Author Topic: Why Used?  (Read 11373 times)

MgoSam

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Why Used?
« on: June 23, 2014, 01:53:48 PM »
Hey,

I am not looking for a car right now, I am currently driving a 2005 Camry and loving it. But I am wondering why it is considered folly to buy a new car? I've heard that you lose an insane amount of value the moment your drive off the lot, but wouldn't this be part of the premium of owning a new car? I don't mind doing research and waiting to find a used car, but I would likely be worried of getting a lemon. When searching for a used car, would it be best to look at certified ones that the dealer sells, or trying to do it on your own (no mechanical knowledge)?

My car is a hand-me down from my other, who bought a 2008 Camry a few years ago and so I was gifted this car. So I have never purchased a car on my own, and would love to know how to approach looking for a new car well before I need to. Right now I think that my next car likely would be a Honda Fit due to its reliability, price,  and gas mileage.

gimp

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Re: Why Used?
« Reply #1 on: June 23, 2014, 02:04:38 PM »
The bit about it losing a ton of value right off the lot isn't true today, at least not for cheap cars. People have bought for 20, sold for 18 a year and a half later.

The real question, for me, is this: What do I get out of it being new vs used? Is it worth the extra money, and the opportunity cost of no longer having that money? In that light, rarely is it worth it, but sometimes it is. Decide for yourself.

I bought used because I couldn't afford new. I'll buy used again, because I find that a nice 10-year-old car is way better than a brand new econobox, even when the brand new car sells for 3x as much. Downsides are less reliability meaning more expenses in repairs, and less gas mileage; the break-even point for me would probably be 10 years (before the new car has a cheaper total cost of ownership) but at that point I've driven a car I like more for ten years and can just buy another used car.

okashira

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Re: Why Used?
« Reply #2 on: June 23, 2014, 02:37:09 PM »
Hey,

I am not looking for a car right now, I am currently driving a 2005 Camry and loving it. But I am wondering why it is considered folly to buy a new car? I've heard that you lose an insane amount of value the moment your drive off the lot, but wouldn't this be part of the premium of owning a new car? I don't mind doing research and waiting to find a used car, but I would likely be worried of getting a lemon. When searching for a used car, would it be best to look at certified ones that the dealer sells, or trying to do it on your own (no mechanical knowledge)?

My car is a hand-me down from my other, who bought a 2008 Camry a few years ago and so I was gifted this car. So I have never purchased a car on my own, and would love to know how to approach looking for a new car well before I need to. Right now I think that my next car likely would be a Honda Fit due to its reliability, price,  and gas mileage.

Why are you even thinking about this at all?
That Camry should be good for the next 10 years. Keep it maintained.
I would think that, in the next 10 years, you can improve your mechanical knowledge to the point where you will look back and have a good laugh at this post.

Northerly

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Re: Why Used?
« Reply #3 on: June 23, 2014, 02:45:28 PM »
I always buy used. The key I think is to have a reputable shop do a pre-buy inspection. Even if you are mechanically inclined, I recommend that you do NOT skip this. When shopping for a used car, just plan on taking your time, test-driving several, and having a pre-buy inspection done on a few. So budget, say, $300-400 dollars for pre-buy inspections to cover up to 4 cars that you get serious about. Just the cost of doing business. It pays off.

GuitarStv

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Re: Why Used?
« Reply #4 on: June 23, 2014, 02:57:06 PM »
We bought our toyota corolla new in 2005 and paid it off in full.  My wife's aunt works at a Toyota dealership and was able to get us a decent price on it.  It has been pretty solid for the past 9 years and hopefully will continue to be for another 9 and more.  I don't think that it's always a waste to buy a car new.

rocksinmyhead

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Re: Why Used?
« Reply #5 on: June 23, 2014, 02:58:13 PM »
I bought my car new... something I thought I would NEVER do. My reasoning (excuses?) was this...

- I needed to buy it quickly. I had been driving an employer-owned car during my internship, then was offered a full time position. HR was pressuring me to return the car quickly. I was in Oklahoma and my 17-year-old, not very reliable vehicle was in Pennsylvania.
- I was (relatively) alone in my city (had some new friends though and they were helpful, but I had only lived there for 4 months and didn't have my dad or boyfriend or anyone to go with me), buying a car for the first time. Not mechanically inclined or car savvy AT ALL.
- I bought a Nissan Versa, and like the first commenter said, supposedly the new car depreciation hit is small for cheap cars. The Versa is a really cheap new car.
- I wanted something that was NOT a beater (like, new or late model used), but didn't have enough to pay cash (I put like $9k down). Nissan had 0% financing.

All in all I'll probably buy my next car used (many years from now) because I'll be taking my time and might even buy something slightly bigger/more comfortable (I do love my car though!) but I don't regret my decision to buy a new car in this instance. It was absolutely worth the freedom from worry.

Jennifer in Ottawa

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Re: Why Used?
« Reply #6 on: June 23, 2014, 03:01:53 PM »
When I purchase a used vehicle I can get more features than I would be willing to get if I bought the new version of it.

So, if I decide on a particular model and really want features x,y and z, I can still get them, but for far less money if I purchase a model a few years older.  I let someone else pay for the depreciation. 

A car is only worth what you can sell it for today, and it is only a hunk of iron which has the purpose of getting you from point A to B.

In terms of research, I always recommend Consumer Reports.  You can get a one month online membership for $6.95, or a year for $30.  This gives you access to professional reviews and analysis as well as ratings for all vehicles for every conceivable criteria.  It is well worth the expense.  Also, I only buy used cars from dealers.

Cpa Cat

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Re: Why Used?
« Reply #7 on: June 23, 2014, 03:25:30 PM »
I bought my car new. I have no justification for it - I just wanted it. There was no mustachian philosophy. That was 2006, and every meager mile on the car is my mile. Every dent is mine. Every repair is one that I made. I know exactly what maintenance has been done. My car has no secrets from me - and I like it that way.

I would absolutely buy new again... You know, in another 10-15 years.

I don't put a ton of miles on my car. To me, I don't see the benefit of buying a high mileage used car and driving around with someone else's miles and wear and tear on the car, especially when my wear and tear is going to be minimal.

Eric

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Re: Why Used?
« Reply #8 on: June 23, 2014, 03:27:57 PM »
I don't mind doing research and waiting to find a used car, but I would likely be worried of getting a lemon.

Where do you think those used "lemons" come from?  They were once new cars!  You can't avoid this issue by buying a brand new car.  If you don't want to buy a used car because it might be a lemon, just think how much it would suck to pay 2 or 3 times more and have the same thing happen.

nereo

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Re: Why Used?
« Reply #9 on: June 23, 2014, 03:50:18 PM »
I don't mind doing research and waiting to find a used car, but I would likely be worried of getting a lemon.

Where do you think those used "lemons" come from?  They were once new cars!  You can't avoid this issue by buying a brand new car.  If you don't want to buy a used car because it might be a lemon, just think how much it would suck to pay 2 or 3 times more and have the same thing happen.
+1 to Eric... and I'll add; one of the greatest advantages I see in buying a used vehicle is that you can get actual data on how reliable each model car has been, and you can avoid ones that have a history of complex electrical problems that you can't fix yourself.  When you buy this year's model, you have no way of judging how reliable it will be. Plus, VIN reports allow you to see if a used vehicle has been sold repeatedly (a potential lemon) or has had major repairs/damage.

One other thing - when you buy a new car it's expected to be shiny and free of cosmetic defects.  Cars that have cosmetic defects can be thousands less than those with pristine paint - yet both will get you to the same place.   
 

MgoSam

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Re: Why Used?
« Reply #10 on: June 23, 2014, 09:03:44 PM »
Thank you for your responses. okashira was correct in that my car should last another 10 years if I am diligent in maintaining my car, something that I need to be better about it. My goal is to be FI before I need a new car.

Nords

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Re: Why Used?
« Reply #11 on: June 23, 2014, 10:18:07 PM »
Thank you for your responses. okashira was correct in that my car should last another 10 years if I am diligent in maintaining my car, something that I need to be better about it. My goal is to be FI before I need a new car.
I'll tell you why you want to buy used:  there are more nice used-car sellers on Craigslist (and fewer whackos) than there are nice new-car dealers.

Whenever I read an article on "How to get the best deal on your new car", it's rarely about getting the best deal on your new car.  It's more about psychological warfare, negotiating skills, brinkmanship, and bladder control.  I'm already an introvert and I try to avoid stress, so why make the car-buying experience even more unpleasant?

Google "How to buy a used car" and start reading.  CarFax, Edmunds.com, KBB.com, an inspection by a mechanic.  If you work on buying the next used car before you get rid of your current car, you'll have plenty of time for the project.  You have a much bigger inventory on Craigslist than in the dealer's lot, and nobody is pressuring you to buy today.  You'll find your share of scams & whackos, but eventually you'll also find a sweet deal.  You're not making a gigantic investment, so the penalty for failure is lower.  If you don't like the way you're treated then you just walk away and wait for the next fat pitch.

I bought my last new car in 1981.  Never again.

hexdexorex

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Re: Why Used?
« Reply #12 on: June 23, 2014, 11:23:46 PM »
-Bought a 1992 Toyota in 2009 for $1800 with 114k miles on it
-Now has 150k miles...repairs = around 300 a year (all wear and tear)
-Checking local craigslist it currently sells for the same price.

0 depreciation is why people buy used. Same goes for craigslist bikes.....have bought/resold 4 of them (didn't want to was moving) and each sold for above what I paid.

If you buy a used car....get it checked out by 2 separate mechanics...and get a Toyota you should be fine. (you already have one)

I was looking at new when I bought the car...but instead I put the money in the market and it has easily doubled since 2009. Obviously what I am giving up with a old car is safety...tech features...etc.

boarder42

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Re: Why Used?
« Reply #13 on: June 24, 2014, 04:20:24 AM »
i buy old fleet vehicles from my company when i need a new car.  maintenance was always completed perfectly.  they sell them at wholesale prices to us.  they have 150k miles on them.  but dont drive like it

bogart

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Re: Why Used?
« Reply #14 on: June 24, 2014, 08:46:29 AM »
I've bought used (5 vehicles) and I've bought new (2 vehicles).  I think there are advantages to each.

A few years ago I watched a friend buy a low-end Mazda, and he could get what he wanted cheaper new than used -- literally, for a lower purchase price.  Most of the used cars had options he didn't want, and the sellers wouldn't negotiate down (maybe they were right not to).  I don't think this is usually the case, but it can happen (This was pretty much at the low point of the recession.  Used cars were holding their value unusually well.).

Buying new can give you more options on features, depending how obscure your preferences are (and how quickly you need a car, and how much time/willingness you have to devote to shopping for one).  I feel pretty strongly about having a stick shift, and those are a lot harder to find than are automatics (I also strongly crank windows but -- eh, dream on, these days). 

When I'm vehicle shopping, I like to go drive the new version of whatever I'm most strongly considering, and price it with what I want.  That gives me a sense of what I'm giving up (or not) when I lose those low-hassle, warranty-covered miles, and what I'm saving by doing so.

Bourbon

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Re: Why Used?
« Reply #15 on: June 24, 2014, 09:14:18 AM »
Thank you for your responses. okashira was correct in that my car should last another 10 years if I am diligent in maintaining my car, something that I need to be better about it. My goal is to be FI before I need a new car.
I'll tell you why you want to buy used:  there are more nice used-car sellers on Craigslist (and fewer whackos) than there are nice new-car dealers.

Whenever I read an article on "How to get the best deal on your new car", it's rarely about getting the best deal on your new car.  It's more about psychological warfare, negotiating skills, brinkmanship, and bladder control.  I'm already an introvert and I try to avoid stress, so why make the car-buying experience even more unpleasant?

Google "How to buy a used car" and start reading.  CarFax, Edmunds.com, KBB.com, an inspection by a mechanic.  If you work on buying the next used car before you get rid of your current car, you'll have plenty of time for the project.  You have a much bigger inventory on Craigslist than in the dealer's lot, and nobody is pressuring you to buy today.  You'll find your share of scams & whackos, but eventually you'll also find a sweet deal.  You're not making a gigantic investment, so the penalty for failure is lower.  If you don't like the way you're treated then you just walk away and wait for the next fat pitch.

I bought my last new car in 1981.  Never again.

Not that I would recommend it from a value proposition, but I do think the internet has made the process considerably easier.  In our pre-MMM days we splurged on a new minivan for my wife.  The model had been redesigned the year before and we couldn't get a discount by buying a one year old used vehicle. 

We test drove a few and settled on a car and then I emailed all of the dealerships within an hours drive of me for a price on what I wanted.  I took the lowest one and sent it out to others to match.  I tried to make it work with the local dealer where we did the test drive, but they didn't want to play ball.  We wound up driving an hour to pick up the van, but we got it for under invoice and never a cross word.  Just walked in, got shown the van and all of the paperwork, declined extended warranty/options and drove home. 

so.mpls

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Re: Why Used?
« Reply #16 on: June 24, 2014, 10:00:46 AM »
My first job out of college was as a new car salesman.  New cars are much more expensive that used. 

Take the Honda Fit for example.  A new EX model with auto transmission will cost roughly $19,000 (we won't worry about tax & lot fees to keep it simple).  Assuming you drive it to 200,000 miles, and the car is worth $2,000 at that point, you'll be paying 8.5 cents per mile.

If you instead decide to buy a 2009 of the exact same specifications and 50,000 miles on it, you'll pay $9,400 according to Edmunds (KBB will always overvalue).  If you still drive the car to 200,000 miles, and it's worth $1,800 (due to being slightly older than the '14), you'll be paying 5.0 cents per mile.

That's just one example.  Most others would be more drastic since a Fit will hold it's value better than most vehicles.

One other thing - used cars are actually less likely to be lemons than new cars; just be sure to have the car inspected by at least one good mechanic.  Read up on the bathtub curve and product failures if you're interested:

http://controlfreaks.mne.psu.edu/Publications/Journals/2010_Yutko_Jerath_AFailureRateAnalysisOfComplexVehicles.pdf

http://www.weibull.com/hotwire/issue21/hottopics21.htm

http://www.weibull.com/hotwire/issue22/hottopics22.htm

paddedhat

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Re: Why Used?
« Reply #17 on: June 24, 2014, 10:13:06 AM »
I'll tell you why you want to buy used:  there are more nice used-car sellers on Craigslist (and fewer whackos) than there are nice new-car dealers.
We are shopping for a replacement for my daughter's hail destroyed Focus. I have no doubt that it will be a craigslist find. I want to spent $10-11K for the best value I can find. Here is what I found recently.
1. the WORST place to buy anything is a used car dealer. The ones in this area get all of their inventory at auction. The stuff going to auction is the crap that new dealers took in as trade-ins, and isn't high enough quality to put on their lots. Used lots are full of overpriced crap with obvious prior body damage, and lots of evidence that the prior owner(s) beat, abused and neglected the car. That said, used dealers don't really want to see your mustachioed face, they are looking for suckers with sub-prime credit who will overpay for the car AND a useless extended warranty, since the dealer can get them financed and they only want to know how much a month the payment is.
2. New car dealers are getting shocking amounts of money for late model, clean used cars. If a car had an invoice of $22K in 2011, don't wait for me to give you $17K for it with 40k miles on the ODO, it isn't happening.
3. There are killer deals on craigsist, they are offered by folks who want to dump a car and offer a clean, decent car for a fair price. These are the ones that end up selling in a few hours, and require the cash in hand.

Plus, VIN reports allow you to see if a used vehicle has been sold repeatedly (a potential lemon) or has had major repairs/damage.


Do not rely on a Carfax to protect you from a vehicle that has major repairs and damage, or you may end up getting screwed. Carfax is a limited, yet valuable tool. It collects and reports publically available info. If you don't report a major repair, it doesn't appear. I have seen vehicles that were reconstructed and others with major body damage, that had glowing Carfax reports.

bogart

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Re: Why Used?
« Reply #18 on: June 24, 2014, 10:38:31 AM »

Not that I would recommend it from a value proposition, but I do think the internet has made the process considerably easier.


I (mostly) concur.  I bought my first new vehicle in 1994 and the dealer was a ... jerk.  Happily I learned that AAA in my state (to which I had a membership) would get "fleet price" on new vehicles and mark them up ~$150, and -- done.  I did end up buying from the dealer because I'd used their time/resources for test driving, but I paid the AAA price.  That truck's still running peachy keen with about 210K miles on it, I paid about $14.5K for it (sold it when I decided I wanted safety features it lacked, like airbags).  Next new purchase was in 2009, price available through AAA no better than dealer prices at that point in time, but I used the internet to find the dealer with the best price on the features we wanted and, no in-person conversation, just drove to the dealership, paid the price agreed to over email and -- done.

skunkfunk

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Re: Why Used?
« Reply #19 on: June 24, 2014, 10:53:17 AM »
I've never had a driver for myself newer than 1991, but I can say with confidence that one place you get screwed on a new car is insurance. Full coverage is absurdly expensive compared to liability. You will make up your repair costs on insurance alone, and that's before the many other savings of owning a fully depreciated vehicle.

If you learn to work on it yourself, you can save even more. My old car had an auto transmission rebuild that cost me all of $200 to do in the garage. When my mothers 2008 vehicle had the transmission fail, it was more like $3500. No way could I have tackled that transmission repair, but my old car was doable if difficult.

eil

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Re: Why Used?
« Reply #20 on: June 24, 2014, 10:56:37 AM »
Quote
I've heard that you lose an insane amount of value the moment your drive off the lot

Insane, perhaps not. But steep. Except in very rare cases, a used car will always be valued at somewhere around 85% of a new car of the same age and mileage. The depreciation curve is steep for the first few years and then begins to level off somewhat afterward.

Quote
, but wouldn't this be part of the premium of owning a new car?

What's your definition of "premium" here? Did you mean "luxury"? Luxury is for weak consumerist suckers who love working for someone else their entire adult lives and hate having money in the bank.

Quote
I don't mind doing research and waiting to find a used car, but I would likely be worried of getting a lemon. When searching for a used car, would it be best to look at certified ones that the dealer sells, or trying to do it on your own (no mechanical knowledge)?

Something like this always seems scary when you haven't done it before. Take the advice of the posters above: take the time to do your research and find a competent mechanic to do the inspection. Don't just walk into a dealership or crack open craigslist one day and announce, "hey there, I want to buy a car from you!"

Quote
My car is a hand-me down from my other, who bought a 2008 Camry a few years ago and so I was gifted this car. So I have never purchased a car on my own, and would love to know how to approach looking for a new car well before I need to. Right now I think that my next car likely would be a Honda Fit due to its reliability, price,  and gas mileage.

Holy shit, I wish someone would just up and give me a 2008 Camry!

Seriously, you are never going to get a better deal than this. Keep that car until it doesn't run any more. Then fix it, and keep it some more. Unless you're driving it across the country every month, it will last you at least another 10 years no problem. By the time it's fully worn out, then you can replace it with a well-cared-for 10 year-old Honda Fit.

neo von retorch

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Re: Why Used?
« Reply #21 on: June 24, 2014, 10:59:01 AM »
How do you a) find a mechanic you like/trust and b) take a car you want to buy, but have not yet bought to that mechanic in a timely manner? I have never done this particular process.

Northerly

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Re: Why Used?
« Reply #22 on: June 24, 2014, 11:48:54 AM »
How do you a) find a mechanic you like/trust and b) take a car you want to buy, but have not yet bought to that mechanic in a timely manner? I have never done this particular process.

a. Ask people you trust who they trust. Try to get a couple names so that:

b. You can just ring up your favorite shop and tell them you'd like to get a pre-buy inspection done today or tomorrow if possible. A good shop will understand and try to slide you in and charge you about $100 (in my area). If they for some reason act confused, then you know you picked the wrong shop! I have found that honest car sellers will coordinate with you to arrange dropping off the car at the shop, etc. An honest seller should really take the arrangement as good faith on your part, because you're the one spending the $100.

hexdexorex

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Re: Why Used?
« Reply #23 on: June 24, 2014, 12:11:14 PM »
How do you a) find a mechanic you like/trust and b) take a car you want to buy, but have not yet bought to that mechanic in a timely manner? I have never done this particular process.

I used yelp when I got my car to find good mechanics.

You wanna do these basic things as well...

https://www.youtube.com/watch?v=Rks40ng2C2Y

ketchup

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Re: Why Used?
« Reply #24 on: June 24, 2014, 01:18:40 PM »
Why used?  I would ask why in the world you'd buy new.

I've only ever bought used cars.  I bought a car in 2012 for $1000, crashed it into a Jeep in 2013 after putting 23k miles on it, bought another car for $2000 in 2013, put 13k on it and then recently sold it for $1750 and bought a different car for $1000 (bought with 146k).  The per mile total costs of each car were/are, respectively (including all costs: depreciation, fuel, maintenance, repairs, insurance, registration, taxes, etc), $0.18/mile, $0.32/mile (relative gas guzzler with expensive maintenance, and $0.16/mile.  That's with doing all the major maintenance (timing belt, water pump, all fluids, spark plugs/wires/cap/rotor, check brakes, etc) right after acquisition (otherwise you're asking for trouble with older cars).

Let's compare my older, used high-MPG subcompact, to a new, even-higher-MPG subcompact.

My girlfriend's sister bought a new Prius C last fall for $26k, financed at 2% with $6k down.  She's put 14k on it.  Currently she has no equity in it, so that's six grand just gone, plus she's still got her obnoxious car payment, and full coverage new car insurance.  If the car gets to 250,000 miles before any major repairs (It's a Toyota, pretty fair assumption I'm pulling out of the air), that puts her at about $0.10/mile in depreciation.  If we assume 60MPG with $4 gas, she's paying $0.07/mile for fuel.  Maintenance is pretty minimal on that car, so if we assume $50 service every 10k for the synthetic oil change, new $400 tires every 50k, and major service every 100k for $500, that's about $0.02/mile.  Her insurance is about $150/mo, which works out to $0.10/mile at her current rate of driving, but that'll go down as she (23) and the car both get older that'll go down, so I'll hand-wave a lifetime average of $0.06/mile.  I'll throw in another $0.01/mile to cover things like wiper blades, car washes, and stupid random problems that come up every 100k or so.

So that's a total of $0.26/mile for the new car over 250,000 miles.  On the surface, that's less than my 26MPG fancy car I used to drive, but only about 63% more than my current cheapo mustachemobile.

But then there's opportunity cost.  This gets trickier to calculate with her financing the car and not buying it outright, but I'll try.  If instead of putting $6,000 down and paying $372/mo for five years, I opened an IRA with $6,000 and added $372 per month to it, assuming an average of 5% growth, that puts the IRA balance at $32,324 after the five years.  Then it sits there growing at 5% for another 9 years (based on her driving habits and my 250,000 mile number), growing to $50,145 when she sells her car for $500 to a bearded musician.  Subtracting out the dollars actually put in (because we already counted that as depreciation earlier), that leaves $21,825 in investment gains over the life of the car.  Dividing that out over 250,000 miles, and we get an additional $0.09/mile.

So then by that metric, using her driving habits again for simplicity, my car would last her three years if I sell for scrap at 200,000.  So if I locked away $1,000 in an IRA for three years with the same 5% return, it would then be worth $1,157.  $157 divided out by the 54,000 miles is $0.003, less than half a cent per mile.

So really, big picture, if that bumps my car up to $0.17/mile, and hers up to $0.34/mile, that's exactly double the cost to drive the new car.  And the numbers get even worse if you get a new car that costs more than $26,000, gets less than 60MPG, isn't as reliable, long-lasting, and cheap to maintain as a Toyota, or all three.  Or if you invest your money at better than 5%.

Also, if something really stupid happens, it's easier to dump a $1,000 car than a $26,000 one.  And if you have to sell it, a $1,000 car sells a lot faster and easier than a $26,000 one, and you can give someone a deal on it and not really be screwing yourself over at all, or worry about sitting on as expensive of an asset.

I also just realized none of my numbers factored in taxes, which I know are significant on a new car.  Oh well, I'm not recrunching those numbers.  And I do think my car will last me longer than 200,000.

That's why you buy used.  The difference is a little less dramatic when you buy less far down the depreciation curve than I do, but it's still very significant.

The absolute only exception I've seen that can ever make sense for some people is leasing an electric car on a super cheap promo lease deal combined with heavy tax incentives.  Sometimes the numbers work out really really well in that situation.  I know at least one person on the forum did something like that within the past year, and their total cost of driving is very close to zero if I remember correctly.
« Last Edit: June 24, 2014, 01:37:04 PM by ketchup »

Eric

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Re: Why Used?
« Reply #25 on: June 24, 2014, 01:32:00 PM »
Excellent post Ketchup!  Love the paragraph on opportunity cost.  People always forget to include that part for some reason.

ncornilsen

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Re: Why Used?
« Reply #26 on: June 24, 2014, 02:09:21 PM »
I bought a new car once in my life - a 2008 chevy Aveo. Paid $7700 with the rebates. Drove it all summer and fall of 08 when gas was $4.25 a gallon.

Someone T-boned me, and the insurance company totaled it and paid out $11500. So, being oh so wise, I went and bought a 1999 Pontiac trans am... cause, you know, 'merica. That said, I loved that car and wish I still had it. But, oh well.

It's been used only ever since.

hexdexorex

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Re: Why Used?
« Reply #27 on: June 24, 2014, 02:42:33 PM »
Ketchup talked about this a little.

Collision is a great cost on a new car. On a old car you don't need to get collision ...for me that addition would double my insurance...another reason to stay away from cars newer than 10 years.

Cwadda

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Re: Why Used?
« Reply #28 on: June 24, 2014, 03:08:52 PM »
I bought a 2007 Mazda3 used on Craigslist with 86k miles on it for $6650. It was $7100 after taxes and I put about $800 into it. All said and done it was about $8000. The guy didn't keep it in great condition. Needed new tires, one of the bearings was shot, and there were scratches all over, which I had buffed out. A brand new 2014 Mazda3 MSRP is about $18,000. After fees and taxes you're probably looking at $20k. The fuel rating is about 10 MPG higher on a new one.

I'll be realistic and say each car will last $175k miles. Which means the used value per mile is $8000 divided by 175,000 - 86,000  = 9 cents/mile. The new Mazda value is $20,000 divided by 175,000 = 11.4 cents per mile. I figure I will save even more because my car insurance barely went up when I got my Mazda3 and would've gone up much more if it was brand new.

2 days ago I backed into a concrete sewer and chipped the paint all over the bumper. Ok, I freaked out. But if that was a new car I would've absolutely lost it.

There are lots of good used cars out there. I spent over a month looking for the right one. I consulted hundreds of customer reviews and talked to a lot of professionals about what exactly to look for in a used car. Once I found the car, the guy was honest and knocked off $850 from his listing price. The amount of money to make repairs!

ketchup

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Re: Why Used?
« Reply #29 on: June 24, 2014, 03:28:52 PM »
2 days ago I backed into a concrete sewer and chipped the paint all over the bumper. Ok, I freaked out. But if that was a new car I would've absolutely lost it.
That's another nice factor.  I still get annoyed if someone in a parking lot dings my door, but I'd absolutely lose my shit if it was a brand new car I had just paid thirty grand for.

beltim

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Re: Why Used?
« Reply #30 on: June 24, 2014, 03:52:00 PM »
Why used?  I would ask why in the world you'd buy new.

I've only ever bought used cars.  I bought a car in 2012 for $1000, crashed it into a Jeep in 2013 after putting 23k miles on it, bought another car for $2000 in 2013, put 13k on it and then recently sold it for $1750 and bought a different car for $1000 (bought with 146k).  The per mile total costs of each car were/are, respectively (including all costs: depreciation, fuel, maintenance, repairs, insurance, registration, taxes, etc), $0.18/mile, $0.32/mile (relative gas guzzler with expensive maintenance, and $0.16/mile.  That's with doing all the major maintenance (timing belt, water pump, all fluids, spark plugs/wires/cap/rotor, check brakes, etc) right after acquisition (otherwise you're asking for trouble with older cars).

Let's compare my older, used high-MPG subcompact, to a new, even-higher-MPG subcompact.

My girlfriend's sister bought a new Prius C last fall for $26k, financed at 2% with $6k down.  She's put 14k on it.  Currently she has no equity in it, so that's six grand just gone, plus she's still got her obnoxious car payment, and full coverage new car insurance.  If the car gets to 250,000 miles before any major repairs (It's a Toyota, pretty fair assumption I'm pulling out of the air), that puts her at about $0.10/mile in depreciation.  If we assume 60MPG with $4 gas, she's paying $0.07/mile for fuel.  Maintenance is pretty minimal on that car, so if we assume $50 service every 10k for the synthetic oil change, new $400 tires every 50k, and major service every 100k for $500, that's about $0.02/mile.  Her insurance is about $150/mo, which works out to $0.10/mile at her current rate of driving, but that'll go down as she (23) and the car both get older that'll go down, so I'll hand-wave a lifetime average of $0.06/mile.  I'll throw in another $0.01/mile to cover things like wiper blades, car washes, and stupid random problems that come up every 100k or so.

So that's a total of $0.26/mile for the new car over 250,000 miles.  On the surface, that's less than my 26MPG fancy car I used to drive, but only about 63% more than my current cheapo mustachemobile.


I really like this approach, but something here doesn't feel right.  You're saying that depreciation on a new Prius over its lifetime is 10 cents per mile, which sounds right.  And you're saying that (pre-opportunity cost) the used cars are about 10 cents per mile cheaper to operate.  But then you're saying that the maintenance in the Prius is minimal compared to your used car, plus fuel costs are lower.  I suspect the difference is due to the crazy high insurance that your girlfriend's sister has, and you'd get much more reasonable numbers if you had comparable insurance.  I mean, you're figuring that 2/3s of the difference in cost is due to the insurance, so it's an important number to get right.  As a comparison, I just priced what the insurance would be for a 2014 Prius C for me, and it comes out at $75 including collision, comprehensive, and huge liability limits.  Taking out collision and comprehensive would get it to about $42/month. 

Why does this matter?  Well, you get a lot more in a Prius C than in a car you bought for $1000.  If the all-in cost comparison is between 18 cents per mile and, say, 23 cents per mile, a lot of people would say the benefits of the new car are worth 5 cents per mile.

CarDude

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Re: Why Used?
« Reply #31 on: June 24, 2014, 05:26:06 PM »
The main advantage of buying that new Prius C over ketchup's cars, from my perspective, would be in safety. However, you can get cars that are safer than either while still costing much, much, much less than new, so even that advantage is easily washed out with a number of used cars.

beltim

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Re: Why Used?
« Reply #32 on: June 24, 2014, 05:52:20 PM »
The main advantage of buying that new Prius C over ketchup's cars, from my perspective, would be in safety. However, you can get cars that are safer than either while still costing much, much, much less than new, so even that advantage is easily washed out with a number of used cars.

Maybe.  But you'd have to run an analysis like ketchup's to quantify that.  Frankly, I don't see how you can get "much, much, much less than new" when you run a full lifecycle analysis like ketchup and the difference between low-maintenance $1000 cars and a brand-new prius is single-digit cents per mile.

Milspecstache

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Re: Why Used?
« Reply #33 on: June 24, 2014, 05:57:24 PM »
Someone above said a Versa.  I shopped for a used Versa in 2011 and found ones in the $12k to $15k range because they had features I didn't want (limited market).  Then I found a new, stripped down model for $12.5k out the door (I don't think it had a single option...).

Since then I've gotten a few free oil changes, free inspections (for life), tire rotations, etc.

I will probably hold onto the vehicle until it falls apart.  Which should be a long time as I like to work on cars.

My thought-process is this:
If you want a car with options and features, then definitely buy used to offset the depreciation hit of all of those options.
But if you can live with a stripped down, very basic car (ie Versa) then don't rule out buying new until you do the cost-analysis.  For me the analysis pointed me towards the new car and at 38mpg it has saved me a lot of money compared to the other options I looked at.

beltim

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Re: Why Used?
« Reply #34 on: June 24, 2014, 05:58:23 PM »
Also, I was curious about my cost per mile, and I'm running about 31 cents per mile over the last 5 years on a low-maintenance Camry well into its second decade, without any depreciation.  I suspect my higher cost per mile is due to high gas costs in a relatively urban and hilly environment (so mediocre mileage), as well as driving few miles, thus averaging out relatively fixed costs (insurance, maintenance to some expense) at a higher rate.

For me, I suspect a new car with correspondingly high fixed costs (purchase price, opportunity cost) would be significantly more expensive than my old Camry.

Nords

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Re: Why Used?
« Reply #35 on: June 24, 2014, 06:26:16 PM »
How do you a) find a mechanic you like/trust and b) take a car you want to buy, but have not yet bought to that mechanic in a timely manner? I have never done this particular process.
When our daughter bought her first used car a couple years ago, she found a Craigslist seller in a particular neighborhood of Houston.  She set up an appointment for a few hours later, but then we drove over to that area to find a mechanic.  The first place was busy and didn't have any time or appointments.  The second place wasn't too busy and made an appointment for 30 minutes after she'd see the Craigslist seller for a test drive.  Both places were polite but the second place had a staff who was more chatty and engaging, and she liked them better even if she'd had to make an appointment for another day.

She met the seller, we did the test drive, she asked to take it to the mechanic.  The seller came along and hung out for the 30 minutes.  The mechanics found a couple of minor issues that needed attention, she negotiated a lower sale price.  She paid the mechanic and bought the car.

You're not asking the mechanics to rebuild your transmission or overhaul your brakes.  You're just asking them to check the diagnostic codes on the car's computer, put it up on a lift to look for bad wheel bearings or cracked CV boots or exhaust leaks, and check under the hood for blown gaskets or other leaks.  They're getting paid for their time and their expertise, it's easy/profitable work, and they know there's no reason to upsell you.

If the seller is not eager to have the car seen by the mechanic, then you're not interested in buying the car.

She bought a 1999 Honda CR-V that she bought with 165K miles on it, and now it's up to 175K miles.  All she's put into it is some R-134 refrigerant and a new timing belt.

If you're looking at a car whose owner has a stack of paperwork indicating that it's been to the dealer every six months for its oil change, and every 5000 miles for its "checkup", and that they ran to the dealer whenever then "Check Engine" light came on, then you might not even care to bother with the mechanic.  But that's a judgement call with the car's age and how comfortable you feel crawling around one to check it out.

ketchup

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Re: Why Used?
« Reply #36 on: June 24, 2014, 06:56:25 PM »
Why used?  I would ask why in the world you'd buy new.

I've only ever bought used cars.  I bought a car in 2012 for $1000, crashed it into a Jeep in 2013 after putting 23k miles on it, bought another car for $2000 in 2013, put 13k on it and then recently sold it for $1750 and bought a different car for $1000 (bought with 146k).  The per mile total costs of each car were/are, respectively (including all costs: depreciation, fuel, maintenance, repairs, insurance, registration, taxes, etc), $0.18/mile, $0.32/mile (relative gas guzzler with expensive maintenance, and $0.16/mile.  That's with doing all the major maintenance (timing belt, water pump, all fluids, spark plugs/wires/cap/rotor, check brakes, etc) right after acquisition (otherwise you're asking for trouble with older cars).

Let's compare my older, used high-MPG subcompact, to a new, even-higher-MPG subcompact.

My girlfriend's sister bought a new Prius C last fall for $26k, financed at 2% with $6k down.  She's put 14k on it.  Currently she has no equity in it, so that's six grand just gone, plus she's still got her obnoxious car payment, and full coverage new car insurance.  If the car gets to 250,000 miles before any major repairs (It's a Toyota, pretty fair assumption I'm pulling out of the air), that puts her at about $0.10/mile in depreciation.  If we assume 60MPG with $4 gas, she's paying $0.07/mile for fuel.  Maintenance is pretty minimal on that car, so if we assume $50 service every 10k for the synthetic oil change, new $400 tires every 50k, and major service every 100k for $500, that's about $0.02/mile.  Her insurance is about $150/mo, which works out to $0.10/mile at her current rate of driving, but that'll go down as she (23) and the car both get older that'll go down, so I'll hand-wave a lifetime average of $0.06/mile.  I'll throw in another $0.01/mile to cover things like wiper blades, car washes, and stupid random problems that come up every 100k or so.

So that's a total of $0.26/mile for the new car over 250,000 miles.  On the surface, that's less than my 26MPG fancy car I used to drive, but only about 63% more than my current cheapo mustachemobile.


I really like this approach, but something here doesn't feel right.  You're saying that depreciation on a new Prius over its lifetime is 10 cents per mile, which sounds right.  And you're saying that (pre-opportunity cost) the used cars are about 10 cents per mile cheaper to operate.  But then you're saying that the maintenance in the Prius is minimal compared to your used car, plus fuel costs are lower.  I suspect the difference is due to the crazy high insurance that your girlfriend's sister has, and you'd get much more reasonable numbers if you had comparable insurance.  I mean, you're figuring that 2/3s of the difference in cost is due to the insurance, so it's an important number to get right.  As a comparison, I just priced what the insurance would be for a 2014 Prius C for me, and it comes out at $75 including collision, comprehensive, and huge liability limits.  Taking out collision and comprehensive would get it to about $42/month. 
Like I said in the last part of the post, the big benefit really by comparison is the opportunity cost of tying up so much money (for her it's about what she makes in a year).  Even if the insurance is cheaper as you suggest, it's not really 16 vs 23, it's 17 vs say 30.  Still close to double.  And for the record, my insurance isn't super cheap either due to the crash last year.  I'm paying about $60/mo for liability-only on a 15 year old car.
The main advantage of buying that new Prius C over ketchup's cars, from my perspective, would be in safety. However, you can get cars that are safer than either while still costing much, much, much less than new, so even that advantage is easily washed out with a number of used cars.

Maybe.  But you'd have to run an analysis like ketchup's to quantify that.  Frankly, I don't see how you can get "much, much, much less than new" when you run a full lifecycle analysis like ketchup and the difference between low-maintenance $1000 cars and a brand-new prius is single-digit cents per mile.
It isn't single digits, due to the large opportunity cost, which is very real.  The true conclusion of my complete analysis was that the Prius C was double the cost per-mile over the lifetime of the cars.  And most new cars don't get 60MPG.

I'm sure you could find safer cars than mine that still are reasonably priced.  Even my '96 Volvo wagon tank with side-impact airbags and ABS was costing me $0.32/mile in total with essentially no depreciation left in it.  That number probably would have gone down too if I had driven it longer.  I did a lot of expensive maintenance on it while I had it, and it only needed oil changes for the next 40k miles or so.

Quote from: beltim
Why does this matter?  Well, you get a lot more in a Prius C than in a car you bought for $1000.  If the all-in cost comparison is between 18 cents per mile and, say, 23 cents per mile, a lot of people would say the benefits of the new car are worth 5 cents per mile.
Factoring in the opportunity cost, the complete comparison is between 17 cents per mile and 34.  So for an 17 extra cents per mile, I'd have to put up with driving a CVT (manual transmission in my current car is far preferable), I'd have to duck my head down to do anything, put up with horrid visibility because Toyota decided you didn't need to look behind yourself in that car, not be able to move the car more than 1mph if the seatbelt gets stuck, have no gauges at all apart from a digital speedometer, and have to freak out if I have a little fender bender.  No thanks.  There are a lot of reasons for someone to like that car better than mine, and and I'm not that someone.  It's just not designed for someone that's 5'11 (despite my smaller car fitting me just fine) and cares about visibility.  The only appeal of it for me would be slightly increased gas mileage, ~55-60MPG city vs my 46MPG I've been getting, but that gets outweighed cost-wise by everything else I've mentioned.  Oh, and I guess the radio in there sounds a little nicer than mine.  My girlfriend's sister loves her Prius C, but I can't stand driving it from a comfort or safety perspective (but hypermiling in it can be fun.  I maxed at 74.5MPG for a 6 miles of city driving once by draining the battery the whole way).

sfsellin

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Re: Why Used?
« Reply #37 on: June 25, 2014, 09:50:19 AM »
-Bought a 1992 Toyota in 2009 for $1800 with 114k miles on it
-Now has 150k miles...repairs = around 300 a year (all wear and tear)
-Checking local craigslist it currently sells for the same price.

0 depreciation is why people buy used. Same goes for craigslist bikes.....have bought/resold 4 of them (didn't want to was moving) and each sold for above what I paid.

If you buy a used car....get it checked out by 2 separate mechanics...and get a Toyota you should be fine. (you already have one)

+1 to learning enough about the car/bike values to be able to "flip" them for a profit after you've used it for a couple years!
I was looking at new when I bought the car...but instead I put the money in the market and it has easily doubled since 2009. Obviously what I am giving up with a old car is safety...tech features...etc.