Is Buying Used Car Really That Much Saving?

The fact that the car depreciates thousands of dollars just by driving it off the lot doesn't sit well with me. You can buy a used car that is newer with very low miles for an excellent price, and you can negotiate much more easily.

There's a LOT more room for negotiation with a used vehicle. When you buy new, it depreciates literally thousands just when you drive it off the lot. That $15K used car will likely sell for around $13K. Just food for thought.

I saved $5000 and bought a $12500 SUV. I talked the dealer down to $10,500. So I have a 3-year loan and my payment is well under $200 a month. I'll probably keep the loan for a year and then pay it off to help build my credit.

Best of luck!

A) I question why the coincidence that current car is near death - at 10 years old, and coincidentally that is also how long the other will last? Why not keep the FREE car you have, and buy when it actually dies?

B) I buy used. HOWEVER - if you're limiting a used car search to only a year or two old, I would advise new.

The rationale is that with so many people keeping their cars longer due to the recession, that drives up the prices on used cars. You saw the result of this when you compared a $17k new to a $15k used.

If you're set on buying a car, then I would buy the new one.

[that last sentence hurt to type as I happily drive a 14 year old car]

I agree with Dad on purpose. 10 years old is not that old so why are you so set on getting a newer car-just because? Have you been having lots of issues with this one?

Drive it til it dies in my opinion-unless it's breaking the bank with repairs :)

We just bought our first brand new car. For us, we wanted the best gas mileage possible. We got a 2012 Camry Hybrid. We didn't go with the Prius V because they wouldn't budge on the price, but we got a great deal on the Camry, which sticker wise gets about the same gas mileage - because of the hyrbid.

We have always bought used because we can get a better deal and more bells and whistles. It was really nice to buy my very first brand new car, but I don't mind used cars either - if I can get what I want out of them.

We could have gotten a better deal on an amazing Lincoln sedan - boy that thing was a DREAM to drive, but it got about 22mpg versus the 41 the Camry gets...

I'm normally against buying a new car (due to the money it loses the moment you drive it off the lot) but it sounds like you have really run the numbers. Your numbers sound very close to ours. My husband and I have calculated that it costs around $200/month to operate a vehicle (new or used). We include maintenance in this figure (and we go out of our way to maintain our vehicles).

One thing to factor is that used cars are at a bit more of a premium now, due that stupid "cash for clunkers" deal.

Our only rule is that we pay cash. We have a leased vehicle that was my MIL's car until she couldn't drive anymore. Instead of buying a 2nd car we just decided to let the lease run out (we don't put on miles). Her lease is $250 month for a basic Honda Accord.

Good luck.

I think it really depends on the car. Seven years ago, we bought a '94 Honda Civic for $2,000. This is the best car for us. We keep it maintained and haven't had to do any major repairs on it. And the mileage: we get about 40 MPG, which saves us a ton of money. I think you have to look at the whole cost of owning and maintaining the car to get an accurate assessment.

When you test drive it, drive it over to a mechanic you trust and have them look it over. Alot of them will tell you things you can bring up with the dealer to get the price knocked down.

depends on the car, depends on the financing avail, depends on a lot more then what you are saying.

The cars 10 years ago are not the same as cars built now

10 years is hardly anything on a car you have a good 5 years left on it...

I have never bought a car over wholesale...always used. My van I purchased used in 09 for 11k is still worth 15k today and it is paid off..we bought it for 6k less then what it's used price was worth...food for thought

You're buying your new car at 17K RETAIL value. Once you put a few miles on it, the WHOLESALE value will be way less than 17K.
You need to take that immediate depreciation into account.
Millionaires don't buy new cars, generally.
They know better! :)
It's rare that an apples-to-apples comparison of a "new" and a "2 year old" car would only be $2K difference in price. Obviously, the seller is gouging on the retail price of the $15K car that they probably valued at 10K when the poor sap traded it in.

Make sure to do your research thoroughly. But we don't buy new cars. And we pay cash. Car payments are NOT a necessary evil, although dealers would like you to think they are. (Not sure if YOU are financing or paying cash)

The ONLY exception I *might* make is if I pay cash for a great deal on a new car and drive it til the rims rot off.

Good luck!

I have an 08 Mazda 6 that I bought for $15k. I loved it until I bought a 1997 Mercury Grand Marquis for $1,000. Now, I make my husband drive the Mazda and I drive the Mercury. Now that I have a great, paid off vehicle, I resent my Mazda. It's not worth $400 a month to drive that car AND still have repair bills. It needs new tires right now. I can't buy them because I'm paying freaking $400 a month! There is nothing that could go wrong with the Mercury that would cost me $400 every single month! It's liberating driving it. So, in my opinion. A good cash car is the great bargain.

In your scenario, try to get a program car. Sometimes you can get the new car incentives on last years model car that never sold or a car that was previously leased for one year. A leased vehicle has to be maintained immaculately and kept under 15k miles per year. There are also certified used cars that come with the same warranty as new. That way yo uget the used car price, but the security of a new car.

It doesn't matter how much a car depreciates once you drive it off the lot unless you plan to go sell it right away. What matters is how long you keep it and how much it costs you to drive it on an annual basis.

As you are discovering, things are a little upside down right now and many used cars are priced relatively high and there are some great discounts on new cars. Having a car under warranty can save you money and add some predictability to your out of pocket expenses for the first few years. Another thing to consider is insurance costs and registration fees which in some states are much higher for the new car than for used.

My car lost half it's value in the first 5 years. But maintenance costs were low. It's 6 years old now and having some more expensive work done, but still cheaper for me than buying new. I'm conscientious about car maintenance and would be wary of buying used, not knowing if the previous owner was as careful. My mechanic has a similar car to mine with 200K miles on it so I'm hoping mine lasts as long!

It all depends. Really.
Are you certain that whatever car you are looking at will LAST 10 years? Some may not. And you are basing the maintenance on what, that you will need new brakes after 3 years? My car (a 2005 SUV bought brand new) has more than 230,000 miles on it, and has NEVER had the brakes done. It gets regular maintenance and they check the brakes at every oil change and tire rotation. They just haven't needed it. It's a 6 speed, and also hasn't yet needed a new clutch.
Granted, I have Expected to have to pay for these things by now. But, you just don't always know that it's going to cost "x" dollars for maintenance when it hits year 3 or 4.
So WHAT car (make/model and prior usage if any) and how you drive it, can have a HUGE impact on what you can expect in maintenance/repair costs and how long you can reasonably expect your vehicle to last.

I do know, that in the past year, year and a half, many of the trusted/reliable make/models in the used car market have cost almost as much as or more than new ones (in the odd rare case). So, yeah... it might make sense to go new---if you can get a bunch of dealer/manufacturer discounts. But, to know if it is really a good deal, you have to compare it to buying the same vehicle slightly used in perhaps a year older model, or maybe 2. That should give you a ballpark on how much of a "discount" you need to make buying new worth it.
You CAN find used cars with VERY few miles on them. I never have been able to, but my husband's aunt/uncle seem to. Maybe it is because they shop for different types of vehicles than I do. ?

Our 'new' car is 6 years old. We paid $8000 for it. When it was new, it was worth $30,000. It is still in amazing condition. So yes, buying a gently used car can save you tons. Just be sure that you have a friend go with you that can help pick out the duds. It obviously won't be worth it if you save a lot on a used car, but it keeps breaking down all the time.

You have to crunch the numbers. For example, when I bought my car, I could get 1.9% interest rate vs the 10% interest rate on a used car. So in the end, the new car was cheaper per month than the used one.

My DH got his car in Feb - just after the model year end. It was a leftover and had a very small dent (that you can't even really see, so he's just lucky he did) and he bought it off the lot. They wanted it gone because they were in the next year by that point and it was "old stock".

If you can swing the new car for $17K, I'd do it for the warranty.

My car is an 02 (bought fall of 01, really) and long since paid off, but I'm holding out til I can get the car I want (and hopefully have just as long) vs something that won't last more than a few years.

The flip side is how much is the old car costing now? Our van is starting to cost more to maintain and I think we should get a new one. It's a 2000 and is hitting a tipping point where it's not a "free" car anymore (major, not minor repairs).

I would go for the new in this case 2k in the grand schem of things really is not going to make a big diff in the peace of mind nowing you will have a warrenty and its new. I bought a used care last Aug I have wanted this model since it came out back in 08' and then it was 45g fully loaded I was able to find it 3yo for 25g with a 1yr GM cert warrenty. In that case yes used was a better option.

Tremendously awesome question and wonderful answers you are getting.

I have always always always wondered this. I tend to lean to the side of new, but i love a bargian too.

I have been in this exact situation and decided to buy the new car. The reason I went new is 1. not getting a car someone else has done god knows what to and 2. the warranty and perks from the dealer more than made up the $2k in my mind. I was able to get the dealership to agree to free lifetime inspections and free oil changes for 5 years or 60k miles. In my case, I have a short commute so I got the full 5 years worth - usually 3 changes a year saving about $40 each time so about $600 saved in just the oil changes. Plus the vehicle had a full warranty on it - not a limited one like the used car would have had and I did end up using it once - my car started doing this weird acceleration/deceleration thing - would have been about $1100 to fix it but it was covered. So I ended up coming out pretty much even or even a little positive b/c I got a higher trade-in value at the end since it was a car with 1 owner vs. 2 (that lowers the resale value). Personally, if you can afford it, I would go new and negotiate as many perks as you can. I also got free car washes @ the dealership and free all-weather floor mats worth about $100 when I bought it. Oh and be sure to tell them you expect the gas tank to be FULL upon delivery. Nowadays that's worth a pretty penny too! Good luck!

I guess it depends on the car. My Odyssey was $26K new 6 years ago and we bought it used last year for $9K, so the prior owner paid $3,400 per year to drive that. We should easily get 5, possibly 10 years out of it so it will only cost us $1K to $2K per year. Most of our deals are like that..I would never bother to buy a car that's fewer than 4 or 5 years old and we drive them until they're dead.

Do you get a 3 year/36,000 mile warranty on the used car, just like the new car? If not, what is the difference in the warranty?

That should factor into your decision.

Dawn

I would take a program car over new just because the new one is going to depreciate to the program car price as soon as you drive it off the lot, instantly it is going to be worth less.

We have bought several cars from dealers that were program cars and have only had one issue, the transmission went out on the van. They replaced it completely free and we got a loaner while it was being done.

A program vehicle is about a year old and should not have over 20K miles on it. Then the full warranty is still on it, the bank should even consider it to be new. If it has more than 20K it will be considered used but still it has the full warranty and all the other perks the dealer offers.

Car insurance will be the same for either one too. They don't distinguish between a program vehicle that has less than 15K-20K either, or at least none of ours have. They all listed ours as new.

We have bought a 2001 Mercury Sable for $17,000. Same model new was about $22K. Bought a Chrysler Town and Country van for $12K, new but next year up same package, $18K. We saved a lot of money by doing the program cars.

We purchase new cars and use them for years. Our 3 cars are in excellent comdition and have low miles. All still look brand new but we take great care of them.

I would agree that if you plan to trade in 2-3 yrs, then no don't buy new.

We have 1 dealer and 1 sales rep we use all the time. He knows us, our likes/dislikes and the service at our dealership is impeccable. They are the only ones to have touched our cars other than getting new tires.

We drive Mercedes and it is the only car we will ever drive again. Yes they are paid for, don't get a car loan and we are quite financially savvy and this works for us. They are expensive from the get go but they run for years and years. As far as what we paid...hubby's new 2010 E350 was around $60,000, daughter's new CLK ###-###-#### was around $45,000, and my 2008 SL550 was over $100,000. That said... we have purchased tires for all 3 (at different times) in the amount around $4000. My car and daughter's car tires are different sizes on front and back so there is no rotating, etc. Yearly upkeep is less than $600 with our warranties which are all still in tact. Never had a breakdown on any of them. Insurance is $1900 for 6 months and that is with a 17 yr old driver and $1000 decuctible.

Look at all the cost involved including insurance, tires, gas (we can only use premium) I get a whopping 15 MPG but I knew that going into it... sports cars get low MPG.

In your case with the difference being $2000. I would buy new since you plan to keep it a long time and you will have the full warranty.

Have hubby do the dealing and do not be afraid wo walk out of the deal if you don't hear what you need to hear. That is the only way a dealer knows you are serious.