New cars...dumb decision?

Great Debates
21

[QUOTE=Simplicio]
For what its worth, according to the AA, cars on average loose 40% of their value the first year, and 60% of the original value by year 3. So on average, I’d say the conventional wisdom is correct, buying a car new is burning money, and not really worth it, though of course as others have noted, YMMV (literally), and if your looking for a particular type of car, it may depreciate considerably slower.

And of course, if that “new car smell” is worth a few grand to you and you have the money to burn, go for it. After all, someone has to, or the rest of us won’t have any cars to buy.
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I agree with this…in fact it may be too high.

I think 50% is reasonable after 3 years.

Now…show me one.

Heck…show me one that is 40% reduced from new that hasn’t been knocked in half and welded back together.

20-30% reduction for a 3 year old car? No way. That’s 3 years of the cars life (its best years) plus taking on possible repairs with limited/no warranty for only that little of a price cut? FLip the question:

WOuld you either

A) Drive a brand new $16000 car for 3 years and walk away only having paid $3500…or

B) By that 3 year old car for $12,500.

I think option B is very foolish.

22

Just adding two data points.

I’ve only bought two cars in my life; a Hyundai Elantra ('98) that I bought in 2002, and a Toyota Corolla ('99) that I bought in 2005.

The Elantra had something like 30,000 miles on it, the Corolla twice that. I don’t remember what the Elantra cost (maybe 5k), and the Corolla was right around 7k (just paid it off two months ago!).

At neither point would I have been able to afford these cars new. I got them at roughly half the original price. I wrecked the Elantra, but I had planned on running it until its death, and likewise for the Toyota.

Used cars are no-brainers for those who don’t have the 13k+ available to spend on a car.

I will say that I’m amazed at some of the used prices I see in the paper for various makes of cars. I have definitely seen used cars at prices that I wouldn’t pay, but that just means you have to be a little more selective in what you buy.

23

[QUOTE=Eonwe]
Just adding two data points.

I’ve only bought two cars in my life; a Hyundai Elantra ('98) that I bought in 2002, and a Toyota Corolla ('99) that I bought in 2005.

The Elantra had something like 30,000 miles on it, the Corolla twice that. I don’t remember what the Elantra cost (maybe 5k), and the Corolla was right around 7k (just paid it off two months ago!).

At neither point would I have been able to afford these cars new. I got them at roughly half the original price. I wrecked the Elantra, but I had planned on running it until its death, and likewise for the Toyota.

Used cars are no-brainers for those who don’t have the 13k+ available to spend on a car.

I will say that I’m amazed at some of the used prices I see in the paper for various makes of cars. I have definitely seen used cars at prices that I wouldn’t pay, but that just means you have to be a little more selective in what you buy.
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Where did you find these cars with 30K miles and at 50% off?

24

[QUOTE=BlinkingDuck]
Where did you find these cars with 30K miles and at 50% off?
[/QUOTE]

The Corolla was six years old and had 60k.

The Elantra was a Hyundai, which tend (or at least did at the time) to depreciate pretty quickly, and was four years old.

They were also both no-frills cars; AC, cassette tape, manual windows, and that’s it. And manual transmission.

25

I got the best of both worlds. I bought a car from CarMax with 6,000 miles on it. I got about a dollar off the cost of the car new for every mile it was driven, yet it was still new enough to smell like it came straight from the dealer.

26

[QUOTE=Eonwe]
Just adding two data points.

I’ve only bought two cars in my life; a Hyundai Elantra ('98) that I bought in 2002, and a Toyota Corolla ('99) that I bought in 2005.

The Elantra had something like 30,000 miles on it, the Corolla twice that. I don’t remember what the Elantra cost (maybe 5k), and the Corolla was right around 7k (just paid it off two months ago!).

At neither point would I have been able to afford these cars new. I got them at roughly half the original price. I wrecked the Elantra, but I had planned on running it until its death, and likewise for the Toyota.

Used cars are no-brainers for those who don’t have the 13k+ available to spend on a car.

I will say that I’m amazed at some of the used prices I see in the paper for various makes of cars. I have definitely seen used cars at prices that I wouldn’t pay, but that just means you have to be a little more selective in what you buy.
[/QUOTE]

I just bought a Toyota Corolla last year…new. It cost me $14,350 and was the ‘middle’ model with the highest package. Looking at local ads right now shows 3 for sale

Average of 3: about 50,000 miles
Average price $12,034

So…should I have spent $14,350 for a new one or $12,034 for a 3 year, 50,000 mile one.

Easy choice. The first 3 years of the new car cost me $2316 (16%).

Now…give me a choice of 1 for $8000 and 30,000 miles? Hell yea…I’ll take the used. However, I don’t see those for sale out there.

27

[QUOTE=Simplicio]
For what its worth, according to the AA, cars on average loose 40% of their value the first year, and 60% of the original value by year 3.
[/QUOTE]

That’s probably correct for the “average” car, but for certain vehicles it is way off.
A brand new Toyota Corolla LE goes for about $18,000 new.
I’d think it would be pretty tough to find a 2007 Corolla with 12,000 miles on it for $11,000. Much less a 2005 Corolla with 36,000 miles for $7,200.

28

We just bought a 2009 Hyundai Sonata Limited with navigation system and hands-free Bluetooth for the cell phone, and we’re very happy with it. We got an exceptionally good price simply by shopping around and negotiating. We were also able to save money by financing, rather than paying cash, and paying off the loan in 3 months because of deals between the bank and the dealer. By our calculations, over a period of 5 years, we will save at least $1,800 over a Toyota Prius even if gas hits $10 a gallon. And the Prius is less safe, far more cramped, and doesn’t have anywhere near the luxury features of the Sonata. There’s a lot more to deciding on a car than just whether it’s new or what’s on the sticker.

29

[QUOTE=Eonwe]
The Corolla was six years old and had 60k.

The Elantra was a Hyundai, which tend (or at least did at the time) to depreciate pretty quickly, and was four years old.

They were also both no-frills cars; AC, cassette tape, manual windows, and that’s it. And manual transmission.
[/QUOTE]

Ok…Elantra…

5 for sale with around 30,000 miles.

Prices:

$13,984
$11,995
$13,998
$13,995
$13,995

MSRP for a new 2008 according to edmunds?

$14,625.

So…WHERE DO YOU FIND YOUR CARS that have 30,000K for 50% off?

I’m serious…I want to know.

30

[QUOTE=BlinkingDuck]
Now…show me one.

Heck…show me one that is 40% reduced from new that hasn’t been knocked in half and welded back together.
[/QUOTE]
How about this ?

It’s a 2007 Impala LT list price $13,999, certified with warranty. The Impala LT lists for $23,100 new. That’s a $9,100 price reduction (40%) for a 1-2 year old car.

It really all depends on the brand of car you are looking at. This won’t work for a Camry, Accord or Cooper.

31

[QUOTE=BlinkingDuck]
Ok…Elantra…

5 for sale with around 30,000 miles.

Prices:

$13,984
$11,995
$13,998
$13,995
$13,995

MSRP for a new 2008 according to edmunds?

$14,625.

So…WHERE DO YOU FIND YOUR CARS that have 30,000K for 50% off?

I’m serious…I want to know.
[/QUOTE]

Well, I’m not sure if the market has gone up in the last five years, and/or if Hyundais are a stronger brand now than they were then. And of course I can’t swear to 50% off for it, but I paid between 5-6k (closer to 5 I think), and I can’t imagine that it was less than 10k new.
Since I just paid off my Toyota, I happen to have the loan/payment info right here, and it was as follows:

March of 2005

$6,768 dollars, which IIRC included the taxes and so forth. No money down.

The car was a 1999 Toyota Corolla. I don’t have the exact mileage, but it was between 60 and 70k.

Manual transmission, AC, cassette, cruise control.

I paid 212.55 a month for three years.

Bought it at the Greensboro Garage about an hour and a half from where I live.

I really know nothing about used cars except my own experience, which is that it is possible to find a decent used car pretty cheap. I had to be picky (cars with more extras tended to be a lot more pricey than their sparse counterparts). Also, manual transmission cars seemed to be a little cheaper than the automatics.

32

[QUOTE=Cheesesteak]
It’s a 2007 Impala LT list price $13,999, certified with warranty. The Impala LT lists for $23,100 new. That’s a $9,100 price reduction (40%) for a 1-2 year old car.

It really all depends on the brand of car you are looking at. This won’t work for a Camry, Accord or Cooper.
[/QUOTE]
Which is one of the considerations. I wouldn’t put good money on an Impala goiing much past 120k miles without some kind of major powertrain repair. I would expect a good chance a well-maintained and calmly Camry or Accord to make it to 200k miles with little in the way of mechanical issues aside from required maintenance (replacement of the timing belt, fluids maintenance, et cetera). If you plan to flip cars every or or three years, then buying new is definitely a disadvantage; buying used or leasing (if your mileage is low) is the way to go. If you plan to hold on to and take care of a car for 10+ years, buying used doesn’t necessarily have such an advantage; what you gain in lower cost you may lose in total mileage, inconvenience, and uncertainty about the provenance of the vehicle.

BlinkingDuck, you’ll find the depriciation on BMWs is about 30%-40% at 30k miles. I suspect the same is true for Mercedes and Audi though I haven’t looked at the numbers recently. Despite (or perhaps because of) their rep as fashionable high end, high performance cars, coupled with high maintenance and replacmenet part costs (especially M models) they’re just not worth as much on the used market until they become ‘classics’. Some of the Japanese makers, particularly Toyota, Honda, and Subaru tend to hold value unreasonable well, to the point that you need to go 5-6 years out or 60k+ miles down just to see significant depreciation.

Stranger

33

We’ve done it both ways (buy new and buy used). if you keep the car for 10+ years the costs are about the same. reason being: even though most Japanese cars do hold up at high mileages, you will find that body and trim parts are VERY hard to find, for older cars. For example, my wife’s 13-yo Nissan sentra needed a headlight cluster-we had to call 7 junkyards before finding one. And, when your car gets beyond 10 years old, it is effectively worthless 9in the event of a major failure). the Sentra lost its transmission at 120K miles 914 years). Replacement (with used) was >$3000. So we junked it.

34

I would bet exactly the opposite. The W-platform Impala is reaching it’s twilight years and pretty much all the technology in it is 20 years old, from the 4 speed auto trans to the 3.5l OHV engine. I know of no problems that have not been resolved in the 2007 model, although I would have preferred a 3800 OHV V6 instead of the 3.5l. Either way, no timing belts. A Honda Accord might interest me as long as it’s a manual 4 cylinder, but a Toyota Camry, with their dodgy engine sludge issues, or any kind of Honda with the awful Honda automatic transmission would not interest me at all. Although admittedly my interest in any of these cars is pretty much nil.