Better to buy a new vs used car these days??

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BHawks87
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Better to buy a new vs used car these days??

Post by BHawks87 »

It has been awhile since I bought a car and am on the market now. My DW and I both have smaller Sedans with nothing wrong with them but we want to upgrade one of the vehicles to something a little bigger for family/safety and trail needs. Both Sedans are 2010's. We are thinking of getting a Toyota Rav4 or Subaru Outback.

I was always under the impression that its best to buy a car 3-5 years old with 40k to 60k miles so that most of the depreciation has already been taken but looking around it seems that the price difference between a brand new Rav4 or Outback and a used one is pretty small. Is it even worth buying a used car right now or is new the best bet?

Also, I would like to buy the vehicle with cash so there is no loan to deal with but with dealerships offering 0% interest or very low interest for 5 to 7 years it seems like taking a loan would be the best option.

Can anyone provide some advice?
TheBeanCounter
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Re: Better to buy a new vs used car these days??

Post by TheBeanCounter »

My mom bought a brand new Rav4 and loves it. Albeit, it is the XSE hybrid, but it seems about as fancy as most luxury brand cars in the market. I would agree that there seems to be very little difference in new vs used pricing for some brands (toyota and subaru in particular).
fuddbogle
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Re: Better to buy a new vs used car these days??

Post by fuddbogle »

I was just web browsing around yesterday for a Mazda CX-5 and noticed the small price difference between new and slightly used models. If I were to purchase this month, I'd buy new. I was surprised.

For the cash vs. loan - Negotiate the loan and then find out if they offer any better pricing for paying cash that day.
Last edited by fuddbogle on Wed Apr 07, 2021 3:51 pm, edited 1 time in total.
IowaFarmBoy
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Re: Better to buy a new vs used car these days??

Post by IowaFarmBoy »

It seems like this new/used pricing phenomena has been true for several years, especially for Toyota/Honda/Subaru. At least it was 6 years ago when we bought our last car. You just need to do the price comparisons and decide. As far a financing, last time we bought we had a choice between a rebate or 0% and we took the rebate. If your only option is 0%, I would definitely do that.
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JoeRetire
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Re: Better to buy a new vs used car these days??

Post by JoeRetire »

BHawks87 wrote: Wed Apr 07, 2021 3:40 pm but looking around it seems that the price difference between a brand new Rav4 or Outback and a used one is pretty small. Is it even worth buying a used car right now
Not for me.

With the price difference so small, I buy new and keep it for 10+ years.
Also, I would like to buy the vehicle with cash so there is no loan to deal with but with dealerships offering 0% interest or very low interest for 5 to 7 years it seems like taking a loan would be the best option.
If someone is willing to lend me money at 0% for 7 years I take it - everything else being equal.

I personally haven't seen 0% for that many years.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.
runner3081
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Re: Better to buy a new vs used car these days??

Post by runner3081 »

I prefer used cars with scratches and dings. I don't feel bad when I add my own.

Also, more practically, both insurance and licensing costs are lower in my state for an older car.
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vineviz
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Re: Better to buy a new vs used car these days??

Post by vineviz »

BHawks87 wrote: Wed Apr 07, 2021 3:40 pm I was always under the impression that its best to buy a car 3-5 years old with 40k to 60k miles so that most of the depreciation has already been taken but looking around it seems that the price difference between a brand new Rav4 or Outback and a used one is pretty small. Is it even worth buying a used car right now or is new the best bet?
In my area, a 2017 RAV4 with <60k miles is less than half the cost of a new vehicle with the same features.

The difference of 50% or morE between a new vehicle and a used one doesn’t strike me as being “small”, so I’m wondering how much geography plays a role ?
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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tennisplyr
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Re: Better to buy a new vs used car these days??

Post by tennisplyr »

fuddbogle wrote: Wed Apr 07, 2021 3:49 pm I was just web browsing around yesterday for a Mazda CX-5 and noticed the small price difference between new and slightly used models. If I were to purchase this month, I'd buy new. I was surprised.

For the cash vs. loan - Negotiate the loan and then find out if they offer any better pricing for paying cash that day.
We leased a new CX-5 last year and really like it. We’ve been leasing for about 25 years and are generally satisfied especially with the advent of all the new safety features. Someone once told us that you never want to buy a depreciating asset.
Those who move forward with a happy spirit will find that things always work out.
OrangeKiwi
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Re: Better to buy a new vs used car these days??

Post by OrangeKiwi »

tennisplyr wrote: Wed Apr 07, 2021 4:37 pm Someone once told us that you never want to buy a depreciating asset.
I'm struggling to think of a single thing I own other than land and equities that is not a depreciating asset. Whoever is leasing the depreciating asset is also aware it's a depreciating asset and pricing accordingly.
Last edited by OrangeKiwi on Wed Apr 07, 2021 4:42 pm, edited 1 time in total.
bikechuck
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Re: Better to buy a new vs used car these days??

Post by bikechuck »

I have owned both new and used cars in my 50 + years of driving. For me purchasing new and driving the car for at least 10 years and at least 150,000 miles has been by far the better value. Once the car is that old rinse and repeat when the expensive repairs begin which eventually they will.
adamthesmythe
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Re: Better to buy a new vs used car these days??

Post by adamthesmythe »

I believe there is little or no price advantage for Toyota/Honda/Subaru. Especially now.

There may be a significant price advantage for unreliable/ luxury/ exotic models a few years old.
Mike Scott
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Re: Better to buy a new vs used car these days??

Post by Mike Scott »

For the cars that hold their value, the balance has tilted to buying new in many cases. There are often additional discounts when using financing. The old mantra of pay cash for a year or so old car is about dead. In many cases, paying cash costs more than financing. You still have to do your homework and price shopping because there are always anomolies. You can also just walk in and write a check for a price you are willing to pay and not stress over the haggling bit. There is some vocal internet competition to be the cheapest car buyer on the planet. You don't have to play that game if you don't want.
gblack
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Re: Better to buy a new vs used car these days??

Post by gblack »

I bought a new outback in 2019 toward the end of the year before new models were going to come out. I used Costco buying program price as a baseline and then called around to local dealerships and got the best price offer for what I wanted. It was significantly below MSRP and yes, made purchasing a used version not even close to worth it.

When I came to write the check for the car, I noticed the 0% for 36 months financing (or some equivalent great financing deal) and asked the guy at the dealer whether I could do the financing and he told me that at the price I was paying, the financing offer didn't apply. My takeaway was that either he was BSing me -- or, more likely, the way dealers make money on financing is by getting a higher purchase price. Now I might've just had good timing in regards to car demand, but in general, if you aren't afraid to haggle and walk away, I think you can get a better purchase price by paying cash than via financing or leasing.

PS - very happy with the outback
cshell2
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Re: Better to buy a new vs used car these days??

Post by cshell2 »

I'm struggling with this replacement vehicle decision as well. Also looking at Rav4 and Outback as well as the CRV. I pretty much have settled on 25K being the most I want to spend and it's really hard to find new for that.

Going to test drive a 2017 Outback Touring 3.6L with 25K miles tonight. New price was 38K and they're asking 26K.
humblecoder
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Re: Better to buy a new vs used car these days??

Post by humblecoder »

vineviz wrote: Wed Apr 07, 2021 4:36 pm
BHawks87 wrote: Wed Apr 07, 2021 3:40 pm I was always under the impression that its best to buy a car 3-5 years old with 40k to 60k miles so that most of the depreciation has already been taken but looking around it seems that the price difference between a brand new Rav4 or Outback and a used one is pretty small. Is it even worth buying a used car right now or is new the best bet?
In my area, a 2017 RAV4 with <60k miles is less than half the cost of a new vehicle with the same features.

The difference of 50% or morE between a new vehicle and a used one doesn’t strike me as being “small”, so I’m wondering how much geography plays a role ?
I am moving to your area then!

Just looked online at one of the bigger dealerships in my area. They have a 2017 Toyota RAV4 XLE with 58K miles for about $21K. Even if you negotiated it down a few thousand dollars, it is still not less than half the new price. Maybe 25% less than an equivalent new RAV4 XLE?
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gr7070
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Re: Better to buy a new vs used car these days??

Post by gr7070 »

For 1 year old buying new probably makes sense, for the cars with good reputations. That's long, long been the case.

Buying 3-5 years still makes sense over new. That's still the sweet spot to me.
gblack
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Re: Better to buy a new vs used car these days??

Post by gblack »

cshell2 wrote: Thu Apr 08, 2021 11:02 am I'm struggling with this replacement vehicle decision as well. Also looking at Rav4 and Outback as well as the CRV. I pretty much have settled on 25K being the most I want to spend and it's really hard to find new for that.

Going to test drive a 2017 Outback Touring 3.6L with 25K miles tonight. New price was 38K and they're asking 26K.
I got the new outback premium for under 25 (pre tax), but again, that was toward the end of the year and right before they were adding eyesight and other features as standard. The Touring is a much nicer version with bigger engine, etc, so might be worth it for you for the better car vs newer car. The next car I buy might be used with higher performance and more fun vs new.
cshell2
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Re: Better to buy a new vs used car these days??

Post by cshell2 »

humblecoder wrote: Thu Apr 08, 2021 11:07 am
vineviz wrote: Wed Apr 07, 2021 4:36 pm
BHawks87 wrote: Wed Apr 07, 2021 3:40 pm I was always under the impression that its best to buy a car 3-5 years old with 40k to 60k miles so that most of the depreciation has already been taken but looking around it seems that the price difference between a brand new Rav4 or Outback and a used one is pretty small. Is it even worth buying a used car right now or is new the best bet?
In my area, a 2017 RAV4 with <60k miles is less than half the cost of a new vehicle with the same features.

The difference of 50% or morE between a new vehicle and a used one doesn’t strike me as being “small”, so I’m wondering how much geography plays a role ?
I am moving to your area then!

Just looked online at one of the bigger dealerships in my area. They have a 2017 Toyota RAV4 XLE with 58K miles for about $21K. Even if you negotiated it down a few thousand dollars, it is still not less than half the new price. Maybe 25% less than an equivalent new RAV4 XLE?
A new XLE is over 30K though. I just looked at a 2018 with 18K miles for 21K. 2017's with 60K are more like 18K here. Not half, but 40% less.
cshell2
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Re: Better to buy a new vs used car these days??

Post by cshell2 »

gblack wrote: Thu Apr 08, 2021 11:14 am
cshell2 wrote: Thu Apr 08, 2021 11:02 am I'm struggling with this replacement vehicle decision as well. Also looking at Rav4 and Outback as well as the CRV. I pretty much have settled on 25K being the most I want to spend and it's really hard to find new for that.

Going to test drive a 2017 Outback Touring 3.6L with 25K miles tonight. New price was 38K and they're asking 26K.
I got the new outback premium for under 25 (pre tax), but again, that was toward the end of the year and right before they were adding eyesight and other features as standard. The Touring is a much nicer version with bigger engine, etc, so might be worth it for you for the better car vs newer car. The next car I buy might be used with higher performance and more fun vs new.
Last years model new seems like it might be a good place to save money too. One Honda dealer I'm talking with has 2020 CRV EXL's left with 4K knocked off to get them off the lot bringing them down to 28K. Tempting. The only ones left are black though. :?
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vineviz
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Re: Better to buy a new vs used car these days??

Post by vineviz »

humblecoder wrote: Thu Apr 08, 2021 11:07 am
vineviz wrote: Wed Apr 07, 2021 4:36 pm
BHawks87 wrote: Wed Apr 07, 2021 3:40 pm I was always under the impression that its best to buy a car 3-5 years old with 40k to 60k miles so that most of the depreciation has already been taken but looking around it seems that the price difference between a brand new Rav4 or Outback and a used one is pretty small. Is it even worth buying a used car right now or is new the best bet?
In my area, a 2017 RAV4 with <60k miles is less than half the cost of a new vehicle with the same features.

The difference of 50% or morE between a new vehicle and a used one doesn’t strike me as being “small”, so I’m wondering how much geography plays a role ?
I am moving to your area then!

Just looked online at one of the bigger dealerships in my area. They have a 2017 Toyota RAV4 XLE with 58K miles for about $21K. Even if you negotiated it down a few thousand dollars, it is still not less than half the new price. Maybe 25% less than an equivalent new RAV4 XLE?
It's possible I was wrong about the trim levels: I see few 2017 or newer XLE models with <60k miles for under $20k, so the 50% difference I mentioned was likely overstated.

Still, Carmax in Northern Virginia has a 2017 RAV4 XLE AWD with 23k miles at $20,998.

According to Edmunds, that's about $10k less than the cash price for a new 2021 XLE in the same area. So maybe the difference is more like 30-35%?
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
fittan
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Re: Better to buy a new vs used car these days??

Post by fittan »

I have always lean towards the "used" car camp. You're definitely saving some $ compared to buying new. And if you learn to do maintenance yourself (e.g. changing brakes, rotors, spark plugs), the savings would be even more.

That said, I think it is advantageous to buy new nowadays. The first reason is the suite of pre-collision and safety features that are now standard. The second reason is the 0% (or close to zero) financing. I just bought a new Subaru and love it. For the first time in my life I don't need to worry about any car repairs (3 year warranty) and actually it is a nice feeling :)
Minority Opinion
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Re: Better to buy a new vs used car these days??

Post by Minority Opinion »

gblack wrote: Thu Apr 08, 2021 10:57 am I bought a new outback in 2019 toward the end of the year before new models were going to come out. I used Costco buying program price as a baseline and then called around to local dealerships and got the best price offer for what I wanted. It was significantly below MSRP and yes, made purchasing a used version not even close to worth it.

When I came to write the check for the car, I noticed the 0% for 36 months financing (or some equivalent great financing deal) and asked the guy at the dealer whether I could do the financing and he told me that at the price I was paying, the financing offer didn't apply. My takeaway was that either he was BSing me -- or, more likely, the way dealers make money on financing is by getting a higher purchase price. Now I might've just had good timing in regards to car demand, but in general, if you aren't afraid to haggle and walk away, I think you can get a better purchase price by paying cash than via financing or leasing.

PS - very happy with the outback
We did something similar in 2017 when the wife's 3 year old outback was totaled. Her payout was $2,000 less than she had paid for the car 3 years prior based on where used Outbacks were selling. We bought new. Found a website that showed how much the new cars had been selling for and reached out to all the local dealers with what we were looking for and how much we were willing to pay based on the lowest reported price (which was $1,000 or so below the Costco price). They were also offering 0% financing for 36 months which we said we wanted.

We waited for about 2 weeks of them all calling every couple of days to entice us with a price before one of the dealers agreed to what we wanted. Stuck the cash in a high yield savings account and then put it on auto pay.
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