I am debating whether I can save some money by buying a slightly older car instead of a new one. Here is a hypothetical situation. How much A 2012 Chevy Cruz at 25K mileage is cheaper than a new Chevy Cruz 2013? 10%, 15%? Is this rate same for all the cars in the same class?
Thank you very much!
Not really. Dealers get their own sales and kick backs and incentives too. There is no hard and fast rule from one make to another. The popularity and market has more to do with the price of different makes then a set %. If an older model is on the lot as a trade in, that trade in value plus profit margin will often determine the price. It depends a lot on how much the dealer has invested into the car, how long it has been sitting and how desperate he is to move it as far as used cars are often often concerned. There actually times when it pays to buy new on cars that hold their value if you plan on trading down the road. Plus, there is value in knowing how well that first 20 k of service and driving wear is done which is now under your control when you by new.
If you are going to finance, also bear in mind that the interest rate on new is usually better. I tried buying a use CPO when shopping for a Honda and it was not worth it. The cars that were 3 years old and had 36K miles on it were only $2k cheaper than new. But buying a used Mazda I came ahead, so it all depends.
Check on truecar.com and edmunds.com to get the lowest/best deal on new, so you know how much you actually would be saving buying a used one.
One really fuzzy area you can get into with cars like this (any make) is how they were maintained; if at all.
Many people lease cars and knowing they will be turning them back in, have no intention of spending one dime of their money on maintenance; even oil changes.
That 25k miles may be the equivalent of 150k miles so make sure there’s a verifiable track record of someone at least trying to take care of it.
Agree with the others and 25K in one year is not low miles and eats quite a bit of the warranty up.
12,000 - 15,000 miles per year are “average.” 25,000 suggest it was a rental or fleet vehicle. Check car fax to see the previous owner. Research what used ones are listed for on cars.com and autotrader.com See what actual ones sold for on ebay motors completed listings. Research used car values on nada.com and edmunds.
Go to a dealer and get the best price you can on an '13 Cruz. Remember the '14 are only 4-5 months away. Then negotiate the best price you can on a '12 with 25K miles. Comprehend the new car comes with a better warranty (more years and miles) brand new tires, brand new brakes, etc. If the used car isn’t that much less than the new one, look elsewhere or just buy new. I think the used car should be 30% less (at the least) to a new comparable car’s MSRP window sticker price. That means a new $20K Cruz, would be about $14K at one year old and 25K miles to catch my interest.
You can get this information from edmunds.com. For a Cruze LS with an auto transmission from a dealer:
2011: $13,166, 25,000 miles
2012: $15,221, 12.500 miles
2013: $17,674, new
Even with low mileage, the 2012 is a couple grand less than a new car. BTW, 25,000 would be extremely high mileage for a one year old car. Go for someting with about half that. I recently bought a 2 year old car with 14,500 miles. They are out there, and you don’t have to pay an incredible premium for hem.
Don’t Overlook Dealer Certified PreOwned Cars. I’d Try And Stay Under 12,000 Miles.
I Believe GM CPOs Still Add 12 Months And 12,000 Miles To Any Remaining Factory Warranty.
Many Of These Vehicles Are Former Rentals And Are Often At Very Attractive Prices If One Shops Carefully. I’ve Seen Lots Of Cruzes At Rental Agencies And Dealers, So There’s Many Circulating.
You should be able to save approximately 1/3 the cost of new and still have a very good warranty. The original warranty should be 36 month/36,000 miles bumper-to-bumper and 60 month/100,000 miles drivetrain.
Add to those warranty months and miles, the 12 months/12,000 miles (warranty coverages begin at the vehicles “original in-service” date, so find out when that was for each vehicle) !
Be sure not to buy one that has had collision damage repaired (not covered by warranty).
You’ll always do better on a used car because the biggest expense of any new car is depreciation. More than gas, maintenance, insurance, etc. This is true of high end and low end models. A certified used car is one way to pay a little extra for more peace of mind.
Two years ago popular one year old cars were selling for about the same price as new cars. That does not appear to be the case now.
Today’s internet prices from the Kansas City area, same trim line:
new 2013 Cruze LS $17350
2012 Cruze LS 21K miles $16550 (multiple dealers show pricing above NADA retail).
NADA retail, for 2012 Cruze LS 21K miles $15575
For the $800 difference, I would go for the new car and zero percent financing with no reservations. Over the years I have run into this situation before and generally opted for new with longer warranty. Had it happen when I was shopping for Corollas and for a Mazda pick up in the 90’s.
Other geographic areas may have different pricing, but in this situation, I don’t see buying used as the best deal. I think I would have to negotiate hard to get the used value down to one that is reasonable, considering miles and warranty left.
Your view and value determination may vary…
Just a comment on depreciation expense. While a new car certainly does depreciate in value the minute you take possession, it is an unrealized expense until you sell it again. It is simply a bookkeeping entry or funny money, like a stock fund. Up or down each day doesn’t matter till you sell. So like the example above, you save $800 on the front end with a used one but may well lose it on the back end again when you sell it or with reduced warranty coverage. For depreciation to really make a dent, you almost have to be looking at a 5 year old car with maybe 60-80K on it. Then the curve is in your favor if you buy right and can put up with the hassles. Just IMHO anyway, assumming we all have enough money to decide either way.
I think frugal folks think 3 years is the cherry point. You’ll get the most bang for you buck purchasing a well maintained 3 year old car. There’s always some risk of course. But I’d maybe be a little more concerned about 1 year old car for sale than a 3 year old car. It might mean the owner of a 1 year old car which was now for sale had become frustrated with it after experiencing mechanical or electrical problems that the dealer’s shop couldn’t solve. This would be esp the case for concern if this was the first year of the production run for a new model or a re-designed existing model.
the 2012 Cruze COULD have been made and bought in 2011, that might explain the higher miles. But I’m just tossing straws around with that guess