To buy a new car or not.

[Denny347]

Brand new??

No way.


3-5 years old seems to be the sweet spot in my limited experience. I've owned 9? autos. I'm currently driving a 2002 pontiac that I bought in 2005 for $10k even. it was originally sold for $26K I think, so it depreciated $16K in 3 years, and if it's worth zero right now, $10K in the next 10 years ($1k/year). I also own a 2011 Nissan Xterra (wife drives it), bought 1 year ago for $18K. Original price $32K. $14K depreciation in first 3 years, probably about $1-2K in the last year.



I don't know if anybody quoted Dave Ramsey above (I scanned the thread, but didn't read everything) but he says something to the effect that "we all drive used cars. some of us just pay a lot more for them."


Another way of looking at it: let's say (for sake of argument) you want to buy a brand new Ford Taurus Limited. You can get one for 33,710. 2015 Ford Taurus Limited, $33,710 - Cars.com


Or, take that same 33,710 and you can buy a 2014 Lincoln MKS 2014 Lincoln MKS , $33,246 - Cars.com
or a 2011 Navigator 2011 Lincoln Navigator Base, $32,998 - Cars.com
or a 2013 Lincoln MKZ 2013 Lincoln MKZ Base, $32,995 - Cars.com

*Note: these are illustrative of my point. You can buy a nicer car at the same price if it's already broken in. I chose Ford/Lincoln because it is easily recognizable as standard/luxury line but could have illustrated it with Chevy/Cadillac, Nissan/Infiniti, Honda/Acura, Toyota/Lexus, etc.

Well, unless the new car has 0% APR and current average USED car APR is in the mid 4%. You are not saving as much as you may think.

 

[BehindBlueI's]

Brand new??

No way.


3-5 years old seems to be the sweet spot in my limited experience. I've owned 9? autos. I'm currently driving a 2002 pontiac that I bought in 2005 for $10k even. it was originally sold for $26K I think, so it depreciated $16K in 3 years, and if it's worth zero right now, $10K in the next 10 years ($1k/year). I also own a 2011 Nissan Xterra (wife drives it), bought 1 year ago for $18K. Original price $32K. $14K depreciation in first 3 years, probably about $1-2K in the last year.



I don't know if anybody quoted Dave Ramsey above (I scanned the thread, but didn't read everything) but he says something to the effect that "we all drive used cars. some of us just pay a lot more for them."


Another way of looking at it: let's say (for sake of argument) you want to buy a brand new Ford Taurus Limited. You can get one for 33,710. 2015 Ford Taurus Limited, $33,710 - Cars.com


Or, take that same 33,710 and you can buy a 2014 Lincoln MKS 2014 Lincoln MKS , $33,246 - Cars.com
or a 2011 Navigator 2011 Lincoln Navigator Base, $32,998 - Cars.com
or a 2013 Lincoln MKZ 2013 Lincoln MKZ Base, $32,995 - Cars.com

*Note: these are illustrative of my point. You can buy a nicer car at the same price if it's already broken in. I chose Ford/Lincoln because it is easily recognizable as standard/luxury line but could have illustrated it with Chevy/Cadillac, Nissan/Infiniti, Honda/Acura, Toyota/Lexus, etc.

Luxury vehicles depreciate faster. The OP already said Ford Explorer. Some vehicles, trucks, 4x4 SUVs, and most real Jeeps, depreciate much slower.

Dealer retail on my truck right now per Edmunds is $25.320. That's $27092.40 after sales tax. In March of 2012 I bought it brand new for $29671.79.

If you assume that the prices between new post-rebate then and now, as well as the value of used trucks being relatively stable...that's a $2579.39 difference to buy new vs 3 years old truck.

 

[GodFearinGunTotin]

Luxury vehicles depreciate faster. The OP already said Ford Explorer. Some vehicles, trucks, 4x4 SUVs, and most real Jeeps, depreciate much slower.

Dealer retail on my truck right now per Edmunds is $25.320. That's $27092.40 after sales tax. In March of 2012 I bought it brand new for $29671.79.

If you assume that the prices between new post-rebate then and now, as well as the value of used trucks being relatively stable...that's a $2579.39 difference to buy new vs 3 years old truck.

And that doesn't consider the fact that with used trucks, the choices tend to be a lot slimmer. (Unless it's changed in the last few years). When I was looking last, if you found one you liked, you'd better take it and not wait until you find one in black instead of grey.

 

[BehindBlueI's]

And that doesn't consider the fact that with used trucks, the choices tend to be a lot slimmer. (Unless it's changed in the last few years). When I was looking last, if you found one you liked, you'd better take it and not wait until you find one in black instead of grey.

Yup. We set out to buy used and the prices were crazy. You figure in the extra set of tires and needing to pay sales tax again sooner and it's nearly a wash.

We also got some extra rebates for Veterans and USAA members through Chrysler at the time which helped.

 

[VERT]

When I bought my 2013 model year truck new in December 2012 I paid $36k with incentives and cash back. A 2012 with 12000 miles was $39000.

 

[Lucas156]

Are you married? If one of your incomes can cover all the bills and the car payment too, I'd say its fine. Definitely should have money left over for investments and such even after the car payments. Also, I wouldn't get 4wd it's overrated, rarely used , and hurts your gas mileage unless you absolutely need it if you live up a steep hill or something.

 

[saleen4971]

i love the idea of a new car, but for me it never makes sense. some of these may not be relevant to you, but.....

1 - warranty. while a warranty on a new car is great, you are looking at a ford. chances of using the warranty are pretty low. even IF you had to spend 5k in that 3 years - depreciation is twice that. (fwiw, the fords that my family has owned? i woudl be shocked if we spent 5k in repairs between the 3 families, with exception of the old taurus that everyone had....they sucked)

2 - payments. while you can get a good deal on payments, if you spend just as much on a used car, you will be making those payment for a shorter time period

3 - modification. i can NEVER leave my cars alone. if i even HAD a warranty, it would be void very shortly.


i doubt i will ever buy a new car. i can get employee pricing, and i STILL dont want to pay that premium. shop smart, and having a 3 year old car wont matter.

FWIW - i was looking at cars for my fiance recently - 2010 lincon MKS with 355hp ecoboost, awd, leather, heated/cooled seats, etc. etc. is under 20 grand. for a car that was 40 grand not that many years ago.


i disagree with lucas above me - if AWD/4WD is an option, GET IT! hell, my 98 jeep (5.9 V8, supercharged, etc. etc.) saw a measly 1mpg gain when i was running a 2wd transfer case vs awd. after having it in the winter months, you will wonder how you got around without it. living in NY (including upstate) for 26 years made me never want another 2wd vehicle again (except my mustang.......thats a whole 'nother ballpark )

 

[CampingJosh]

Yup. We set out to buy used and the prices were crazy. You figure in the extra set of tires and needing to pay sales tax again sooner and it's nearly a wash.

I'm not understanding this part of the argument. If over twenty years you buy four new cars for $100k total or five used cars for $100k total, the sales tax is the same.

 

[VERT]

All this talk of used cars reminds me of a mini van we used one summer in graduate school. We got an extra vehicle from the university fleet to haul students to the different projects. I took it in for maintance and the shop could not find record of the van. Turns out they forgot they owned it. So first trip to the shop it got an oil change and new tires. Oh it had 36000 miles on it! Yep 36000 miles and still had the filter from the assembly line. MSU fleet services run their vehicles for a couple of years and sell them as lightly used, well maintained fleet vehicles.

On the the other hand we own a former fleet vehicle that my wife drives every day. Solid car.

I know people who buy lightly used vehicles who have good luck and bad. My mothers current car must have been a lemon that someone traded in. Dads car was a fleet vehicle that someone took care of. Point is good luck with used cars, payments and non-factory or no warranty. That is why I say never finance used cars. Late model used maybe but get that thing paid off right away. So maybe a better rule is never have money borrowed against a vehicle more the 5 years old.

Also the depreciation thing is way overrated. Unless you are buying at an auction there is really not that much difference r savings in the price of used. Yes three year old cars with 50000 miles cost less. That is because they have 50000 miles on them. They should cost less. Cars are not investments. They are something you gotta have and they need to work. In the end other then paying interest on the loan I don't think there is much difference in the price of ownership.

 

[cce1302]

Well, unless the new car has 0% APR and current average USED car APR is in the mid 4%. You are not saving as much as you may think.

Doesn't matter what the APR is if the purchase price difference is 14-16 thousand dollars. My pontiac was paid off in less than 3 years. Pretty sure I didn't pay $16,000 in interest.

 

[EricG]

I finally bit the bullet and went new, last year. I got tired of worrying about what the last guy did or did not do to it.
When I picked up my car, it had an eentire 9 miles on the clock. 4 of that was from me when I test drove it a week before. I was not only buying a car, I was purchasing a piece of mind.

Glad I did it.

 

[wtburnette]

I finally bit the bullet and went new, last year. I got tired of worrying about what the last guy did or did not do to it.
When I picked up my car, it had an eentire 9 miles on the clock. 4 of that was from me when I test drove it a week before. I was not only buying a car, I was purchasing a piece of mind.

Glad I did it.

The vehicle I drive now I bought brand new in the fall of 2003. It's a 2004 Pontiac Grand Prix. I did for similar reasons to you, I had been driving a used car and after less than 5 years started having a lot of issues with it. My GP is still going strong over 12 years later. I love this car and feel that buying new was fine for me. The peace of mind I had for the first 5 years while it was under warranty was well worth the cost. At the time, I was married and the wife and I had a very good combined income. IT wasn't pleasant paying those payments, but I've gone over 7 years without a payment. I'm hoping to keep this car going another year or two, but already thinking ahead to my next purchase. As I posted earlier, I'm hoping to get a Ford Fusion, but will look at both new and used to make sure I get a good deal. I had planned to just buy new, but after reading this thread I'll investigate all of my options.

 

[BehindBlueI's]

I'm not understanding this part of the argument. If over twenty years you buy four new cars for $100k total or five used cars for $100k total, the sales tax is the same.

If you assume you are spending the same amount in a given time period, yes, its the same. However run the numbers in my personal example. I don't spend as much money to buy 4 new ones as I do 5 used ones, so the sales tax is less.

5 used cars (3 yrs old) = 126600
4 new cars = 103156

----------------
Difference 23444
Sales tax x .07

-----------------
Sales tax saved: $1641.08

 

[BehindBlueI's]

Doesn't matter what the APR is if the purchase price difference is 14-16 thousand dollars. My pontiac was paid off in less than 3 years. Pretty sure I didn't pay $16,000 in interest.

Per Truecar, I can expect to buy a brand new Ford Explorer 4wd XLT for $31747 after rebates.

Using cars.com, looking at a 2012 Explorer 4wd XLT, asking prices are averaging around $28500.

I'm thinking the OP isn't looking at a $14-$16k difference.

 

[CampingJosh]

If you assume you are spending the same amount in a given time period, yes, its the same. However run the numbers in my personal example. I don't spend as much money to buy 4 new ones as I do 5 used ones, so the sales tax is less.

5 used cars (3 yrs old) = 126600
4 new cars = 103156

----------------
Difference 23444
Sales tax x .07

-----------------
Sales tax saved: $1641.08

This isn't in line with "normal" depreciation. New cars typically depreciate 15-20% in the first year. If you save just that 20%, you're even. If in the example you are paying more for five cars that are three years old than you are for four new cars, your example is using new and used cars that are not comparable.

From Edmunds:

At 3 years old, 60% of original value is more likely. And again, 80% is the breakeven point. So even if used cars are higher priced now than historically, you're still almost certainly better on sales tax on the used cars.

 

[cce1302]

Per Truecar, I can expect to buy a brand new Ford Explorer 4wd XLT for $31747 after rebates.

Using cars.com, looking at a 2012 Explorer 4wd XLT, asking prices are averaging around $28500.

I'm thinking the OP isn't looking at a $14-$16k difference.

Or this one for 21,770 and save ten thousand. (saving almost 1/3 of the price of a new one.)
2012 Ford Explorer XLT, $21,770 - Cars.com

 

[BehindBlueI's]

Or this one for 21,770 and save ten thousand. (saving almost 1/3 of the price of a new one.)
2012 Ford Explorer XLT, $21,770 - Cars.com

Not 4wd. 64k miles. Keep trying, though.

 

[BehindBlueI's]

This isn't in line with "normal" depreciation. New cars typically depreciate 15-20% in the first year. If you save just that 20%, you're even. If in the example you are paying more for five cars that are three years old than you are for four new cars, your example is using new and used cars that are not comparable.

From Edmunds:

At 3 years old, 60% of original value is more likely. And again, 80% is the breakeven point. So even if used cars are higher priced now than historically, you're still almost certainly better on sales tax on the used cars.

I'm using the exact same car. My Ram as optioned as a 2012 Edmunds dealer retail today in 2015 vs what I paid in 2012.

Averages are irrelevant to the specific at hand. If you are buying a luxury car or sports car it will likely shake out different. Trucks, real Jeeps, and SUV's depreciation is less.

 

[cce1302]

Not 4wd. 64k miles. Keep trying, though.

2012 Ford Explorer XLT, $22,997 - Cars.com
only 51,000 miles. Easy.

Tons of used vehicles out there, much better value than buying new.

 

[CampingJosh]

I'm using the exact same car. My Ram as optioned as a 2012 Edmunds dealer retail today in 2015 vs what I paid in 2012

Ah ha! I've found where we are seeing differently. We're not seeing the same thing because we're not looking at the same thing. I always assume private sale used price, but I do realize that isn't for everyone.

Here's a 2012 XLT 4x4 for $24k. Used 2012 Ford Explorer XLT For Sale in Oak Lawn & Chicago, IL | (Not sure why my phone put Chicagoland within 50 miles of me; I'm closer to Cincinnati. But that one is closer to the OP.)

$25k for this one in Noblesville. 2012 Ford Explorer XLT

And here's an old (2008) one with 62k miles for $15k. 2008 Ford Explorer XLT 4x4 I would have a mechanic check it, but that one could be a great deal.