Is there boglehead consensus on buying a car?

[quickhustle]

I haven't owned one in some time, and now need to buy one. I understand that tastes will differ. And I can do my own searches for consumer review type sites. Is buying a used car 3-5 years old still conventional wisdom, or are new cars ever a good bet? It seems clear to me to default towards a reliable car with good gas mileage and a cheap price (unless you have a good reason to depart from this baseline).

[dbr]

No, there is no consensus. If you ask what to do and wait long enough someone will suggest each of all the possibilities you might imagine and many more you didn't think of. This last might be a good reason to ask.

To start off, lots of people might argue for buying a new car with the proviso that the intention is to own it for a long time. There are also people who just prefer to own new cars almost all the time and can afford it. Most Bogleheads would probably support that a person should not buy cars beyond what they can afford, but that does not immediately preclude buying a new car rather than a used car.

In past discussions the idea that Bogleheads are frugal, cheap, or always try to use money the most efficiently possible has been blown out of the water.

[jmndu99]

My thought is this. Buy used and let someone else buy the depreciation

[AntsOnTheMarch]

My opinion: if you're buying something like civic, buy it new (or really old if you like a beater). I doesn't pay to buy a 2 year old civic or Accord because they hold a lot of their value. You don't know how the previous owner treated the car and to save a couple of thousand on a 20k plus car doesn't make sense to me. Again, imho.

Now if your buying something more costly, many models really dip in price when used. So get a used one. A couple of years old will drop the price drastically. I have friend who's got a bogglehead philosophy of life and he's bought 2-3 year old volvos for each of his last 3-4 cars. He keeps them a good long time and likes this approach. A really expensive luxury car like an expensive Mercedes usually drops so much in value, I'd probably never buy one new. Don't know about Acura and Lexus.

My 2 cents.

[evilscholar]

So just my personal opinion is I like buying a car and using it for a while, and Hyundais have a 10 year/100k mile power train warranty, along with a 5 year/60k bumper to bumper warranty, so I like having that warranty protection while I run the car into the ground.

Also, I’m not sure if I got lucky last time I did this but for buying the car I did most of my research online, and corresponded by email with the Internet sales department at dealers in my area. I would basically email them, letting them know I was speaking to multiple dealers, and ask them for their best price, and when I got one that was good I went in and surprisingly got the price with no further discussion/sales pitch. It helped that I had my financing all lined up in advance from a local credit union.

[quickhustle]

My thought is this. Buy used and let someone else buy the depreciation

Yeah I was thinking of the car as a work expense--because that's the only reason I'm buying it--so I was crushed to learn that there is no depreciation available for normal commuting. Just a giant hole to pour money into, post-tax.

[dbr]

Let's see:

jmndu99 used
AntsOnTheMarch used 1/2 new 1/2
evilscholar new

So the running tally is equal votes either way but there is some useful commentary.

[taguscove]

There is no consensus

[Sandtrap]

Here is a consensus of one.
Toyota/Lexus
New or up to 3 years old depending on budget. Lower mileage the better.
Shop and purchase wisely, perhaps with forum input?
Pay cash, not from emergency fund, not from funds.
Drive it until expenses no longer warrant ownership.

[dbr]

My thought is this. Buy used and let someone else buy the depreciation

Yeah I was thinking of the car as a work expense--because that's the only reason I'm buying it--so I was crushed to learn that there is no depreciation available for normal commuting. Just a giant hole to pour money into, post-tax.

The solution to that is to change work or living situation to avoid commuting or to find a way to use public transit or a car pool. A secondary benefit is that a major cause of death in persons aged 20 to 50 is auto accidents, the incidence of which is in proportion to miles driving or riding in a car. You are correct that there is no means of reimbursement in most employment for the cost of getting to work, clothing purchased for but not mandated for work, expenses for day care, and so on.

Another thought is that there is a wide range in the cost of cars. A used Mercedes could still be expensive to buy and expensive to maintain compared to a used low end Ford, if the deciding factor is lifetime cost. A new Camry might be the cheapest of all, all-in. I think there are data bases of lifetime ownership costs, including purchase, maintenance, gasoline, insurance, and taxes, if cheapest is the only objective (which it should not be).

[dbr]

Here is a consensus of one.
Toyota/Lexus
Shop and purchase wisely, perhaps with forum input?
Pay cash, not from emergency fund, not from funds.
Drive it until expenses no longer warrant ownership.

Yes, probably a good thought, but the question is new or used.

[jmndu99]

My thought is this. Buy used and let someone else buy the depreciation

Yeah I was thinking of the car as a work expense--because that's the only reason I'm buying it--so I was crushed to learn that there is no depreciation available for normal commuting. Just a giant hole to pour money into, post-tax.

So, I think you'll take the depreciation pre-tax on the new car, and when you're done with the car, I'll buy used for commuting. Knowing I'm buying from a Bogle head makes it a sweeter deal as it is best for both of us?

[dbr]

My thought is this. Buy used and let someone else buy the depreciation

Yeah I was thinking of the car as a work expense--because that's the only reason I'm buying it--so I was crushed to learn that there is no depreciation available for normal commuting. Just a giant hole to pour money into, post-tax.

So, I think you'll take the depreciation pre-tax on the new car, and when you're done with the car, I'll buy used for commuting. Knowing I'm buying from a Bogle head makes it a sweeter deal as it is best for both of us?

You couldn't buy a car from me because when they left me it was straight to the junkyard. I'm not sure I will keep up that philosophy.

A little story. Some years ago we had a car on its last legs. We were at a dealer getting something else and they asked if we had a trade. We said, "Sure, you want to see it?" They did and offered $250 for it. A couple of weeks later we happened to drive past that dealer and the old car was on display out in front on the road. It had a sign on it "We trade on anything"

[Sandtrap]

Here is a consensus of one.
Toyota/Lexus
Shop and purchase wisely, perhaps with forum input?
Pay cash, not from emergency fund, not from funds.
Drive it until expenses no longer warrant ownership.

Yes, probably a good thought, but the question is new or used.

oops.
corrected.
New or up to 3 years old depending on budget. Lower mileage the better.

[michaeljc70]

I think buying a used car around 2 years old is a good idea. It still will look new, have a warranty to work out any issues and the first buyer will have ate the biggest drop in depreciation.

That being said, last time I bought a new car. I had the prior one for 13 years and felt I deserved it

[bampf]

Consider something like ecarone. They sell used just off lease high end vehicles. I have had really good luck with them. (Four cars purchased so far...).

[Nicolas]

So just my personal opinion is I like buying a car and using it for a while, and Hyundais have a 10 year/100k mile power train warranty, along with a 5 year/60k bumper to bumper warranty, so I like having that warranty protection while I run the car into the ground.

Also, I’m not sure if I got lucky last time I did this but for buying the car I did most of my research online, and corresponded by email with the Internet sales department at dealers in my area. I would basically email them, letting them know I was speaking to multiple dealers, and ask them for their best price, and when I got one that was good I went in and surprisingly got the price with no further discussion/sales pitch. It helped that I had my financing all lined up in advance from a local credit union.

It takes me longer than ten years to run a car into the ground. My current vehicle is a '96 Corolla. Still gets me from point A to point B, though I admit it's ugly.

[A7las]

I spent 3 months looking for a car. I drive a ton for work and so I settled for a 1 year old car.

I purchased a 2016 Ford C-Max SEL for about 11k less than it sold for new.

I had unique requirements because of my height otherwise there are some great hybrids that you can get 2 or 3 years old in the $12 to $13k range.

Depending on how far you commute, you may want to look into a Nissan leaf or a Chevy bolt as well. There are some great government rebates on those.

[Jack FFR1846]

Bogleheads allows only one of two choices. Either a ten year old Corolla or a new Tesla model S double D plus a fire wall, 1.21 jiggawatt solar panel set up and supercharger. Then drive it onle 8k miles a year.

[Watty]

Is there boglehead consensus on buying a car?

Leasing almost never makes sense except for a business that gets tax advantages.

If you are buying new then you should do the negotiation over the internet and have a "done deal" deal out the door price before you go into the dealership.

Manufacturers extended warranties are a bad deal. Buying third party non-manufacturers extended warranty is even worse and are sometimes little more than a scam. If you decide to get one on a new car then you can wait until the full warranty is about to expire and then search around the country for the best deal. You can buy a manufactures warranty from any dealer in the country.

Look at the yearly total cost of ownership over the time you expect to own the car and not just the purchase price. That would include the purchase price - eventual resale and the cost for gas, insurance, and expected maintenance.

Buy either a ten year old Corolla or a new Tesla.

[The Wizard]

There is no consensus

This is correct...

[Alexa9]

Honda/Toyota new or used. All good cars:
Civic/Corolla
Accord/Camry
CR-V/RAV-4
Pilot/Highlander

[Youngblood]

With all the hurricane flooding in Texas and Florida there will undoubtedly be many cars with water damage as used vehicles that you definitely don't want.

I would stay away from used unless you know for sure the car has not had any water damage. Electrical and computer damage due to water are really hard to fix and frequently cause long term problems.

[supersecretname]

My opinion: if you're buying something like civic, buy it new (or really old if you like a beater). I doesn't pay to buy a 2 year old civic or Accord because they hold a lot of their value. You don't know how the previous owner treated the car and to save a couple of thousand on a 20k plus car doesn't make sense to me. Again, imho.

This is exactly what I did. Bought a new honda fit, and went new instead of slightly used since they hold their value very well. I got a good deal (15k on a '17 model base model), so the used options were not attractive in comparison.

I put on 20k miles last year, so that also factored into buying new vs 2-3 years used.

[blindpuppy]

This Fidelity article always struck me as rather Boglehead-ish.

https://www.fidelity.com/viewpoints/fin ... ective-car

[AntsOnTheMarch]

My opinion: if you're buying something like civic, buy it new (or really old if you like a beater). I doesn't pay to buy a 2 year old civic or Accord because they hold a lot of their value. You don't know how the previous owner treated the car and to save a couple of thousand on a 20k plus car doesn't make sense to me. Again, imho.

This is exactly what I did. Bought a new honda fit, and went new instead of slightly used since they hold their value very well. I got a good deal (15k on a '17 model base model), so the used options were not attractive in comparison.

I put on 20k miles last year, so that also factored into buying new vs 2-3 years used.

I also own a Fit.

[lthenderson]

Back when I first started buying cars, I bought mostly used cars. But back then, cars weren't built as well so they depreciated much quicker. It was easy to buy a car three years old that was significantly cheaper than a new car.

As the years have passed, cars have been built much better. Now instead of a decade of use, cars regularly go past two decades of use. Cash for Clunkers also came along and destroyed the used car market but the effects of that program seems to have passed with the time that has gone by.

My last three vehicles have been brand new. I searched for models that were a few years old and didn't have a lot of miles on them but in the brands I like to buy (Honda/Toyota) that only saved a few thousand dollars off sticker price and so wasn't worth it in my opinion. I typically drive my vehicles until they go directly to the scrapyard so I'm not so concerned about depreciation costs.

[djpeteski]

I prefer to buy used rather than new. When buying used, it is a good idea to checkout the car fax. It will let you know about accidents and major repairs. Doing this would have saved me a lot of money on a car that I purchased.

Where to buy it? I find CarMax over priced, but really like Carvana. If you are sure of the make and model you want, I have had good luck on ebay. Craigslist by me is so ripe with fake ads and scammers it is nearly worthless.

The last car I purchased was new. We were looking at a Ford Edge. We could purchase a 2014 < 20K miles for about 21K. We also found a new 2016 with less than 100 miles for 27K which was equipped just how we liked. We weren't real fond of the color, but whatever. We chose the new car. There was some convenience around the purchase in addition to a small uptick in price so it made it worth while for us.

[The Wizard]

Depreciation is completely overstated as an issue related to car buying for personal use.
I can't think of any other consumer purchase beyond motor vehicles where depreciation is routinely discussed. Certainly not snowblowers, chainsaws, bicycles, or cell phones.

I think it's better just to consider a car a consumer purchase and be done with it.
If your finances don't easily allow you to purchase a new vehicle of the type you want, then buy a used one for less.
People do the same thing with iPhones...

[Ruger]

My opinion: if you're buying something like civic, buy it new (or really old if you like a beater). I doesn't pay to buy a 2 year old civic or Accord because they hold a lot of their value.

I agree with this. When I bought my car, I was still working and it was important to get something reliable (I was commuting 80 miles/day) and comfortable (an hours drive each way required it). I wanted a Camry and found the used ones were not much less than a new one and didn't have
the equipment I wanted. So I bought new.

When I bought a pickup, it was as a secondary car to haul stuff and to drive in the winter. I bought used and got a great deal on a 6 month old Ram with 6,000 miles on it.

So it really depends on your individual needs and wants.

[psteinx]

There is no consensus for a good reason - peoples' needs, resources, etc vary considerably. There are also differences of opinion even for folks in the same situation, but the bigger driver I think is the differences in opinion.

For starters, resources:

In *general*, a used car will be cheaper to operate, per unit of time and distance. This makes sense. Why would anyone mess with a used car if a new car was as cheap or cheaper?

But used cars have drawbacks - they're generally worn, less attractive, less reliable, and less likely to have the latest safety, convenience, and other features.

Driving a used car can mean spending more of your time dealing with maintenance issues (either on your own, or taking car to and from repair shop), and the possibility of an on-the-road breakdown will, I think, generally be higher in a used car. For some folks, this time/reliability issue outweighs cost savings. But for say, a college student or a person on tight finances with a little bit of job flexibility, it may not be such a big deal.

Some folks have some personal ability to repair cars and may even enjoy it. Others would prefer to not even pump their own gas (hi New Jersey-ites!), much less do car repairs and/or maintenance.

Some know they'd be parking their cars on the streets, driving in an urban area, etc, and a new car would be undesirable. Others will garage their cars in suburbia.

Some will put 2K miles/year on their car, and so the capital cost/depreciation is the dominant factor in their car cost. Others will put 25K miles/year on their car (or more), and so reliability & cheap and easy maintenance become much greater concerns.

[Nate79]

Depreciation is completely overstated as an issue related to car buying for personal use.
I can't think of any other consumer purchase beyond motor vehicles where depreciation is routinely discussed. Certainly not snowblowers, chainsaws, bicycles, or cell phones.

I think it's better just to consider a car a consumer purchase and be done with it.
If your finances don't easily allow you to purchase a new vehicle of the type you want, then buy a used one for less.
People do the same thing with iPhones...

Depreciation is critical for personal use car buying for someone to actually understand the cost of ownership. Depreciation is one of the highest expense line items for a car for a consumer. It is the critical factor in understanding whether one should buy new or used. Depreciation of the car's value is highest in the first few years of a car.

Depreciation is discussed when buying other items like snowblowers, chainsaw, bicycles, etc. It is implicit when people are discussing whether to buy used off of Craigslist.

[KlangFool]

OP,

I only buy new Nissan Altima. I am on my third Nissan Altima.

KlangFool

[psteinx]

In a different direction, some are disappointed that you can't buy a 2 year old Toyota or Honda at, say, 30-40% off the new car cost. I'm not sure when late model used prices compressed versus new prices, but remember that a car can be expected to be a lot more reliable for a lot longer these days.

In the 1980s, a 2 year old car might have used up 20-30% of its lifespan, so for a 2 year old used car to sell for 30-40% off new car prices was pretty rational. But modern cars last longer, and hence should be expected to depreciate more slowly.

[H-Town]

I haven't owned one in some time, and now need to buy one. I understand that tastes will differ. And I can do my own searches for consumer review type sites. Is buying a used car 3-5 years old still conventional wisdom, or are new cars ever a good bet? It seems clear to me to default towards a reliable car with good gas mileage and a cheap price (unless you have a good reason to depart from this baseline).

I don't think there is any consensus on this. It's a big purchase. Keep the cost of ownership low and buy what makes you happy.

[sunny_socal]

I think this is the consensus:
1. If buying mid range Japanese car and planning on keeping it, it is ok to buy new (eg. Honda, Toyota)
2. If buying a Luxury car, get a CPO. Someone else already paid for most of the depreciation and thought they beat the system! (ie. they leased it)

A used car is generally a good idea, but stay away from old beaters that don't have airbags or have existing mechanical problems.

[mickeyd]

I have owned over a dozed cars, new and used. I have decided that a new car (I like Toyota) with all of it's warranties is right for me as we tend to keep cars around 15 years and maintain them as required by the manufacturer.

[The Wizard]

Depreciation is completely overstated as an issue related to car buying for personal use.
I can't think of any other consumer purchase beyond motor vehicles where depreciation is routinely discussed. Certainly not snowblowers, chainsaws, bicycles, or cell phones.

I think it's better just to consider a car a consumer purchase and be done with it.
If your finances don't easily allow you to purchase a new vehicle of the type you want, then buy a used one for less.
People do the same thing with iPhones...

Depreciation is critical for personal use car buying for someone to actually understand the cost of ownership. Depreciation is one of the highest expense line items for a car for a consumer. It is the critical factor in understanding whether one should buy new or used. Depreciation of the car's value is highest in the first few years of a car...

And since I bought my last car new and kept it for 12 years, what is the importance of its market value at the two, three, or four year point?

Or are you saying that that you personally buy a new car every 3+/- years by trading in the previous one so that the drop in market value over those few years matters quite a bit to you?

[kjvmartin]

I am leasing my main commuter car, a 2018 Chevrolet Equinox LT AWD for $245 per month. No up front or turn in fees.

This is $2940 per year. Total cost over 10 years will be $29,400 - If I can continue to get a competitive lease rate, which is undetermined. $29.4k cost of ownership over 10 years, to me, is worth it for hassle free and maintenance free driving.

If I cannot find a lease from any auto company at or under $250 next car, I will purchase a CR-V.

[ncbill]

I am leasing my main commuter car, a 2018 Chevrolet Equinox LT AWD for $245 per month. No up front or turn in fees.

This is $2940 per year. Total cost over 10 years will be $29,400 - If I can continue to get a competitive lease rate, which is undetermined. $29.4k cost of ownership over 10 years, to me, is worth it for hassle free and maintenance free driving.

If I cannot find a lease from any auto company at or under $250 next car, I will purchase a CR-V.

yep, if you don't care about a specific model/trim-line there are always lease specials within whatever category (car/truck/SUV/etc) you desire

between my family & some older relatives I'm currently responsible for maintaining a half-dozen vehicles, 10-20 years old.

within 5 years the relatives won't be driving & my kids will be gone, so if I 'own' at all I'll be leasing whatever's on sale.

[rj49]

I finally joined the lease club too, since I don't want to deal with repairs or getting tired of a car. I got a Toyota Corolla for $185 a month, and with the falls in new car sales and the rush to buy SUVs, there should continue to be attractive lease options for non-luxury passenger cars.

My Boglehead approach is driving Uber/Lyft for 15 hours or so a week and making enough to cover vehicle and operation costs, and to make enough extra to contribute to a travel fund, but also to contribute to a Roth IRA, which I can't otherwise do as a retiree. It also has the intangible benefits of meeting people, helping people out, and having fun (it offers the same thrills as fishing--hunting out promising spots, getting a 'bite' (ride request), and then finding the person.

[fittan]

Of course there is! I think it is as follows

1) Buy a 2 to 3 year old Toyota or Honda. About 30K miles. Since it is still under warranty, you're unlikely to be "buying someone else problem".

2) You will save on the destination charge. I think it is about $700 when buying new.

3) You will save on local excise tax. If new you can expect about $450 for 1st year. If 2 or 3 year old, it drops exponentially to about $250 or so.

[likegarden]

Our philosophy is to buy good quality new cars, maintain them properly and run them 10 to 11 years or 110,000 miles when they start to need more expensive repairs. We had good success over 37 years.

[technovelist]

My "new" car is a 2008 Acura TL-S, bought new.
My "old" car is a 2001 Maxima GXE, bought new.
My truck is a 1995 Dodge Dakota, bought used.
My previous old car was a 1990 Maxima, bought new and sold in 2008 when I bought the Acura.

I almost never buy used vehicles. I generally buy new ones with good repair records, then drive them until I have a good reason to buy a new one.
The 1990 Maxima was an exception. I sold it because I felt like buying a sports car.
But even then I bought the best car I could find. Consumer Reports had only one negative point in their review: it has too long a turning radius.

[trueson1]

I buy new. Research to get a good reliable car. Take care of it. Drive it till the wheels fall off.

[daveydoo]

I've done all of the above (new Toyota, off-lease luxury, etc., etc.). There is no consensus because it depends entirely on the following:

1. Which car we're talking about
2. How long you intend to keep it
3. How you drive (timid or aggressive)
4. Your risk-aversion vis-a-vis repairs
5. Your net worth (and/or willingness to diminish same)
6. probably others I can't think of right now

The replies won't help if you haven't answered these questions for yourself. A few others have touched on the reasons. Toyota is reliable, and buying used is important, but I would not buy a two-year old Toyota when I can buy a new one for a little more. I would never buy a new (nice) BMW or Mercedes when I can get it for 40% off two years later with 20K miles and a clean service record. And so on. To your specific point, there are plenty of terrible 3 - 5 year-old cars out there so that's not the deciding factor. There is really no one-size-fits-all car-buying strategy.

[Artful Dodger]

My opinion: if you're buying something like civic, buy it new (or really old if you like a beater). I doesn't pay to buy a 2 year old civic or Accord because they hold a lot of their value. You don't know how the previous owner treated the car and to save a couple of thousand on a 20k plus car doesn't make sense to me. Again, imho.

Now if your buying something more costly, many models really dip in price when used. So get a used one. A couple of years old will drop the price drastically. I have friend who's got a bogglehead philosophy of life and he's bought 2-3 year old volvos for each of his last 3-4 cars. He keeps them a good long time and likes this approach. A really expensive luxury car like an expensive Mercedes usually drops so much in value, I'd probably never buy one new. Don't know about Acura and Lexus.

My 2 cents.

This would be my approach as well.

When my out of town daughter needed a car a few years ago, we ended up with a new Ford Fiesta at $500 over dealer cost, so with extended warranty and tax right about $20K. I was happy having the new car guarantees and no worry about prior use. It has turned out to be a worry free purchase.

When I looked 2+ years ago, I bought a 2011 Hyundai Genesis with 42K miles. I got for $18,500 + tax and this was originally a $40-$45K car new. 35K miles later with no repairs, I'm a happy camper.

For what its worth. I've owned two Hyundai's, the above Genesis and a 2007 Tucson, and they've both been good purchases.

[dsmclone]

I've been a car fan my whole life and there are no set rules but here are a few that I've discovered.

10 years ago I told myself I would never get another car loan
Cars today in general are so much more reliable
If you trade a lot, you're going to lose money. I'm comfortable with this and treat it like a luxury item (Vacations, electronics, etc).
I like buying used luxury cars. I bought a 2011 CPO Infiniti M56x in 2013 with 15k miles for $35k. The original sticker was $71k.
I love Honda/Acura. My best buy ever was a new 2000 Civic Si that I bought new in 2000 for $16,500 and sold it 18 months later for $16k. I won't mention the other 10+ cars where I've lost a bunch of money...
Like others have said, buying a used Honda is not always a great idea since they hold their value so well.
Most people hate the process of buying a car. I don't mind it at all. I know that I don't have to buy and can walk out at anytime. Also, with the internet I can have dealers compete against each other. I also realize that at the end of the day the dealers on not losing money on my purchase.

[Jags4186]

The trick with buying used vs new IMO is the mindset. When I buy new I want *exactly* what I want. I don’t accept the dealer telling me they can’t get a certain color combination, I just go to a different dealer.

But buying used is more than just a trade off on color combinations. It’s a true trade off on everything. As people above mentioned, civics and corollas don’t really depreciate that much and then they say “well I’ll just buy new it makes no sense to get a 3 year old car that only costs $2000 or $3000 less than new” when in reality they should have just bought a 3 year old Hyundai, Kia, or Chevy. New those cars are all similar in price, but a 3 year old civic might cost $3000 more than a 3 year old Chevy cruze.

I also think leasing inexpensive cars can be right for some people in certain circumstances. I saw a lease deal the other day for a Civic LX which amounted to about $5000 over 3 years including downpayment, taxes, fees etc. assuming 3% inflation you can have a new Civic every 3 years for 15 years at $32000. If you value having a new car and can stay within the mileage it’s not awful.

[dsmclone]

The other thing people forget about when it comes to resale value is the actual price paid. With a Honda you're usually lucky to get $2k off sticker where you can a lot of times get $10k off sticker on a truck from the Big 3.