I’m not at all sure they do. They don’t last as long and have more repairs. I look at a new car as an asset, that will last 12-13 yrs or 150K miles. Which ever
comes first. Who knows after that? What looks like the best value, is a base car. Like say a Toyota Corolla L model. They are advertised in central FL, for
around $15K…new. A 2 1/2 yr old model, with 40K miles is like $14-15K. This doesn’t make sense to me. The new car is a better buy by a long ways.
I guess used cars tend to be sold to people with less than real good credit.
supply and demand, simple as that.
Used cars aren’t as readily available as they were before the CARS program awhile back, so they command a higher price tag because of it.
Are you sure that the 2.5 year old car with 40k miles on it is an L model and not a higher trim level model?
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Comparing asking prices is pretty pointless, as cars (new and used) rarely sell for that.
Given that a BASE 2013 Corolla has a MSRP of $16,230, that advertised $15,000 is a “come-on” price that factors in military incentive, loyalty incentive, etc–and doesn’t include dealer prep, etc. Bottom line, you’d be lucky to get out the door for less than $16k.
(The used car might be the highly optimistic “list” on a used car lot…a good negotiator might get it for $12k.)
Flat out…I’m not a rich man, I have lousy credit…if it weren’t for used cars, I’d be taking the bus. So for me, used cars are invaluable.
P.S.: for a decent used deal, forget the Hondas and Toyotas–look for mechanically sound cars that are (ahem) “underappreciated in the marketplace.” Simple domestics make a good starting point.
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Here’s the deal: don’t buy a used Toyota. They’re fine cars, but IMO, used ones are overpriced compared to the competition. If you want to save money, look at a used Ford or Chevy compact car. And as @meanjoe75fan said, make sure they are mechanically sound by a prepurchase inspection by a mechanic you trust.
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If a used car is priced close to a new car, of the 2 it is a no brainer to go with the new car. However used cars in the 3-4 year old range have most of the current features of new cars and should be a good deal less than a new car.
Depreciation is greatest in the 1st 2 years of ownership, after 4 years the yearly depreciation is much less. A 3-4 year old car should be about 40% to 50% the price of a comparable new car. Some manufacturers and models depreciate more than others, but this can be researched easily on web sites such as Edmunds.com. This 3-4 year old car will have some miles on it, it would need new tires, and often new brakes but should not need major repairs for a few more years.
With any used car the care given by the previous owners is important and often unknown. A used car with a complete service history showing it had regular oil changes and maintenance with no gaps in services adds to the value of the car. An inspection by a mechanic of the buyer’s choice (and paid for by the buyer) is highly recommended.
There are horror stories about used cars that had major problems. Most often these were older that 4 year old cars. An informed buyer can save a lot of money on a used car and get good looking, comfortable, and reliable service from a used car.
Cars that are 8-10 years old can are much more risky. Sometimes a car is well cared for by the 1st and 2nd owners. By the time the car is 10 years old it could have had 4-5 owners and service might be skipped as a way to save money. Some 10 year old cars are cheap to buy but expensive to own due to high repair bills and more frequent need for repairs. These cars might not be good values for their owner.
It is absolutely impossible to judge the value of a car based upon it’s purchase price new or used. You can only judge the value of a car at the end of it’s life with you and include maintenance and operating costs and resale value. I have a friend who paid $10k more new for his SUV in 2008 then I Did for mine in 2004. That might not seem too extreme today given inflation, but today, according to KBB, they are worth almost exactly the same trade in value. You do the math. So in 2008 when his was new and mine was 4 years old, you could make an arguement for a new car being a better value. But really, you have to wait until it’s time to trade, sell or take it to the end of it’s useful life.
A used car is a gamble. You show a couple of examples that are not typical though, but not unheard of. I went to a Toyota dealer once that wanted almost the same for a year old “program” car with 40k miles on it as a brand new car. That did not make since to me, bought a new Honda instead.
But during the 20 years that I served my country, a new car was out of the question. In fact any car less than 10 years old was pretty much out of reach. I did get the shaft a couple of times, but by and large I stuck to a few rules and got pretty good cars. I always got the best cars from senior citizens, well cared for and babied.
Thanks to the auto hobby shops on base, I could keep these old cars running for years without spending a lot of money on maintenance, and I learned a lot doing all the maintenance myself, with a little help from friends and the hobby shop instructors.
With respect to my previous post…To continue my story “jt” about your comment about “not buying a used Toyota”. My SuV is a 4Runner, and his is a SAAB 9-7x (aka,GMC) if he had bought my used 4 year old 4Runner, his vehicle would be worth as much, 4years later. During the time of ownership, we compared up keep. Mine cost less, is more powerful, rides better, is more economical, really goes off road, has better tow rating, along with having more practical features. His does have the SAAB grill.
There are cars that depreciate than the others. Usually they have a problem (reliability, design etc) but sometimes they are too many fleet cars of the same make/model flooding the market. An example I have come across recently is in the midsize SUV/CUV market. You can not find a 3-4 year used Highlander that is worth looking at vs the new, but you can get a Mazda CX-9 that is 2 years old for ~$6K or more less than new and that is a good deal.
So, bottom line is that it depends on what you are looking for. When I was shopping for my Honda CRV, buying a CPO would have cost me more. The Jeep Grand Cherokee’s were a different story.
And how many people are eyebrow deep in car payments on new cars that they really can’t afford and should not even be driving?
Seen all of those ads about "Are you upside down! Come in and get right side up with a new car!"
Those ads are geared towards people with very good credit and little common sense.
Your assessment that a new car will last a dozen years and go 150k trouble free miles may be correct in some cases but in most it is not. Many are neglected into the pavement or wrecked followed by being towed to the salvage yard.
Many people who sweat out large car payments every month are also the type who have no money left over for maintenance; assuming they even consider the maintenance angle of it.
I respectfully disagree that a used car will not last as long as a new one. One time many years ago I almost took the plunge and bought a brand new car but got cold feet at the last minute. That decision has never been regretted.
For what it’s worth, I buy nothing but used cars after an inspection and keep them for a long time while amassing a lot of miles on them. A 150k miles is nothing around my household.
I agree. There are many factors that determine longevity. The primary one, is to buy a car with the potential for trouble free ownership. Secondly, remember that trouble free ownership includes a good body design and not just well engineered mechanics.
Given that a BASE 2013 Corolla has a MSRP of $16,230, that advertised $15,000 is a "come-on" price that factors in military incentive, loyalty incentive, etc--and doesn't include dealer prep, etc. Bottom line, you'd be lucky to get out the door for less than $16k.
Are you kidding?? Even my wifes Lexus we were able to knock $3000 off of MSRP. If you can’t negotiate $1500 off of MSRP…then you’re doing something wrong. Dealers have a LOT of wiggle room. My 05 4runner I bought used. It was 1 year old with about 11k miles on it. Asking price $24k…I bought it for $20k. 98 Pathfinder I bought new…Asking price $21k…I bought it for $16k.
As for new vs used…If they are the same car at the same price…then yes buy new. It doesn’t matter what the used market is. Makes no sense what-so-ever. But I suspect that the used car is NOT a base model. Probably fully loaded. And the new one selling for $15k is a base stripped down model.
@dagosa, I went the other direction, buying GM cars for the most part. The purchase price was less initially and I never made up the difference in purchase price with repairs. We can only experience the cars we buy and not the ones we didn’t, so personal comparisons are not really possible. But my method works for me, and I will continue to use it.
Any used car is a gamble. Assuming you have owned your car for a long time, then you are more likely to have a better idea of it’s hidden problems.
However, from an economist point of view, a used car may be the best (from a strict economic point of view, choice.) When you buy used, you are taking a risk, and if you are factoring in the potential negatives of a used car and assuming it at least appears to be a good value.
Honestly, I think value enters into very, very few used car purchase decisions. The overwhelming majority of used car buyers buy them becaiue they need a car and simply cannot afford a new one.
Back in th '60s, when life was affordable, adults bought new cars and used cars could be bought for practically nothing. I paid $125 for my first car, a '61 beetle. Today, everything is so expensive that the price of used cars has been drawn up to where a late model used car is almost as expensive as a new car. There is a small portion of th eused car market that buys because they want something fancier than they can really afford, but I don;t believe that’s the bulk of the market.
This is only a perception, an impression. I have no data to back it up.
The OP @DogFather said he likes to keep a car for 12-13 years and put 150K miles on it. For that kind of buyer a new car makes good sense. The difference in depreciation from the original selling price after 12 years is pretty much the same whether you bought a car new or used.
I’ve bought both new and used cars over 36 years and without doubt, used is the better deal. If you can drive a manual transmission, buy a used manual and drive it until its ready for the wrecking yard. Cheapest wheels you’ll ever have!
Here is a screen print of the ad. Below is the verbiage after the asterisk:
All advertised vehicles exclude tax, tag, registration, title and includes Dealer Fees (*Service & handling fee of $698.50), *this charge represents costs and profits to the dealer for items such as inspecting, cleaning & adjusting vehicle and preparing documents related to the sale. Customers elect special APR program or S.E.T/Dealer cash back when available. Advertised prices are not applicable on lease vehicles. All prices after S.E.T/Dealer cash back. Advertised prices cannot be used in conjunction with special APR programs. All vehicles subject to prior sale. Prices good through 11-30-12.
The hook appears to be the underlined “All vehicles subject to prior sale”. But, what I have done in
the past, is show up the very morning a dealership’s new ad came out. They have to sell that car
to someone. Twice I have bought a new Toyota truck this way. In 1993 I bought an 8100 for $6500 new and in 2002 a Tacoma for $11K new. The 93 truck didn’t come with a radio, rear
bumper. Those things I added for about $400. I had a total of $7500, in the 93, with tax, title,
plate & camper shell. Making it the best new auto buy I have ever made.
Sure wish I could buy one like that again!
Like say a Toyota Corolla L model. They are advertised in central FL, for around $15K…new. A 2 1/2 yr old model, with 40K miles is like $14-15K…I guess used cars tend to be sold to people with less than real good credit
That doesn’t make sense to me.
If you’re financing, then you’re financing it whether it is used or new. If the price is nearly the same, you’re financing the same amount whether it is used or new. How does whether or not you have good credit weigh into that?
I never buy new vehicles anymore. That’s been my policy for about 20 years. If you know what to look for then a used car is a better value. I always have a second pair of eyes look it over as well. I have never bought a Honda because of the price and I’ve only owned a couple of Toyotas for the same reason. I found out long ago that Nissan is just as reliable as a Honda or Toyota without the big price tag.