Buying new car or buying used car

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Nate79
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Re: Buying new car or buying used car

Post by Nate79 »

To continue the example of the Nissan Altima you can get 2008 or 2009 with between 110k and 150k miles for $6-8k. So the residual value in the example for a 10 year old Altima with 150k miles is a minimum of $6k, not scrap value.

So:

2018 Nissan Altima S
$20k purchase price
$6k ending price
total depreciation cost: $14k
- Miles Driven: 120,000 (purchased with 0 miles)
- Years Kept: 10 Years
- Cost Per Mile: 11.7 Cents

2016 Nissan Altima S
$13.5 purchase price
$6k ending price
- Miles Driven: 80,000 (purchased with 40,000 miles)
- Years Kept: 6.67 Years
- Cost Per Mile: 9.4 Cents

20% cost per mile savings.
deltaneutral83
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Joined: Tue Mar 07, 2017 3:25 pm

Re: Buying new car or buying used car

Post by deltaneutral83 »

Nate79 wrote: Tue May 08, 2018 2:43 pm To continue the example of the Nissan Altima you can get 2008 or 2009 with between 110k and 150k miles for $6-8k. So the residual value in the example for a 10 year old Altima with 150k miles is a minimum of $6k, not scrap value.

So:

2018 Nissan Altima S
$20k purchase price
$6k ending price
total depreciation cost: $14k
- Miles Driven: 120,000 (purchased with 0 miles)
- Years Kept: 10 Years
- Cost Per Mile: 11.7 Cents

2016 Nissan Altima S
$13.5 purchase price
$6k ending price
- Miles Driven: 80,000 (purchased with 40,000 miles)
- Years Kept: 6.67 Years
- Cost Per Mile: 9.4 Cents

20% cost per mile savings.
Well now you've left out the part about repairs for Scenario B (used) that you don't have in Scenario A (new). If you run 4 iterations, so 40 years of this example, the guy buying used is going to have much more in repairs because he is driving the car(s) for miles 40,000-120,000 and the guy buying new is driving the car(s) for miles 1-120,000.
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Nate79
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Location: Delaware

Re: Buying new car or buying used car

Post by Nate79 »

deltaneutral83 wrote: Tue May 08, 2018 2:55 pm
Nate79 wrote: Tue May 08, 2018 2:43 pm To continue the example of the Nissan Altima you can get 2008 or 2009 with between 110k and 150k miles for $6-8k. So the residual value in the example for a 10 year old Altima with 150k miles is a minimum of $6k, not scrap value.

So:

2018 Nissan Altima S
$20k purchase price
$6k ending price
total depreciation cost: $14k
- Miles Driven: 120,000 (purchased with 0 miles)
- Years Kept: 10 Years
- Cost Per Mile: 11.7 Cents

2016 Nissan Altima S
$13.5 purchase price
$6k ending price
- Miles Driven: 80,000 (purchased with 40,000 miles)
- Years Kept: 6.67 Years
- Cost Per Mile: 9.4 Cents

20% cost per mile savings.
Well now you've left out the part about repairs for Scenario B (used) that you don't have in Scenario A (new). If you run 4 iterations, so 40 years of this example, the guy buying used is going to have much more in repairs because he is driving the car(s) for miles 40,000-120,000 and the guy buying new is driving the car(s) for miles 1-120,000.
Right, for a total cost of ownership you would need to know the cost of maintaining a car per mile over multiple purchases and you would need to include all of the costs, not just depreciation. The cost of ownership except for depreciation, taxes, insurance will be much lower for the first 40,000 miles. But the cost for insurance, taxes, etc will be higher.
randomguy
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Joined: Wed Sep 17, 2014 9:00 am

Re: Buying new car or buying used car

Post by randomguy »

thangngo wrote: Mon May 07, 2018 10:50 am
Buying new car is a luxury. If you want value, buy a slightly used, low mileage car that can last you as long as a new car would. Note that you are responsible to do regular maintenance to keep the car running as long as it can. If you neglect your car, it doesn't matter you buy a new or a used car.
Why do you think new cars have shorter lifespan than used (i.e. the only reason why you could expect a say 2 year old car to last as long a new one)? That makes zero sense. Used car buyers like to talk about the huge savings off MSRP. You buy a 30k car for 18k in 3 years and they save 12k. The math doesn't work out as well when you buy that 30k car for 24k and you realize you saving in tires/maintenance and 3 more years of service. The cost difference shrinks pretty darn quickly and which one is cheaper will be based on you assumptions. Heck I have actually seen new Hondas listed for less than used ones of the same trim level.:)

In the end this choice really doesn't matter much compared to the bigger ones of buying the right car and being able to drive it for 10+ years. It is why the topic keeps coming up time and time again.
H-Town
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Re: Buying new car or buying used car

Post by H-Town »

randomguy wrote: Tue May 08, 2018 3:11 pm
thangngo wrote: Mon May 07, 2018 10:50 am
Buying new car is a luxury. If you want value, buy a slightly used, low mileage car that can last you as long as a new car would. Note that you are responsible to do regular maintenance to keep the car running as long as it can. If you neglect your car, it doesn't matter you buy a new or a used car.
Why do you think new cars have shorter lifespan than used (i.e. the only reason why you could expect a say 2 year old car to last as long a new one)? That makes zero sense. Used car buyers like to talk about the huge savings off MSRP. You buy a 30k car for 18k in 3 years and they save 12k. The math doesn't work out as well when you buy that 30k car for 24k and you realize you saving in tires/maintenance and 3 more years of service. The cost difference shrinks pretty darn quickly and which one is cheaper will be based on you assumptions. Heck I have actually seen new Hondas listed for less than used ones of the same trim level.:)

In the end this choice really doesn't matter much compared to the bigger ones of buying the right car and being able to drive it for 10+ years. It is why the topic keeps coming up time and time again.
Apparently you have a crystal ball to help you see in the future when car will break down or when you get rid of the old car for a new and fancy car.

Spin it any way you want. I bought a slight used 2.5 year old car with 17k miles on the odometer for 20k. Sticker price for a new version of that car is 32k. Works out for me thus far.

Why would anybody want to pay $20k while they can get a new one at 22k? Would you?

Imagine you bought a new 2017 Honda CR-V, how that would work out for you?
Time is the ultimate currency.
Hogan773
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Joined: Thu May 07, 2015 11:14 am

Re: Buying new car or buying used car

Post by Hogan773 »

thangngo wrote: Tue May 08, 2018 3:28 pm
randomguy wrote: Tue May 08, 2018 3:11 pm
thangngo wrote: Mon May 07, 2018 10:50 am
Buying new car is a luxury. If you want value, buy a slightly used, low mileage car that can last you as long as a new car would. Note that you are responsible to do regular maintenance to keep the car running as long as it can. If you neglect your car, it doesn't matter you buy a new or a used car.
Why do you think new cars have shorter lifespan than used (i.e. the only reason why you could expect a say 2 year old car to last as long a new one)? That makes zero sense. Used car buyers like to talk about the huge savings off MSRP. You buy a 30k car for 18k in 3 years and they save 12k. The math doesn't work out as well when you buy that 30k car for 24k and you realize you saving in tires/maintenance and 3 more years of service. The cost difference shrinks pretty darn quickly and which one is cheaper will be based on you assumptions. Heck I have actually seen new Hondas listed for less than used ones of the same trim level.:)

In the end this choice really doesn't matter much compared to the bigger ones of buying the right car and being able to drive it for 10+ years. It is why the topic keeps coming up time and time again.
Apparently you have a crystal ball to help you see in the future when car will break down or when you get rid of the old car for a new and fancy car.

Spin it any way you want. I bought a slight used 2.5 year old car with 17k miles on the odometer for 20k. Sticker price for a new version of that car is 32k. Works out for me thus far.

Why would anybody want to pay $20k while they can get a new one at 22k? Would you?

Imagine you bought a new 2017 Honda CR-V, how that would work out for you?
You obviously didn't buy a Honda
invst65
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Joined: Thu Nov 27, 2014 10:04 am

Re: Buying new car or buying used car

Post by invst65 »

My mother-in-law, who used to live with me once upon a time, went shopping for a used car with my (now deceased) wife despite my advice to wait until I could go with them when I wasn't so busy at work. They returned home with a 2 year old car, bragging about what a good deal they got, and when I checked it out, she paid about $1k more than she would have paid for a brand new car (a Ford Pinto nonetheless).

That was a long time ago but amazingly when I checked into buying used cars from a dealer years later I found that a lot of times the "opening bid" on the car was more than what I could buy a new one for. How they get away with this I have no idea but apparently there are enough gullible people in the world to make it profitable.

If you want to buy a used car today all you have to do is go online and look up the Kelly Blue Book price. Should take no more than 5 minutes. That should be the MOST you will pay if you really like the car and it's in good shape. Any thing more than that is B.S.
jehovasfitness
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Re: Buying new car or buying used car

Post by jehovasfitness »

Good luck finding a 2-3 yr old jeep 20-40% cheaper
randomguy
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Joined: Wed Sep 17, 2014 9:00 am

Re: Buying new car or buying used car

Post by randomguy »

thangngo wrote: Tue May 08, 2018 3:28 pm
randomguy wrote: Tue May 08, 2018 3:11 pm
thangngo wrote: Mon May 07, 2018 10:50 am
Buying new car is a luxury. If you want value, buy a slightly used, low mileage car that can last you as long as a new car would. Note that you are responsible to do regular maintenance to keep the car running as long as it can. If you neglect your car, it doesn't matter you buy a new or a used car.
Why do you think new cars have shorter lifespan than used (i.e. the only reason why you could expect a say 2 year old car to last as long a new one)? That makes zero sense. Used car buyers like to talk about the huge savings off MSRP. You buy a 30k car for 18k in 3 years and they save 12k. The math doesn't work out as well when you buy that 30k car for 24k and you realize you saving in tires/maintenance and 3 more years of service. The cost difference shrinks pretty darn quickly and which one is cheaper will be based on you assumptions. Heck I have actually seen new Hondas listed for less than used ones of the same trim level.:)

In the end this choice really doesn't matter much compared to the bigger ones of buying the right car and being able to drive it for 10+ years. It is why the topic keeps coming up time and time again.
Apparently you have a crystal ball to help you see in the future when car will break down or when you get rid of the old car for a new and fancy car.

Spin it any way you want. I bought a slight used 2.5 year old car with 17k miles on the odometer for 20k. Sticker price for a new version of that car is 32k. Works out for me thus far.

Why would anybody want to pay $20k while they can get a new one at 22k? Would you?

Imagine you bought a new 2017 Honda CR-V, how that would work out for you?
What crystal ball? If you think a car is good for 15 years, it is pretty logical to think a 2.5 year old car is only lasting 12.5. It isn't logical to think it lasts 17.5 because you only owned it for 15 of it.

And you prove my point. Instead of talking about what the actual price you would have paid for a new car (10-20% off is pretty standard. More if you buy at the end of the model year), you cling to the idea of a MSRP that basically nobody pays in an attempt to make your numbers look better. If you could have bought the car for say 25k, your numbers over 15 years look like
25/15 = 1.67k/year
20/12.5 = 1.6k/year
Thats pretty darn close. Obviously the close you pay to 32k, the more buying used works. Only pay 29k and you are paying 300 more a year for the new car. Obviously we are only looking at depreciation and ignoring taxes, repairs, and maintenance. You rapidly go from saving 40% by buying used to something in the 10% range. Up to decide if that is worth it or not.

As to how a 2017 CRV works out, who knows. It is far to early. Maybe only a small fraction ends up with the issue. Maybe it gets fixed. Maybe it is a problem. It is no different than buying a car with 17k miles and learning that every single one of them needs a new head gasket at 40k after you bought the car.
inbox788
Posts: 8372
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Re: Buying new car or buying used car

Post by inbox788 »

Hogan773 wrote: Mon May 07, 2018 10:29 am2) When you are buying new, you are buying a COMMODITY. Every dealer has new Black Accords or Civics or Camrys or whatever you are targeting. When USED, then you are targeting one or a few units, likely from different sources. Everyone has that one really nice used Civic with low miles, but they probably have ONE of them. And you will still be comparing SIMILAR cars but not identical. One might be a 2016 with 30K miles and one might be a 2015 but lower miles. By definition much harder to really compare apples to apples and drive price tension.

3) There are still enough people who don't really know the opening price of a new car so they look at sticker price and then compare that to the asking price of the used car. They might he happy to pay $25K for a 2yr old car that was stickered at $31K. What they overlook is that the car could have sold for $27.5K new.
Besides the manufacturers and dealers needing to book some sales immediately, I think those 1 and 2 year lease deals take some of these dynamics into consideration. They might not make much profit on the initial deal, and they plan on making more the second time around.
Topic Author
GoldenGoose
Posts: 353
Joined: Tue Jan 30, 2018 1:08 pm

Re: Buying new car or buying used car

Post by GoldenGoose »

Hogan773 wrote: Tue May 08, 2018 5:12 pm
thangngo wrote: Tue May 08, 2018 3:28 pm
randomguy wrote: Tue May 08, 2018 3:11 pm
thangngo wrote: Mon May 07, 2018 10:50 am
Buying new car is a luxury. If you want value, buy a slightly used, low mileage car that can last you as long as a new car would. Note that you are responsible to do regular maintenance to keep the car running as long as it can. If you neglect your car, it doesn't matter you buy a new or a used car.
Why do you think new cars have shorter lifespan than used (i.e. the only reason why you could expect a say 2 year old car to last as long a new one)? That makes zero sense. Used car buyers like to talk about the huge savings off MSRP. You buy a 30k car for 18k in 3 years and they save 12k. The math doesn't work out as well when you buy that 30k car for 24k and you realize you saving in tires/maintenance and 3 more years of service. The cost difference shrinks pretty darn quickly and which one is cheaper will be based on you assumptions. Heck I have actually seen new Hondas listed for less than used ones of the same trim level.:)

In the end this choice really doesn't matter much compared to the bigger ones of buying the right car and being able to drive it for 10+ years. It is why the topic keeps coming up time and time again.
Apparently you have a crystal ball to help you see in the future when car will break down or when you get rid of the old car for a new and fancy car.

Spin it any way you want. I bought a slight used 2.5 year old car with 17k miles on the odometer for 20k. Sticker price for a new version of that car is 32k. Works out for me thus far.

Why would anybody want to pay $20k while they can get a new one at 22k? Would you?

Imagine you bought a new 2017 Honda CR-V, how that would work out for you?
You obviously didn't buy a Honda
Agree. He must have bought a Hyundai.
Topic Author
GoldenGoose
Posts: 353
Joined: Tue Jan 30, 2018 1:08 pm

Re: Buying new car or buying used car

Post by GoldenGoose »

Sooooooo after much debating can we put to rest that non sense about buying used? It really irks me to see some bogleheads mindlessly advise buying used in other posts? If I see that happen I might have to hijack the thread to start another rounds of debate. 😄
H-Town
Posts: 5905
Joined: Sun Feb 26, 2017 1:08 pm

Re: Buying new car or buying used car

Post by H-Town »

GoldenGoose wrote: Tue May 08, 2018 11:02 pm
Hogan773 wrote: Tue May 08, 2018 5:12 pm
thangngo wrote: Tue May 08, 2018 3:28 pm
randomguy wrote: Tue May 08, 2018 3:11 pm
thangngo wrote: Mon May 07, 2018 10:50 am
Buying new car is a luxury. If you want value, buy a slightly used, low mileage car that can last you as long as a new car would. Note that you are responsible to do regular maintenance to keep the car running as long as it can. If you neglect your car, it doesn't matter you buy a new or a used car.
Why do you think new cars have shorter lifespan than used (i.e. the only reason why you could expect a say 2 year old car to last as long a new one)? That makes zero sense. Used car buyers like to talk about the huge savings off MSRP. You buy a 30k car for 18k in 3 years and they save 12k. The math doesn't work out as well when you buy that 30k car for 24k and you realize you saving in tires/maintenance and 3 more years of service. The cost difference shrinks pretty darn quickly and which one is cheaper will be based on you assumptions. Heck I have actually seen new Hondas listed for less than used ones of the same trim level.:)

In the end this choice really doesn't matter much compared to the bigger ones of buying the right car and being able to drive it for 10+ years. It is why the topic keeps coming up time and time again.
Apparently you have a crystal ball to help you see in the future when car will break down or when you get rid of the old car for a new and fancy car.

Spin it any way you want. I bought a slight used 2.5 year old car with 17k miles on the odometer for 20k. Sticker price for a new version of that car is 32k. Works out for me thus far.

Why would anybody want to pay $20k while they can get a new one at 22k? Would you?

Imagine you bought a new 2017 Honda CR-V, how that would work out for you?
You obviously didn't buy a Honda
Agree. He must have bought a Hyundai.
LOL try again.
Time is the ultimate currency.
H-Town
Posts: 5905
Joined: Sun Feb 26, 2017 1:08 pm

Re: Buying new car or buying used car

Post by H-Town »

GoldenGoose wrote: Tue May 08, 2018 11:14 pm Sooooooo after much debating can we put to rest that non sense about buying used? It really irks me to see some bogleheads mindlessly advise buying used in other posts? If I see that happen I might have to hijack the thread to start another rounds of debate. 😄
Whatever floats your boat. your money, your decision.
Time is the ultimate currency.
H-Town
Posts: 5905
Joined: Sun Feb 26, 2017 1:08 pm

Re: Buying new car or buying used car

Post by H-Town »

randomguy wrote: Tue May 08, 2018 7:33 pm
thangngo wrote: Tue May 08, 2018 3:28 pm
randomguy wrote: Tue May 08, 2018 3:11 pm
thangngo wrote: Mon May 07, 2018 10:50 am
Buying new car is a luxury. If you want value, buy a slightly used, low mileage car that can last you as long as a new car would. Note that you are responsible to do regular maintenance to keep the car running as long as it can. If you neglect your car, it doesn't matter you buy a new or a used car.
Why do you think new cars have shorter lifespan than used (i.e. the only reason why you could expect a say 2 year old car to last as long a new one)? That makes zero sense. Used car buyers like to talk about the huge savings off MSRP. You buy a 30k car for 18k in 3 years and they save 12k. The math doesn't work out as well when you buy that 30k car for 24k and you realize you saving in tires/maintenance and 3 more years of service. The cost difference shrinks pretty darn quickly and which one is cheaper will be based on you assumptions. Heck I have actually seen new Hondas listed for less than used ones of the same trim level.:)

In the end this choice really doesn't matter much compared to the bigger ones of buying the right car and being able to drive it for 10+ years. It is why the topic keeps coming up time and time again.
Apparently you have a crystal ball to help you see in the future when car will break down or when you get rid of the old car for a new and fancy car.

Spin it any way you want. I bought a slight used 2.5 year old car with 17k miles on the odometer for 20k. Sticker price for a new version of that car is 32k. Works out for me thus far.

Why would anybody want to pay $20k while they can get a new one at 22k? Would you?

Imagine you bought a new 2017 Honda CR-V, how that would work out for you?
What crystal ball? If you think a car is good for 15 years, it is pretty logical to think a 2.5 year old car is only lasting 12.5. It isn't logical to think it lasts 17.5 because you only owned it for 15 of it.

And you prove my point. Instead of talking about what the actual price you would have paid for a new car (10-20% off is pretty standard. More if you buy at the end of the model year), you cling to the idea of a MSRP that basically nobody pays in an attempt to make your numbers look better. If you could have bought the car for say 25k, your numbers over 15 years look like
25/15 = 1.67k/year
20/12.5 = 1.6k/year
Thats pretty darn close. Obviously the close you pay to 32k, the more buying used works. Only pay 29k and you are paying 300 more a year for the new car. Obviously we are only looking at depreciation and ignoring taxes, repairs, and maintenance. You rapidly go from saving 40% by buying used to something in the 10% range. Up to decide if that is worth it or not.

As to how a 2017 CRV works out, who knows. It is far to early. Maybe only a small fraction ends up with the issue. Maybe it gets fixed. Maybe it is a problem. It is no different than buying a car with 17k miles and learning that every single one of them needs a new head gasket at 40k after you bought the car.
Nah, I rarely see anyone I know in real life buy a new car and drive it past 15 year mark. Some might get it past 10 years and then looking to new cars with fancy tech. It's not about making my numbers look better. It's about the reality how long you actually can keep the vehicle. The denominator in your equations might be the same in reality. I'd rather keeping acquiring cost low up front than waiting to see how long I can keep the vehicle 10-15 years in the future.

Pay the premium for new car if you want to. Car makers and dealers are thrilled with your mindset.
Time is the ultimate currency.
Topic Author
GoldenGoose
Posts: 353
Joined: Tue Jan 30, 2018 1:08 pm

Re: Buying new car or buying used car

Post by GoldenGoose »

thangngo wrote: Wed May 09, 2018 9:37 am
randomguy wrote: Tue May 08, 2018 7:33 pm
thangngo wrote: Tue May 08, 2018 3:28 pm
randomguy wrote: Tue May 08, 2018 3:11 pm
thangngo wrote: Mon May 07, 2018 10:50 am
Buying new car is a luxury. If you want value, buy a slightly used, low mileage car that can last you as long as a new car would. Note that you are responsible to do regular maintenance to keep the car running as long as it can. If you neglect your car, it doesn't matter you buy a new or a used car.
Why do you think new cars have shorter lifespan than used (i.e. the only reason why you could expect a say 2 year old car to last as long a new one)? That makes zero sense. Used car buyers like to talk about the huge savings off MSRP. You buy a 30k car for 18k in 3 years and they save 12k. The math doesn't work out as well when you buy that 30k car for 24k and you realize you saving in tires/maintenance and 3 more years of service. The cost difference shrinks pretty darn quickly and which one is cheaper will be based on you assumptions. Heck I have actually seen new Hondas listed for less than used ones of the same trim level.:)

In the end this choice really doesn't matter much compared to the bigger ones of buying the right car and being able to drive it for 10+ years. It is why the topic keeps coming up time and time again.
Apparently you have a crystal ball to help you see in the future when car will break down or when you get rid of the old car for a new and fancy car.

Spin it any way you want. I bought a slight used 2.5 year old car with 17k miles on the odometer for 20k. Sticker price for a new version of that car is 32k. Works out for me thus far.

Why would anybody want to pay $20k while they can get a new one at 22k? Would you?

Imagine you bought a new 2017 Honda CR-V, how that would work out for you?
What crystal ball? If you think a car is good for 15 years, it is pretty logical to think a 2.5 year old car is only lasting 12.5. It isn't logical to think it lasts 17.5 because you only owned it for 15 of it.

And you prove my point. Instead of talking about what the actual price you would have paid for a new car (10-20% off is pretty standard. More if you buy at the end of the model year), you cling to the idea of a MSRP that basically nobody pays in an attempt to make your numbers look better. If you could have bought the car for say 25k, your numbers over 15 years look like
25/15 = 1.67k/year
20/12.5 = 1.6k/year
Thats pretty darn close. Obviously the close you pay to 32k, the more buying used works. Only pay 29k and you are paying 300 more a year for the new car. Obviously we are only looking at depreciation and ignoring taxes, repairs, and maintenance. You rapidly go from saving 40% by buying used to something in the 10% range. Up to decide if that is worth it or not.

As to how a 2017 CRV works out, who knows. It is far to early. Maybe only a small fraction ends up with the issue. Maybe it gets fixed. Maybe it is a problem. It is no different than buying a car with 17k miles and learning that every single one of them needs a new head gasket at 40k after you bought the car.
Nah, I rarely see anyone I know in real life buy a new car and drive it past 15 year mark. Some might get it past 10 years and then looking to new cars with fancy tech. It's not about making my numbers look better. It's about the reality how long you actually can keep the vehicle. The denominator in your equations might be the same in reality. I'd rather keeping acquiring cost low up front than waiting to see how long I can keep the vehicle 10-15 years in the future.

Pay the premium for new car if you want to. Car makers and dealers are thrilled with your mindset.
You must be living an isolated life.

Hi thangngo, nice to meet you. Let me be the first person you come across that has not one, but 2 cars bought new, a 2001 bmw and a 2002 hyundai, and still drives them and still plans on driving them until the wheels fall off.
H-Town
Posts: 5905
Joined: Sun Feb 26, 2017 1:08 pm

Re: Buying new car or buying used car

Post by H-Town »

GoldenGoose wrote: Wed May 09, 2018 10:30 am
thangngo wrote: Wed May 09, 2018 9:37 am
randomguy wrote: Tue May 08, 2018 7:33 pm
thangngo wrote: Tue May 08, 2018 3:28 pm
randomguy wrote: Tue May 08, 2018 3:11 pm

Why do you think new cars have shorter lifespan than used (i.e. the only reason why you could expect a say 2 year old car to last as long a new one)? That makes zero sense. Used car buyers like to talk about the huge savings off MSRP. You buy a 30k car for 18k in 3 years and they save 12k. The math doesn't work out as well when you buy that 30k car for 24k and you realize you saving in tires/maintenance and 3 more years of service. The cost difference shrinks pretty darn quickly and which one is cheaper will be based on you assumptions. Heck I have actually seen new Hondas listed for less than used ones of the same trim level.:)

In the end this choice really doesn't matter much compared to the bigger ones of buying the right car and being able to drive it for 10+ years. It is why the topic keeps coming up time and time again.
Apparently you have a crystal ball to help you see in the future when car will break down or when you get rid of the old car for a new and fancy car.

Spin it any way you want. I bought a slight used 2.5 year old car with 17k miles on the odometer for 20k. Sticker price for a new version of that car is 32k. Works out for me thus far.

Why would anybody want to pay $20k while they can get a new one at 22k? Would you?

Imagine you bought a new 2017 Honda CR-V, how that would work out for you?
What crystal ball? If you think a car is good for 15 years, it is pretty logical to think a 2.5 year old car is only lasting 12.5. It isn't logical to think it lasts 17.5 because you only owned it for 15 of it.

And you prove my point. Instead of talking about what the actual price you would have paid for a new car (10-20% off is pretty standard. More if you buy at the end of the model year), you cling to the idea of a MSRP that basically nobody pays in an attempt to make your numbers look better. If you could have bought the car for say 25k, your numbers over 15 years look like
25/15 = 1.67k/year
20/12.5 = 1.6k/year
Thats pretty darn close. Obviously the close you pay to 32k, the more buying used works. Only pay 29k and you are paying 300 more a year for the new car. Obviously we are only looking at depreciation and ignoring taxes, repairs, and maintenance. You rapidly go from saving 40% by buying used to something in the 10% range. Up to decide if that is worth it or not.

As to how a 2017 CRV works out, who knows. It is far to early. Maybe only a small fraction ends up with the issue. Maybe it gets fixed. Maybe it is a problem. It is no different than buying a car with 17k miles and learning that every single one of them needs a new head gasket at 40k after you bought the car.
Nah, I rarely see anyone I know in real life buy a new car and drive it past 15 year mark. Some might get it past 10 years and then looking to new cars with fancy tech. It's not about making my numbers look better. It's about the reality how long you actually can keep the vehicle. The denominator in your equations might be the same in reality. I'd rather keeping acquiring cost low up front than waiting to see how long I can keep the vehicle 10-15 years in the future.

Pay the premium for new car if you want to. Car makers and dealers are thrilled with your mindset.
You must be living an isolated life.

Hi thangngo, nice to meet you. Let me be the first person you come across that has not one, but 2 cars bought new, a 2001 bmw and a 2002 hyundai, and still drives them and still plans on driving them until the wheels fall off.
Peeing contest? Gotta love this. I bought a used '98 Camry and it's still running fine. Bought it for $8k out of the door. Does that make you or I better? No it does not. I know value when I see it. I don't pay premium just because the new car smells good. Used car can smell good too if you take good care of it. You pay premium for new cars. So be it. If you can keep your vehicles that long, it does not really matter one way or the other.

I just know for the facts that I set goals for my life and I keep knocking them down.
Time is the ultimate currency.
Topic Author
GoldenGoose
Posts: 353
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Re: Buying new car or buying used car

Post by GoldenGoose »

thangngo wrote: Wed May 09, 2018 10:40 am
GoldenGoose wrote: Wed May 09, 2018 10:30 am
thangngo wrote: Wed May 09, 2018 9:37 am
randomguy wrote: Tue May 08, 2018 7:33 pm
thangngo wrote: Tue May 08, 2018 3:28 pm

Apparently you have a crystal ball to help you see in the future when car will break down or when you get rid of the old car for a new and fancy car.

Spin it any way you want. I bought a slight used 2.5 year old car with 17k miles on the odometer for 20k. Sticker price for a new version of that car is 32k. Works out for me thus far.

Why would anybody want to pay $20k while they can get a new one at 22k? Would you?

Imagine you bought a new 2017 Honda CR-V, how that would work out for you?
What crystal ball? If you think a car is good for 15 years, it is pretty logical to think a 2.5 year old car is only lasting 12.5. It isn't logical to think it lasts 17.5 because you only owned it for 15 of it.

And you prove my point. Instead of talking about what the actual price you would have paid for a new car (10-20% off is pretty standard. More if you buy at the end of the model year), you cling to the idea of a MSRP that basically nobody pays in an attempt to make your numbers look better. If you could have bought the car for say 25k, your numbers over 15 years look like
25/15 = 1.67k/year
20/12.5 = 1.6k/year
Thats pretty darn close. Obviously the close you pay to 32k, the more buying used works. Only pay 29k and you are paying 300 more a year for the new car. Obviously we are only looking at depreciation and ignoring taxes, repairs, and maintenance. You rapidly go from saving 40% by buying used to something in the 10% range. Up to decide if that is worth it or not.

As to how a 2017 CRV works out, who knows. It is far to early. Maybe only a small fraction ends up with the issue. Maybe it gets fixed. Maybe it is a problem. It is no different than buying a car with 17k miles and learning that every single one of them needs a new head gasket at 40k after you bought the car.
Nah, I rarely see anyone I know in real life buy a new car and drive it past 15 year mark. Some might get it past 10 years and then looking to new cars with fancy tech. It's not about making my numbers look better. It's about the reality how long you actually can keep the vehicle. The denominator in your equations might be the same in reality. I'd rather keeping acquiring cost low up front than waiting to see how long I can keep the vehicle 10-15 years in the future.

Pay the premium for new car if you want to. Car makers and dealers are thrilled with your mindset.
You must be living an isolated life.

Hi thangngo, nice to meet you. Let me be the first person you come across that has not one, but 2 cars bought new, a 2001 bmw and a 2002 hyundai, and still drives them and still plans on driving them until the wheels fall off.
Peeing contest? Gotta love this. I bought a used '98 Camry and it's still running fine. Bought it for $8k out of the door. Does that make you or I better? No it does not. I know value when I see it. I don't pay premium just because the new car smells good. Used car can smell good too if you take good care of it. You pay premium for new cars. So be it. If you can keep your vehicles that long, it does not really matter one way or the other.

I just know for the facts that I set goals for my life and I keep knocking them down.
Nope, not a contest. Just want to say that just because you rarely see people drive cars past their 15 years mark does not mean that it's rare. Funny my brother also bought a 98 camry new too. It has 200K+ miles on it and by the look of it he is going to keep on driving that thing for a long time yet. I know tons of people who do this so I wouldn't say it's rare.
rgs92
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Re: Buying new car or buying used car

Post by rgs92 »

Example:
2017 Lexus LS460 AWD: new at $80K MSRP, $66K street price with some haggling.
2014 version (same car as CPO, only minor changes in display, essentially same car), 8,000 miles: $50,000.

So, for essentially break-in mileage, at least $15K saved. Worth it? I think so; others may prefer the new one for the car feeling, color, etc.
Just a real world example here.
Topic Author
GoldenGoose
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Re: Buying new car or buying used car

Post by GoldenGoose »

rgs92 wrote: Wed May 09, 2018 11:29 am Example:
2017 Lexus LS460 AWD: new at $80K MSRP, $66K street price with some haggling.
2014 version (same car as CPO, only minor changes in display, essentially same car), 8,000 miles: $50,000.

So, for essentially break-in mileage, at least $15K saved. Worth it? I think so; others may prefer the new one for the car feeling, color, etc.
Just a real world example here.
If one spends $50K to buy a car, then $15K shouldn't matter much to those buyers, IMO. For myself, $20K is about the range I would pay for a new car.
mountain-lion
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Re: Buying new car or buying used car

Post by mountain-lion »

GoldenGoose wrote: Wed May 09, 2018 11:46 am If one spends $50K to buy a car, then $15K shouldn't matter much to those buyers, IMO. For myself, $20K is about the range I would pay for a new car.
I don't see how that makes sense.

$15K is about 30% of $50K--that is a very significant difference in percentage terms.

Put another way, 30% of $20K is about $6,000. If one describes $20K as the limit (as you do above), it seems cavalier to say, "$20k vs $26K, what's the difference?"
Hogan773
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Re: Buying new car or buying used car

Post by Hogan773 »

rgs92 wrote: Wed May 09, 2018 11:29 am Example:
2017 Lexus LS460 AWD: new at $80K MSRP, $66K street price with some haggling.
2014 version (same car as CPO, only minor changes in display, essentially same car), 8,000 miles: $50,000.

So, for essentially break-in mileage, at least $15K saved. Worth it? I think so; others may prefer the new one for the car feeling, color, etc.
Just a real world example here.
yes in that case I might buy the 8000 mile one and save $15 grand

It all depends on the situation - but I can say that in my real world cases for Honda Accords and Odysseys and such, saving $2500-$3500 to get a 2 or 3 year old car that was driven by someone else for 20-25K miles was not a good choice for me.
Topic Author
GoldenGoose
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Re: Buying new car or buying used car

Post by GoldenGoose »

mountain-lion wrote: Wed May 09, 2018 12:34 pm
GoldenGoose wrote: Wed May 09, 2018 11:46 am If one spends $50K to buy a car, then $15K shouldn't matter much to those buyers, IMO. For myself, $20K is about the range I would pay for a new car.
I don't see how that makes sense.

$15K is about 30% of $50K--that is a very significant difference in percentage terms.

Put another way, 30% of $20K is about $6,000. If one describes $20K as the limit (as you do above), it seems cavalier to say, "$20k vs $26K, what's the difference?"
Sorry, if it was me buying a $50K car used, this means I have the $ to splurge. If I can afford to splurge, then why skimp if I'm going to be happy owning a brand new car. The reality is I won't be happy if I have to pay that much for a car. That's my thinking but that's me.
GodelianKnot
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Re: Buying new car or buying used car

Post by GodelianKnot »

thangngo wrote: Wed May 09, 2018 9:37 am Nah, I rarely see anyone I know in real life buy a new car and drive it past 15 year mark. Some might get it past 10 years and then looking to new cars with fancy tech. It's not about making my numbers look better. It's about the reality how long you actually can keep the vehicle. The denominator in your equations might be the same in reality.
So, you're saying most people may drive a car for 10-12 years, regardless of how many more miles they might actually get out of the car. Ok, but then you still have to account for the residual value of those miles. So, if a new car is driven for 12.5 years, and the old car is driven for 12.5 years, then the old car is 15 years old and kaput (in this scenario), then new car still has 2.5 years of value left, which you should be able to recoup to some extent by selling it.
Hogan773
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Re: Buying new car or buying used car

Post by Hogan773 »

GoldenGoose wrote: Wed May 09, 2018 12:54 pm
mountain-lion wrote: Wed May 09, 2018 12:34 pm
GoldenGoose wrote: Wed May 09, 2018 11:46 am If one spends $50K to buy a car, then $15K shouldn't matter much to those buyers, IMO. For myself, $20K is about the range I would pay for a new car.
I don't see how that makes sense.

$15K is about 30% of $50K--that is a very significant difference in percentage terms.

Put another way, 30% of $20K is about $6,000. If one describes $20K as the limit (as you do above), it seems cavalier to say, "$20k vs $26K, what's the difference?"
Sorry, if it was me buying a $50K car used, this means I have the $ to splurge. If I can afford to splurge, then why skimp if I'm going to be happy owning a brand new car. The reality is I won't be happy if I have to pay that much for a car. That's my thinking but that's me.
Yes this is true in practice I think. The kind of person who wants to drive an $80K car (sticker) probably is a little, ahem, more free with their spending than the average Boglehead who is counting every dollar no matter their net worth. If they are going to splurge on such a car then it makes sense that they may be more interested in also splurging to get the newest model, or to get a brand new shiny version vs one that has been driven already for several years. I'm sure there are examples of both though, and probably some people who are rich and want to drive that car but also are happy to save $15K on it
Hogan773
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Re: Buying new car or buying used car

Post by Hogan773 »

GodelianKnot wrote: Wed May 09, 2018 1:16 pm
thangngo wrote: Wed May 09, 2018 9:37 am Nah, I rarely see anyone I know in real life buy a new car and drive it past 15 year mark. Some might get it past 10 years and then looking to new cars with fancy tech. It's not about making my numbers look better. It's about the reality how long you actually can keep the vehicle. The denominator in your equations might be the same in reality.
So, you're saying most people may drive a car for 10-12 years, regardless of how many more miles they might actually get out of the car. Ok, but then you still have to account for the residual value of those miles. So, if a new car is driven for 12.5 years, and the old car is driven for 12.5 years, then the old car is 15 years old and kaput (in this scenario), then new car still has 2.5 years of value left, which you should be able to recoup to some extent by selling it.
This is what the "only buy used" advocates ignore, among other things, as I posted earlier. Yes you start out at a lower cost when you buy 3 yrs old vs brand new, BUT when it comes time to sell, all else equal, 3 years NEWER will command a higher price than the car you bought as used. Yes the delta has probably shrunk on a $$$ basis, but it should still be there. So that is further rationale for saying that the "savings" of buying used may not be what it seems. If you save $3500 up front, you might end up getting back an incremental $1000 or $1500 or maybe more on the sale. It is not unreasonable to think that an 8yr old car with 100K miles would be valued at $7500 while an 11yr old car with 130K miles would be valued at $6000. Maybe the delta is even greater. If you need an extra set of tires during your ownership of the used car that you wouldn't have had to buy on a new car, then deduct another $800 from your savings. Same for extra maintenance which can accelerate in the late years (you might be spending more $$$ per year in years 9, 10, 11 than you would for the car that is age 6,7, 8.)

So basically YES if you can save ENOUGH up front then it makes sense, but what many of us are saying is that it often isn't a "truism" as many make it. And you can often save ENOUGH only on cars that have a steeper depreciation curve than many.
H-Town
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Re: Buying new car or buying used car

Post by H-Town »

GodelianKnot wrote: Wed May 09, 2018 1:16 pm
thangngo wrote: Wed May 09, 2018 9:37 am Nah, I rarely see anyone I know in real life buy a new car and drive it past 15 year mark. Some might get it past 10 years and then looking to new cars with fancy tech. It's not about making my numbers look better. It's about the reality how long you actually can keep the vehicle. The denominator in your equations might be the same in reality.
So, you're saying most people may drive a car for 10-12 years, regardless of how many more miles they might actually get out of the car. Ok, but then you still have to account for the residual value of those miles. So, if a new car is driven for 12.5 years, and the old car is driven for 12.5 years, then the old car is 15 years old and kaput (in this scenario), then new car still has 2.5 years of value left, which you should be able to recoup to some extent by selling it.
That's right. Again, I've seen more people trade in their cars at the dealership than people who actually sell their car to private party. There is no reason not to take a discount up front when buying used cars, unless you want to enjoy the luxury of buying new cars.
Time is the ultimate currency.
H-Town
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Re: Buying new car or buying used car

Post by H-Town »

Hogan773 wrote: Wed May 09, 2018 1:35 pm
GodelianKnot wrote: Wed May 09, 2018 1:16 pm
thangngo wrote: Wed May 09, 2018 9:37 am Nah, I rarely see anyone I know in real life buy a new car and drive it past 15 year mark. Some might get it past 10 years and then looking to new cars with fancy tech. It's not about making my numbers look better. It's about the reality how long you actually can keep the vehicle. The denominator in your equations might be the same in reality.
So, you're saying most people may drive a car for 10-12 years, regardless of how many more miles they might actually get out of the car. Ok, but then you still have to account for the residual value of those miles. So, if a new car is driven for 12.5 years, and the old car is driven for 12.5 years, then the old car is 15 years old and kaput (in this scenario), then new car still has 2.5 years of value left, which you should be able to recoup to some extent by selling it.
This is what the "only buy used" advocates ignore, among other things, as I posted earlier. Yes you start out at a lower cost when you buy 3 yrs old vs brand new, BUT when it comes time to sell, all else equal, 3 years NEWER will command a higher price than the car you bought as used. Yes the delta has probably shrunk on a $$$ basis, but it should still be there. So that is further rationale for saying that the "savings" of buying used may not be what it seems. If you save $3500 up front, you might end up getting back an incremental $1000 or $1500 or maybe more on the sale. It is not unreasonable to think that an 8yr old car with 100K miles would be valued at $7500 while an 11yr old car with 130K miles would be valued at $6000. Maybe the delta is even greater. If you need an extra set of tires during your ownership of the used car that you wouldn't have had to buy on a new car, then deduct another $800 from your savings. Same for extra maintenance which can accelerate in the late years (you might be spending more $$$ per year in years 9, 10, 11 than you would for the car that is age 6,7, 8.)

So basically YES if you can save ENOUGH up front then it makes sense, but what many of us are saying is that it often isn't a "truism" as many make it. And you can often save ENOUGH only on cars that have a steeper depreciation curve than many.
First rule of buying used car: don't buy it when you don't see any value doing so. If you can't negotiate for a new set of tires and/or break pads, you're better off go to dealership to buy new cars. I heard that you can get free coffee there. :sharebeer
Time is the ultimate currency.
mountain-lion
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Re: Buying new car or buying used car

Post by mountain-lion »

GoldenGoose wrote: Wed May 09, 2018 12:54 pm Sorry, if it was me buying a $50K car used, this means I have the $ to splurge.
If I've set the splurge budget at $50k, then I want to get the best car I can for $50k, not splurge $65k. I presumably set that budget for a reason. Just like when you say: "The reality is I won't be happy if I have to pay that much for a car." You have some number, "that much" that is your budget, and going over wouldn't make you happy.

Exactly the same reasoning applies to the person at $50k.

For whatever reason, if $X is the budget, then saying, "If you have the means to spend $X, then you have the means to spend $X+$Y." is nonsensical, for most values of $X. Just like for you at $20K.
ClemsonBogle
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Re: Buying new car or buying used car

Post by ClemsonBogle »

My issue with all of this is:
1. Assumptions are made that anyone can negotiate a great price on a new car when in reality most people dont arent able to.
2. Assumptions are made that people should have emotional connections to cars vs treating them as a utility to get from a to b. anything more than that by definition is luxury and you will likely be taxed for that.
3. A used car can be find for a great deal, is a Camry any different really than an accord? Not really...so if you are open to the "best" used car in your price range you can do very well...
4. I believe that you shouldn't make deals for your future self because your future self will have more information than you at the time. AKA i dont want to decide what my 10 years into the future self HAS to invest in. I might have ideas but things change...and in that future time he (me) will be better equipped than i am to decide. I feel the same way about cars, if i am justifying a purchase because i can drive it 15 year or whatever then i am deciding things for my future self when i don't have to. Instead i try and keep my options flexible and adaptable. If i got an amazing job with a car allowance i would sell my current car and walk away relatively unscathed. If my new to me car got totaled i could replace it and not have it get fixed because it was worth 30K and got 15K in damage... (my aunt had a new car get rear ended after only 8 months in it, she had it fixed but hated that car from then on... and selling it she would have taken a huge hit in value) ETC.

I also agree with your money your choices. So enjoy !!!

I have owned a lot of cars. I have never owned a new car. I have been driving for 25 years now and have had :
1982 Nissan Sentra, 1989 For tempo, 1989 Ford Probe, 1992 Buick Regal, 1987 Chrysler LeBaron, 1991 Ford Taurus SHO, 1993 Ford Taurus SHO, 1992 For Taurus LX, 1995 240 SX, 1996 240 SX SE, 1993 Saturn SC2, 1989 Chevy Corisca, 1987 Honda Accord, 1993 Geo Prizm, 1995 Civic Del Sol, 1997 Ford Explorer, 1998 Ford Explorer, 1998 Accord LX, 1999 Accord EX-L, 2000 Accord EX V6, 2006 Lincoln LS V8, 2003 Ford F150 XLT, 2005 Ford F150 King Ranch, 2007 Acura TL Type S, 2005 Accord EX-L, 2007 Accord LX, 2007 Accord EX - V6, 2013 Accord EX-L, 1994 Oldsmobile Intrigue, 1995 Acura Vigor, 1993 Ford Probe, 1995 Ford Contour, 1999 Toyota 4runner at least I think their are more i am just not thinking about right now....

Almost all had high mileage for their year. I have only one that was unreliable (the lebaron). I have had none totaled, no speeding tickets, none scrapped out, etc. I have sold almost all of them for a profit after my ownership. At least 35% of the above had more than 150K when purchased. THe 2007 accord v6 and the 2005 accord EX-L had 220 and 250 when i sold them.

All those cars and I am positive of one thing, i drive cheaper than any of my peers. My current car the 2013 accord EXL i bought in May of 2016 for 9500 and 90K. I paid for the 100K service to be done and it has 110K on it now. I believe it to be worth about 9500-9000 today.

I believe you that given most situations you come out cheaper buying 4-5 years old and driving for 2-3 years. Most analysis being done is comparing 2 year old cars to new. The used car will MOSTLY be cheaper but you can come out almost even given that window.

However - I believe that my 2013 accord (the first of its model year) has almost the same equipment as a modern one aka lane detection, back up cameras, bluetooth, CVT, etc etc. It gets 40 mpg on trips and ~29 in the city. And i believe that each year of ownership costs me less than 1500 including insurance and taxes etc. 100 bucks a month for a full size sedan that gets 40 mpg and has no battery packs to wear out. Seems like a good deal to me, if you can beat that with leather moonroof, honda reliability etc please let me know.
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Re: Buying new car or buying used car

Post by Nate79 »

Whether someone tries to rationalize buying a new car or a used car the fact remains as documented over and over by many sources (and very easy to do yourself) that the first few years of a cars life is the highest depreciation rate. There is no doubt about this. This includes taking into account actual purchase price (not msrp) and such games that people try and use to rationalize buying new. A used car has a lower cost per mile to operate - again well documented as the primary cost outside of operating costs is depreciation. The depreciation rate for cars after 5 years really slows down. Maintenance cost is way overblown also.
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Re: Buying new car or buying used car

Post by Hogan773 »

Nate79 wrote: Wed May 09, 2018 4:24 pm Whether someone tries to rationalize buying a new car or a used car the fact remains as documented over and over by many sources (and very easy to do yourself) that the first few years of a cars life is the highest depreciation rate. There is no doubt about this. This includes taking into account actual purchase price (not msrp) and such games that people try and use to rationalize buying new. A used car has a lower cost per mile to operate - again well documented as the primary cost outside of operating costs is depreciation. The depreciation rate for cars after 5 years really slows down. Maintenance cost is way overblown also.
This may be true but I think the "shape" of those depreciation curves depends a lot on the make and model. I would guess that the shape of the depreciation curve for a Honda Accord or Toyota Camry is much shallower than for some other cars, either higher priced cars or cars that are much less popular as "good used cars to target"

when the curve is more shallow, then your annual depreciation charge is more even whether you are riding it down from years 1-5 or 3-7, and then it matters less when you buy. I agree that if a car has a very steep depreciation curve in the first 2 years, then it would be best to sidestep that and try to own the car after that occurred.

There is the old mantra "the car loses 30% of its value as soon as you drive it off the lot". That is bunk, at least in terms of a Honda Accord. Maybe if I paid full sticker price for it, maybe. But if you buy a new Accord for $29,500, no way does it immediately decline in value to $20,500 in the first year. No way.
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Re: Buying new car or buying used car

Post by Nate79 »

Hogan773 wrote: Wed May 09, 2018 4:43 pm
Nate79 wrote: Wed May 09, 2018 4:24 pm Whether someone tries to rationalize buying a new car or a used car the fact remains as documented over and over by many sources (and very easy to do yourself) that the first few years of a cars life is the highest depreciation rate. There is no doubt about this. This includes taking into account actual purchase price (not msrp) and such games that people try and use to rationalize buying new. A used car has a lower cost per mile to operate - again well documented as the primary cost outside of operating costs is depreciation. The depreciation rate for cars after 5 years really slows down. Maintenance cost is way overblown also.
This may be true but I think the "shape" of those depreciation curves depends a lot on the make and model. I would guess that the shape of the depreciation curve for a Honda Accord or Toyota Camry is much shallower than for some other cars, either higher priced cars or cars that are much less popular as "good used cars to target"

when the curve is more shallow, then your annual depreciation charge is more even whether you are riding it down from years 1-5 or 3-7, and then it matters less when you buy. I agree that if a car has a very steep depreciation curve in the first 2 years, then it would be best to sidestep that and try to own the car after that occurred.

There is the old mantra "the car loses 30% of its value as soon as you drive it off the lot". That is bunk, at least in terms of a Honda Accord. Maybe if I paid full sticker price for it, maybe. But if you buy a new Accord for $29,500, no way does it immediately decline in value to $20,500 in the first year. No way.
To take two examples I looked at data for the Accord vs the Altima - base model for each. As you would expect the 2 year depreciation for the Honda was about half of that for the Nissan (~15% vs 30%). But for the Honda the depreciation rate really slows down after the car is about 8 years old but for the Nissan it looks like it continues to decrease at a pretty high rate (this is probably due to the quality difference really showing up after 10 years+).

For the Honda, the depreciation rate for the first about 8 years is about 3x the depreciation rate for years 8-16. The depreciation rate of about 7% per year for the Honda was pretty steady for the first 8 years. So the point is that even for the Honda the curve is still steeper during the first few years of ownership even if the rate is small.

This is all just a quick data gathering of a listing of used cars in my area. Within each model year there is a wide variety of prices, miles, models, etc so this is just a fast and loose review. I will also say that there is a real opportunity to shop around for the used cars and find one a few $k cheaper than the average which will really boost the savings.
MnD
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Re: Buying new car or buying used car

Post by MnD »

Note the location of the dark brown wash return water in this video.
Used cars do come with a bonus from the previous owners.

https://www.youtube.com/watch?v=oyqclZgv0mk
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Hogan773
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Re: Buying new car or buying used car

Post by Hogan773 »

Nate79 wrote: Wed May 09, 2018 5:26 pm
Hogan773 wrote: Wed May 09, 2018 4:43 pm
Nate79 wrote: Wed May 09, 2018 4:24 pm Whether someone tries to rationalize buying a new car or a used car the fact remains as documented over and over by many sources (and very easy to do yourself) that the first few years of a cars life is the highest depreciation rate. There is no doubt about this. This includes taking into account actual purchase price (not msrp) and such games that people try and use to rationalize buying new. A used car has a lower cost per mile to operate - again well documented as the primary cost outside of operating costs is depreciation. The depreciation rate for cars after 5 years really slows down. Maintenance cost is way overblown also.
This may be true but I think the "shape" of those depreciation curves depends a lot on the make and model. I would guess that the shape of the depreciation curve for a Honda Accord or Toyota Camry is much shallower than for some other cars, either higher priced cars or cars that are much less popular as "good used cars to target"

when the curve is more shallow, then your annual depreciation charge is more even whether you are riding it down from years 1-5 or 3-7, and then it matters less when you buy. I agree that if a car has a very steep depreciation curve in the first 2 years, then it would be best to sidestep that and try to own the car after that occurred.

There is the old mantra "the car loses 30% of its value as soon as you drive it off the lot". That is bunk, at least in terms of a Honda Accord. Maybe if I paid full sticker price for it, maybe. But if you buy a new Accord for $29,500, no way does it immediately decline in value to $20,500 in the first year. No way.
To take two examples I looked at data for the Accord vs the Altima - base model for each. As you would expect the 2 year depreciation for the Honda was about half of that for the Nissan (~15% vs 30%). But for the Honda the depreciation rate really slows down after the car is about 8 years old but for the Nissan it looks like it continues to decrease at a pretty high rate (this is probably due to the quality difference really showing up after 10 years+).

For the Honda, the depreciation rate for the first about 8 years is about 3x the depreciation rate for years 8-16. The depreciation rate of about 7% per year for the Honda was pretty steady for the first 8 years. So the point is that even for the Honda the curve is still steeper during the first few years of ownership even if the rate is small.

This is all just a quick data gathering of a listing of used cars in my area. Within each model year there is a wide variety of prices, miles, models, etc so this is just a fast and loose review. I will also say that there is a real opportunity to shop around for the used cars and find one a few $k cheaper than the average which will really boost the savings.
That's fine but that proves my (our) point - if you are trying to get some steal deal on a 2 year old Honda, it is much harder and your "savings" is less. Of course you might be able to REALLY save money if you buy a Honda that is already 8 or 10 years old and drive it for another 8 years. I agree that the annual depreciation between years 8 and 16 will be much lower per year than for years 1 through 8. But that is a completely different scenario than the one I have been questioning, which is the mantra that you get some awesome deal on a 2 year old Honda. I've never shopped for an 8 yr old used car. That said, I could see doing so for a car for my son when he turns 16 or 17. There I would be happy to find a good 2005 Civic or something.
wander
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Re: Buying new car or buying used car

Post by wander »

I think both camps have valid points. I bought a $25k old, have been driving 20+ years, 400k miles. The money I saved just for new car is invested and gains with the stock markets. Yes, I know it is boring, but I have no problem treating a car as a transportation tool. I could pay cash for new cars, but I don't need to. On the other hand, my older brother gave me his non-working car at 210k miles, I fixed it up and still runs well at 300k miles. And I am not a mechanic.
Both ways work, I can tell you that if you know how to take care of your car, and your car is not a defect one, unless you abuse it, 200k miles is just a number on the odometer.
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GoldenGoose
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Re: Buying new car or buying used car

Post by GoldenGoose »

MnD wrote: Wed May 09, 2018 11:46 pm Note the location of the dark brown wash return water in this video.
Used cars do come with a bonus from the previous owners.

https://www.youtube.com/watch?v=oyqclZgv0mk
This must have been a flooded car or something. Why on earth would anyone soak their car seats like that?
Topic Author
GoldenGoose
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Re: Buying new car or buying used car

Post by GoldenGoose »

wander wrote: Thu May 10, 2018 4:23 pm I think both camps have valid points. I bought a $25k old, have been driving 20+ years, 400k miles. The money I saved just for new car is invested and gains with the stock markets. Yes, I know it is boring, but I have no problem treating a car as a transportation tool. I could pay cash for new cars, but I don't need to. On the other hand, my older brother gave me his non-working car at 210k miles, I fixed it up and still runs well at 300k miles. And I am not a mechanic.
Both ways work, I can tell you that if you know how to take care of your car, and your car is not a defect one, unless you abuse it, 200k miles is just a number on the odometer.
I bet you could by a used car for way cheaper than what you bought and drive it to 400k miles too. But along the way you could spend more money fixing things and inconveniences when it broke down. To what extreme does one take?

I just want to put to rest this notion of "buy used" because when you keep driving your car until the wheels fall off, then it doesn't really matter. If you buy new and then trade it in frequently then yeah. But then how about buying used but also trade it in frequently as well? You gotta compare apples to apples.
wander
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Re: Buying new car or buying used car

Post by wander »

GoldenGoose wrote: Thu May 10, 2018 8:38 pm
wander wrote: Thu May 10, 2018 4:23 pm I think both camps have valid points. I bought a $25k old, have been driving 20+ years, 400k miles. The money I saved just for new car is invested and gains with the stock markets. Yes, I know it is boring, but I have no problem treating a car as a transportation tool. I could pay cash for new cars, but I don't need to. On the other hand, my older brother gave me his non-working car at 210k miles, I fixed it up and still runs well at 300k miles. And I am not a mechanic.
Both ways work, I can tell you that if you know how to take care of your car, and your car is not a defect one, unless you abuse it, 200k miles is just a number on the odometer.
I bet you could by a used car for way cheaper than what you bought and drive it to 400k miles too. But along the way you could spend more money fixing things and inconveniences when it broke down. To what extreme does one take?

I just want to put to rest this notion of "buy used" because when you keep driving your car until the wheels fall off, then it doesn't really matter. If you buy new and then trade it in frequently then yeah. But then how about buying used but also trade it in frequently as well? You gotta compare apples to apples.
It's your money, you do what you want. I keep my money, and continue to do what I do.
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GoldenGoose
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Re: Buying new car or buying used car

Post by GoldenGoose »

wander wrote: Thu May 10, 2018 9:18 pm
GoldenGoose wrote: Thu May 10, 2018 8:38 pm
wander wrote: Thu May 10, 2018 4:23 pm I think both camps have valid points. I bought a $25k old, have been driving 20+ years, 400k miles. The money I saved just for new car is invested and gains with the stock markets. Yes, I know it is boring, but I have no problem treating a car as a transportation tool. I could pay cash for new cars, but I don't need to. On the other hand, my older brother gave me his non-working car at 210k miles, I fixed it up and still runs well at 300k miles. And I am not a mechanic.
Both ways work, I can tell you that if you know how to take care of your car, and your car is not a defect one, unless you abuse it, 200k miles is just a number on the odometer.
I bet you could by a used car for way cheaper than what you bought and drive it to 400k miles too. But along the way you could spend more money fixing things and inconveniences when it broke down. To what extreme does one take?

I just want to put to rest this notion of "buy used" because when you keep driving your car until the wheels fall off, then it doesn't really matter. If you buy new and then trade it in frequently then yeah. But then how about buying used but also trade it in frequently as well? You gotta compare apples to apples.
It's your money, you do what you want. I keep my money, and continue to do what I do.
Exactly. So people stop telling other people to buy used. Let people buy what they want to buy, new or used. It's their money.
Hogan773
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Re: Buying new car or buying used car

Post by Hogan773 »

GoldenGoose wrote: Thu May 10, 2018 8:38 pm
wander wrote: Thu May 10, 2018 4:23 pm I think both camps have valid points. I bought a $25k old, have been driving 20+ years, 400k miles. The money I saved just for new car is invested and gains with the stock markets. Yes, I know it is boring, but I have no problem treating a car as a transportation tool. I could pay cash for new cars, but I don't need to. On the other hand, my older brother gave me his non-working car at 210k miles, I fixed it up and still runs well at 300k miles. And I am not a mechanic.
Both ways work, I can tell you that if you know how to take care of your car, and your car is not a defect one, unless you abuse it, 200k miles is just a number on the odometer.
I bet you could by a used car for way cheaper than what you bought and drive it to 400k miles too. But along the way you could spend more money fixing things and inconveniences when it broke down. To what extreme does one take?

I just want to put to rest this notion of "buy used" because when you keep driving your car until the wheels fall off, then it doesn't really matter. If you buy new and then trade it in frequently then yeah. But then how about buying used but also trade it in frequently as well? You gotta compare apples to apples.
Exactly.....

One can buy a rusted out 1991 Honda Civic for $750 or something and really be "smart" with their money. I don't need to drive a BMW for show but I also would feel embarrassed driving around in a rusted out 1991 Honda Civic. I'm happy to drive a 2014 Accord V6. Lots of interior space, awesome power and acceleration, good fuel economy, good reliability. And I bought it NEW because it was only $2500 more than a 1 yr old used version, and the 1yr old was the first model year of that new design.
wander
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Re: Buying new car or buying used car

Post by wander »

Hogan773 wrote: Fri May 11, 2018 9:49 am Exactly.....

One can buy a rusted out 1991 Honda Civic for $750 or something and really be "smart" with their money. I don't need to drive a BMW for show but I also would feel embarrassed driving around in a rusted out 1991 Honda Civic. I'm happy to drive a 2014 Accord V6. Lots of interior space, awesome power and acceleration, good fuel economy, good reliability. And I bought it NEW because it was only $2500 more than a 1 yr old used version, and the 1yr old was the first model year of that new design.
That's very true. I too feel embarrassed driving a rusty, dirty car. The key is driving an old car but you have to up keep and maintain it well. If the car doesn't perform well and run as I expect, I don't care how many miles on it, I will fix, have it fixed or replace it.
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