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This is not true. Cars can fail even if perfectly maintained, due to a design flaw or just wear (like you're going to routinely inspect the innards of your transmission to find abnormal wear before it fails on you driving to Mom's house 3 states away?). Repair shops aren't losing money because used cars don't break.
When I've bought new (or especially leased) I'm buying a known, fixed low cost for the piece of mind that I don't have to dive into savings or home improvement budget or whatever to repair the car if a transmission fails or something like that (which can happen on Hondas and Toyotas just as easily as it can on Minis and Audis). Budgets don't work on TCO whether you're talking cars or houses or businesses. I don't get paid annually, so I don't run my budget annually.
I guess I should have clarified on what I meant. ALL cars could fail. That doesn't mean the risk is increased when you buy a low mileage used vehicle. For the new car to be the more financially sound option would mean that the likelihood of a major component failure (engine, transmission, etc) would need to be more than 60% likely. On a vehicle with 20-30k miles, it just isn't there.
You're buying peace of mind. You really aren't buying much more than that. I'm not saying not to go do it if it makes you feel good, but trying to justify it by saying it is cheaper just isn't true.
Plus, doesn't seem he's taking into account that the new car is owned from years 0-5 of that car's life, while the used one is during the car's 5th through 10th year of existence. You may not need to change spark plugs, etc, until year 7 which in that case it would apply to the used scenario of his, not the new scenario.
I think he is understating the repair dollars needed in his used scenario. Plus, like you said, the risk of a major problem starts to grow exponentially each year as the car ages.
That was taken into account.... but again you're making up examples. You aren't using the ones I am providing to you. The ones I provided were an option where the vehicles were 2 years old and had less than 25k miles more than the brand new one. But the price differential was great enough that it would take a major catastrophic event to offset the cost of buying new over used.
I've owned over 45 vehicles in my lifetime (some new, most used). Of those, very few (with exception to the Audi and an F250 with a 6.4L Powerstroke) were money pits where the cost to maintain them grew exponentially. Of all my vehicles the most expensive repair I ever made (outside of tires) was ball-joints and that cost me $600. All went well over 100k and many went well over 200k miles.
The risk of a major problem begins to increase the very second that a car rolls off the factory floor. The problem is that it isn't an exponential growth. It's a very minor growth that (when maintained properly) shouldn't be recognized until well over the 200k mile mark. The risk is minimal assuming one does their research accordingly and knows what vehicles to avoid.
You can't just make up things. I have yet to see a sound "advantage" to buying a brand new car laid out in real world terms (not made up scenarios). As I said before, you are willing to pay for convenience and peace of mind. That's fine. But peace of mind is not a financial advantage over a vehicle that I have illustrated in any of my examples.
I used to buy only used cars. Now I buy new (and I keep them for at least 10 years).
First of all, the market for used cars is awful. My time is money and in order to find a decent used (and get the best deal), I have to contact numerous individuals, check each car individually, etc. Also, the used car market in my area has crappy old cars. And pretty much everybody lies...about condition, not having records, about accidents, etc. Used car sellers greatly overestimate value of their vehicle. I even ask them for the research backing up their price because I know I can be wrong and they just don't have it, or base the value on what they owe.
Second, a corollary to this is that I can't work on my own cars. So while a used car might be a great deal, I have to factor in the maintenance required. My mechanic is expensive. His tools alone are impressive.
Third, buying new is a breeze. I do all of my research online (including incentives, etc), talk to dealerships from my office, negotiate online, and show up and get the car.
Fourth, technology. I love technology. I will always buy new to replace a car just so I can have that amazing new technology. I recently went on a road trip with a friend who has a 2017 Benz SUV. In addition to seat warmers/coolers, it also has cup holder warmers or coolers. And the back-up camera, blind-spot monitoring and all of the other features were great, too. That really made my ride home in my 2006 Sienna minivan a little uncomfortable, lol.
Fifth, insurance. I was pleasantly surprised at the difference in price when I dropped an old car and added a new. The new apparently had all kinds of safety features the positively impacted insurance.
I agree with everything, except for negotiating online and then showing up to get the car. For me, I don't even bother researching much before I test drive the vehicle. I've sat in vehicles that were horribly uncomfortable pushing my neck too far forward or hurting my back ect. It's funny because even the same auto maker/same year in different models can feel VERY different. Ergonomics, seating position ect. can't be researched online. I always like to feel how the car handles and overall comfort. I do that FIRST. Then I research/negotiate. I do end up visiting multiple dealers even for a new car to test drive and compare products. People get too stuck on spec sheets and then complain afterwords about how the vehicle handles. Something that should have been very apparent during a test drive. Just look at the posts on this forum! Take a LONG test drive. A dealer if they think you're interested will many times even let you take the vehicle home for a day. Remember you are in charge with the salesman. Tell them you want a longer test drive. Also, your negotiating position is MUCH stronger in person with a checkbook out than over a phone/emails because they know you've a real buyer.
Location: Stuck on the East Coast, hoping to head West
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Quote:
Originally Posted by BeyondtheHorizon
I agree with everything, except for negotiating online and then showing up to get the car. For me, I don't even bother researching much before I test drive the vehicle. I've sat in vehicles that were horribly uncomfortable pushing my neck too far forward or hurting my back ect. It's funny because even the same auto maker/same year in different models can feel VERY different. Ergonomics, seating position ect. can't be researched online. I always like to feel how the car handles and overall comfort. I do that FIRST. Then I research/negotiate. I do end up visiting multiple dealers even for a new car to test drive and compare products. People get too stuck on spec sheets and then complain afterwords about how the vehicle handles. Something that should have been very apparent during a test drive. Just look at the posts on this forum! Take a LONG test drive. A dealer if they think you're interested will many times even let you take the vehicle home for a day. Remember you are in charge with the salesman. Tell them you want a longer test drive. Also, your negotiating position is MUCH stronger in person with a checkbook out than over a phone/emails because they know you've a real buyer.
Good point about the test drive.
You're really in command if you understand financing. I will frequently finance thru dealer and then pay off early--sometimes within a month or 2. Usually, there's an incentive for dealer financing and exploiting the salesperson's hope to make money on the spread is yet another way to negotiate. Goes without saying, I always know my credit. Even if I plan to write a check, I don't tell the dealer until the absolute last minute.
My current car was purchased used after a 3-year lease. The car was 3 years old, had less than 15K miles on it, and I bought it for 40% off the original MSRP sticker. THAT'S why I buy used.
And if you'd have bought it new you'd have gotten 15-20% off the sticker price. If you financed it, you'd have gotten a lower interest rate on a new car. Maintenance costs would probably have been lower with a new car. And if you'd have bought new, the trade-in value would be higher when it's time to trade for another new one.
Not saying that buying used is a mistake, but it's seldom a clear-cut decision. Your insurance, sales tax and license plate fees are likely lower with the used car, too.
I've usually purchased new but have bought a few used cars. I can't recall many car purchases, used or new, that I regretted... a new (1986) Jeep Wagoneer was the worst.
I don't think it necessarily is. But I've done both. A couple times with used vehicles I've gotten deals which on paper seemed really good. But I was recently looking for a Jeep, and the used ones were almost always as much as the new ones- so I got new.
Sometimes, you can get pretty good deals on new cars, and you get the whole warranty and better financing.
My approach has been to buy cars no younger than 15 years old, no less than 100K miles. I prefer sports-oriented cars that were driven hard, not necessarily maintained well, sold by owners who’ve lost their affection for the car, and are ready to move on. While prospects are never certain, it’s been my experience that there’s a sweet-spot in vehicles age and wear, where it’s already near the bottom of its depreciation-curve, but still has several 10s of thousands of miles remaining before major maladies obtrude. The idea is to buy something that has deteriorated somewhat, but not too much… and to resell (or scrap) once the serious problems start mounting. Of course, this entails putting up with a few inoperable components, maybe some rust, rattles and shakes, diminished power and so forth. But if one is lucky, the only cost of ownership is liability-coverage, registration/taxes, gasoline, and wear-items such as motor oil and brake pads. The car is then sold for nearly that for which one has paid for it.
Something like that. I won't put an age limit on it. It's more a cost vs risk vs value thing. There is higher risk in spending $20000 on a late model used than there is on a older good car for $2500 to $7500.
If that $20000 car blows an engine and needs a $5000 repair, you almost have to do it to protect your investment. If that happens to the $2500 car you can get rid of it and move on.
That was taken into account.... but again you're making up examples. You aren't using the ones I am providing to you. The ones I provided were an option where the vehicles were 2 years old and had less than 25k miles more than the brand new one. But the price differential was great enough that it would take a major catastrophic event to offset the cost of buying new over used.
I've owned over 45 vehicles in my lifetime (some new, most used). Of those, very few (with exception to the Audi and an F250 with a 6.4L Powerstroke) were money pits where the cost to maintain them grew exponentially. Of all my vehicles the most expensive repair I ever made (outside of tires) was ball-joints and that cost me $600. All went well over 100k and many went well over 200k miles.
The risk of a major problem begins to increase the very second that a car rolls off the factory floor. The problem is that it isn't an exponential growth. It's a very minor growth that (when maintained properly) shouldn't be recognized until well over the 200k mile mark. The risk is minimal assuming one does their research accordingly and knows what vehicles to avoid.
You can't just make up things. I have yet to see a sound "advantage" to buying a brand new car laid out in real world terms (not made up scenarios). As I said before, you are willing to pay for convenience and peace of mind. That's fine. But peace of mind is not a financial advantage over a vehicle that I have illustrated in any of my examples.
Your own scenario compared a new 2017 versus buying a used 2012. Five years apart - not two. Then you keep them both for 5 years which most rational people doing that type of analysis would not do. The whole point of buying a new car for many people is that it will last longer than new, therefore you don't need to buy a car as often. So in your example, if you are truly willing to hold onto a 2012 for five more years, that means you can buy a new car and hold it for 10 years, or buy a 2012 now - hold it for five years - then buy a 2017 five years from now and hold that one for 5 more years. That's how it should be analyzed IMO.
I stand by my assumptions and if you don't agree with them that's fine. You have plenty of off base assumptions, too, which I've already pointed out. You may be better than the general public as far as upkeep, knowing what to fix (or not) on your vehicles, etc. That gives you a leg up on most and the ability to hold cars longer. Most people can't even maintain proper tire pressure let alone follow a proper maintenance schedule on a car.
I have bought both new and used - I do not advocate for one over the other. It can go either way depending on what I'm buying, how long I plan to keep it, etc.
Your own scenario compared a new 2017 versus buying a used 2012. Five years apart - not two. Then you keep them both for 5 years which most rational people doing that type of analysis would not do. The whole point of buying a new car for many people is that it will last longer than new, therefore you don't need to buy a car as often. So in your example, if you are truly willing to hold onto a 2012 for five more years, that means you can buy a new car and hold it for 10 years, or buy a 2012 now - hold it for five years - then buy a 2017 five years from now and hold that one for 5 more years. That's how it should be analyzed IMO.
I stand by my assumptions and if you don't agree with them that's fine. You have plenty of off base assumptions, too, which I've already pointed out. You may be better than the general public as far as upkeep, knowing what to fix (or not) on your vehicles, etc. That gives you a leg up on most and the ability to hold cars longer. Most people can't even maintain proper tire pressure let alone follow a proper maintenance schedule on a car.
I have bought both new and used - I do not advocate for one over the other. It can go either way depending on what I'm buying, how long I plan to keep it, etc.
I provided you with a 5 year plan as you requested. Let's just move the goalposts.
And if you'd have bought it new you'd have gotten 15-20% off the sticker price.
Hmmmm. I'd like to see you walk into a BMW dealership and buy a brand new $80,000 car for $64,000.
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