Author Topic: Buying new vs used car  (Read 5237 times)

BuckeyeFinance

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Buying new vs used car
« on: September 13, 2015, 09:08:42 AM »
I am going to buy a car to take advantage of an incentive from my new employer. I'm going to trade in the used Honda I bought last year worth 13k (owned outright)  as a trade. My state's tax laws dictate that trade ins only reduce sales tax when purchasing a new car. This equates to roughly 1k in savings if purchasing new.

I am looking to get a Honda Civic lx 2012 or later with less than 50k miles. I would not have considered purchasing new if not for the tax advantage on the trade in. I can't take advantage of my employer's incentive if I buy an old beater and at roughly 4k per year, the incentive is a must.

I plan to have the car for a long time. What would you do in my situation? Is there anything obvious I'm missing?
« Last Edit: September 13, 2015, 09:10:35 AM by BuckeyeFinance »

Tabitha

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Re: Buying new vs used car
« Reply #1 on: September 13, 2015, 09:22:16 AM »
2012 isn't new, will you still get the incentives? (Or was that a typo?)
Will the $13 k plus employer incentive cover the cost of the new car or will you have to take on debt?
You say the incentive is $4k per year - how rock solid is your employment

If this deal means taking on debt, even to get the incentives, I'd be inclined to say no, unless the incentives are all up front and worth substantially more than the cost of debt over the life of the loan. Substantially is to cover for the risk you are assuming when you assume debt payments.

lbmustache

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Re: Buying new vs used car
« Reply #2 on: September 13, 2015, 09:28:04 AM »
You will pay more than 1k in depreciation the second you drive a new car off the lot...

Also, a 2012 w/ <50k is not a new car. Does your state mean you can only get the sales tax reduction if you purchase a car (any car) at a dealership?

Rezdent

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Re: Buying new vs used car
« Reply #3 on: September 13, 2015, 12:17:59 PM »
What year is your current car?

BuckeyeFinance

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Re: Buying new vs used car
« Reply #4 on: September 13, 2015, 12:40:32 PM »
2012 isn't new, will you still get the incentives? (Or was that a typo?)
Will the $13 k plus employer incentive cover the cost of the new car or will you have to take on debt?
You say the incentive is $4k per year - how rock solid is your employment

If this deal means taking on debt, even to get the incentives, I'd be inclined to say no, unless the incentives are all up front and worth substantially more than the cost of debt over the life of the loan. Substantially is to cover for the risk you are assuming when you assume debt payments.

The car doesn't have to be brand new to get the employer incentive. It just can't be a beater. The car has to be new to get the tax incentive.

Yes the trade in and incentive would cover the cost of a new or used car.
« Last Edit: September 13, 2015, 12:47:20 PM by BuckeyeFinance »

BuckeyeFinance

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Re: Buying new vs used car
« Reply #5 on: September 13, 2015, 12:41:07 PM »

JLee

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Re: Buying new vs used car
« Reply #6 on: September 13, 2015, 02:34:40 PM »
2012 isn't new, will you still get the incentives? (Or was that a typo?)
Will the $13 k plus employer incentive cover the cost of the new car or will you have to take on debt?
You say the incentive is $4k per year - how rock solid is your employment

If this deal means taking on debt, even to get the incentives, I'd be inclined to say no, unless the incentives are all up front and worth substantially more than the cost of debt over the life of the loan. Substantially is to cover for the risk you are assuming when you assume debt payments.

The car doesn't have to be brand new to get the employer incentive. It just can't be a beater. The car has to be new to get the tax incentive.

Yes the trade in and incentive would cover the cost of a new or used car.
How's the incentive work? Is it only based on purchasing another vehicle, or do you get $xxx/month for vehicle reimbursement?
« Last Edit: September 13, 2015, 02:50:43 PM by JLee »

Rezdent

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Re: Buying new vs used car
« Reply #7 on: September 13, 2015, 02:48:29 PM »
What year is your current car?

2012

You are talking about a lateral move from a 2012 Honda to a 2012 Honda?

BuckeyeFinance

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Re: Buying new vs used car
« Reply #8 on: September 13, 2015, 07:26:29 PM »
What year is your current car?

2012

You are talking about a lateral move from a 2012 Honda to a 2012 Honda?

Basically, yes. The incentive is based on advertising on the car which has to be a certain color. That's why I need a new car. I hadn't even thought about having my entire car painted until now so maybe I will look into that as well.

lbmustache

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Re: Buying new vs used car
« Reply #9 on: September 13, 2015, 07:57:05 PM »
What year is your current car?

2012

You are talking about a lateral move from a 2012 Honda to a 2012 Honda?

Basically, yes. The incentive is based on advertising on the car which has to be a certain color. That's why I need a new car. I hadn't even thought about having my entire car painted until now so maybe I will look into that as well.

I think this would have been easier to understand if your first post was clearer. Not trying to be rude, just an observation. From what I understand:

- You drive a 2012 Honda in X color
- Your employer has some sort of advertising incentive which will bring you $4000 a year? Catch is the car has to be Y color.
- Your 2012 Honda is worth $13k. You can trade it in on another Honda for the same year or newer, with Y color.
- Tax laws based on the year of the car mean you save $1k.

So you are doing all of this for $5k the first year, and $4k for who knows how long your employer offers this incentive, correct?

BuckeyeFinance

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Re: Buying new vs used car
« Reply #10 on: September 13, 2015, 08:52:02 PM »
What year is your current car?

2012

You are talking about a lateral move from a 2012 Honda to a 2012 Honda?

Basically, yes. The incentive is based on advertising on the car which has to be a certain color. That's why I need a new car. I hadn't even thought about having my entire car painted until now so maybe I will look into that as well.

I think this would have been easier to understand if your first post was clearer. Not trying to be rude, just an observation. From what I understand:

- You drive a 2012 Honda in X color
- Your employer has some sort of advertising incentive which will bring you $4000 a year? Catch is the car has to be Y color.
- Your 2012 Honda is worth $13k. You can trade it in on another Honda for the same year or newer, with Y color.
- Tax laws based on the year of the car mean you save $1k.

So you are doing all of this for $5k the first year, and $4k for who knows how long your employer offers this incentive, correct?

 I think you understand with two exceptions:
The incentive is a contract which guarantees they can't cancel their end of the agreement so long as the ad is displayed.
The (unrelated to the employer incentive) tax law states that if trading in for a NEW car, there is no sales tax on the value of the trade in. However, if traded for a used car, the entire purchase price is subject to sales tax. This results in a tax savings of 1k when purchasing a new car.

Sorry if the initial post was unclear. I was more interested in discussing new vs. used than the details of the incentive. The incentive is a no-brainer--everyone at the company does it. Hopefully it's clear now.

JLee

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Re: Buying new vs used car
« Reply #11 on: September 14, 2015, 09:44:03 AM »
For what it's worth, a quality paint job is very expensive. Unless you'd be satisfied with a crappy paint job (inside of the doors, hinge area, door jambs, engine bay, under hood, inside trunk, etc etc all unpainted), swapping cars to something identical of a different color would likely be a better deal.

Jeremy E.

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Re: Buying new vs used car
« Reply #12 on: September 14, 2015, 08:42:26 PM »
Mustachians don't trade in their cars, they sell them on craigslist to get a lot more money, more than the tax savings you'll get. Then they buy used cars off craigslist for a lot cheaper, after having a good mechanic look at them. They pay a mechanic to do it if they don't know one. Just have the seller meet you where the mechanic is.

BuckeyeFinance

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Re: Buying new vs used car
« Reply #13 on: September 15, 2015, 05:48:36 AM »
Mustachians don't trade in their cars, they sell them on craigslist to get a lot more money, more than the tax savings you'll get. Then they buy used cars off craigslist for a lot cheaper, after having a good mechanic look at them. They pay a mechanic to do it if they don't know one. Just have the seller meet you where the mechanic is.

Interesting. I will look into this.

Le Barbu

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Re: Buying new vs used car
« Reply #14 on: September 15, 2015, 06:39:41 AM »
Mustachians don't trade in their cars

mostly this

ShoulderThingThatGoesUp

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Re: Buying new vs used car
« Reply #15 on: September 15, 2015, 06:41:57 AM »
Mustachians don't trade in their cars, they sell them on craigslist to get a lot more money, more than the tax savings you'll get. Then they buy used cars off craigslist for a lot cheaper, after having a good mechanic look at them. They pay a mechanic to do it if they don't know one. Just have the seller meet you where the mechanic is.

I'm embarrassed to admit this, but I think the Chevy Volt is super-cool and I went to look at one at a dealership a few weeks ago. They wanted to give me...$6400 for my low-mileage 2010 Honda Fit. Don't trade in your car.

I was hoping low gas prices had gotten them to reduce their asking prices to something crazy like I'd been seeing on here with Priuses. Not so much.

Le Barbu

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Re: Buying new vs used car
« Reply #16 on: September 15, 2015, 06:59:05 AM »
Mustachians don't trade in their cars, they sell them on craigslist to get a lot more money, more than the tax savings you'll get. Then they buy used cars off craigslist for a lot cheaper, after having a good mechanic look at them. They pay a mechanic to do it if they don't know one. Just have the seller meet you where the mechanic is.

I'm embarrassed to admit this, but I think the Chevy Volt is super-cool and I went to look at one at a dealership a few weeks ago. They wanted to give me...$6400 for my low-mileage 2010 Honda Fit. Don't trade in your car.

I was hoping low gas prices had gotten them to reduce their asking prices to something crazy like I'd been seeing on here with Priuses. Not so much.

once, a dealer offered me 2,200$ for a used Civic. I sold it for 5,500$ on Craiglist few days later. Your Fit could go for 8-9k$. Keep it for another 15 years and face a maximum of 500$/year depreciation. Electric cars are cool indeed but the numbers dont works, especially when you dont drive much

lbmustache

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Re: Buying new vs used car
« Reply #17 on: September 15, 2015, 12:59:43 PM »
For what it's worth, a quality paint job is very expensive. Unless you'd be satisfied with a crappy paint job (inside of the doors, hinge area, door jambs, engine bay, under hood, inside trunk, etc etc all unpainted), swapping cars to something identical of a different color would likely be a better deal.

Another option is a vinyl car wrap. They run about $2k or so. http://solutions.3m.com/wps/portal/3M/en_EU/3MGraphics/GraphicSolutions/Applications/CarWrapping/

However, I don't know if the advertising incentive requires you to put another vinyl wrap or similar on the car - I don't know if you can layer vinyl, I guess.