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I've almost always been of the opinion that you're better off buying a used vehicle and let the first owner pay for the depreciation.
What about right now?
There are manufacturers offering attractive incentives to buy new cars, and there are used cars that are listing for pretty close to the price of new.
If you're comparing a brand-new car with a good price and 0% financing and a late-model used car of the same model for a few thousand less, is it still a given that you're better off buying the used one? I would imagine you could work the numbers so that the total of all the payments on the loan would be pretty comparable.
Note: I'm not in the market to buy, but the spate of "what should I buy?" threads got me wondering.
Just depends on the car. A junker like a Hyundai is a good bet to buy used since they depreciate quickly. A real brand that holds it's value is a better bet to buy new.
Yea, I'm looking to purchase a vehicle as well. The two key differences I've noticed are; the interest rate for financing on a used car is higher. In my case, I can get 0.0 on a new car and about 3.4% thru my bank. They can't give me an exact rate without running my credit but it'll be 3.0 - 3.5%. The second is, most used cars I've seen come with a warranty. In my case, 100k but that all depends when and what type of vehicle you are buying.
Carmax.com has a great payment calculator so you can see the difference. From what I've input, it looks like about 3k more for a new car only makes a $15 difference monthly for 60 months. Of course, down payment makes a big difference as well.
I think the answer to the OP's question is not clear - it depends very much on the vehicle and the buyer's priorities.
I think the best buys in used cars are those that don't hold their resale well - but are still good cars. Hyundai Sonatas are a good example. Lots available for sale, resale isn't good, so used prices are good.
Used Hondas and Toyotas on the other hand are relatively expensive because their resale value is so high. Still may be a smart buy - but new vs. used may not show a big difference.
Some of the other best buys in used cars are near-luxury or luxury brands. Acura TL, Infiniti M, BMW 5 series, Jaguar, etc are often very good buys used. Lots of them come off leases or the owners are serial upgraders.
one thing is stay away from 4-5 year old hybrids cause they will be up for getting their battry pack replaced around that time and it's 4-5 grand but buying used is good because you don't take the hit depreciation and it afford's some one to get a nicer fully loaded model or a better model car all together plus there are some geat fun cars out there on the market like the G8 and mustang GT that have discontinued or have a update so they are a great bargin right now for a sport's car lover also in the truck market it's good too because you can get the better more capable and powerful 3/4 ton model less the the base price of a new 1/2 ton and if it's 2 year's old used car or truck you still have a year left of factory warranty
I personally always buy something that is around 9-10 years old at the lowest price and well maintained.....it`s my preference because it has already been road tested and survived.....my next vehicle to own will be out of warranty and cheap....It was born in 2008, but I will buy it in 2012....i`m patient like a vulture when it comes to wheels
A lot of it comes down to life-cycle and use. Generally speaking gently used (1-2 years old) is a better value than new as the depreciation hit has been taken and the warranty is generally still in full affect, or extended in the case of CPO. Given this scenario, if you keep your car for 4-5 years from purchase the used buyer will get the better value.
In the case of manufacturer incentives it generally takes 3-6 months for the reduction in new prices to catch up with the used market. To use the example of GTO's Pontiac G8 it wasn't too long ago that new G8's with incentives were selling for LESS than used cars of even the same model year. A couple months down the road and the used values plummetted in reaction as the used supply had built up when the incentives were in effect.
Interest rate is part of the affordability concern, but may not be that major of a factor. Let's say we can get the same exact car new and used. The new car costs 30k and has 0.0% and the used car that is two years old costs $8k less, but the best financing can only net you 8.9% for 60 months. In this case the new car would cost you $500 a month and the used car would cost $455.61. That is a pretty realistic case and would come down to details like warranty coverage and the "new car feeling premium".
Also, leasing is important to remember. Cars that generally have high resale values make for excellent lease deals and often carry the cheapest rates. If leasing is possible for you (you will not exceed the mileage) than that is the best bang for the buck you will find as you are only paying for the portion you use.
Please remember the main factor is how long you plan to keep the vehicle. If you are pegging the usable life of a vehicle at 10 years and plan to keep it until it reaches that age, buying new is the better bet as it will net you more time with zero payments.
Carmax.com has a great payment calculator so you can see the difference. From what I've input, it looks like about 3k more for a new car only makes a $15 difference monthly for 60 months. Of course, down payment makes a big difference as well.
Then their payment calculator sucks. $16.67 per $1000 is 0% interest over 60 months. So $3K would be, at a minimum, $50.
one thing is stay away from 4-5 year old hybrids cause they will be up for getting their battry pack replaced around that time and it's 4-5 grand but buying used is good because you don't take the hit depreciation and it afford's some one to get a nicer fully loaded model or a better model car all together plus there are some geat fun cars out there on the market like the G8 and mustang GT that have discontinued or have a update so they are a great bargin right now for a sport's car lover also in the truck market it's good too because you can get the better more capable and powerful 3/4 ton model less the the base price of a new 1/2 ton and if it's 2 year's old used car or truck you still have a year left of factory warranty
Hi. I'd like to introduce you to something called "punctuation". You'd be surprised at the little miracles it work.
I think it comes down to your plans for the car - if you buy new but keep the car for 7-10 years, you're not losing much money vs buying used and keeping for 3-4 years. One way has higher upfront cost with a warranty, the other more frequent purchases that include tax and time, plus repair bills, but it really comes down to initial costs, depreciations and used costs, plus repair bills over time.
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