New car incentives question

[ChristianPatriot]

So the only real difference is initial purchase cost difference and an extra two years of ownership. They both depreciate to roughly $2500.

Uh yeah I think that's what they're getting at. I'd bet the used one with 40k on the clock is significantly cheaper than the brand new one.

I found several Malibu's with a quick search that are only a couple years old with low miles in the $12k range vs the $20k he's gonna pay.

Pay almost twice as much for a car that's gonna be worth the same in 8-10 years? No thanks.

 

[BehindBlueI's]

Uh yeah I think that's what they're getting at. I'd bet the used one with 40k on the clock is significantly cheaper than the brand new one.

I found several Malibu's with a quick search that are only a couple years old with low miles in the $12k range vs the $20k he's gonna pay.

Pay almost twice as much for a car that's gonna be worth the same in 8-10 years? No thanks.

That's about $66 a month over the life of the car, and an extra two years of ownership. For which you get a warranty, know the full history of the car, have a newer and lower miles car for the duration, etc.

 

[Brad69]

I purchase autos between Christmas and New years.
You will not believe what they will do to sell a car at that time.

 

[ChristianPatriot]

That's about $66 a month over the life of the car, and an extra two years of ownership. For which you get a warranty, know the full history of the car, have a newer and lower miles car for the duration, etc.

If you just want a brand new car, get one, but don't pretend it's a wise financial decision. It isn't.

 

[CHCRandy]

If you just want a brand new car, get one, but don't pretend it's a wise financial decision. It isn't.

Unless I buy a used one with 40K and a year from now it has mechanical failure......then buying new would make me look like a genius. The way I figure it the warranty and peace of mind is worth something....and even a good used car extended warranty is gonna add $2000+ to the used price. So now I am $4000 from the price of the new one, that will be worth 12-14K in 2 years. If I buy used for 12K then in 2 years it is worth 8K, where the new one is worth 12-14K....seems like a wash.

You do have me thinking though....maybe a 2015 with under 30,000 is worth looking into.

 

[ChristianPatriot]

You do have me thinking though....maybe a 2015 with under 30,000 is worth looking into.

Let someone else take that hit

 

[dprimm]

Search online for extended warranty options before buying. For our Escape I found a dealer online that offered our bumper to bumper coverage for a TON less Than Ford did. Tried to get Bill Estes to match but they would not. They lost.

I looked at at the warranty as insurance since one amjor failure would cost what the warranty did. I called Fore directabout he online guy and they knew who I was talking about and told me it was legit.

 

[WebSnyper]

Unless I buy a used one with 40K and a year from now it has mechanical failure......then buying new would make me look like a genius. The way I figure it the warranty and peace of mind is worth something....and even a good used car extended warranty is gonna add $2000+ to the used price. So now I am $4000 from the price of the new one, that will be worth 12-14K in 2 years. If I buy used for 12K then in 2 years it is worth 8K, where the new one is worth 12-14K....seems like a wash.

You do have me thinking though....maybe a 2015 with under 30,000 is worth looking into.

I'd also say there is a difference in putting your wife into a new vs used car based on the numbers you have mentioned. Me, I'll buy the used car for myself (and did, partly because what I was after was no longer available new). Wife, I'd go new, for the small difference in $ you mentioned just to be safe, not have to listen to it if there is an issue, and have the warranty, etc. That's not necessarily car advice, but marriage advice, I realize.

 

[WebSnyper]

Thank you all for your replies. I think I may jump today. I never thought I would buy a new car....but I have found if I buy em right someone else eats the depreciation. My last car is a 2016 Cruze. Bought it for no money down, $88 a month lease(27 months) since it was cheaper to do that then buy it for cash, with GM discount. The residual on the Cruze is about the same as trade in value......so I felt I did ok on it. I was just going to buy it out at lease end but with the Malibu prices I am thinking of using buyout money and some cash with it and just buying the Malibu. Malibu is $27,500 and I can buy it for $18,500 + tax. You can't touch a used Malibu for what I am paying for a brand new one.....seems kind of like a no brainer. Am I missing something?

One other note...they offered me 0% for 72 months, but then they take the incentives away and make me use GM employee discount. SO basically I pay $2000 more but get 0%. We'll see what happens. Thanks for everyone's advice.

Download an amortization schedule spreadsheet and you can work the numbers easily on the 0% vs what your credit union/bank rate would be and determine which is the better deal.

 

[BehindBlueI's]

If you just want a brand new car, get one, but don't pretend it's a wise financial decision. It isn't.

Owning a car, period, is generally not a wise financial decision. It's a matter of convenience, comfort, etc. I'm just pointing out that if you hold a car long term, the difference in new and used is pretty small for a lot of cars. If you flip cars every 2-4 years, then you're eating big chunks of depreciation. Buy and drive for a decade plus, not so much. The math can also change when looking at luxury cars/trucks, sports car, etc where depreciation is quite different than the more mundane vehicles.

Unless I buy a used one with 40K and a year from now it has mechanical failure......then buying new would make me look like a genius. The way I figure it the warranty and peace of mind is worth something....and even a good used car extended warranty is gonna add $2000+ to the used price. So now I am $4000 from the price of the new one, that will be worth 12-14K in 2 years. If I buy used for 12K then in 2 years it is worth 8K, where the new one is worth 12-14K....seems like a wash.

You do have me thinking though....maybe a 2015 with under 30,000 is worth looking into.

Peace of mind is certainly worth something. Aftermarket warranties are a whole other thing. My only "real" job outside of .gov was for a warranty company. I'd not buy a warranty that wasn't from the manufacturer, or possibly from a major insurance company. Remember if the underwriter goes bankrupt, your warranty is worthless, so be careful fo buying Joe Bob's BackStreet Warranty Service plans. Kemper Insurance was our underwriter. Also, look for an exclusionary warranty. In short, they cover everything other than what's specifically excluded. This is much harder for them to wiggle out of for "that's not covered". There's also several scams that masquerade as warranties that require you to use a certain lube service, etc.

You're really got to do the math yourself and then stick to the plan. The longer you can go without needing to replace the vehicle, generally the better off you'll be. I bought my truck new in 2012, first time I'd bought a new vehicle. 5 years in, I'm at about 35k miles and should easily get another 10-15 out of it. The amount I spent over the cost of the same truck at 3 years old will be less than $10 a month over the life of the vehicle (assuming it doesn't get totaled out somehow in a crash or the like), and I've got a lifetime warranty, bumper-to-bumper exclusionary, with a $100 deductible for anything that breaks on the truck as long as I own it.

 

[PGRChaplain]

Last 2 cars I bought were 1 & 2 years old. The first I paid 50% of the window sticker, it had 11,000 mi. The second was 32% of what it cost 18 months before. Look for Dealers with off brand cars on their lot, ie. A Ford at a Chevy Dealer. Dont be afraid to really low-ball them on price.

 

[CHCRandy]

Last 2 cars I bought were 1 & 2 years old. The first I paid 50% of the window sticker, it had 11,000 mi. The second was 32% of what it cost 18 months before. Look for Dealers with off brand cars on their lot, ie. A Ford at a Chevy Dealer. Dont be afraid to really low-ball them on price.

If I can find something under 20,000 miles that is a 2016 or 2017(New body style I want)....for 50% off sticker, I would do it. But I am getting nearly 30% off on a brand new one.....that means I can drive it for 18 months and break even. Correct?

 

[woowoo2]

30% off of invoice or MSRP?

(Use invoice pricing for comparison)

 

[Route 45]

Last 2 cars I bought were 1 & 2 years old. The first I paid 50% of the window sticker, it had 11,000 mi. The second was 32% of what it cost 18 months before. Look for Dealers with off brand cars on their lot, ie. A Ford at a Chevy Dealer. Dont be afraid to really low-ball them on price.

Man, I have to know what 1 year old car you got for 50% of sticker price with only 11,000 miles. I've never seen anything like that.

 

[Nojoy621]

Man, I have to know what 1 year old car you got for 50% of sticker price with only 11,000 miles. I've never seen anything like that.

only 11k miles, but Dirty Mike and the boys used it as an F-shack...

 

[BehindBlueI's]

Man, I have to know what 1 year old car you got for 50% of sticker price with only 11,000 miles. I've never seen anything like that.

Every now and then the bottom falls out of a particular car. Ford Excursion in the early 2000s when the roll over controversy sprung up, SAAB when GM spun them off and they shortly thereafter declared bankruptcy, etc. It's not business as usual, but it does happen.

 

[Zombie]

Owning a car, period, is generally not a wise financial decision. It's a matter of convenience, comfort, etc. I'm just pointing out that if you hold a car long term, the difference in new and used is pretty small for a lot of cars. If you flip cars every 2-4 years, then you're eating big chunks of depreciation. Buy and drive for a decade plus, not so much. The math can also change when looking at luxury cars/trucks, sports car, etc where depreciation is quite different than the more mundane vehicles.



Peace of mind is certainly worth something. Aftermarket warranties are a whole other thing. My only "real" job outside of .gov was for a warranty company. I'd not buy a warranty that wasn't from the manufacturer, or possibly from a major insurance company. Remember if the underwriter goes bankrupt, your warranty is worthless, so be careful fo buying Joe Bob's BackStreet Warranty Service plans. Kemper Insurance was our underwriter. Also, look for an exclusionary warranty. In short, they cover everything other than what's specifically excluded. This is much harder for them to wiggle out of for "that's not covered". There's also several scams that masquerade as warranties that require you to use a certain lube service, etc.

You're really got to do the math yourself and then stick to the plan. The longer you can go without needing to replace the vehicle, generally the better off you'll be. I bought my truck new in 2012, first time I'd bought a new vehicle. 5 years in, I'm at about 35k miles and should easily get another 10-15 out of it. The amount I spent over the cost of the same truck at 3 years old will be less than $10 a month over the life of the vehicle (assuming it doesn't get totaled out somehow in a crash or the like), and I've got a lifetime warranty, bumper-to-bumper exclusionary, with a $100 deductible for anything that breaks on the truck as long as I own it.

Where did you get the lifetime warranty? I will have to get a new vehicle soon and this is very interesting! Thanks!

 

[BehindBlueI's]

Where did you get the lifetime warranty? I will have to get a new vehicle soon and this is very interesting! Thanks!

Chrysler offers it.

 

[Route 45]

Chrysler offers it.

I wouldn't have much faith in a Chrysler warranty, considering that "lifetime" only means the lifetime of the company.
I will be surprised if Fiat Chrysler even exists 5 years from now.
And I'd bet money that the 1 year old car worth half its original sticker was a Chrysler product.

 

[BehindBlueI's]

I wouldn't have much faith in a Chrysler warranty, considering that "lifetime" only means the lifetime of the company.

I'm not real worried. None of the major car companies haven't been acquired and when a company is acquired, it's contracts go with it. Saab is probably the biggest one that went under, and that was a true bankruptcy with nobody to acquire it. Chrysler may change hands, but it's not going anywhere.