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Old 02-03-2016, 11:27 AM
 
4,833 posts, read 5,675,740 times
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Quote:
Originally Posted by Nlambert View Post
By "shady" past, my assumption is that the OP means you do not know if the maintenance was kept up or what type of work was performed. A dealership has the maintenance records and will provide them to whomever owns the car (minus the previous owner's info).


The Venza didn't have a shady past when we bought it as it only had 8 miles on it. BUT..... my point was to show that even a new car isn't guaranteed not to have problems. It's a gamble. For us, warranty covered the repairs they did do, but we were still out multiple trips to the dealership and out use of the vehicle for weeks at a time.


As of right now, that Venza has a shady past. The local dealer has all the service records. But they didn't fix the problems. The dealer we bought it from one town over has those records and since they attempted to cover up the roof issue, it's likely the local dealer won't see it in the warranty history.


It's a gamble to buy a used car. But it's also a gamble to buy a brand new one.
Sure, everything is a gamble. I'm happy just to wake up every morning. But just like in your post at least you're protected with new cars (warranty). And I'm sure the ratio of brand new cars vs used car issues is much higher for used.

I'm not an advocate of buying new but just making a point.
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Old 02-03-2016, 12:05 PM
 
Location: Huntsville
6,013 posts, read 6,594,753 times
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Quote:
Originally Posted by North Beach Person View Post
But are the odds the same?


Going back to something you mentioned earlier, the average initial ownership length of new cars is just under 8 years (Dodge and Buick being over 9 years and Benz being around 6 years).


http://www.cnbc.com/2014/11/05/


It depends on the new car you buy, and the used car you buy. All things equal in my opinion based on my past experience with new vs used, the odds are very similar. Follow me here.... I'm going to do the math to explain.




We can go with the 8 year figure as well. I guess times are changing in that loan periods have been extended, which I think in many cases force people to hold onto their cars a little longer. The initial purchase price has also gone up substantially and since depreciation is still existent until about the 5 year mark folks may be holding onto them so as not to take a big hit.


Let's look at an 8 year ownership average. I'll use NADA's valuation of new retail price vs used retail price. We will also go with Toyota's offering in my area of 1.9% financing and my bank's used car financing rate of 3%. We will also go the longest term available on each vehicle to drive down the monthly payment. We will also use a zero downpayment and assume the driver will drive 12k miles per year.




We will also assume that both owners maintain their vehicles appropriately with proper fluid changes and follow a 3k mile service interval (yes I know they're longer but to be consistent will use this number).


We will use these basic maintenance costs for now to keep it simple.
Oil change - $50
Trans flush - $75 - (assuming this is done every 60k miles)
Tires - $600 (assuming tires are replaced every 60k miles)
Timing belt replacement (90k miles) - $800
Spark plug replacement (90k miles) - $200




Vehicle A - brand new:


2016 Toyota Avalon XLE
MSRP - $33,880
Financed for 84 months at 1.9% interest.
$33,880 + 1.9% interest ($6,437.20) = $40,317.20 financed
Monthly payment will be $479.96 + GAP. Let's use $7/mo on GAP. Total monthly payment $486.96.


For the first two years at our local Toyota dealership, maintenance is free. Warranty is the standard 3 yr/36k bumper to bumper warranty.


Total Cost of ownership:


Yr 1 - 12k miles: $5843.52 (monthly pmt * 12)
Yr 2 - 24k miles: $5843.52
Yr 3 - 36k miles: $5843.52
Yr 4 - 48k miles: $5843.52 + 3 oil changes ($150) = $5993.52
Yr 5 - 60k miles: $5993.52 + $75 (trans fluid change) + $600 (tires) = $6,668.52
Yr 6 - 72k miles: $5993.52
Yr 7 - 84k miles: $5993.52
Yr 8 (paid off) - 96k miles: $150 (oil change)+ $800 (timing belt) + $200 (tune up) = $1,150


Total cost of ownership for 8 years: $43,329.64

NADA retail value on an 8 year old Avalon with 96k miles (2008 for reference): $11,550


Total cost per mile in 8 years: $0.45/mile




If you drive this car for 8 years and sell it for the NADA price, the cost to own would be $31,779.64.






Vehicle B - used: (bought from a dealer with all maintenance records. No maintenance required immediately after purchase)


2012 Toyota Avalon XLE (60k miles)
Clean Retail - $20,275
Financed for 60 months at 3% interest.
$20,275 + 3% ($6,082.50) = $26,357.50 financed
Monthly payment will be $439.29 + GAP. $7/mo. Total monthly payment is $446.29


Yr 1 - 72k miles - $5,355.48 (monthly pmt * 12) + 3 oil changes ($150) = $5505.48
Yr 2 - 84k miles - $5505.48
Yr 3 - 96k miles - $5505.48 + $800 (timing belt) + $200 (tune up) = $6505.48
Yr 4 - 108k miles - $5505.48
Yr 5 - 120k miles - $5505.48 + $600 (tires) + $75 (trans fluid)= $6180.48
Yr 6 (paid off) - 132k miles - $150
Yr 7 - 144k miles - $150
Yr 8 - 156k miles - $150




Total cost of ownership for 8 years = $29,652.40
NADA retail value on a 12 year old Avalon with 156k miles(2004 for reference): $7,025

Now, let's sprinkle in some repairs during these 8 years required by some higher mileage vehicles.

Shocks/struts - $600
Tie rod ends - $250
New muffler - $150
Wheel bearings - $200
Transmission replacement (major failure) - $3,000


New Cost: $33,852.40.




Total cost per mile in 8 years (you've put 96,000 miles on the car): $.35/mile




Difference in cost of: $9,477.24 in 8 years.


If you drive the car for 8 years and sell it for NADA price, the cost to own would be $26,827.40.






For the new car to be the better value, the used car would need to require over $9,477.24 in repairs over the course of 8 years.
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Old 02-03-2016, 12:11 PM
 
Location: On the Chesapeake
44,900 posts, read 59,882,454 times
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You actually are saying that the odds of major expense with a new car as opposed to a used car are equal? You really are saying that?
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Old 02-03-2016, 12:12 PM
 
Location: Huntsville
6,013 posts, read 6,594,753 times
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Quote:
Originally Posted by IShootNikon View Post
Sure, everything is a gamble. I'm happy just to wake up every morning. But just like in your post at least you're protected with new cars (warranty). And I'm sure the ratio of brand new cars vs used car issues is much higher for used.

I'm not an advocate of buying new but just making a point.


The warranty is where people get the warm and fuzzy. Go look up Steve Richards on Youtube. He is a guy that trains salespeople HOW to sell you a new car. He's GOOD. Scary good. I enjoy watching him teach salespeople how to create value through numbers and what if scenarios. By the end of some of his spiels, I'VE wanted to buy a car from him. So he's doing his job.


He teaches sales people to CREATE value in your mind with a warranty.


He wants you to believe something is going to happen to the vehicle that the warranty will pay for so he creates a kneejerk reaction during the deal. They all do.


But you are taking an expensive gamble that you will need to use the warranty (and in my comparison above) extensively to make up the difference in a new vs used car purchase.


Now if a warranty is worth an additional $9k to you, by all means go that route. I'm not saying there are some instances where folks might need it. But my point is to look at the total cost of ownership and then weigh your options first.
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Old 02-03-2016, 12:18 PM
 
Location: Huntsville
6,013 posts, read 6,594,753 times
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Quote:
Originally Posted by North Beach Person View Post
You actually are saying that the odds of major expense with a new car as opposed to a used car are equal? You really are saying that?


I am saying that you are getting hung up on the chance that something catastrophic is going to happen just because it's used, and because you picture this catastrophic event in your mind, you choose to spend the extra money to buy new because there is a piece of paper that tells you within 36k miles you are SAFE and don't have to worry about it.


Why do you think a lot of manufacturer warranties only go 36k miles? The major issues aren't going to happen in the first 3 years or 36k miles because the dealer is going to maintain it FOR you during those times in many cases and the concern that something catastrophic is going to happen is minimal. If they extended the warranty to 100k miles on all vehicles their warranty claims would skyrocket.




You're going to either pay extra for the warranty in your monthly car payment, or you're going to pay money if something happens on your used car. You pay the money either way. It just depends on where you choose to bucket the money.
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Old 02-03-2016, 12:23 PM
 
Location: On the Chesapeake
44,900 posts, read 59,882,454 times
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Quote:
Originally Posted by Nlambert View Post
I am saying that you are getting hung up on the chance that something catastrophic is going to happen just because it's used, and because you picture this catastrophic event in your mind, you choose to spend the extra money to buy new because there is a piece of paper that tells you within 36k miles you are SAFE and don't have to worry about it.


Why do you think a lot of manufacturer warranties only go 36k miles? The major issues aren't going to happen in the first 3 years or 36k miles because the dealer is going to maintain it FOR you during those times in many cases and the concern that something catastrophic is going to happen is minimal. If they extended the warranty to 100k miles on all vehicles their warranty claims would skyrocket.

You're going down the catastrophic failure path comparing new to used?


So no warranty on a used car puts you in a better position than having one on a new car? Is that what you're saying?


Use your scenario with failure at 100K:
Buy a used car at 60K, in 3 1/2 years you have that failure.
Buy a new car at 0, in 8 years you have that failure.


And you're saying having that failure in 3 1/2 years (before that used car is paid off) is a better deal? Is that what you're really saying.


I don't pay much attention to the warranty as it is anyway. That's not why I buy a vehicle.
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Old 02-03-2016, 12:31 PM
 
1,039 posts, read 1,148,184 times
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GM for instance offers to extend your warranty at a very cheap price in the first 12,000 miles of driving if still under factory warranty.

I bought a two year old GM car with 5,000 miles, it came with a four year factory warranty. Did not buy extended warranty form dealer, but right before I turned 12,000 miles I extended warranty out five years for only $900 bucks. I used an out of state dealer ship competitive on price.

So I get a full warranty on used car for 7 years. My wife bought brand new and got less of a warranty.
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Old 02-03-2016, 12:34 PM
 
1,039 posts, read 1,148,184 times
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BTW if you maintain and repair car yourself - use is way to go. I had a car I bought used and owner gave me all receipts. I kept receipts.

Car made it to 170,000 miles at 18 years of age with most expensive repair ever $35 bucks. Some years maint on car was under $10 bucks.

Car never went back to dealership not even for free 1,000 mile oil change.
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Old 02-03-2016, 01:08 PM
 
Location: Huntsville
6,013 posts, read 6,594,753 times
Reputation: 7036
Quote:
Originally Posted by North Beach Person View Post
You're going down the catastrophic failure path comparing new to used?


So no warranty on a used car puts you in a better position than having one on a new car? Is that what you're saying?


Use your scenario with failure at 100K:
Buy a used car at 60K, in 3 1/2 years you have that failure.
Buy a new car at 0, in 8 years you have that failure.


And you're saying having that failure in 3 1/2 years (before that used car is paid off) is a better deal? Is that what you're really saying.


I don't pay much attention to the warranty as it is anyway. That's not why I buy a vehicle.









I'm speaking in terms of the money spent. If you look at the long term (using the 8 years you posted) even with a catastrophic failure at 3 years on a used vehicle versus 8 years on a new one it still comes out to less money spent during the time period in which you own the car.


Get past the first 3 years of warranty and look at the entire 8 year timeline. Or 10 years, or 12 years... However long you want to do the math. It's numbers.


In 8 years you spend ABC to own a new car. Initial investment is more, but over that 8 years maintenance is less.


In 8 years you spend XYZ to own a used car. Initial investment is less, but over 8 years the maintenance costs more.


If XYZ is cheaper than ABC, doesn't it make sense to go the route that gives you the same results for less money spent?
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Old 02-03-2016, 01:19 PM
 
17,104 posts, read 11,943,054 times
Reputation: 17035
Depends on how much you're spending on that new car too.

Can buy a new Kia at $18k. Finance it at 0% for 5 years and actually keep it through the whole 10 year warranty or longer. You're looking at owning a car you were the first to fart in for 10 years at a pretty low "ABC" cost. The higher cost car you're talking about the more used makes sense.
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