to be.

Part of the issue is just what is being compared, and I think if you compare what you would pay at a dealership for a new car, and what that dealership would pay you for that car the next day...THAT price difference is going to be closer to the instant depreciation numbers that are thrown around.  But, that same dealership will turn around and charge a significantly higher price to someone shopping for such a car...poof, there goes that depreciation that the buying public has access to.  Your example (and this one) relies on a good chunk of desperation, which not everyone can take advantage of very easily. Exceptions don't prove the rule.
Title: Re: New vs Old Cars
Post by: Chris22 on April 07, 2017, 10:02:28 AM
For those that say a car depreciates 25% when you drive it off the lot, please tell me where I can buy a $25k car for $19k with 100 miles on it, I haven't found it.  When I look around at 1-2 year old cars they seem to generally cost close to what they do new minus about what the years life driven out of it would be worth.  It does seem like once you start looking at 4-5 year old cars you can get them for a good deal less...and if they have another 10 years of fairly maintenance free life in them it turns into a great deal (which many cars do now).

That has been my experience too, I'm calling BS...
Looked on Craigslist, and search for used cars that are current year models.  Search for 2017 XXXX.  I bought a few months old car from the original owner, saved myself 20% off the sales price.  He was in a rush to sell due to a personal emergency, and had few takers.  I gave him a low ball offer and he took it. 

Call BS all you want, it's true.

Sure, true in this case, and some others...I'm not saying you can't find examples of the idea, but that it isn't as prevalent as it is often made out to be.

Part of the issue is just what is being compared, and I think if you compare what you would pay at a dealership for a new car, and what that dealership would pay you for that car the next day...THAT price difference is going to be closer to the instant depreciation numbers that are thrown around.

Exactly.  There's a big bid-ask spread between what your car is suddenly worth to a dealer the day after you buy it, and what a person off the street could buy it for.  The idea that because a brand new car is suddenly worth less back to the dealer that a prospective buyer can capture that savings is incorrect. 
Title: Re: New vs Old Cars
Post by: Valhalla on April 07, 2017, 10:12:01 AM
For those that say a car depreciates 25% when you drive it off the lot, please tell me where I can buy a $25k car for $19k with 100 miles on it, I haven't found it.  When I look around at 1-2 year old cars they seem to generally cost close to what they do new minus about what the years life driven out of it would be worth.  It does seem like once you start looking at 4-5 year old cars you can get them for a good deal less...and if they have another 10 years of fairly maintenance free life in them it turns into a great deal (which many cars do now).

That has been my experience too, I'm calling BS...
Looked on Craigslist, and search for used cars that are current year models.  Search for 2017 XXXX.  I bought a few months old car from the original owner, saved myself 20% off the sales price.  He was in a rush to sell due to a personal emergency, and had few takers.  I gave him a low ball offer and he took it. 

Call BS all you want, it's true.

Sure, true in this case, and some others...I'm not saying you can't find examples of the idea, but that it isn't as prevalent as it is often made out to be.

Part of the issue is just what is being compared, and I think if you compare what you would pay at a dealership for a new car, and what that dealership would pay you for that car the next day...THAT price difference is going to be closer to the instant depreciation numbers that are thrown around.  But, that same dealership will turn around and charge a significantly higher price to someone shopping for such a car...poof, there goes that depreciation that the buying public has access to.  Your example (and this one) relies on a good chunk of desperation, which not everyone can take advantage of very easily. Exceptions don't prove the rule.
I think you've totally missed the point.  Who cares how much the car is worth to the dealer?   Everyone here is talking about how much the buyer loses.  You think the buyer can get the dealer to buy the car back at anything close to original purchase price + taxes + fees?  Not a friggin chance.

Not sure why you're talking about how much the dealer would sell it for.  We all know dealers mark up a lot, and smart buyers know how to buy cars so they don't overpay.  Marking up cars at a dealer is also different from what buyers end up paying after negotiations.

So the examples of the original buyer of the new car losing 20% is perfectly legitimate and valid.   You'd have to be a fool to think otherwise.  Would you buy a used new from someone who's had the car for a few weeks / month at anything close to dealership price?? I highly doubt it.
Title: Re: New vs Old Cars
Post by: Valhalla on April 07, 2017, 10:12:48 AM
For those that say a car depreciates 25% when you drive it off the lot, please tell me where I can buy a $25k car for $19k with 100 miles on it, I haven't found it.  When I look around at 1-2 year old cars they seem to generally cost close to what they do new minus about what the years life driven out of it would be worth.  It does seem like once you start looking at 4-5 year old cars you can get them for a good deal less...and if they have another 10 years of fairly maintenance free life in them it turns into a great deal (which many cars do now).

That has been my experience too, I'm calling BS...
Looked on Craigslist, and search for used cars that are current year models.  Search for 2017 XXXX.  I bought a few months old car from the original owner, saved myself 20% off the sales price.  He was in a rush to sell due to a personal emergency, and had few takers.  I gave him a low ball offer and he took it. 

Call BS all you want, it's true.

Sure, true in this case, and some others...I'm not saying you can't find examples of the idea, but that it isn't as prevalent as it is often made out to be.

Part of the issue is just what is being compared, and I think if you compare what you would pay at a dealership for a new car, and what that dealership would pay you for that car the next day...THAT price difference is going to be closer to the instant depreciation numbers that are thrown around.

Exactly.  There's a big bid-ask spread between what your car is suddenly worth to a dealer the day after you buy it, and what a person off the street could buy it for.  The idea that because a brand new car is suddenly worth less back to the dealer that a prospective buyer can capture that savings is incorrect.
again totally false argument. Why are you looking at it from a dealer perspective??  This makes zero sense.
Title: Re: New vs Old Cars
Post by: RWD on April 07, 2017, 10:25:16 AM
If KBB is to be believed, a 2017 Camry LE with 50 miles in perfect condition is worth $17.7k private party. MSRP is $23k + taxes/fees/options. That's essentially 23% depreciation for driving it off the lot.
Title: Re: New vs Old Cars
Post by: JLee on April 07, 2017, 10:48:57 AM
For those that say a car depreciates 25% when you drive it off the lot, please tell me where I can buy a $25k car for $19k with 100 miles on it, I haven't found it.  When I look around at 1-2 year old cars they seem to generally cost close to what they do new minus about what the years life driven out of it would be worth.  It does seem like once you start looking at 4-5 year old cars you can get them for a good deal less...and if they have another 10 years of fairly maintenance free life in them it turns into a great deal (which many cars do now).

That has been my experience too, I'm calling BS...
Looked on Craigslist, and search for used cars that are current year models.  Search for 2017 XXXX.  I bought a few months old car from the original owner, saved myself 20% off the sales price.  He was in a rush to sell due to a personal emergency, and had few takers.  I gave him a low ball offer and he took it. 

Call BS all you want, it's true.

Sure, true in this case, and some others...I'm not saying you can't find examples of the idea, but that it isn't as prevalent as it is often made out to be.

Part of the issue is just what is being compared, and I think if you compare what you would pay at a dealership for a new car, and what that dealership would pay you for that car the next day...THAT price difference is going to be closer to the instant depreciation numbers that are thrown around.  But, that same dealership will turn around and charge a significantly higher price to someone shopping for such a car...poof, there goes that depreciation that the buying public has access to.  Your example (and this one) relies on a good chunk of desperation, which not everyone can take advantage of very easily. Exceptions don't prove the rule.
I think you've totally missed the point.  Who cares how much the car is worth to the dealer?   Everyone here is talking about how much the buyer loses.  You think the buyer can get the dealer to buy the car back at anything close to original purchase price + taxes + fees?  Not a friggin chance.

Not sure why you're talking about how much the dealer would sell it for.  We all know dealers mark up a lot, and smart buyers know how to buy cars so they don't overpay.  Marking up cars at a dealer is also different from what buyers end up paying after negotiations.

So the examples of the original buyer of the new car losing 20% is perfectly legitimate and valid.   You'd have to be a fool to think otherwise.  Would you buy a used new from someone who's had the car for a few weeks / month at anything close to dealership price?? I highly doubt it.

Some states charge sales tax on dealer sales but not on private party sales, so seeing a nearly new used vehicle for sale close to MSRP is not uncommon, because you're potentially saving thousands in sales tax.
Title: Re: New vs Old Cars
Post by: JLee on April 07, 2017, 10:52:46 AM
If KBB is to be believed, a 2017 Camry LE with 50 miles in perfect condition is worth $17.7k private party. MSRP is $23k + taxes/fees/options. That's essentially 23% depreciation for driving it off the lot.

Or you could go buy a brand new one from a dealer. Who pays MSRP on a Camry...?

(http://i.imgur.com/Sj0DWO0.png)
Title: Re: New vs Old Cars
Post by: RWD on April 07, 2017, 11:02:36 AM
If KBB is to be believed, a 2017 Camry LE with 50 miles in perfect condition is worth $17.7k private party. MSRP is $23k + taxes/fees/options. That's essentially 23% depreciation for driving it off the lot.

Or you could go buy a brand new one from a dealer. Who pays MSRP on a Camry...?

Are you sure those are actual prices? I found the first one ($16,529) on Autotrader and it says this: "This one's available at the low price of $24,029 (http://www.autotrader.com/cars-for-sale/vehicledetails.xhtml?listingId=438392125)." TrueCar says their average price for a 2017 Camry LE is $19.3k. Assuming a sales tax of 7% (approximately the US median), you're still looking at 14% immediate depreciation.
Title: Re: New vs Old Cars
Post by: Chris22 on April 07, 2017, 11:15:15 AM
For those that say a car depreciates 25% when you drive it off the lot, please tell me where I can buy a $25k car for $19k with 100 miles on it, I haven't found it.  When I look around at 1-2 year old cars they seem to generally cost close to what they do new minus about what the years life driven out of it would be worth.  It does seem like once you start looking at 4-5 year old cars you can get them for a good deal less...and if they have another 10 years of fairly maintenance free life in them it turns into a great deal (which many cars do now).

That has been my experience too, I'm calling BS...
Looked on Craigslist, and search for used cars that are current year models.  Search for 2017 XXXX.  I bought a few months old car from the original owner, saved myself 20% off the sales price.  He was in a rush to sell due to a personal emergency, and had few takers.  I gave him a low ball offer and he took it. 

Call BS all you want, it's true.

Sure, true in this case, and some others...I'm not saying you can't find examples of the idea, but that it isn't as prevalent as it is often made out to be.

Part of the issue is just what is being compared, and I think if you compare what you would pay at a dealership for a new car, and what that dealership would pay you for that car the next day...THAT price difference is going to be closer to the instant depreciation numbers that are thrown around.

Exactly.  There's a big bid-ask spread between what your car is suddenly worth to a dealer the day after you buy it, and what a person off the street could buy it for.  The idea that because a brand new car is suddenly worth less back to the dealer that a prospective buyer can capture that savings is incorrect.
again totally false argument. Why are you looking at it from a dealer perspective??  This makes zero sense.

Because where are you going to buy it for that 20% off price?  How many people go out, buy a brand new car, and then a few weeks later want to sell it private party?  Almost no one.  And if you are telling me I shouldn't buy a new car because I will lose 20%, but I can't go buy a used one a few weeks old for 20% off, why should I care? 
Title: Re: New vs Old Cars
Post by: JLee on April 07, 2017, 12:02:02 PM
If KBB is to be believed, a 2017 Camry LE with 50 miles in perfect condition is worth $17.7k private party. MSRP is $23k + taxes/fees/options. That's essentially 23% depreciation for driving it off the lot.

Or you could go buy a brand new one from a dealer. Who pays MSRP on a Camry...?

Are you sure those are actual prices? I found the first one ($16,529) on Autotrader and it says this: "This one's available at the low price of $24,029 (http://www.autotrader.com/cars-for-sale/vehicledetails.xhtml?listingId=438392125)." TrueCar says their average price for a 2017 Camry LE is $19.3k. Assuming a sales tax of 7% (approximately the US median), you're still looking at 14% immediate depreciation.

Sales tax is a transaction cost, not depreciation.
Title: Re: New vs Old Cars
Post by: Daughn on April 07, 2017, 12:02:32 PM

I buy a car for 2.5k drive it for 4 years and sell it for 500-1k that's around 750 per year. The problem with financing for me is that it conditions you to think you can afford a much more expensive car so you end up spending say 10k rather than a 2-5k second hand car.

Sam
[/quote]

I agree 100%. Plus a lot of people feel the need to "keep up with the Jones's" and go way beyond what they can truly afford. In the end all that gets you is a very unimpressive bank account and tons of expensive stuff you don't really need. I recently bought my wife a used 1997 Toyota Camry for $2500 it runs great and she loves it.
Title: Re: New vs Old Cars
Post by: RWD on April 07, 2017, 12:18:26 PM
If KBB is to be believed, a 2017 Camry LE with 50 miles in perfect condition is worth $17.7k private party. MSRP is $23k + taxes/fees/options. That's essentially 23% depreciation for driving it off the lot.

Or you could go buy a brand new one from a dealer. Who pays MSRP on a Camry...?

Are you sure those are actual prices? I found the first one ($16,529) on Autotrader and it says this: "This one's available at the low price of $24,029 (http://www.autotrader.com/cars-for-sale/vehicledetails.xhtml?listingId=438392125)." TrueCar says their average price for a 2017 Camry LE is $19.3k. Assuming a sales tax of 7% (approximately the US median), you're still looking at 14% immediate depreciation.

Sales tax is a transaction cost, not depreciation.

I agree, and that's how I accounted for it when I purchased my new car. Though in some states this is a dealership-only transaction cost (no sales tax on private party used).
Title: Re: New vs Old Cars
Post by: DoubleDown on April 07, 2017, 01:14:22 PM
Like others have mentioned, I'm now a fan of buying used luxury or classic cars. I bought a 9-year-old Jaguar with about 65k miles for $8,000 that would have cost about $65k back when it was originally purchased. It runs great, and the lower costs for insurance, taxes, etc. have been awesome. Used luxury cars come with so many great features standard -- powerful engine, great handling, great safety features, leather interior, nice audio system, power everything, heated everything, all kinds of fancy stuff, and it looks great too if you care about cachet or need the appearance of wealth for your profession. If you want the absolute latest and greatest technology (like internet connectivity, etc.) you can always find affordable after-market stuff.

I figure I'll drive it a few more years, and probably sell it for only $1k or $2k less than I bought it, then I'll turn around and buy another used luxury car that's 5-10 years old that was only ever driven to church on Sundays by a grandma ;-)
Title: Re: New vs Old Cars
Post by: Valhalla on April 07, 2017, 02:02:02 PM

Because where are you going to buy it for that 20% off price?  How many people go out, buy a brand new car, and then a few weeks later want to sell it private party?  Almost no one.  And if you are telling me I shouldn't buy a new car because I will lose 20%, but I can't go buy a used one a few weeks old for 20% off, why should I care?
WTF do you mean where are you going to buy it for 20% off the new price?  For fuck's sake did you even look at Craigslist like I suggested earlier? 

I was like you, skeptical that anyone would sell brand new cars.  I decided to look just for fun, and was astounded by how many people were selling brand new cars they've had for less than 1 year, on Craigslist.  Many of them had been languishing and were willing to deal, because almost no one looks for these.

I bought a few months old car with less than 6k miles for more than 20% off the new price.  What the fuck are you arguing with me for? Go take a look for yourself.

You should care because depreciation, and why wouldn't you want to save 20% or more on a virtually brand new car, instead of getting raped by a dealer?   I mean, you can buy a brand new widget for full price, or buy a virtually new widget for 20% or more off, you shouldn't care?  WTF??

Ignore everything I said. Go buy your new car at the dealer.  Go feel good about it.  None of us care.  The math doesn't care.  This is everything Mr. Money Mustache is against, but hey, you're only here to feel good about yourself, right?

Even mr. cheapskate Dave Ramsey is against buying brand new cars, unless you're so damn wealthy that it's pocket change. Go against everyone's wisdom for goodness sake. Why are you arguing with me and the rest of the financial gurus?
Title: Re: New vs Old Cars
Post by: Valhalla on April 07, 2017, 02:07:05 PM

Some states charge sales tax on dealer sales but not on private party sales, so seeing a nearly new used vehicle for sale close to MSRP is not uncommon, because you're potentially saving thousands in sales tax.
Private sales vs dealer prices are drastically different, regardless of sales tax impact.  A motivated private seller will always take less than a dealer, especially if they can get cash in hand and not deal with buyer financing, etc.
Title: Re: New vs Old Cars
Post by: Valhalla on April 07, 2017, 02:10:11 PM



Sales tax is a transaction cost, not depreciation.
You could call it whatever you want, but it's still a total cost out of pocket. Just because you call it a transaction cost, doesn't mean it costs the buyer any less.   I always count total cost.  And I tend to buy and register my cars in states where there's no sales tax for buying from private party.  I have a LLC set up for my vehicles, based in a certain state where I do some business and move my cars through the LLCs.

I have owned some wonderful cars, all with minimal total cost of ownership because I look for vehicles with motivated sellers and in high demand or limited supply.  Half of the vehicles I've purchased, used for a while, and sold I've actually made money on. 
Title: Re: New vs Old Cars
Post by: Dave1442397 on April 07, 2017, 04:30:27 PM
We bought a 2011 Acura in 2012 with 14k miles from an Acura dealer for 79% of original sale price.

I also bought my 2010 Cadillac in 2011 with 21k miles for 62% of original MSRP (also from an Acura dealer), but I'm sure the car sold for less than MSRP to the original purchaser. I know I got a good deal because I was seeing the same 2010 model for sale two years later at a higher price than I paid.
Title: Re: New vs Old Cars
Post by: spokey doke on April 08, 2017, 12:52:40 PM
For those that say a car depreciates 25% when you drive it off the lot, please tell me where I can buy a $25k car for $19k with 100 miles on it, I haven't found it.  When I look around at 1-2 year old cars they seem to generally cost close to what they do new minus about what the years life driven out of it would be worth.  It does seem like once you start looking at 4-5 year old cars you can get them for a good deal less...and if they have another 10 years of fairly maintenance free life in them it turns into a great deal (which many cars do now).

That has been my experience too, I'm calling BS...
Looked on Craigslist, and search for used cars that are current year models.  Search for 2017 XXXX.  I bought a few months old car from the original owner, saved myself 20% off the sales price.  He was in a rush to sell due to a personal emergency, and had few takers.  I gave him a low ball offer and he took it. 

Call BS all you want, it's true.

Sure, true in this case, and some others...I'm not saying you can't find examples of the idea, but that it isn't as prevalent as it is often made out to be.

Part of the issue is just what is being compared, and I think if you compare what you would pay at a dealership for a new car, and what that dealership would pay you for that car the next day...THAT price difference is going to be closer to the instant depreciation numbers that are thrown around.  But, that same dealership will turn around and charge a significantly higher price to someone shopping for such a car...poof, there goes that depreciation that the buying public has access to.  Your example (and this one) relies on a good chunk of desperation, which not everyone can take advantage of very easily. Exceptions don't prove the rule.
I think you've totally missed the point.  Who cares how much the car is worth to the dealer?   Everyone here is talking about how much the buyer loses.  You think the buyer can get the dealer to buy the car back at anything close to original purchase price + taxes + fees?  Not a friggin chance.

Not sure why you're talking about how much the dealer would sell it for.  We all know dealers mark up a lot, and smart buyers know how to buy cars so they don't overpay.  Marking up cars at a dealer is also different from what buyers end up paying after negotiations.

So the examples of the original buyer of the new car losing 20% is perfectly legitimate and valid.   You'd have to be a fool to think otherwise.  Would you buy a used new from someone who's had the car for a few weeks / month at anything close to dealership price?? I highly doubt it.

nope...you miss the point...I'm not talking about what people typically do, I'm suggesting where the source of confusion is on depreciation, and the misleading sources of the huge instant depreciation numbers often cited...which more closely match my (unlikely) example, than what people actually see when shopping for used cars (noting there are exceptions that can be found)
Title: Re: New vs Old Cars
Post by: JLee on April 09, 2017, 08:34:03 AM



Sales tax is a transaction cost, not depreciation.
You could call it whatever you want, but it's still a total cost out of pocket. Just because you call it a transaction cost, doesn't mean it costs the buyer any less.   I always count total cost.  And I tend to buy and register my cars in states where there's no sales tax for buying from private party.  I have a LLC set up for my vehicles, based in a certain state where I do some business and move my cars through the LLCs.

I have owned some wonderful cars, all with minimal total cost of ownership because I look for vehicles with motivated sellers and in high demand or limited supply.  Half of the vehicles I've purchased, used for a while, and sold I've actually made money on.

Yes, but it does not change the value of the vehicle.  If you buy a $50k car and pay $4k in taxes, you didn't lose $4k to "depreciation."
Title: Re: New vs Old Cars
Post by: runewell on April 09, 2017, 09:11:30 AM
As the above responders  point out, the financial arguments for buying a used car are extremely compelling. I fully agree. However, what is not discussed are the associated increased RISKS with buying a used car. These risks can vary in a number of ways but must be factored into the final calculus. What a new (or nearly) car does is reduce those risks, sometimes bringing them down to ZERO. Some folks are willing to shell out the extra cash (a lot!) to reduce those risks.

Not me, however. I will buy the used but try to minimize risk buy having a qualified mechanic I trust go over the vehicle from bumper to bumper. I also do my research on car model longevity, average yearly maintenance, safety recalls, etc. This doesnt guarantee the used car I buy will pay off mathematically over the decade or longer I use it, but it does increase the probability that it will. Over the last 20 years, the 2 used vehicles I purchased did work out to be great investments. Luck? Maybe. New vehicle owners may just not want to roll those dice.
You also have no idea how reliable a car is going to be when you buy it new, because there are no data points.

If I buy a 10 year old model, a couple minutes of research will reveal all the common pitfalls that new buyers have discovered for me. I can then take that into consideration.

There ARE data points, it's called Consumer Reports magazine.  Redesign model years can have an increased number of problems which usually get sorted out a year or two later.  Last year's Toyota Camry was incredibly reliable, so the next model year won't be rubbish
Title: Re: New vs Old Cars
Post by: runewell on April 09, 2017, 09:15:12 AM
One thing that bothers me is having so much equity trapped in an depreciating asset. I'm going to be in the market for a "new" car soon and i'm starting to think I'd rather buy 1 used car every 6 years instead of one new car every 12 years.

I don't get this argument, who cares if the asset depreciates.  By that argument you shouldn't buy new groceries or go to any sporting or entertainment event because those don't hold much value or are easily sold.
Title: Re: New vs Old Cars
Post by: Spork on April 09, 2017, 09:27:52 AM
One thing that bothers me is having so much equity trapped in an depreciating asset. I'm going to be in the market for a "new" car soon and i'm starting to think I'd rather buy 1 used car every 6 years instead of one new car every 12 years.

I don't get this argument, who cares if the asset depreciates.  By that argument you shouldn't buy new groceries or go to any sporting or entertainment event because those don't hold much value or are easily sold.

If you drop your chicken spaghetti on the floor, you're out $10.  100% depreciation.
If you drive your Model S Tesla into a concrete wall, you're out $70,000.

Big difference.

Depreciation matters with cars because it's potentially the largest portion of your annual cost of ownership.  A $5000 used car driven for 10 years has almost negligible costs.  A $70,000 car driven for 10 years has pretty significant costs, even with a reasonable resale value.
Title: Re: New vs Old Cars
Post by: GU on April 09, 2017, 09:50:15 AM



Sales tax is a transaction cost, not depreciation.
You could call it whatever you want, but it's still a total cost out of pocket. Just because you call it a transaction cost, doesn't mean it costs the buyer any less.   I always count total cost.  And I tend to buy and register my cars in states where there's no sales tax for buying from private party.  I have a LLC set up for my vehicles, based in a certain state where I do some business and move my cars through the LLCs.

I have owned some wonderful cars, all with minimal total cost of ownership because I look for vehicles with motivated sellers and in high demand or limited supply.  Half of the vehicles I've purchased, used for a while, and sold I've actually made money on.

If you register a vehicle in State X which has no sales tax, but you then bring the car into State Y and use it there, you almost certainly owe use tax on the sale in State Y.  If you are ever audited, expect to pay the tax plus penalties and interest. By purposefully doing this to dodge taxes, you may even incur higher than normal penalties.
Title: Re: New vs Old Cars
Post by: Valhalla on April 09, 2017, 10:15:31 AM



Sales tax is a transaction cost, not depreciation.
You could call it whatever you want, but it's still a total cost out of pocket. Just because you call it a transaction cost, doesn't mean it costs the buyer any less.   I always count total cost.  And I tend to buy and register my cars in states where there's no sales tax for buying from private party.  I have a LLC set up for my vehicles, based in a certain state where I do some business and move my cars through the LLCs.

I have owned some wonderful cars, all with minimal total cost of ownership because I look for vehicles with motivated sellers and in high demand or limited supply.  Half of the vehicles I've purchased, used for a while, and sold I've actually made money on.

If you register a vehicle in State X which has no sales tax, but you then bring the car into State Y and use it there, you almost certainly owe use tax on the sale in State Y.  If you are ever audited, expect to pay the tax plus penalties and interest. By purposefully doing this to dodge taxes, you may even incur higher than normal penalties.
Sure, just like the tons of people being audited for buying stuff online and who have reported "sales tax" voluntarily as well, right? 

Let me know when this becomes a real problem.  The government has a ton higher priority issues to deal with, from people who do some crazy tax avoidance things, than this area.

Look at how many people are doing back-door Roth IRA conversions... technically those people shouldn't be allowed to contribute to a Roth IRA due to official income limits, and yet they continue to move money to Roth IRA via the backdoor.  If those people aren't taking much of a risk, how much risk do you think I'm taking? 
Title: Re: New vs Old Cars
Post by: JLee on April 10, 2017, 12:50:08 AM



Sales tax is a transaction cost, not depreciation.
You could call it whatever you want, but it's still a total cost out of pocket. Just because you call it a transaction cost, doesn't mean it costs the buyer any less.   I always count total cost.  And I tend to buy and register my cars in states where there's no sales tax for buying from private party.  I have a LLC set up for my vehicles, based in a certain state where I do some business and move my cars through the LLCs.

I have owned some wonderful cars, all with minimal total cost of ownership because I look for vehicles with motivated sellers and in high demand or limited supply.  Half of the vehicles I've purchased, used for a while, and sold I've actually made money on.

If you register a vehicle in State X which has no sales tax, but you then bring the car into State Y and use it there, you almost certainly owe use tax on the sale in State Y.  If you are ever audited, expect to pay the tax plus penalties and interest. By purposefully doing this to dodge taxes, you may even incur higher than normal penalties.

Sales tax is due in the state where the vehicle is registered.
Title: Re: New vs Old Cars
Post by: GU on April 20, 2017, 04:02:25 PM



Sales tax is a transaction cost, not depreciation.
You could call it whatever you want, but it's still a total cost out of pocket. Just because you call it a transaction cost, doesn't mean it costs the buyer any less.   I always count total cost.  And I tend to buy and register my cars in states where there's no sales tax for buying from private party.  I have a LLC set up for my vehicles, based in a certain state where I do some business and move my cars through the LLCs.

I have owned some wonderful cars, all with minimal total cost of ownership because I look for vehicles with motivated sellers and in high demand or limited supply.  Half of the vehicles I've purchased, used for a while, and sold I've actually made money on.

If you register a vehicle in State X which has no sales tax, but you then bring the car into State Y and use it there, you almost certainly owe use tax on the sale in State Y.  If you are ever audited, expect to pay the tax plus penalties and interest. By purposefully doing this to dodge taxes, you may even incur higher than normal penalties.

Sales tax is due in the state where the vehicle is registered.

And if you don't pay tax in that state, and then bring the vehicle into another state and use it there, you owe use tax.  Here is an illustrative FAQ from California--virtually every state has the same policy.  https://www.boe.ca.gov/sutax/faqtrans.htm

"Use tax applies to the cost of vehicles, vessels, and aircraft purchased from non-dealers (for example, private parties) or from outside California for use in this state."

Valhalla tried to justify his tax evasion for two different reasons:  (1) the government has bigger things to worry about and won't audit him for stuff like that, because after all, no one pays tax on online orders; and (2) other people are doing back-door Roths, so purposefully evading sales tax on vehicles is o.k.

On the first point, small businesses are actually prime audit targets, precisely because owners are often engage in tax shenanigans like this.  And it is very easy to audit for this issue--people get caught on this all the time.  And with respect to individuals dodging their use tax liability on un-taxed internet purchases, you're correct, individuals are not audited for this, but if you don't think this is a "real problem" or "high priority issue" for state and local governments, you are uninformed.  They are in active revolt against the tax collection rules as we speak, and it's the number one priority for many states right now to force companies to collect the tax on remote sales.  See, e.g., https://www.bna.com/states-retailers-continue-n57982086624/

The second point is a non-sequitur.  While back-door Roths are aggressive, they are tacitly blessed by Congress and the IRS, both of which are aware of the position and have so far done nothing about it.  A back-door Roth does not rise to the level of tax evasion.  But registering an automobile through your business in a no tax jurisdiction when you know it will be primarily used in a different, higher tax jurisdiction, in order to evade paying tax, is illegal tax evasion.  And I guarantee you there are no state departments of revenue that would be o.k. with people purposely avoiding sales/use tax on big ticket items like automobiles.  So it's not like a back-door Roth in this regard.

I am very sympathetic to small business owners, and the plight they face with the myriad of burdensome and mostly unnecessary regulations passed by the feds and the states.  But skipping on your taxes isn't right, whether you own a business or not.
Title: Re: New vs Old Cars
Post by: JLee on April 20, 2017, 05:16:50 PM
And if you don't pay tax in that state, and then bring the vehicle into another state and use it there, you owe use tax.  Here is an illustrative FAQ from California--virtually every state has the same policy.  https://www.boe.ca.gov/sutax/faqtrans.htm

"Use tax applies to the cost of vehicles, vessels, and aircraft purchased from non-dealers (for example, private parties) or from outside California for use in this state."

If by "virtually every state" you are excluding Delaware, Montana, Oregon, New Hampshire, Alaska, and also Arizona/Nevada for private party sales...then sure?