Author Topic: When is a 'Nearly New' car too 'New' for you?  (Read 3739 times)

Mr stuble

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When is a 'Nearly New' car too 'New' for you?
« on: January 05, 2017, 07:50:36 AM »
Hi all, I am currently driving an 8 year old VW Polo, 1.2L Petrol, Manual transmition and 50,000 Miles. Unfortunately I seem to have rotten luck when selecting a car to buy, I have owned this one for about 18 months and have had constant electrical faults with it. I am hoping to really run it into the ground before I get rid of it, however should I need to replace it, I was thinking about going for a change in tactic and looking at slightly newer cars.

I was just looking for a general view on how old and how many miles on the clock the 'least' mustachian car that would still be a mustachian option. I have to have a reliable car for work, however I only do around 6,000 miles per year.

To throw in my two pence I was thinking 3 years old, and 35,000 Miles on the clock. Is that to decadent, or not, or just about right in your opinion?

Also I know it can depend on the make or model of the car, I am just looking for general guidelines out of interest. :)

Thanks all!

NoStacheOhio

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #1 on: January 05, 2017, 07:54:30 AM »
I think it's less about the age, and more about the fact that it's a VW. Eight years old with only 50k miles shouldn't be giving you a ton of headaches. Try something Japanese or Korean?

Bicycle_B

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #2 on: January 05, 2017, 08:59:46 AM »
I've seen 2 camps on these boards:

Hardcore Mustaches seem to buy cars 8 to 15 years, learn to do many of the repairs personally, and drive them a long time.  These folks will have great advice on when to finally sell.

Milder Mustaches, including myself, sometimes have a newer car but are more quiet on the forum most of the time.  I've advised spendy friends who want a new-looking car to shop in the 3 to 6 years old range.

The one distinctive contribution I have to offer is the opinion that cars in my market (USA) seem to depreciate about 15% annually from the lowest possible purchase price of new, with the 15% applied to the revised price. ($20,000 goes to 17,000; 17k to $14,450; etc...  a $4000 used car now becomes $3400 next year.  I use KBB private party price in both years).   The 15% doesn't seem to change much ever, whether a car is 3 years old or 13.  To me it appears the market is reasonably efficient, but biased towards overpaying for new, so value increases gradually with the years rather than in big jumps.  Obviously this leaves you with a judgment call to make (sorry!)

Fwiw, getting a good deal vs a bad deal on the purchase relative to the market makes a difference too - where I am, there can be thousands of dollars in difference.  So shop carefully if you try to trade/sell your way out of the problems.
« Last Edit: January 05, 2017, 09:02:34 AM by Bicycle_B »

KBecks

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #3 on: January 05, 2017, 09:05:52 AM »
If you want reliable, get a Honda, for goodness sake and don't mess around with VW.

The question about the car is -- do you have the money saved up to pay for it in cash?  Dave Ramsey generally says that all your cars value should total less than 1/2 of your annual income.

But seriously, just get a Honda, or an Acura.   We put just under 250,000k on an Acura TL and we have 135k on an Odyssey and they have been champ cars.  Just a little routine maintenance here and there.

I have been thinking on and off about trading up out of the Odyssey to a newer Odyssey.  Was just looking at a 2 year old car with 45k miles for $25k, msrp was around $36.  But -- I'd rather have the cash than the new car. 

Since you drive so few miles a year, a higher mileage, depreciated car Honda may be a good deal for you. yo
« Last Edit: January 05, 2017, 09:08:29 AM by KBecks »

Spork

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #4 on: January 05, 2017, 09:14:17 AM »
I don't think we have a hard and fast rule.  It just depends on what cars are out there.  The last 2 we bought were 2yo and 8yo.  Both had low mileage relative to their age.  Both were immaculate looking for their age.  Both were brands we trusted -- both Toyota, but I'm not so brand loyal I wouldn't buy anything else.

And, yeah, I totally agree with the above: VW is a known high maintenance item.  Consumer Reports has generally ripped them to pieces for maintenance costs.

Laserjet3051

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #5 on: January 05, 2017, 09:37:44 AM »
If you want reliable, get a Honda, for goodness sake and don't mess around with VW.

The question about the car is -- do you have the money saved up to pay for it in cash?  Dave Ramsey generally says that all your cars value should total less than 1/2 of your annual income.

But seriously, just get a Honda, or an Acura.   We put just under 250,000k on an Acura TL and we have 135k on an Odyssey and they have been champ cars.  Just a little routine maintenance here and there.

I have been thinking on and off about trading up out of the Odyssey to a newer Odyssey.  Was just looking at a 2 year old car with 45k miles for $25k, msrp was around $36.  But -- I'd rather have the cash than the new car. 

Since you drive so few miles a year, a higher mileage, depreciated car Honda may be a good deal for you. yo

Ramsey advises ttl car value <50% income? Hmmmm, curious. My car's value currently  = 0.6% of my total income. Of course, when I first bought it, it was worth more and I was making less income so the % was much higher, maybe 5%?

50%? Really?

JAYSLOL

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #6 on: January 05, 2017, 09:40:45 AM »
I think it's more the car you buy rather than the age or mileage.  For example buying a 2 year old Honda Fit is much more mustachian than buying a 12 year old Ford Explorer.  I've always bought cars when they were 7 years old and the warranty just expired.  The idea being that they take a big price hit by being past warranty, but are generally well maintained during the warranty period, so going forward they shouldn't have too many unexpected services.  I also recommend going with Honda, Toyota or Nissan for reliability.

Spork

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #7 on: January 05, 2017, 09:42:07 AM »
If you want reliable, get a Honda, for goodness sake and don't mess around with VW.

The question about the car is -- do you have the money saved up to pay for it in cash?  Dave Ramsey generally says that all your cars value should total less than 1/2 of your annual income.

But seriously, just get a Honda, or an Acura.   We put just under 250,000k on an Acura TL and we have 135k on an Odyssey and they have been champ cars.  Just a little routine maintenance here and there.

I have been thinking on and off about trading up out of the Odyssey to a newer Odyssey.  Was just looking at a 2 year old car with 45k miles for $25k, msrp was around $36.  But -- I'd rather have the cash than the new car. 

Since you drive so few miles a year, a higher mileage, depreciated car Honda may be a good deal for you. yo

Ramsey advises ttl car value <50% income? Hmmmm, curious. My car's value currently  = 0.6% of my total income. Of course, when I first bought it, it was worth more and I was making less income so the % was much higher, maybe 5%?

50%? Really?

I don't speak for Dave.... but I suspect it's just a general rule of thumb intended from keeping an average working Joe from buying an $80k Mercedes and paying for it instead of paying into his retirement.  I use that example because I've got a friend -- now 62 and laid off from work -- that did precisely this.  Oh, and he totaled the Mercedes about a year ago, after paying for it for about 6 years and never fully getting it paid off.

It won't apply to everyone.  And I suspect it's meant to be an UPPER limit, not a guideline on how much to spend.

Bicycle_B

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #8 on: January 05, 2017, 09:56:18 AM »
I don't think we have a hard and fast rule.  It just depends on what cars are out there.  The last 2 we bought were 2yo and 8yo.  Both had low mileage relative to their age.  Both were immaculate looking for their age.  Both were brands we trusted -- both Toyota, but I'm not so brand loyal I wouldn't buy anything else.

And, yeah, I totally agree with the above: VW is a known high maintenance item.  Consumer Reports has generally ripped them to pieces for maintenance costs.

Spork has a really good point here.  Low mileage is usually much more value per purchase dollar than high mileage.  You can see the flip side of this by researching prices on kbb.com or whatever the equivalent is in your country, if the pattern is similar:  mileage has a small impact on price but a larger impact on repair costs.

SimpleCycle

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #9 on: January 05, 2017, 10:05:35 AM »
Basically it's a tradeoff between how much depreciation you're willing to pay yourself vs. how much you want a newer car.  I've only ever owned one car, and it was purchased when it was only two years old.  So it certainly had depreciated some but we paid extra to have a newer car with lower miles.  And then we maintained it meticulously and it's now 14 years old and still going strong.

I also would recommend Toyota or Honda for reliable cars with low maintenance costs.

Ftao93

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #10 on: January 05, 2017, 10:13:58 AM »
I think it's less about the age, and more about the fact that it's a VW. Eight years old with only 50k miles shouldn't be giving you a ton of headaches. Try something Japanese or Korean?

^^This.  We were gifted a VW and I had to throw it away it was so annoying.   Several friends have had similar experiences.  Hopefully they get back on track.

I've had very good luck with the smaller Japanese manufacturers.  Metallurgy is so advanced now, it's more about the electronics these days.

Dave1442397

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #11 on: January 05, 2017, 10:19:04 AM »
Our two cars were purchased at one year old. I did that because we basically got two new cars at a substantial discount and still under warranty.

Mine was selling for 62% of its original MSRP (actual selling price was probably way less than MSRP).

My wife's was at 79% of its original selling price, which was a good deal for that particular car.

In general, I would stick with Japanese cars. I would favor Toyota over Honda, but that's just based on what I see on the car forums.

We've had three Hondas overt the years. One had no issues.
Our '94 Civic DX blew head gaskets at 94,000 miles and 118,000 miles, when I got rid of it. The AC had also died, and it had some weird electrical issues. I ended up donating it and getting a tax receipt for $1800. Not bad.
Our 2003 CR-V was good up until 137,000 miles, when the transmission started slipping. That one I traded in when I bought my current car.

Slee_stack

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #12 on: January 05, 2017, 10:21:09 AM »
I ignore the year.

I like to buy cars whose price represents the best value to my needs and wants.

That has meant a 2- 5 year old car in my experience thus far.

I end up with a lot of 'undesirable' vehicles.  Not bad ones, just ones people don't tend to like or think about.  I am absolutely disloyal to brands.  It isn't a coincidence that these are harder for someone to offload and consequently cheaper.  Resale is also less, but that tends to be a smaller factor in overall cost.

That doesn't mean I don't look up common potential problems with certain brands and makes, only that I don't discredit something just because its a 'VW' or whatever.  If the price/value is right, I don't care.

If I can leverage a remaining factory warranty in, that's huge as well.  I like a 'chance' to get something fixed before all hell breaks loose.
« Last Edit: January 05, 2017, 10:24:44 AM by Slee_stack »

ketchup

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #13 on: January 05, 2017, 10:22:53 AM »
If I care when the bumper gets a little busted up because I hit the garbage can, it's too new.

Currently driving a high-mileage 2009 Hyundai that I bought with a bad heater core for $1000 in September (and fixed before it got cold).  It passes the test.

Just find something known for reliability (Honda, Toyota, Nissan, Hyundai/Kia once you get past about 2007).

With This Herring

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #14 on: January 05, 2017, 11:12:54 AM »
I think it's less about the age, and more about the fact that it's a VW. Eight years old with only 50k miles shouldn't be giving you a ton of headaches. Try something Japanese or Korean?

^^This.  We were gifted a VW and I had to throw it away it was so annoying.   Several friends have had similar experiences.  Hopefully they get back on track.

I've had very good luck with the smaller Japanese manufacturers.  Metallurgy is so advanced now, it's more about the electronics these days.

I just burst out laughing at your perfect phrasing.  It has me picturing a metal garbage can out by the curb with a VW "in" it precariously balanced up on one headlight.

I agree on going for one of the Japanese cars.  My old Saturn Ion (2003, 14K - 100K miles) had constant wiring issues (until it was totaled, RIP) every year or so.  With my Toyota (2009) purchased a year ago at 90K-ish miles, it has just been oil changes and getting snow tires.  It is so nice to not have little things constantly needing shop work.

I prefer a car to already come with some scrapes and dings.  Then I do not need to be paranoid about scrapes when I brush snow off of it or park it near other cars.  Pull right up next to that loose shopping cart!  Hahaha!

MayDay

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #15 on: January 05, 2017, 11:21:36 AM »
I don't know the market outside the US, but in the US Hondas and Toyotas do not depreciate much in the first two years. You tend to be just as well off buying a new one with incentives like 0% financing.

You have to get 3+ years old to save a lot.

We'll be replacing our Honda or Toyota sometime soon (both are older) and it's possible we will get a new base model for this reason. However, if money was tighter we'd look at 5-7 years old.

Part of the reason we are willing to go new (maybe- we'll run the numbers and shop for both, and che k car insurance rates) is we have a track record of keeping vehicles until they die. We know we won't be tempted to upgrade. We'll drive it for 15 years.

I'm a red panda

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #16 on: January 05, 2017, 11:25:12 AM »
My car was purchased new (with cash, though we put the maximum amount they would let us on a credit card for rewards).  I selected a car that was reasonable for my needs and was not high cost.   Would it have been less if I bought used- sure, it probably would have.  But I kept my previous car (also purchased new) 13 years. If I keep this one even half that I think I'll be doing fine.  The older cars I first had (it was free...) and when my previous car got older needed a lot of work. I'm happy to not do work, both time and money wise.  So new was just fine for me.

If I wanted a Suburban or something like that- no way would I go new.  But for a little sedan, it was fine for me.

Based on Dave Ramsey's car budget advice posted above, I could have bought 2 1/2 of them...
« Last Edit: January 05, 2017, 11:38:10 AM by iowajes »

prognastat

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #17 on: January 05, 2017, 11:25:49 AM »
If you want reliable, get a Honda, for goodness sake and don't mess around with VW.

The question about the car is -- do you have the money saved up to pay for it in cash?  Dave Ramsey generally says that all your cars value should total less than 1/2 of your annual income.

But seriously, just get a Honda, or an Acura.   We put just under 250,000k on an Acura TL and we have 135k on an Odyssey and they have been champ cars.  Just a little routine maintenance here and there.

I have been thinking on and off about trading up out of the Odyssey to a newer Odyssey.  Was just looking at a 2 year old car with 45k miles for $25k, msrp was around $36.  But -- I'd rather have the cash than the new car. 

Since you drive so few miles a year, a higher mileage, depreciated car Honda may be a good deal for you. yo

Ramsey advises ttl car value <50% income? Hmmmm, curious. My car's value currently  = 0.6% of my total income. Of course, when I first bought it, it was worth more and I was making less income so the % was much higher, maybe 5%?

50%? Really?

I don't speak for Dave.... but I suspect it's just a general rule of thumb intended from keeping an average working Joe from buying an $80k Mercedes and paying for it instead of paying into his retirement.  I use that example because I've got a friend -- now 62 and laid off from work -- that did precisely this.  Oh, and he totaled the Mercedes about a year ago, after paying for it for about 6 years and never fully getting it paid off.

It won't apply to everyone.  And I suspect it's meant to be an UPPER limit, not a guideline on how much to spend.

I like watching Dave's stuff on youtube from time to time. however I agree you have to keep in mind who his audience is. His audience aren't Mustachians. His audience is the kind of people that get posted on the wall of shame. He is trying to get them to a point where they can retire comfortably without debt and a healthy retirement once at the standard retirement age of 65.

This would be a massive improvement for the average consumer sucka as MMM refers to them himself. However for anyone here they are probably already doing better than what Dave Ramsey sets as the goals and Mustachians are generally looking to improve from that point. Not to say this is the wrong way to go about it. I actually gifted the program to my SIL despite not following it myself and disagreeing on a lot of his stuff myself because my goals aren't reasonable for her at this time and Dave Ramsey might at least get her to where she is doing enough to be able to get by well.

Some examples are things like:
- paying of debt by smallest sum not highest APR first. Mathematically it makes 0 sense, but for people that have trouble managing their finances to start with it's a more comfortable way to get through it.
- not using CC no matter what, there are situations where using a CC might be beneficial such as credit card churning, travel hacking, selling trade lines or using it as springy debt for emergencies. However if you are someone who has time and again proven to not be able to handle having a credit card responsibly, you probably shouldn't have one.
- Having a 0 Credit Score. Similar to the CC thing. Credit Score can be raised quite high without spending anything if done smartly and can lead to some good opportunities to save/make money. However if you have shown you can't handle debt then not having one and not being tempted to go in to debt might be best.

Now as for on topic:
My preference falls towards a affordable 3-6 year old car and then driving it for as long as possible.
« Last Edit: January 05, 2017, 11:33:18 AM by prognastat »

aceyou

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #18 on: January 05, 2017, 11:44:52 AM »
For me it's a tradeoff between...

New car = extra costs due to more depreciation (and higher insurance if the price is high enough to make me feel the need to get full coverage)

and

old car = slightly higher repair costs. 

I find that buying a 5k reliable car with good gas mileage (I have a prius) and driving it until it's a 2k or 2.5k car maximizes for that tradeoff.  Anything above 5k and I'm paying too much in depreciation.  Anything below 2-3k and I find myself paying too much in repairs. 

Your mileage may vary!

BFGirl

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #19 on: January 05, 2017, 12:02:24 PM »
I am not a hardcore Mustachian, but for the first time in my life  in 2016 I bought a used car instead of a new car mainly because of this site.  I usually keep my cars for around 8 years and am going to try to keep this one longer.  I bought a 2015 Ford C-Max hybrid from CarMax and saved about $11,000 off the MSRP for a new one.  I do not have the tools nor the time to fix a car myself and I wanted one that still had the manufacturer's warranty.

KBecks

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #20 on: January 05, 2017, 12:22:11 PM »
If you want reliable, get a Honda, for goodness sake and don't mess around with VW.

The question about the car is -- do you have the money saved up to pay for it in cash?  Dave Ramsey generally says that all your cars value should total less than 1/2 of your annual income.

But seriously, just get a Honda, or an Acura.   We put just under 250,000k on an Acura TL and we have 135k on an Odyssey and they have been champ cars.  Just a little routine maintenance here and there.

I have been thinking on and off about trading up out of the Odyssey to a newer Odyssey.  Was just looking at a 2 year old car with 45k miles for $25k, msrp was around $36.  But -- I'd rather have the cash than the new car. 

Since you drive so few miles a year, a higher mileage, depreciated car Honda may be a good deal for you. yo

Ramsey advises ttl car value <50% income? Hmmmm, curious. My car's value currently  = 0.6% of my total income. Of course, when I first bought it, it was worth more and I was making less income so the % was much higher, maybe 5%?

50%? Really?

Yeah, that's the maximum.  And so he's leaving room for people to have a nice car if they want, and to even have toys like boats or motorcycles, 4-wheelers, etc, as long as they're paid for with cash and don't total more than 50% of income.  Some people love cars and boats and toys and things.  Dave's advice has never been about stripping it down to the minimum, he's OK with spending as long as it's not screwing up your future wealth and retirement.   He's not an early retirement extreme type. 

Mr stuble

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #21 on: January 06, 2017, 05:26:20 AM »
Thanks all for the responses, it definitely seems that the smart money moving forward is trading German for Japanese! I am generally happy to do some low level maintenance, however as the current fault is electrical it would probably be out of my comfort zone to repair. Some posters have queried around the budget I would be looking at to purchase, so for some background info (I think I am being relatively mustachian but feel free to pass judgement on it!).
- My current car cost me 3,800 I reckon I could sell it for around 2,000
- My Salary is 25,000
- Savings/Investments approx 12,000
- I have recently got a mortgage so would rather buy outright than have a monthly amount leaving my bank account.
- Potential budget 3,000 - 6,000 with a willingness to stretch if there is a 'good' deal.

I will check Autotrader for some prices on used Hondas! Thanks once again!

I'm a red panda

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #22 on: January 06, 2017, 07:32:23 AM »
My Honda was amazing, but we've also had great luck with Hyundai's. You might want to look into those as well.

ketchup

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Re: When is a 'Nearly New' car too 'New' for you?
« Reply #23 on: January 06, 2017, 08:31:41 AM »
My Honda was amazing, but we've also had great luck with Hyundai's. You might want to look into those as well.
+1 for Hyundai.  And they depreciate way faster than Honda/Toyota right now.  My boss at work last year bought a 2010 Accent with ~40k on it for less than 5k in perfect shape.