All this talk about cars made me wonder another critical point.
I know the “conventional” wisdom (from Dave Ramsey) says that you should never ever ever buy a new car, because you’re only throwing money away on depreciation. Apparently (and my mom is a DEVOUT believer in this), when you buy a new car, you should just “take a $100 bill every week and just set it on fire and watch it burn away”, because that’s how much the new car costs in depreciation.
In my very limited experience, new cars are a LOT cheaper than used ones. I had problems almost from day 1 with every used car that I ever owned, but the one new one I bought is nine years old this month. Got 150k miles on it, and it still runs like a champ.
I think a lot of people say that you should avoid new cars because if you buy a new car for $40k, drive it around the block, then try to resell it, you’ll only get $30k for it. So, in essence, you’ve paid $10k for the first mile. My take–who buys a car and sells it back after one mile? I want my car to last me 250,000 miles. I want to drive it until it falls apart. I am not interested in the resale value, because I never intend to resell it. And I’m pretty firmly convinced that if you want to drive a car for 250-300k miles, new is definitely the better way to go.
A few years ago new cars were actually a better value - in a lot of cases - than quality, low-mileage used cars because of all the dealer incentives that were being offered to move the manufacturer’s merchandise. I don’t think that’s the case as much now though.
Yeah, there was a point last year where some used cars were more expensive than new cars of the same model. This was due to currency factors, tsunami in Japan, and maybe some new car manufacturer promotions.
Of course, sometimes, used car prices get heavily discounted also. In 2009 or so, for instance, everyone sold their sports cars. I was seeing 1-2 year old BMW Z4s for like $19,000, or $11,000 Miatas. Really wanted to buy one, but I had no parking…
The obvious advantage of a brand new car is that you can get exactly what you want. I’m in the market for a SUV/crossover and I’m finding it very difficult to find exactly what I want in the used market. I’m confident I’ll eventually find what I’m looking for and can wait until I do, but if I had to make a move today I would have to settle for something I’m not completely happy with or pay quite a bit more to buy new.
See? Everybody falls prey to this way of thinking. I would like to know what assumptions they use. If you’re talking about buying the car today and selling back tomorrow, then I would agree. But who does that?
On a “total cost to own over the life of the car” basis, I’m not sure that this is correct.
Higgs, one of the things I liked about buying the TL like 5 years ago, was that back then they didn’t really have many features for the car, just like 2 packages. So it was pretty easy to grab the car you wanted used as they were all similar. I could see for some of the US cars especially that offer a more customized approach that this could be a hassle.
I just look at it this way. If I buy 2 years used with like 30-45k miles from an authorized dealership with warrenty, I get essentially a car that “feels new” with some legal backstop, at a cost that allows me to buy a significantly better model than if I bought new. I’d rather have a 2 year used Acura MDX than a new Ford Explorer (both are great cars by the way - at least in my mind).
You instantly lose money because your buyer is going to want a pretty big discount to justify the fact that you’re selling a car immediately after buying it. There’s advantages and disadvantages to buying used vrs new but both are priced correctly. Basically, there’s a premium to driving a new car for two reasons one is for vanity i.e. you’re driving a new car and the other is practicality i.e. you don’t need to replace your car for a few years. It’s your choice and the market provides options for both.
I see what you’re sayiing, but you’re comparing Acuras and Explorers, which is akin to apples and oranges.
I look at it this way–if you buy a 2-year old Acura MDX, you’ll pay $30k. If you buy a new Acura MDX, you’ll pay $40k. (I’m just throwing numbers out there.) If you drive them both until they fall apart, which one will cost you less?
Or conversely, if you’re one of those people who think you can’t drive a car for more than three years, which one will cost you less?
Or if you refuse to drive a car with more than 120k miles on it, which one will cost you less?
When my cars hit about 80-90k miles I generally swap them in. But here’s the point. If I can only spend 30k, I can either get a new ford explorer or a 2 year lightly used acura MDX. To me that is a complete no brainer. So you say, but for 43k, you could get a NEW MDX! To which I would respond with yes, but for 40k, I can get a 2 year used XYZ car, or even a 2 year used MDX with the super amazing advanced package, instead of some blah base model that doesn’t have nav, sunroof, etc. All of which, btw, will boost my resale.
This is true with clothes, jewelry, textbooks, or pretty much any other non-appreciating asset in the world. Yet for some reason, buying a new car is anathema to some people who don’t mind shopping for brand new clothes or jewelry.
If you buy a car and keep it until dealth, then New is not horrible. You’d then be aware and privy to all maintenance and care prolonging it’s life. If you don’t plan to do this, don’t buy new.
^^ I always bought used textbooks when I was in school, don’t wear any jewelry, and I very rarely buy clothes (no, I don’t walk around naked all the time, I get enough clothes as gifts that I don’t need to buy them myself).
Right, because it’s used. A used car comes with the risk that you have no idea how that person really drove it. Maybe they drove it like a rally car and didn’t tell you.
And, that stat is misleading because nobody is driving a car off they lot and then turning around and selling it immediately. If someone is, I want their contact info.
I wish I was in that situation. Currently leaning toward an Audi Q5 and it’s a PITA due to the different engines, tech packages, etc. Thought I found it the other day, only to discover that it was beat to hell despite being pretty low mileage. Of course it was at a dealer 70 miles away, so it killed an entire day, and I don’t even know how they were able to make it look as nice as they did in the pictures.
I think the used vs. new analysis is a lot more in depth than people think.
typically, I’ve heard that cars depreciate the fastest during years 1,2 and sometimes 3… so the new car incentives, warranties, and money saved form less repairs, would have to make up for the depreciation losses. Doing all this analysis for multiple cars (both new and used) is easier said than done.