Author Topic: Used vs New  (Read 1224 times)

The Fake Cheap

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Used vs New
« on: February 14, 2018, 06:30:26 PM »

We will be shopping for a new (hopefully) used car soon.

We will likely be going used, but I'm really not enjoying the prices I've been seeing, and I've been keeping an eye on used car prices for about a year.  For example a 5 year old car, seems to cost about 40% the price of a new car, same make/model.  At a 60% discount the 5 years and typical ~100K-150K KM doesn't seem worth it to me.  I would rather pay *shudder* new car price and keep the car 10 or 11 or 12+ years.  I'm assuming we would keep a 5 year old used car for 5 years. 

I know a lot of people are going to say go older, 7,8,9 years or whatever, but unfortunately this will be my wife's car, she will not be willing to go that old.  In fact I would even consider a 5 year old car a bit of a victory. 

Also just to add that I think we could really use a car sub forum around here.

Appreciate any thoughts or how anyone else may have weighed the used vs new issue.

ketchup

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Re: Used vs New
« Reply #1 on: February 14, 2018, 06:45:59 PM »
Even if all your assumptions are true, I think 50% the lifespan for 40% the price is a win. Plus insurance savings and halved opportunity cost.

SC93

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Re: Used vs New
« Reply #2 on: February 14, 2018, 06:46:09 PM »
If you do buy new, wait until December and get that current year. That way they give you a discount since the new year cars are already on the lot and being sold. They need to get rid of as many of the current year as possible. We got an extra $2000 off.

Telecaster

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Re: Used vs New
« Reply #3 on: February 14, 2018, 06:54:29 PM »
Depends on the vehicle.   Higher end vehicles tend, especially luxury sedans (think Nissan Maxima) to have big depreciation hits, so you can save a ton of money by buying used.  Same with the typical mid-sized American sedan.  Most Toyotas and Hondas hold their value well,  to the point where you might not get much of a discount by buying used.  Depending on the model of course.

One used vehicle that is a bargain is the Nissan Leaf.  Most of them are leased, and as they come off their leases dealers dump them for a fraction of the initial value. 



furrychickens

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Re: Used vs New
« Reply #4 on: February 16, 2018, 07:02:05 AM »
Given the parameters, it really depends on your local used market and the specific models you’re thinking of. I personally have never owned a car less than 10 years old.

Will you be paying cash or financing? If financing often new cars make much more sense if you wait for a special rate event.

If she really wants a newish car all the time, look at leasing. Leasing is often much, much cheaper than owning IF you’re going to be replacing it regularly. Some factory subsisdized lease rates are ridiculously cheap.
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FIRE 20/20

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Re: Used vs New
« Reply #5 on: February 16, 2018, 08:28:44 AM »
As has already been mentioned, the vehicle you're looking at makes a big difference.  Also keep in mind that purchase and ownership taxes as well as insurance rates typically drop as vehicles age, although I don't know Canadian tax rules.  There are a lot of techniques for finding a used car value.  My last car purchase was a Mazda3, which isn't as popular a vehicle in the States as it is in Canada.  I found a manual transmission 2.0L hatchback that was for sale near me.  By searching the VIN online, I was able to see that it had been on the lot for 87 days.  Dealerships often wholesale cars after 90 days on the lot, so they will be very motivated to make a sale at that point.  I could also see the price drops that they had already applied as it sat on the lot.  I knew they were willing to sell it for just about anything to get it off the lot and avoid the loss they would take at auction.  I had a pre-purchase inspection done which identified a few minor issues, and told them how much they needed to take off the price to account for the issues that were found.  I got it for way under market value and am now benefiting each year from the lower insurance rates and lower taxes applied to older cars. 

Vegasgirl

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Re: Used vs New
« Reply #6 on: February 16, 2018, 08:41:15 AM »
I vote for certified used.  The last two cars we've purchased we've bought certified used.  We've saved 20-30% off new sticker price and gotten the vehicles with under 10k miles.  The other bonus is the warranty on the certified used has been way better than new !!!  (3yr 36/k vs 6yr 100/k)  I view this as a win/win since we keep our vehicles until we run them into the ground.  We had a 1995 Saturn w 275k miles when we finally let it go.  My Nissan Sentra only got 150k until it fell apart.

Slow&Steady

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Re: Used vs New
« Reply #7 on: February 16, 2018, 08:47:29 AM »
I am in the new car, take care of it, and drive it for 10+ years. 

My husband is currently driving (for his work vehicle) a 2006 Prius with over 300k miles on it, that I bought brand new.  We took it in to the dealership to give it a once over just this week and the response we got was this car is in great shape for it's year and mileage.  Most of the people in his field drive a truck due to the equipment (ladders, inspection tools) that they have to carry, we chose to spend more on an awesome ladder that he can fit in a Prius than to buy and fuel a truck.  Plus with a dedicated (paid off many years ago) vehicle for work he doesn't have to unload all his equipment every day.

The reason I am not still driving this car is because we got me a new 2017 Nissan Leaf that I intend to drive for 10+ years.  We also have a 2-3 year old van that he drives for non-work related trips, mostly transporting kids.  In the next month or so there will be 6 of us, meaning that if we all wanted to go somewhere we would have needed both of the other 2 vehicles.  The van was purchased used, because he believes in buying a couple years old and he is the one that drives it.  This is one of my not very MMM traits, we have more vehicles than drivers and 2 of them were purchased brand new.  This works for us.

Scandium

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Re: Used vs New
« Reply #8 on: February 16, 2018, 08:54:52 AM »
Why does it have to be 5 years old (or 7-8)? From my research the depreciation curve is steepest out to ~3 years old. By going with a car 3 years old, ~40k miles (60k km) savings is 30-40% of new. Depending on brand. A lot of leases are also 3 years so the supply of cars at that age is pretty good.

I think that's the sweet spot, and features etc are still not very different from the latest models. Not much happens with "normal" cars in 3 years. (super-luxury models of course get all kinds of gimmicky features every year)

Pigeon

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Re: Used vs New
« Reply #9 on: February 16, 2018, 09:06:52 AM »
We buy base model relatively inexpensive cars like Corollas and we buy them new.  We maintain them and drive them for a long time.  The last time we were in the market, there was very little difference in  price between new and a couple of years old.  In fact, the new one was actually cheaper than ones that were a year old.  I'm not interested in buying much older than that.

LaineyAZ

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Re: Used vs New
« Reply #10 on: February 16, 2018, 09:12:57 AM »
I am so glad to see others on this forum who buy new and keep for 10+ years.  So many people think it's easy to pick up a used Honda or Toyota that's still in great condition for little money; however, you're in competition with many other car buyers who are looking for that exact same car.  Plus, I have no idea how well the original owner maintained that vehicle.
After being burned on several different used cars years ago, I stick to the route of buying new and making sure they were well-maintained and keeping them for many years.  I have the security of a reliable vehicle and no car buying hassles in exchange for several years of payments.  It's worth it to me.

Scandium

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Re: Used vs New
« Reply #11 on: February 16, 2018, 09:35:26 AM »
We buy base model relatively inexpensive cars like Corollas and we buy them new.  We maintain them and drive them for a long time.  The last time we were in the market, there was very little difference in  price between new and a couple of years old.  In fact, the new one was actually cheaper than ones that were a year old.  I'm not interested in buying much older than that.

Where?
2018 corolla LE is $20,250 - https://www.cars.com/vehicledetail/detail/721904703/overview/
2015 corolla LE is $12,840 @ 28k miles - https://www.cars.com/vehicledetail/detail/722554377/overview/
(also many 2016 with 40k miles for same price)

Personally I like to save $7,000 if I can.. Assuming you drive them both to 200k miles, at 12k/year that works out to $1,200/year for the new one, and $907/year for the used one. Just because you say you'll "drive it for a long time" doesn't mean it's any cheaper per year. This isn't even including the much higher insurance cost of the new one, and opportunity cost of not investing the $7k (which is $11,049 at 7% return for 14 years).

So in the end you'll pay $18,459 more to drive the 2018 corolla and additional 2.3 years. Actually way worse than even I had thought! If you drive two cars double that, and compound over a whole lifetime of something like 3-4 cars, at least.

edit; buying two cars at 30 and 45. This will cost you approximately an extra $138,000 by the time you're 60. (after 2 round of car buying). Ouch! But if that's "worth to you" go ahead.
« Last Edit: February 16, 2018, 11:55:58 AM by Scandium »