# New vs Used Vehicles



## FluxCapacitor (Dec 9, 2011)

The wife and are starting to get ready to maybe think about possibly buying a new vehicle.

Vehicles we are considering include:
-Toyta Highlander (new or used)
-Subaru Outback (new or used)
-I have considered some other ones, but these are our favourites.

Now, these vehicles are considered quite reliable. So let's assume I will drive our new vehicle until 250,000 kms.

First, considering a brand new Outback:
At 19,000 kms per year (my avg over last 10 years), that is 13.2 years for a new vehicle.
Let's say we go with a new Outback 3.6R in Limited Trim. That works out to about $44K, including taxes, Freight, PDI, etc.
Let's say I can sell this vehicle for $7000 at the end of the 13.2 years at 250,000 kms (this seems to be about average in my area for an Outback with this amount of kms).
That works out to a cost of $2812 per year.


Now, let's consider a used Outback.
It looks like I can get a used Outback 3.6R with around $22,000 and with around 120 Kms. (Highlander looks to be about the same price).
It will take 6.8 years to get to my 250,000 kms limit.
Let's say I can sell it at the end for $5000 (it's a bit less than before due to the extra age of the vehicle)
That works out to a cost of $2484 per year.

So, it looks to me like a used vehicle would save me around $327 per year, or $2,240 for the 6.8 years I would keep the used vehicle.

Of course the used vehicle has several disadvantages:
-No (or less) warranty
-I never get to enjoy having a brand new car with no wear
-You never know how the previous car was maintained
-You get less features in the older vehicle. Some newer features are great (Blind spot, collision avoidance, power tail gate, back up camera) and are not on some older models

But I guess the used car might also have cheaper insurance that I haven't factored in???

You always hear about how it's way better financially to buy a used vehicle to avoid the depreciation hit...
But looking at the numbers on the vehicles I'm interested in, it barely seems worth it when it's all said and done.

Any comments?

The numbers for the Highlander are a bit


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## rikk (May 28, 2012)

Or ... way back when I was looking for a legacy wagon, had just taken a test drive, I said to the salesman who came across as an ok guy, if a used one comes in, low mileage, let me know and you know what ... one did come in, it was a second car in the family, rarely driven, selling because they were transferred out of the country for a while ... just saying if you're going used, you likely could do better mileage wise, age wise, and price wise than that $22K, 120km ... now, if you're building a case to convince your wife that a new vehicle will cost the same as a used one, well, that's different ... :encouragement:


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## fraser (May 15, 2010)

I would look for something four years old, low mileage, with some remaining warranty. It takes some time, and some work.

The last car we bought was a four year old Honda w/ 43K on the clock....warranty still there. Paid about half what we would have paid for a new one. Expect to keep it until at least 300K...just like the Camry.


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## off.by.10 (Mar 16, 2014)

FluxCapacitor said:


> You always hear about how it's way better financially to buy a used vehicle to avoid the depreciation hit...
> But looking at the numbers on the vehicles I'm interested in, it barely seems worth it when it's all said and done.
> 
> Any comments?


That bit of popular wisdom is mostly true for people who "must" change car every few years because they grow tired of the "old" one. If you buy a quality car and drive it into the ground, it isn't as important. I try to buy cars for at least 10 years (will be on my second soon) and over that period, fuel, maintenance, tires, insurance, registration, etc become just as significant as the cost of the vehicle itself.


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## nobleea (Oct 11, 2013)

FluxCapacitor said:


> It looks like I can get a used Outback 3.6R with around $22,000 and with around 120 Kms. (Highlander looks to be about the same price).
> It will take 6.8 years to get to my 250,000 kms limit.
> Let's say I can sell it at the end for $5000 (it's a bit less than before due to the extra age of the vehicle)
> That works out to a cost of $2484 per year.


Both the new and used Outback would be about 13.2 yrs old when they hit 250K. They should sell for the same price, it just wouldn't be the same year. You'd likely have to pay for and replace the same things from year 6 to 13.2 in each cars life, so that's a wash. You wouldn't have to fix anything in the first 5 years of the new car's life, but the previous owner of the used car didn't have to either, so the maintenance cost is a wash as well.

Insurance on the used car will probably be cheaper. You should also factor in any interest costs on the new one, or lost opportunity cost.


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## AltaRed (Jun 8, 2009)

I would take the new car each time, for the main reason that you should not expect any real out of pocket maintenance for the first 120,000 km anyway (except fluid changes, maybe a set of tires, maybe a set of brake pads). You get a lot of value for not having to shell out $1-2k per year in maintenance in the last 6-7 years or so of life (worth $6000+) over that first 120,00 km. The second key reason is how the original owner treated the vehicle. Did he/she change fluids on schedule?

I have had both used and new vehicles that I have typically kept until 10-15 years old. Depreciation amortized over that period of time becomes a minor part of the cost while giving you 120,000 km of trouble free driving. As an example, I have a 2007 Infiniti M series (turning 8 yrs old this summer) with 163k on it. Other than regular fluid and filter changes, the only things I have put into it are a serpentine belt at 80k, set of tires, brake pads (twice) and just in the last year: a battery, one wheel bearing, and a set of spark plugs. The first 7 years went without a hitch. Why would you NOT want to have that no/low cost experience?


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## fraser (May 15, 2010)

I think it depends on the person.

In my case I saved $19K by purchasing a car with 43K miles on the clock. That $19K has been invested in the market since 2010. That extra $19K has worked very well for me. I did not feel so bad about taking a great vacation last year. I did however, spend a total of $1K on a set of tires and brake pads shortly after purchasing the car.

So, there is a foregone investment return when you buy a new car, or a higher cost of finance if you are borrowing money for the car. This needs to be included in the equation.

My guess is that 15 years down the line, there will be a very small difference between the values of my car and one that is 4 years newer.


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## AltaRed (Jun 8, 2009)

Except most will need a replacement sooner with the used vehicle than with the new one. It is never as simple as the comparisons made so far in this thread. On average over a lifetime, one either replaces a used car every 8-10 years, or a new car every 13-15 years.


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## Spidey (May 11, 2009)

I find the sweat spot to be about 2-years-old with about 50,000 kms. For example we bought our Honda Civic under these conditions for $15,000. We saw the invoice for the new vehicle at, I believe, $24,000(with taxes, freight, etc.). That seems like quite a premium to own a new vehicle.


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## brad (May 22, 2009)

AltaRed said:


> Except most will need a replacement sooner with the used vehicle than with the new one. It is never as simple as the comparisons made so far in this thread. On average over a lifetime, one either replaces a used car every 8-10 years, or a new car every 13-15 years.


Depends on where you live, but I find that the limiting factor tends to be age rather than kms, simply because Canadian winters are tough on cars. In California you can drive cars for 20 years or more; there are Honda Civics on the road with 500,000 kms. When I lived in New England I drove a Honda Civic for 400,000 kms over 10 years and sold to a family of four, who drove it another 160,000 kms before selling it on. But here in Québec I'm driving a 9-year-old Toyota Matrix with not much more than 100,000 kms and sometimes it feels like it's in the last few years of its life. Winters are harder up here.

Anyway, if you buy a used car and drive it for 10 years, you're avoiding the extra cost associated with a new car and you might not drive the new car a whole lot longer than 10 years anyway.


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## Addy (Mar 12, 2010)

We bought both our vehicles a year old with little mileage for about 60% the cost of new. Very good value and we are happy with both vehicles.

Since then I have found a broker who can get me new prices that are incredibly close to the cost of a 1 yr old use vehicle - not as cheap as used, but close enough to make it worth looking at buying new in the future. There are great deals to be had on new vehicles if you know where to look.


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## kcowan (Jul 1, 2010)

My last new car was purchased from GE Capital Leasing. I drove it for 4 years and then sold it for $1400 more than my buyout. I would focus on finding an agent to get the best price. It can make a big difference. Also people relocating for their job will often accept a below market offer.

We buy used now because we drive so little that the new car warranty expires long before the miles are used. The last one was a 2008 with 80k on it that sold for 45% of the new one last November. And in pristine condition!


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## dogcom (May 23, 2009)

I think waiting until closer to year end like November can net you a better deal as dealers want to make room and clear out last years new and used models. Also buying near the end of the day can help as a dealer may not want you to walk away and is more willing to bargain to get in a last minute sale.


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## fraser (May 15, 2010)

I had a new company car every year for six years. Everything from a luxury sedan to a SUV. With one exception, every vehicle from this particular manufacturer had issues. Each issue caused me an expense......I had to rent a car for several days. The last one was a three week rental while they put in a new transmission at 21K. 

These 'new' cars caused me much more agro than our 15 year old, 250KM Camry.


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## DayTek (Sep 26, 2013)

My husband and I owned several used cars; Ages ranged from 2 - 10 years old upon purchase. They all varied in models: '94 Chevy Cavalier Station Wagon, '92 Ford Tarus, 2000 VW Beetle, 2000 Kia Sportage. Every one of them had problems during ownership. Master cylinder crack, leaking gas tank, rear suspension busted...I could go on. After the timing belt busted in the Kia, we decided to buy new...

We bought a 2008 Honda Civic Hybrid for $30K. Got the government incentive hybrid tax refunds after, which dropped the price down to about $26K. Paid it off last year. We get regular oil changes when due, and they inspect the car at the same time. Besides a bit of bad luck with nails in the tires, we've had *0* problems. It's at 160,000kms and we just had to replace a set of brakes and some spark plugs...Obviously a standard maintenance thing, not an issue with the car. A little rusting around the one wheel well, but it's seen 6 winters, so it's not surprising. It's the longest we've ever owned a car and it's been the least problematic. It's been a fantastic car, but we know we've contributed to it's longevity by regular maintenance. After owning this car, we can't see ourselves ever buying used again. We like knowing how the car has been treated. Might not buy one as expensive next time, but definitely buying new. 

Maybe that doesn't help with your question, but I think buying new has it's advantages, even with the initial "driven off the lot" depreciation. And remember, the sticker price doesn't always have to be what you pay...Heckling is a craft, my friend!


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## dogcom (May 23, 2009)

It is funny to hear someone to say a little rusting around the wheel on a 2008 and that is good. I know it is normal for back east but in Vancouver that would be a terrible thing.


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## Nemo2 (Mar 1, 2012)

DayTek said:


> ..Heckling is a craft, my friend!


Wow...and here _I_ thought heckling was simply yelling at public speakers. :redface:


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## Mortgage u/w (Feb 6, 2014)

They vehicule you choose makes all the difference. Your choices are good ones where I would not hesitate to buy used. Do some research and find out what the most common problems are out there and what they cost. It will give you a better idea if your buying into a potential lemon.

Benefits of buying new vs used has many factors and will be different for everyone. And its nice to plan out the life of the vehicule but again, many factors are at play. 

Myself, I've always bought used and the car I've had the most issues with was a Ford. It was the one and only non-jap car I have ever owned. My wife had a brand new Jeep Liberty which we had to desperately trade in after 3 years. Dash board was a christmas tree display!

If you stick to used, I think you will be fine with either one.


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## FluxCapacitor (Dec 9, 2011)

Great discussion here. Lots of interesting points raised. Lots for me to think on.



rikk said:


> Or ... way back when I was looking for a legacy wagon, had just taken a test drive, I said to the salesman who came across as an ok guy, if a used one comes in, low mileage, let me know and you know what ... one did come in, it was a second car in the family, rarely driven, selling because they were transferred out of the country for a while ... just saying if you're going used, you likely could do better mileage wise, age wise, and price wise than that $22K, 120km ... now, if you're building a case to convince your wife that a new vehicle will cost the same as a used one, well, that's different ... :encouragement:


Well, to get more specific, I would choose a 3.6R in Limited trim. I made that assumption for my calculations of the used and new options.

In all of Alberta, there are 2 such vehicles on Kijiji with between 80,000 and 120,000 kms. One is asking $23K and the other is asking $24K. Of course, I could always negotiate a lower price, but I also didn't factor in negotiation in for the new vehicle scenario either (I'm assuming that they will roughly offset).

If I look for that model with less than 80,000 kms, there are 2 asking $28K (both with ~75K kms). There is one with 25K kms asking $30K, which seems like a very good deal. However, this one doesn't have Nav or rear backup camera and I see other older models that have these options, which confuses me (I guess it must have been an option back then and not included in the limited trim?)




nobleea said:


> Both the new and used Outback would be about 13.2 yrs old when they hit 250K. They should sell for the same price, it just wouldn't be the same year. You'd likely have to pay for and replace the same things from year 6 to 13.2 in each cars life, so that's a wash. You wouldn't have to fix anything in the first 5 years of the new car's life, but the previous owner of the used car didn't have to either, so the maintenance cost is a wash as well.
> 
> Insurance on the used car will probably be cheaper. You should also factor in any interest costs on the new one, or lost opportunity cost.


Good points, especially about the insurance and opportunity costs... The used option has a higher upfront opportunity cost (~$22-29K depending on year and kms). The new option is obviously higher in the end, but is phased in with monthly payments. The present value of the car payments would be about $38K (assuming 7% rate of return).


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## fraser (May 15, 2010)

I place no value in NAV nor would I take the option on a new car. Not unless is was dead cheap. Our Honda has NAV.

Here is the issue. NAV systems need to updated-especially a growing city like Calgary. Just try calling the dealership, or going on line to find out the cost of the software update. On our Honda, the cost is $250. Instead, we purchased a Garmin that has NA and European maps (we travel in Europe fairly often) for $200. The technology is better (increasing memory, better graphics) and it is portable. We needed the Garmin for Europe and always intended to see if we could get a bootleg copy of the Honda upgrade but we have never bothered. It just was not needed.


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## FluxCapacitor (Dec 9, 2011)

Yeah, I'm with you... And in fact my iPhone has audible turn by turn directions. It's the wife that wants it. 
One thing we really do want is the rear view camera. It really makes parallel parking and reversing out of parking stalls a lot easier and safer.


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## Sherlock (Apr 18, 2010)

I agree with fraser. Smart phones have made in-car nav systems look obsolete by comparison. I wonder what car navigation systems will look like 10 years from now. My guess is this: You sit in your car with your phone in your pocket, and the car communicates with your phone through bluetooth and displays whatever nav software your phone is running on the car's screen. So it is entirely up to you if you want to use google maps or mapquest or sygic or blackberry maps or whatever.

As for the original question I always buy used (3-4 years old) because it allows me to afford a much nicer car than if I bought new. For 20k I can buy a 3 year old car that was 40k new, whereas if I wanted new then that 20k would only buy me a compact. And I like driving something with decent power not some 4-banger.


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## Spidey (May 11, 2009)

We are considering either a Forester or Outback for our next vehicle and while that purchase is a couple of years off, I've been casually checking the prices. While I generally prefer a 2-year-old vehicle with low kms, one point for the OP buying new is that it is very hard to find 2-year-old Subarus for sale and if they are for sale it is usually not at a bargain price. It just seems to be one of those vehicles that people keep for a while. 

If you are buying new, I agree with Dogcom's point - wait to late in the year, preferably December. Sales volumes are low and dealers are attempting to boost their year end quotas.


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## fraser (May 15, 2010)

One of the best tools you have in buying a new or used car from a dealer is your feet. Leave emotion at home. Be prepared to simply walk away from the sales person. It can work like a charm. They hate it when that happens.

Also remember that for the dealer, there is typically more margin in a used vehicle than in a new one.

I am like Sherlock. I want a high end Japanese label, 6 cyl, with all the bells and whistles. I want to pay 1/2 price, and I will keep the car for 15 years.

It took us 3 months of shopping to get the 'right' car with very low mileage. Before buying it, I made offers on three others. Two private, and one dealer. All three claimed that the vehicles were accident free. I spent about $40. each to get a report. All three had been in accidents-two of the cars had serious front end damage. You need to be patient and you need to be careful. Trust but verify.


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