New or used vehicle?

In My Humble Opinion
1

I know opinions are like assholes, but if I may give a brief history and explain where I am, I’d appreciate some advice.

I’ve had a few new cars in my life so it’s not like it would be a particularly novel experience to drive one fresh off the lot yadda yadda. In my recent past (past 10 years) due to poor personal choices and even poorer marital choices, I’ve not had credit good enough to actually pick a vehicle I want/need, I have had to pick whatever I could swing at the time or whatever they would give me horrible financing for. My credit is on the rebuild now but I still don’t come anywhere near qualifying for something like a car loan.

That said, I have come into some money- a not insubstantial amount and I am looking forward to driving a car that is not 16 years old, leaking, muffler falling off, working power windows and locks and those kinds of luxuries. Oh and AC, since I live in south FL and haven’t had working AC in 2 years due to the compressor seizing up.

I live on an island and don’t do much driving- that’s actually mostly due to driving a POS so I don’t like traveling far (and no AC- you try driving a POS that’s a stick shift with no AC in Miami traffic. OMG nightmare). I would **LIKE **to do some traveling though. Road trips no more than probably 500 miles and weekly commutes around 150 miles round trip. My drive to work is only like 10 miles round trip 3x a week.

I am active- scuba diving, kayaking, hiking, camping. I need something that is easy to load, lots of room for my dive gear/tanks, can rack my kayaks and/or tow a trailer behind if I want.

So: I can buy what I want, let’s put it that way, without a loan. I would love to not spend more than 20-25k and I want this to be the last vehicle I have to think about for a VERY long time. I no longer have the spousal issue I had, so it’s just me and my dawg.

Advice requested: New or used? I’m looking at something like a Toyota Rav 4, something along those lines. Is it worth it to get a brand new (2012/2012) model or is it financially smarter to get a 2009/2010? Do the long warentees transfer to me if I get one used? I don’t to ask some car dealer stuff like this because I don’t really have one I trust down here yet.

Regardless of new/used, which one? Godamighty, I’m going from the BARE minimum of transportation and obviously am a woman of simple needs. I wouldn’t mind some fun stuff in it, though- I like the back up camera thing and the iPod support built into the radio, little stuff like that. I’m currently looking at the Rav4, Hundai CR-V, Mazda CR-X. My problem is that cars have been so far off my radar that I am starting from square one here. I’m reading Car and Driver reviews but welcome opinions on these cars or similar. I’d hate to buy a Hundai and have people say “OMG you bought THAT? EVERYONE knows they’re shit!” because I really DON’T know. I am open to small SUVs, crossovers, or even cars that fit my needs.

and if anyone knows, regarding rebuilding my credit: A friend who used to work at a bank said that perhaps I should pay half of the money on the car down and take out a secured bank loan to make payments on the rest of it so that it shows a positive payment record on my credit. Thoughts?

OK that’s it for now, I appreciate your comments and advice. Please don’t fight! I’ll answer any questions I can.

2

I usually buy new and then run that for as long as it lasts. My last one ran 14 years.

Having said that, when the last one gave out, I bought a used 2009 Hyundai Accent. It is pretty much a bare-minimum car - even hand-crank windows! I won’t get a car without AC, so it wasn’t that bare. But I miss cruise control on the highways. So far it has served me well. I think I got it for 13K.

When next I buy, and it may be soon, I will get a new Subaru. I’m waiting to see if they do indeed come out with a hybrid like the rumor say. (And I’m waiting until I get my next contract and/or full-time job) I like the all-wheel drive and the safety features of Subarus.

3

I have a 2010 Toyota Rav4 Sport. It is a great car and trouble-free. I always advise people to buy used cars but I am not so sure in this case. The 2010 models are still in high demand and are holding their resale value unusually well. I got 0% financing so people that have to finance today would end up with nearly the same monthly payment 3 years later if they bought mine.

If you get a Rav4, go for the V6 engine. It costs a few thousand more than the 4 cylinder but the gas mileage is virtually identical and the performance jump is large.

4

The last new car I bought was in 1985. I still have it. I’ve saved a fortune since then by buying used. But the best deals on used cars are in the mid-range of prices. If you’re stuck buying the only car you can afford it’s likely to be in pretty bad shape. Also, used car prices are higher than ever. Cars in general are lasting much longer and retaining more value. But it is true that you lose 10-20% of the value of a new car as soon as you drive it off the lot, so obviously new car prices are higher than the actual value of the vehicle. The trick is to grab a used car that has at least half of it’s expected lifetime left and costs substantially less than half the the original price.

However, many people seem to like driving new cars. A good model should require only basic maintenance for years. It starts out without dents, scratches, holes in the upholstery, broken knobs, etc. And it looks new. If those things are important to you, then buy new.

5

Whoa, really? I missed all this. I’m very sorry to hear it.

When I was shopping for a Toyota Tacoma, I found that, to really see a significant difference between used and new prices, I’d have to go back several model years and get something that wasn’t the condition I was looking for, had outdated technology, etc. so I ended up going for new with a package consisting of everything I could imagine wanting in a vehicle (and with a selection of the latest options at that). I have every intention of driving it until I die of old age, if possible.

Not that you asked, but when you’re buying, they’ll inevitable try to push a number of warranties/protection packages on you. Conventional wisdom dictates that you say “no” to all of these. However, I did get the 8-year 125,000 mile protection plan, because I do plan to drive it forever. BUT, I did not buy it from the dealer, I bought it from a dealer in the mid-West (Kansas, I think) for half of what the local dealer was quoting me. If you’re interested in checking them out I can give you contact information. IIRC you can just check the cost on their website without even talking to anyone.

6

Another consideration is that buying a lightly-used car means that you buy one that has already been made - more ecologically sound. My 2005 Corolla had about 2000 kms on it when I bought it - I got a virtually new car, but no more resources went into creating it for me.

As for Hyundai, they’ve been making a very good car for quite a while now. The Tucson or Santa Fe are coming in with very good ratings.

7

Don’t be- I had a major life reboot in April 2011 and things have been difficult but exponentially better since then. I kept it off FB as we’re both still on there, as are mutual friends, etc. I’m getting better every day. :slight_smile:

8

I don’t think it will ever make financial sense to buy a new vehicle, no matter how long you keep it. The steepest depreciation is in the early years of a car’s life, so if you let someone else absorb that loss, your per-mile depreciation cost will be far less.

Example:

I bought a brand new Nissan Maxima ten years ago for about $30,000. I expect to sell it this fall for $6000. Net depreciation, $2400 per year.

In 2007, my sister bought a well-used '96 Maxima for $5000. She just sold it for $1500. Net depreciation, $700 per year.

If she had done something similar for the prior five years, she’d be averaging $700 per year in depreciation for the same time that I was averaging $2400 per year.

In other words, owning a brand-new car is a luxury. You don’t have to go as extreme as my sister did (her Max was 11 years old when she bought it), but you can save a substantial amount by buying a vehicle that’s just a couple of years old.

Specifics? Last year my wife bought a new 2011 Honda CR-V. We like it a lot. No back-up camera, but if you get one with the top trim level, it’ll come with the good sound system and an iPod interface. Rear seats fold forward for lots of cargo space, it’s easy to load via the hatchback, and a roof rack is optional. Top trim level was I think about $26K when new; if you get a 2010 or 2011 model now, I’d guess they’re around $20K, depending on how many miles they’ve racked up.

9

I’d look at some prices for new and used cars and see what you get.

Traditionally, there’s been a fairly large premium on new vehicles. But as cars have gotten more reliable, and as the economy has faltered in recent years, that premium has shrunk. There’s still something of one. Buying used cars is generally cheaper in the long run, but used cars are also more worn out. The first few years of a new car are the nicest ones, so it makes sense to pay more if you value having the car during its best years. There’s also something to be said for knowing the history of a car and not getting stuck with someone else’s problem.

Regarding things like iPod support: consider third-party installations. The factory installed premium radios are often more expensive than comparable 3rd-party ones, taking advantage of the fact that people’s mental accounting for money isn’t very rational when it comes to large purchases (we tend to think of money in percentages rather than absolute amounts, so an additional $300 on a $20k car seems like a minor addition, while a standalone $300 purchase seems like a much bigger one).

I used to own a 1996 Rav4, and it was a great car. The newer models look even better.

10

My rule is - if the car you want is a model with minimum depreciation, buy new. If it’s a car that depreciates a lot, buy used. Usually Hondas and Toyotas depreciate the least, although I think other brands (notably Subaru) are starting to catch them in terms of slow depreciation.

Are you going to want to take it off-road? If so, that will be a major limiting factor.

11

No plans for off roading, no bad weather driving (except rainstorms, no snow)

12

I say buy used, particularly given your credit situation. I’m not very smart about cars, but I know that there’s a risk you might buy a brand-new car and get a lemon. Failure rates for a lot of parts have bi-nodal spikes, meaning that they either die super-early in the life of the car, or super-late. And even if it’s under a full warranty, you don’t want the hassle of driving to the dealership all the time OR the experience of being unable to trust your vehicle. I believe it’s better to get a slightly-used one, where someone else has already dealt with that shit.

I would highly recommend the experience I had at Carmax. If you have a passion for wheeling and dealing and love haggling, you won’t like Carmax. But I hate haggling and bullshit sales tactics, so I had a really good experience there. I got a 3-year-old car in 2009 that was VERY attractive and comfortable, and it’s been hella reliable. It came with air conditioning, power locks/windows, and a remote unlocking keyfob. The sticker price before tags and financing was $11k. It was definitely worth it, the car is a dream. It was a lease before I got it, so it was in very very good shape. I haven’t been as nice to it as the previous owner, but I plan to drive it until it falls apart on the highway anyway. Resale schmesale!

13

Despite the common wisdom, I found that it overall made more sense to buy a foreign, low depreciation car, new, rather than used, unless you went almost 10 years old or older. (as mentioned about by Its not Rocket Surgery)
Couple of reasons why the conventional wisdom can be bad:

  1. Depreciation calculators and the “losing value off the lot” type calculations you see are usually based on MSRP. You aren’t going to pay MSRP, you’re going to pay the least you can - use Edmunds.com TMV as a starting point. (Edmunds TMV should be the price including everything except Tax/Title/License - destination, ad fees, etc are included in “TMV”).
  2. Used cars tend to not be the base model/least featured models. But the new car with the best value is going to be the base model/no options package.
  3. People look only at the actual cost of the car - but you should only be concerned about Total Cost of Ownership (TCO). That is, the car, repairs, taxes & fees, gas, and insurance.
    Newer cars tend to get better gas mileage. So your Total Cost of Ownership will be lower in that category. Will be higher than most used cars in insurance cost.

You’re looking for a small SUV with some limited towing capability ?
Honda CR-V, Hyundai Tuscon, Toyota Rav-4 are all good choices. Checking Edmunds.com it figures that the CR-V is actually the cheapest over 5 years, considering gas mileage, insurance, and payments - event though the Hyundai Tuscon is initially several thousand cheaper.
http://www.edmunds.com/car-comparisons/?veh1=101388389|suv&veh2=101323927|suv&veh3=200426223|suv&veh4=101213347|suv

But get the base model if you go new ! The “options” are where the markup/profit is, so why pay it ? Some options you can easily get aftermarket way cheaper (reverse camera, GPS). Towing hitch, roof rack, etc can easily be fitted later for less $. Others are probably just unneccesary when it comes down to it. Even the base model of all of these will have automatic transmission, full complement of airbags, decent stereo, A/C.

Edit to add, I’ve bought 3 new cars thus far, (Honda CR-V - older model, Toyota Tundra, Kia Sedona). On none of those did I pay more than edmunds TMV, and you shouldn’t either - you will find a dealer who will sell you all but the hottest cars for that price or less. But ask for quotes from the internet departments of dealers before you bring out TMV, on the Honda CR-V their best offer was several hundred better than TMV.

14

I wouldn’t be put off by depreciation if you plan on keeping the car a long time. No matter what, it’ll basically be worthless by the time you sell it.

Hyundai’s have an awesome warranty and are highly rated:

In terms of what you’re looking for, I’d look at/test drive:

Honda CRV
Honda Element (funky)
Toyota Rav-4
Nissan Highlander
Volkswagon Toureg (Pricey)
Hyundai Santa Fe
Mazda 7
Ford Flex
I also secretly like the Dodge Magnum, which is quite cheap now that it’s been discontinued.

I always buy used to avoid the heavy initial depreciation, but with financing terms so friendly these days it can almost be a wash if you get 0% financing/$0 down for a long period. Plus, you get the peace of mind of a new vehicle and free servicing.

Good luck

15

Hey, right ! there’s the other issue with used cars that made new cars look better - new car financing usually has a lower interest rate (even without a manufacturer incentivized rate). Not an issue in this case if you are going to pay cash though.

16

Great opinions and I’m absorbing/looking into each one thanks so much! Looking forward to more as well. Just to clarify, unless I do it for credit building purposes, I won’t be financing, I’ll be paying in full. Does that give me any leverage at all pricewise? I’ve obviously never bought a car and paid in full. I don’t know if the dealer cares either way if your bank loans you the money or if you write them a check, they get the same money, I think.

17

It can help you. They use financing as a negotiating tool and it generally requires some work on their part to help you get financing if you need it. If you have cash, you can make a take it or leave it offer and they should take it if you are giving them any profit at all. It isn’t that easy to try that if you have to get financing.

18

Yes, I had good success in negotiating when I paid cash - and played two Toyota dealers off against each other.

I read something by the Car Talk guys that said buying used was almost always the better deal - so long as you do due diligence to avoid buying someone else’s problem. The only exceptions would be if used prices are really high, if the new car had features unavailable on one from a few years back, or if the car was early in its life time so that the older model was still buggy.