Why by a newer used car?

My two recent examples of why:

2011 Kia Forte SX hatch, loaded to the gills. Bought in late 2012. Would be $24k+ new. Bought for $17k with only 11,000 miles on it.

2010 Toyota Prius - bought two months ago. The 2014 model isn't substantially different. New it's in the mid $20k range. I got mine for just over $10k. Yes, it had 100k miles on it, but it's as clean as new plus has a documented service history at Toyota. I also could have gotten a 2010 w/55k miles for $13,700.

I do agree that for some cars, such as the Fit, it doesn't make a lot of sense. But for many other cars, it does.

I think part of the problem is that my wife's car only has 124k miles on it but it has so many creaks and rattles and given that it is a V6 Saturn Vue I am worried about the transmission going and I don't want to deal with replacing that if it goes.

Its really very simple. On the front end, cars that depreciate faster are going to be better used car buys than those that don't. The real question is, do you really want a car that depreciates fast? You may buy it cheaper, but also lose more in the end. But nevertheless, when talking about 2 or 3 year old cars, it likely makes more sense to buy a new version of a car that holds its value and a used example of one that doesn't.

My 2012 Ford Explorer optioned out was $56K on the sticker.

I bought it in 2013 for $31K.

New with 0% Financing the payment would have exceeded $900 a month.

I pay $550 a month on my secured line of credit.

Why buy new???

On the opposite side, we just bought my wife a new RAV4. It's a '14 model and had a sticker of $28.9k. We got them down to $24k on closeout. This is only the 4th car she's ever owned so she keeps them forever. That's cheaper than some of the 1 to 2 year old ones we looked at.

By contrast, we shopped CRV's, as her previous car was an '03 CRV, and they would only come off the price of the '14's about $700. On the used lot, they had several that were within $1k of the new price, and one was a 2011 model. At that point, I have to agree, why buy used? However, they may have dropped the price more, but still.

In the end, the 6 year warranty and included maintenance for 6 years is far, far better than buying used. Even tires were included.

As far as the RAV4 goes, its awesome for what it is, and drives pretty well. I'd go as far as to say that its "sporty" for a SUV. Hopefully Toyota is coming out of it's "dark ages".

It all depends on the situation. When we were shopping to replace my wife's '99 CR-V, there was basically no cost difference between new and used, so we bought our RAV4 new. Over time, it's held its value very well.

When we were looking for a minivan in 2008, the new Odysseys were very expensive, and we got a good deal on a CPO used one. We added the HondaCare warranty, and in the end we had a vehicle with a better warranty than a new model for $10k less money.

Some of the things that factor into the equation:
- How many years has the current body style been available (and when is a redesign expected)?
- Finance costs of new vs. used (if applicable)
- Insurance rates
- Taxes
- How willing dealerships are to deal on a particular model?
- How front-loaded is the depreciation on the vehicle you're looking at?

Agree on all fronts here. Just bought the wife a CPO Lexus 2011 CT200h (42k miles, all documented maintenance) with 3 yr/100k bumper to bumper warranty for 23k whereas the new ones we were looking closer to $35k. I'll let the person who leased it eat that depreciation. Buying on the edge of CPO seems to make sense more often than not (especially on premium brand offerings).

93EXCivic wrote: I think part of the problem is that my wife's car only has 124k miles on it but it has so many creaks and rattles and given that it is a V6 Saturn Vue I am worried about the transmission going and I don't want to deal with replacing that if it goes.

I'm in a similar situation. The girl unit's V6 Vue has 117k miles on it and I'm debating on whether we should go ahead and get rid of it while it has some value.

NGTD wrote: My 2012 Ford Explorer optioned out was $56K on the sticker. I bought it in 2013 for $31K. New with 0% Financing the payment would have exceeded $900 a month. I pay $550 a month on my secured line of credit. Why buy new???

Full-size trucks/SUVs always sell for well below the "sticker" price.

Most to the tune of nearly $10k off.

Whenever I hear a car/truck ad proclaiming that their car has "the higest resale value" I make a mental not that those models will be crappy cars to shop for on the used market. Choice between a Toyota/Honda minivan or a Dodge/Ford unit? If my wallet allows I buy the Toyota/Honda new and take advantage of their ability to hold their value. Otherwise I look at the Dodge/Ford and buy 3 years old for 50% or more depreciation.

docwyte wrote: Because a new Audi S4 optioned the way I want is over $60k, whereas the '11 Audi S4 I recently bought was only a little more than 50% of that. Car still has a bit of warranty left on it too and has 37k miles on it. I'm more than happy to save almost $30k in order to drive a car with 37k miles on it.

Agree. Not all cars will have the numbers work this way, but many will. Those first 2-3 years are very expensive ownership times!

PS - it is 'Buy', not 'By'......

mazdeuce wrote: Toyotas are always reliable. Ford makes junk.

Funniest joke I've seen all week.

I'm just hoping the Jaguar F-Type depreciates like a Jaguar. I wouldn't mind picking one up for $20k in five years.

"Buy at two and sell at five and always pay cash".

Myself, I think this goes back a bit to far to be exactly true in today's world. Probably offsets to 3 year old and 6 year old since warranties have increased. Regardless, this is also a game of finding the right car for the right price, and that takes education and effort on the buyers side.

If you are not paying cash, you are SOL cause the bank eats your savings.

Newer used car can still have a warranty, you can get an extended warranty. That is an advantage that helped my a lot with my lemon-quality 350Z a while back.

Bank doesn't eat your saving at all, especially right now! I've got a loan from Lexus on my wife's GX470 at 1.9%, the loan on the Audi I just bought is 2.4%.

At those rates I'm making money, the interest over the entire life of the loan is around $5-600. I can make more on investing the money over the term of the loan then by locking it up in the car.

It's been a while since I looked at CPO BMWs but the last time I did, I didn't see a whole lot of savings vs the cost of a modestly equipped new one.

In some cases, I view CPOs a lot like demos. It might look like a bargain on paper, but if you don't need all the extra crap that they added to the car, you can get something with zero miles for the same or less.

I was looking at CPO Accords recently and they all seemed to be right around $20k. If you look at what you can actually buy a new one for (not msrp), CPO doesn't make much sense. But if I was in the market for a Tahoe or Suburban, I'd be going CPO all the way.

z31maniac wrote:

NGTD wrote: My 2012 Ford Explorer optioned out was $56K on the sticker. I bought it in 2013 for $31K. New with 0% Financing the payment would have exceeded $900 a month. I pay $550 a month on my secured line of credit. Why buy new???

Full-size trucks/SUVs always sell for well below the "sticker" price. Most to the tune of nearly $10k off.

Ford did not have any deals at the time on Explorer's, other than the 0%. Even if we take that off the sticker, the PO took $14K depreciation over about 18 months. I will take my used Explorer and laugh all the way to the bank.

Cars that retain high resale - like all the others have said buy new.

I think you guys are putting too much stock in the asking prices you're seeing for used cars. In my experience, used car prices are generally more negotiable than new ones. My most recent purchase, a V70R, had an ask of $10,800 at a VW dealer and I paid $9k, a 17% discount. I think I left a little on the table but I wanted it. I once negotiated a similar percentage discount for a then-2-year-old E36 M3.

Also, depreciation figures never seems to take into account actual transaction prices vs. MSRP.

mfennell wrote: I think you guys are putting too much stock in the asking prices you're seeing for used cars.

With many makes, the incentives kick in to purge the existing stock of the old model in preparation for the new year's model. I've twice been in a situation where the new price from the dealer on existing stocks was lower than the price the poor schmucks that bought the same car the previous year were asking for their now used car. Incentives of $6-7,000 are not unusual.

wspohn wrote: I've twice been in a situation where the new price from the dealer on existing stocks was lower than the price the poor schmucks that bought the same car the previous year were asking for their now used car. Incentives of $6-7,000 are not unusual.

I've seen it too. Asking prices may briefly lag reality but they eventually catch up. Unless a seller was incredibly lucky with an uninformed buyer, those cars were eventually sold (or traded) for a price that reflected the incentives on the new cars.

mfennell wrote:

wspohn wrote: I've twice been in a situation where the new price from the dealer on existing stocks was lower than the price the poor schmucks that bought the same car the previous year were asking for their now used car. Incentives of $6-7,000 are not unusual.

I've seen it too. Asking prices may briefly lag reality but they eventually catch up. Unless a seller was incredibly lucky with an uninformed buyer, those cars were eventually sold (or traded) for a price that reflected the incentives on the new cars.

We bought our 2007 Odyssey EX-L for $28K new with end-of-model-year incentives. Sticker was $32.5K, and people on Craigslist were asking $29K for their 20K mile used ones.

The "buy a 3 year old car" mantra has been repeated so many times that prices on 3-year-old cars that are popular and perceived as reliable have been driven up stupidly high.

Again, not always. A 2014 Audi S4 with the options I want is over $60k. I paid a little more than 50% of that.

That's a far cry from the scenario you laid out. The more expensive, luxury performance cars are the ones where you can save serious money. I bought my wife's 2005 Audi A4 avant with 17k miles and a better CPO warranty than a new one for a 45% discount over new and the car was 18 months old.

I've had the same luck buying used BMW's etc, etc.

I sent you a note about my Accord. Reliable? Frugal? Fun? Okay, maybe not a ton of fun but I do race through the 5-speed, 4-cylinder as I drive and it meets all the "sales car" requirements I need.

I made my very first brand new car purchase this summer and I came to the same conclusion. Why buy a $20K car with 12-20K miles vs. a brand new one when the cost savings is only $2K?

I ended up with a 2015 Mazda6 Touring and I even mulled over the benefit vs. depreciation of a 3K mile 2014 that was a Mazda Corporate car a dealership had. Their asking price was about $1,500 less then the best initial quote I got but I ultimately decided that the savings was negligible on the amount I was going to finance (and I got 1.9% through Mazda) and at the end of 3 yrs and 36K miles if I chose to sell I would have a car that was a year older model year wise and depreciation wise and I wouldn't save enough to make it worth it. I probably could have gotten them down to $21K or $20,500 vs the $22,650 I paid for mine pre tax, tags, etc. but I decided not to bother.

Like others said if I was shopping for a luxury vehicle or an SUV or truck I could see the value in it but for the average midsize or compact car there just isn't the value in it.