# Cars: buying new or used



## Harp (Jul 18, 2012)

I am so lost on this subject - please help! :upset:

We currently like the Honda CR-V and the Toyota Rav4. I have no idea what is a better bang for out buck: new or used? What is the smart move here?

I see new at low rates but used rates are like at 5.99 but the price is lower on used.


----------



## Just a Guy (Mar 27, 2012)

Toyota has a reputation for retaining its value more. So for used, you'll probably get better bang for the buck with Honda. 

Buying new these days has some benefits (close to 0% financing), warranty, etc. but not sure how it stacks up to the premium you pay for new vs. used. 

Just to throw a wrench in your thinking, have you also looked at the Hyundai tucson? Hyundai is really going after the other two giving a lot more bang for the buck period. Many people I know looked reluctantly at Hyundai as a third option, then bought it because it was too good compared to the others...ironically, they all seem ashamed to admit they love them too (Hyundai does have a reputation thanks to things like the pony, but that was 30+ years ago)...

You seem to get better bragging rights driving a Toyota, but you pay a premium for less car.


----------



## Harp (Jul 18, 2012)

Just a Guy said:


> Toyota has a reputation for retaining its value more. So for used, you'll probably get better bang for the buck with Honda.
> 
> Buying new these days has some benefits (close to 0% financing), warranty, etc. but not sure how it stacks up to the premium you pay for new vs. used.
> 
> ...


Refuse Hyundai. Had a major accident with one and left bad taste in my mouth at how bad it stood-up to impact.


----------



## Fraser19 (Aug 23, 2013)

Harp said:


> I am so lost on this subject - please help! :upset:
> 
> We currently like the Honda CR-V and the Toyota Rav4. I have no idea what is a better bang for out buck: new or used? What is the smart move here?
> 
> I see new at low rates but used rates are like at 5.99 but the price is lower on used.


There are many factors, how long are you going to keep it. There is no point buying new if you are just going to trade it in after a few years. 
If you are going to keep it for 10 years it makes sense to buy it new.

I personally buy cars with a reputation of being easy to work on. The worst scam going in automotive labor, so that is why I drive a Honda. I have found Honda to make extremely reliable cars, at a good price. 
Also a lot of there factory service manuals can be easily found on the internet that say what Honda is supposed to charge for the work being done. In the link below it shows the work I need done and how long it should take.
http://ww2.justanswer.com/uploads/acuramstr/2009-10-31_134118_fyuse.pdf
Every time I take my Honda in I give them one of these sheets too. I have found this keeps them in check real well. I have never been able to find these sheets for any company other than Honda.


----------



## Ihatetaxes (May 5, 2010)

The 2015 CR-V is newly released and has some nice new features including the engine and CVT transmission out of the Accord so better power yet better fuel economy. It just won SUV of the year (Motor Trend I believe) I would buy a new one and keep it for the next 10 years. The Rav4 is also a good choice and if you are using financing you will get a better deal on it since the current model has been around for over a year and I bet they are going to offer some good incentives for people cross shopping the new CR-V.

If we needed a new vehicle for my wife right now it would be the CR-V.


----------



## 1980z28 (Mar 4, 2010)

I have worked as a mechanic for 36 years


Buy the CRV,new or used,cost of ownership will be better with the CRV and will never let you down

My wife did own a crv Head Edition for 10 years,sold it now we split my car


----------



## fatcat (Nov 11, 2009)

i have had a lifelong love of toyota and a very good experience
the best bang for your buck is to buy a certified used or gently used car by which i mean like less than 20K and maybe 18 months of life
you let the new buyer absorb the major costs and you get a car that is still fully warranted and as good as new
i bought my toyota echo with like 18K on it and you could barely tell it had been used
my good friend has a crv and loves it


----------



## uptoolate (Oct 9, 2011)

Hard to go wrong with Toyota or Honda. Though the only lemon I've ever owned was a 2004 Toyota Sienna. I generally buy new as I am willing to trade the peace of mind that a 3 to 5 year warranty brings over the savings of buying used. I also don't like the idea of the possibility of buying someone else's lemon (or about to be lemon).


----------



## Synergy (Mar 18, 2013)

I prefer to buy used when you can afford to pay in cash. Otherwise, I'd go with a zero percent offering on a new vehicle.

If I had to pick between the CRV and the Rav4 I'd go with the CRV. If I was looking for that type of car I'd also take a close look at the new Ford Escapes.


----------



## james4beach (Nov 15, 2012)

I really like the idea of buying a nearly-new, used car. It's good to take advantage of original warranties.

Given how rapidly cars depreciate, you can save a lot by buying a car that's just 1 or 2 years old. Personally what I'm looking for in my next car is: buy from dealership, 1 or 2 years old, very low km, still covered under warranty.

Basically you won't be able to tell the difference from a new car, and it will be much cheaper



fatcat said:


> the best bang for your buck is to buy a certified used or gently used car by which i mean like less than 20K and maybe 18 months of life


That's what I mean, yeah


----------



## indexxx (Oct 31, 2011)

Personally I would never buy a new car unless I was at a point financially where money was not a consideration at all. I always look for used Toyota or Honda vehicles where the owner has kept all service records and then buy it with cash. A regularly serviced quality Toyota can last for hundreds of thousands of kilometres. I've always felt that a new car loses 20% of its value the instant you drive it off the lot.


----------



## liquidfinance (Jan 28, 2011)

What a sad world we live in where we have to consider the liability issues involved with what is a simple request to park a car on neighbours drive for a very small reward.


----------



## ChrisR (Jul 13, 2009)

I'm going to be the dissenting voice here: 

The conventional wisdom is that a brand new car loses 20% of its value as soon as it is driven off the lot, so you're better off buying 1 or 2 years old. However, in practice, I have never been able to find a 1 or 2 year old Honda or Toyota that was anywhere close to being a good deal. 

What I normally see is a car that sells for $25000 with 0% financing brand new, sells for something ludicrous like $23000 at 1 year old. If you take a conservative view that a new car should last 10 years of regular driving, then the original owner paid less than 10% to drive the best year off the car.

Its worth noting that some of the large used car dealers actually own their own rental car companies for the sole purpose of producing 1 or 2 year old cars that can be sold on the used car lot. I have long suspected that they are simply playing on people's belief that a 1 or 2 year old car is the best deal. 

If I were you, I would carefully consider the cost of owning the car per year over a 10 year life-span (including cost of the car, financing charges if applicable), and also consider that the first few years are "better" than the last few. (ie. warranty coverage, lower repair costs, and the joy of driving a newer car), to determine which is the better deal.

On the other hand, if you really want to save money, I think it's still safe to say that buying a 10 year old Honda or Toyota, getting it repaired as necessary... and driving it until it returns to dust is going to get the best bang for your buck!


----------



## nathan79 (Feb 21, 2011)

I agree with ChrisR.

I don't think you'd be any further ahead by buying a 1-2 year old car with 5.99% financing vs. buying a new one with 0% financing. Paying cash isn't any better because there's a large opportunity cost vs. investing that money in a non-depreciating asset.

I don't see the need to buy something near-new unless it's a specific vehicle that is hard to find, or something you're passionate about (there's nothing wrong with treating yourself to something nice, just don't pretend it's frugal). I've long held the opinion that buying well-maintained, low mileage (rust-free), older vehicles and fixing them as needed is the most cost-efficient way to go. Almost any car will last 20 years if properly serviced and not abused. The worst that might happen is engine or transmission fails, then just drop the 3K or whatever and put a new one in and drive the vehicle for another 10 years, or until you get tired of it. I usually change vehicles every 3-4 years and they rarely depreciate more than a 1-2K over that time. I've been driving for 16 years and only had to replace a transmission once.


----------



## nobleea (Oct 11, 2013)

Really depends on the particular vehicle.
When we were looking, we could have bought a 4yr old car for $23K cash, or a brand new car for $27.5K all in with 0.5% financing. Exact same model. We obviously went with the new one and the cash we had saved up went towards the mortgage. Other vehicles depreciate 60% or more after 4 years.


----------



## ChrisR (Jul 13, 2009)

nobleea said:


> Really depends on the particular vehicle.
> When we were looking, we could have bought a 4yr old car for $23K cash, or a brand new car for $27.5K all in with 0.5% financing. Exact same model. We obviously went with the new one and the cash we had saved up went towards the mortgage. Other vehicles depreciate 60% or more after 4 years.


I totally agree with your decision. Why would anyone pass up the best 4 years of a car's life to save 4.5k?

On the other hand, what car is it that loses 60% of its value in the first 4 years? Whatever it is, I would buy it at exactly 4 years old... even if the name starts with Dodge, Chevrolet, Pontiac or Chrysler!


----------



## sags (May 15, 2010)

With 0% interest and a reasonably priced car..............the depreciation loss is much less.

Every car depreciates.........unless a person is buying a "rent a wreck" worth nothing to start with.


----------



## rford (Aug 16, 2014)

with the introduction of all these low financing deals on new cars, it makes me wonder what the used car market is going to be like, in say, 3-5 years. 

me personally, i wouldn't want to be financing a car for 7 or 8 years which some of these 0 percent terms ask for.


----------



## sags (May 15, 2010)

I think the used car market has already started to tank around here at least.

Two used car dealers closed shop recently just up the way from us. 

They had been fixtures there for years.........but sales had dropped right off a cliff.

People are upgrading their cars to new ones. 

Auto companies are giving away free money and the dealers are throwing in free oil changes for 4 years and other perks.


----------



## ChrisR (Jul 13, 2009)

rford said:


> with the introduction of all these low financing deals on new cars, it makes me wonder what the used car market is going to be like, in say, 3-5 years.
> 
> me personally, i wouldn't want to be financing a car for 7 or 8 years which some of these 0 percent terms ask for.


I'm not sure on it myself. If you're buying a new car, and planning to drive it until it falls apart after 14-20 years, what difference does it make if you finance for 3 years at 0%, or 8 years at 0%? 

The only difference that I can see is that the 8 year loan gives you more control over your money. If you invest it wisely, you'll come out ahead with the longer loan. 

Don't get me wrong. I don't advocate longer loan periods. I personally don't borrow money if I can help it, and I would never borrow money for a luxury item like a new car. But if you are borrowing money for a car, and if the interest rate is truly 0%, and you're planning to hold onto the car for a long time... why wouldn't you extend the loan to the maximum length possible?


----------



## ChrisR (Jul 13, 2009)

sags said:


> Auto companies are giving away free money and the dealers are throwing in free oil changes for 4 years and other perks.


You have to be wary about this kind of deal, as well as the "free gas for six months" sort of thing.

My last oil change cost $40 (and that was for semi-synthetic oil). If you consider that most new cars need an oil change every 6 months, then free oil changes for 4 years = $320... which is probably lower than any one of the BS fees car dealerships tack onto the purchasing price, like "glass etching fee" or "paper-work fee", or "supplying the coffee maker in the showroom fee".


----------



## james4beach (Nov 15, 2012)

ChrisR said:


> What I normally see is a car that sells for $25000 with 0% financing brand new, sells for something ludicrous like $23000 at 1 year old. If you take a conservative view that a new car should last 10 years of regular driving, then the original owner paid less than 10% to drive the best year off the car.


Wow, 25k brand new and 23k used after 1 year? That _is_ a bad deal (for the used buyer)... only 8% cheaper. That's not enough.

I agree that if presented with numbers like that, I'd take the new.


----------



## sags (May 15, 2010)

Always check the history on used cars with only a few thousand kilometers on them.

They are often dealer demos or factory executive cars being sold.

Around the 60,000 kilometer mark........beware of rental cars.

In Ontario, the ownership package will show the history and that the cars were owned by the dealer or the rental agency.

It will lower the residual value of the vehicle.


----------



## rford (Aug 16, 2014)

what i meant was all these new cars coming on to the road, there should be a marked increase in supply in 3-5 years of used car, perhaps driving down the prices.

and as for financing for 7-8 years. i don't want to be locked in that long, still paying the same monthly cost from day 1, for a continuously depreciating asset. what, you have another 2-4 years of use out of the car? then it's back to making payments again?


----------



## nobleea (Oct 11, 2013)

ChrisR said:


> On the other hand, what car is it that loses 60% of its value in the first 4 years? Whatever it is, I would buy it at exactly 4 years old... even if the name starts with Dodge, Chevrolet, Pontiac or Chrysler!


I've been looking at the Hyundai Genesis sedan. It's not a common car, but good quality. New, it sold for low to mid 40's. You can get a 4yr old one for 17-18K if you are patient.


----------



## My Own Advisor (Sep 24, 2012)

I really like the idea of buying a nearly-new, used car (<2 years old) depending upon the financing conditions.

If you can get 0% financing AND you will keep car for >10 years, going new is I think, a good route to take.


----------



## rford (Aug 16, 2014)

i have a 1996 honda accord with 167k km. 

changed the starter motor a week ago and the master cylinder a month before that. cheap driving since i can do the work myself. i think being able to work on your car and keep an old one going is the ideal situation. only thing is that i wish it had the same fuel economy ratings as the new cars have, but 9.1 L/100km isn't bad for an old car.


----------



## sags (May 15, 2010)

rford said:


> what i meant was all these new cars coming on to the road, there should be a marked increase in supply in 3-5 years of used car, perhaps driving down the prices.
> 
> and as for financing for 7-8 years. i don't want to be locked in that long, still paying the same monthly cost from day 1, for a continuously depreciating asset. what, you have another 2-4 years of use out of the car? then it's back to making payments again?


The loans are open and can be paid off at anytime.

Why use your money........when you can use their money ?

The criticisms I have read about buying a car for 0% interest rates are :

1) People won't qualify for 0% rates, and they would end up paying a higher rate.

2) People will overspend on the vehicle, because the payments are lower.

3) The terms of the 0% are short and revert to a higher interest rates for the balance of the term.

If a person qualifies for the 0% for the whole term of the loan, and spend only what they need to spend.........0% is free money.


----------



## banjopete (Feb 4, 2014)

Am I crazy? Doesn't anyone like using craigslist or kijiji? Isn't buying used cars specifically what those sites are for? Well maintained cars last much longer than this imaginary 10 year window everyone speaks of. Think about the real costs of owning a car when you consider your new vs used options. I'll tell people as long as I can; save up some cash, buy a reliable car with a good reputation from people that took care of it since new, negotiate. Find a good deal, see lots of cars so you know the good ones from the bad ones, and know your price. Then once you buy it, enjoy it, take it to a reliable and trustworthy mechanic, and do preventative maintenance.

Also no one really ever got stuck in winter with a front wheel drive car with snow tires, especially not one with a magic third pedal. Find 10k, and go get the best honda you can. Then laugh all the way to the bank with all the money you saved over the suckers making $600+ payments each month lease(rent) a car from the stealerships. Math it out, I bet it's scary the real difference.

My current car I bough for 7k two years ago, an all options german wagon (because I love them), 10 years old, low kilometers, in incredible shape. I've had minor repair bills in the two years I've had it, and I think I could sell it today for more than I paid for it two years ago. I think I got it for cheap because A) everyone thinks they need an suv b) people can't/won't drive standard c) the dummy seller didn't post pictures in their ad and I called first and came with cash.

Not having monthly payments is waaaaaay underrated.


----------



## sags (May 15, 2010)

I agree that people should consider the whole cost of ownership.

A person pays $7000 for a 10 year old car and keeps it for another 7 years That is a cost of slightly less about $80 a month.

At the end of the 7 years...........a 17 year old car would be worth approximately $100 from the auto wreckers.

Likely a car between 10 and 17 years old is going to require a considerable amount of normal part replacement at an unknown cost. 

A new compact car can be purchased for $280 a month for 7 years @ 0% interest.

The car would be worth approximately $8000 in 7 years. The residual value of the car reduces the monthly cost to $200 a month.

It would cost an extra $120 a month to purchase a new car than a 10 year old car.

Normal repair costs for the older car would reduce the difference in cost.

The new car has a full warranty, is more fuel efficient, is better equipped with safety equipment, has new electronic features, and is more reliable.

Of course, if a person isn't satisfied with an inexpensive compact car.....the cost of ownership goes up with the purchase price.

Rental car agencies and a lot of people trade their cars in before the warranty expires. They know the normal cost of part replacement becomes more likely with age and increasing kilometers.

Cars can last a long time..........but they usually require a lot of maintenance and repair to do so.

Many of the older vehicles on the road today, would not meet minimum Ministry safety standards.

People "drive them until the wheels fall off"...........and sometimes they actually do.

Frames tend to rust out, suspension parts wear out, and fuel, steering and brake systems start to fail.

A safety blitz by Ontario's Ministry of Ontario revealed that 1 in 3 vehicles checked were deemed "unsafe" and taken off the road.

One of the top three causes for accidents is listed as "vehicle failure".

New car dealers won't sell vehicles older than a couple of years, because they don't want their reputation tied to old cars.

I think people are "saving" a lot less than they believe by buying old cars.


----------



## rford (Aug 16, 2014)

normal repair costs for the older car would not reduce the difference in cost. it would be negated at the very least since i don't need collision and comprehensive insurance (only liability) with an older car.


----------



## nobleea (Oct 11, 2013)

sags said:


> A person pays $7000 for a 10 year old car and keeps it for another 7 years That is a cost of slightly less about $80 a month.
> 
> At the end of the 7 years...........a 17 year old car would be worth approximately $100 from the auto wreckers.
> 
> ...


I think you should redo that analysis for a brand new car vs a 4yr old version of the same car at 40-50% off. Keep each one for 10 years, the only difference in maintenance costs is the additional costs from year 6-10 on the used car (car would be 10-14yrs old). As someone who is currently driving a 15 yr old honda (and have owned it for the past 5 years), my total repair bills during that time were about $550. Fuel efficiency difference for the same model car, 4yrs apart is not going to be significant. Maybe 1-2mpg. Better safety features? maybe an extra side air bag or something.


----------



## Fraser19 (Aug 23, 2013)

sags said:


> I agree that people should consider the whole cost of ownership.
> 
> A person pays $7000 for a 10 year old car and keeps it for another 7 years That is a cost of slightly less about $80 a month.
> 
> ...


I disagree with some of this and agree with some of this. I find a lot of this is true in the mind of a person who does not know much about cars or does not take the time to learn to work on there car.

I am currently driving a 1999 Honda civic with 230,000km. I have put 200 dollars into this car and paid 2,500.00 for the car. My last car was a 2004 BMW 330 which I only spent about $2,000.00 into as I did all the work myself. Actually I did not need to repair anything, I just looked up what are common problems and replaced them before any failure occurred, I believe this is the true way to keep car ownership costs low.

What I have found is that maintenance on newer cars is much worse than older cars with a good reputation of being reliable. They have so many parts in them to break that cost a lot to buy, even if you are doing the work yourself. In addition they way they are stuffing engines and trannys into cars these days is very complicated that makes working on them just horrible.

While I am not advocating buying a 2,500.00 car I am saying that buying new wont necessarily be cheaper for maintenance. Look at the current previous generation of Honda and how accessible the engine compartment is. Even if you pay for labor it wont be that much do to a simple engine bay.

If you are truly concerned about long term costs, research the vehicle in great detail. Check out every automotive forum that has a section dedicated to that specific model. Look up what are common problems associated with the vehicle. Compare that to another vehicle you are looking at. This also plays a part in why I like older cars, as there have been enough out there to show what faults each model has. 

Fuel efficiency will have more to do with driving habits than EPA listing.

If buying used get a good inspection done, not just a safety inspection a full mechanical inspection. And make sure you request a leak down test on the engine!


----------



## Synergy (Mar 18, 2013)

banjopete said:


> Am I crazy? Doesn't anyone like using craigslist or kijiji?


Kijiji works for me. Sold 2 cars on Kijiji myself over the years and purchased 2 used cars from private sellers on Kijiji as well. Just finished a transaction last month - couldn't be happier with my "new to me" used car - excellent condition.


----------



## PrairieGal (Apr 2, 2011)

I took my car in to get a couple of recalls fixed yesterday and while I was waiting I wandered around looking at the new cars. Yikes! A new model of Sonata (which is what I have, and love) was over $30K. They advertised payments of around $200 bi-weekly for 7 years. Who wants to be stuck paying for a car for 7 years? The thing will be worn out before it is paid for.


----------



## Eclectic12 (Oct 20, 2010)

^^^^

I can understand the concern about a long time to pay.

The "worn out" part is more of a YMMV.

For the my first Ford Escort, over ten years - the "non maintenance" items (i.e. not oil changes, tires worn out) were a couple of ignition modules at about $40 to fix plus a rusted fuel tank at about $150.

For the second Escort over sixteen years - one alternator died in about two weeks ... everything else was maintenance. My brother drove it for another two years before someone under the influence hit the car and totaled it.


The mileage / gas log showed typical highway driving of 48 to 53 Mpg.


Cheers


----------



## m3s (Apr 3, 2010)

Buying new cars from dealers and telling yourself it's a better "deal" than a used car is like gambling addicts telling themselves they have a chance at winning the jackpot. The dealers stay in business because they are winning..

Buying used cars is a skill that requires you to know what is a good car and what is a good deal and how to negotiate etc etc. I recently bought a 2.5 year old car at less than 50% of new value, accessories, add ons, warranty, tax etc with just 30k kms

You can tell yourself your new car was cheaper until you are blue in the face but I will always find a better deal on a used car. Guaranteed. Those 0% loans come with hidden fees and higher insurance rates etc. You can't beat the dealers at their game


----------



## sags (May 15, 2010)

New car...........$30,000

3 year old used car..........$15,000

Keep the car for 10 years and figure out the "savings".

$15,000 difference in price........divided by 120 months of ownership..........equals $120 a month more for the new car?

Those are the numbers.........it is what it is. In your own examples of depreciation of 50%.......for a car worth $30,000

I didn't say that buying new cars was "cheaper" than buying used cars. I said the cost difference is less than people think.

The savings would also be reduced by repair costs for the used car during the period of time the new car is covered by warranty.

Plus, any difference in interest rates between new (0%) and used (?) or in the event of cash payment.......the loss of the return on investment on the capital.

The introduction of 0% interest has reduced the savings of buying used cars.

There are no "hidden" charges. We bought the car, acquired the discounts, signed the contract and that is the amount of the loan.

Payments come directly off the principle and the total amount is reduced by the payment amount.

Our insurance actually went down with the new car.......as it is deemed to be "safer" than the old one.

Better safety equipment..........many more air bags.......stability control........lower the liability costs for injury claims.

Of course, the higher the value of the new vehicle.........the greater the savings of buying used.


----------



## sags (May 15, 2010)

As to new cars being worn out after 7 years...........if that were true, why would anyone buy a used one ?

Buy a 4 year old car for 50% discount...........so you can drive it for 3 years until it is worn out ?

If that were the case..........a person would have to buy 2 used cars over the 7 year life of a new one.

Two used cars at 50% of cost each.........equals 100% of cost........might as well buy a new one.


----------



## m3s (Apr 3, 2010)

Sags, warranty doesn't pay for repairs. It only pays for manufacture defects. I would have never paid for extended warranty as it's known to be a waste of money, but my used car has warranty for another 2.5 years paid by the original owner.

Now in 10 years I can double that hypothetical $15k saved on a used car by investing it in solid dividend stocks, which will only payoff more in decades after that. Free used cars perpetually forever after? Or you can keep paying $30k for them?

Yes insurance is cheaper on cars without 0% liens against them. Far better payoff than the risk of my $15k dividend stocks, is the risk of not insuring myself for my own accidents. Someday I will add up the staggering amount I have saved on insurance.

Insurance is based on models not whether they are new or used. You can find models cheaper on insurance regardless if they are new or used. 0% loans is also not worth mentioning. You can negotiate this out of the equation (it's baked into the price)


----------



## cainvest (May 1, 2013)

New vs used ... the debate will go on forever and both sides have pros and cons.

I typically by new, why .... I get the exact car I want and I always wait for the "good deals" to appear before I do, as in manufacturer rebates. I also always go to every dealer that sells the car and pit them against each other for the best price, usually someone is more hungry for a sale than the others. New also tends to be more reliable for a longer period of time. If you keep your car for a long time like I do the cost difference is pretty small IMO over 10+ years.

Used will likely save you money but requires you to have good mechanical knowledge, or have a trusted mechanic, to look for issues. Your reliability wil be less due to how many years old you're buying and km's driven. If you're not picky about the vehicle, as in anything in a certain class will do (compact, truck, etc) then you'll likely do better finding a good used deal if it's a common model. If you are willing/able to fix things cars yourself, used is likely the best way to go.

There are many cost factors on cars, purchase price is only one of them. Maintenance costs, fuel, insurance, etc all play a role so weigh them out accordingly. A good example of this is the money I've saved over the years on fuel alone compared to many of my friends, enough to pay for a new car with the difference.


----------



## nobleea (Oct 11, 2013)

sags said:


> New car...........$30,000
> 3 year old used car..........$15,000
> Keep the car for 10 years and figure out the "savings".
> $15,000 difference in price........divided by 120 months of ownership..........equals $120 a month more for the new car?
> ...


Our insurance went down on a new vehicle as well. But that is because we went from a 10yr old basic econobox to a mid size SUV with traction control, etc. I suspect there would be no difference in insurance in a brand new vs 4yr old in the exact same model.
There are hidden charges in the 0% financing. A good salesman has convinced you otherwise. Almost every manufacturer has a cash purchase discount. Usually 1500-2000$.
To compare properly, you should assume a cash payment on both. The loss of return on investment capital affects the new vehicle purchase more.
$120/mo doesn't sound like much, but it is. That's $15K. It's not quite that much due to the retained value of the vehicle after 10 years will be higher in the N case vs N+4, and the used car has repair expenses in the 6-10 yr time frame that the new case wouldn't.
I don't think it's black and white either. There are some instances where buying new makes more sense, but that is primarily due to really low depreciation of some models. And in other cases, buying used makes far more sense.


----------



## sags (May 15, 2010)

New or used..........it is always up to the buyer to get the best price and then decide if financing or cash makes the most sense.

Beyond the cost............there is also the reliability and comfort factors, which are worth more to me than the extra money.

I also like to know what my future costs will be............a loan payment each month, rather than surprise repair bills adding into thousands of dollars.

To each their own though................personally, I have had enough of used cars and their problems.

Having said that...........I do plan on buying a "toy" for myself...........and it will be a used vehicle.

It just won't be the vehicle we depend on everyday.


----------



## banjopete (Feb 4, 2014)

sags said:


> I also like to know what my future costs will be............a loan payment each month, rather than surprise repair bills adding into thousands of dollars.


I think people get conned into that idea by new car buyers and car sales people, this idea of "surprise many thousand dollar" repairs is pure fiction. So many people have bought into it that making $500 car payments each month seems safer than having $1000 sitting around for unexpected car repairs.

If something goes wrong with your car that requires many thousands of dollars to repair you probably did something pretty heinous to it, or it's a premium branded car with equally premium parts cost or.... you took it back to the same dealer that's giving you your 0% financing.

Much like anything the more you know about something the more likely you are to find a good deal that works for you. Just to poke the bear a little, I think why most people get so hot about the topic is that they're angry they've committed such vast sums to a car that for most people they' still won't own at the end of the agreed upon terms.

With my 10 year old $7k car vs an average sedan new, I could buy my car every year for $7k and still have money in my pocket vs the new car, and the real kicker is at the end I'd own all those cars vs having to cough up an agreed upon (in fine print) depreciated value to continue the debt payment experience at who knows what rate.

Should I get into maintenance schedules to remain warranty compliant? and warranty approved oil changes? 

I'm with you though sags, to each their own. We need each other, someone's got to buy the new car for me to buy a used car.


----------



## cainvest (May 1, 2013)

banjopete said:


> I think people get conned into that idea by new car buyers and car sales people, this idea of "surprise many thousand dollar" repairs is pure fiction. So many people have bought into it that making $500 car payments each month seems safer than having $1000 sitting around for unexpected car repairs.


Nope, not pure fiction, it does happen but from what I've seen it doesn't happen a lot. A month or so ago a friend bought a used car and two days later, the timing belt broke. So now he's got no car for a week, needed to rebuilt the head, new tensioner, etc and pay for a rental car. In the long run he'll come out ahead, mainly because he did the repair work himself. There are two other instances over the years that I remember of people getting hit by repairs on used cars but only one got nailed pretty hard because he doesn't work on the car himself and he trusts stealerships.


----------



## Eclectic12 (Oct 20, 2010)

banjopete said:


> ... Just to poke the bear a little, I think why most people get so hot about the topic is that they're angry they've committed such vast sums to a car that for most people they' still won't own at the end of the agreed upon terms ... the real kicker is at the end I'd own all those cars vs having to cough up an agreed upon (in fine print) depreciated value to continue the debt payment experience at who knows what rate.


Say what? 

The car loans I've been party to the details of - at the end of the agreed term, the car is 100% paid for (earlier if extra payments are made).
I suspect you are confusing the more common loan for the less common lease, which does have "an after term buyout".

Most people I know who lease have a business and are writing the cost off (100% write off on taxes).
I can think of two non-business people in the last twenty years who leased versus going with a loan or paying cash.




banjopete said:


> ... With my 10 year old $7k car vs an average sedan new, I could buy my car every year for $7k and still have money in my pocket vs the new car, ...


I understand the point in general and that YMMV, especially where higher priced options or extra items are added to the new car.

At the same time - you did say $500 car payments ... which if this is monthly, 12 x $500 = $6000, which is $1K under the yearly $7K quoted for used cars.


Cheers


----------



## sags (May 15, 2010)

I view the used car market as shark infested waters.

Unscrupulous dealers........buying used cars at the auction for $500 and selling them for $5000. 

Loan companies charging 30% interest gouge the customer for more cash.

Payday loan companies squeeze any remaining life out of them with loans for car repairs.

In the end........they have a car worth nothing............and a lot of high cost debt.

A lot of people would be better off............if they had access to 0% credit and a new car.

Keep it simple...........work........pay $300 a month for a new car.......and avoid all the problems.

That would be my advice to a lot of people starting out.

Scrupulously maintain the vehicle and drive it until major problems start appearing.


----------



## m3s (Apr 3, 2010)

Many people view the stock market the same way, Sags. You are free to buy bonds and GICs but don't come on CMF claiming they out perform other investments! If you like new cars fine, but they are not cheaper.

It takes various skills to invest in the stock market. There is a risk involved for a reward. It takes various skills to buy used cars and look after them. There is less risk for the reward, while the skill set is much easier to obtain than investing in the shark infested water imo. We live in a competitive capitalist society.

Same thing for warranties and car insurance. You pay someone else to assume the risk. Having the skill set to not drive like an idiot and assume your own risk of self insurance is the best payoff of them all. That and reading a few magazines to reduce the majority of manufacture defects. Even if there is a real manufacture defect, that's what recalls are for..


----------



## banjopete (Feb 4, 2014)

Eclectic12 said:


> Say what?
> I suspect you are confusing the more common loan for the less common lease, which does have "an after term buyout".
> 
> I understand the point in general and that YMMV, especially where higher priced options or extra items are added to the new car.
> ...


All noted and no, I'm not confused. I think most people lease which is why I mentioned the scenario I did, and sticking to generalities not specifics like your friend I suspect most people end up in perpetual leases. Just my opinion. The reason I mentioned too that I'd be up money despite the obvious math is for the sake of potentially more costly insurance and total cost final figures to completely own the car when it's all said and done.

Still my opinion of course but if our less financially careful neighbours are pinched financially the spillover effects of being short on money never end as we all know. There's a reason debt associated with car loans has skyrocketed in the last decade as household indebtedness has done the same. People find it increasingly difficult to save any meaningful amount of money so the idea of having a few thousand dollars for a single purchase is a lofty expectation so naturally getting a brand new car with monthly payments is attractive/or the only option and not everyone qualifies for 0% financing. It's why everything is a monthly price now, and also why people have so much yet own so little. Ask our billion dollar a quarter lenders who's getting rich? Much as anything is a canary in the coal mine this small bicker about used vs new cars is symptomatic of the way our society looks at household finances. I know the majority of people on this forum don't fall in this category but we're a tiny bit of a tiny slice of society, and sadly few people consider this decision with as much scrutiny as we are, but I digress.


----------



## warp (Sep 4, 2010)

In the past few years we, ( as a family), have bought 4 used cars, including a nice 2005 Lexus ES, that my brother bought this week, and brought home last night, which I have driven today.
The others were 2 Toyota Avalons, ( 2002 and 2004),and a Volkswagon Jetta.

All of these cars were with lowish miles, and in good condition. Granted that we know people in the New Car dealerships, so we got them at good prices, when they came in on trades for new cars. 

They drive great, look good, and we are saving a ton of money over buying new....which I have also done over the years, including several new Corvettes, which were fun to drive, but cost a lot in terms of depreciation, etc.

The bottom line, is that I would say that buying used is a better bet, if you want to save money.


----------



## Eclectic12 (Oct 20, 2010)

banjopete said:


> All noted and no, I'm not confused. I think most people lease ...


Good to know you are not confused between a loan and a lease. :biggrin:

I am surprised that you think most lease as in just one area at work, there's five people with ten cars (or vans) purchased using loans and zero leases.

That might be biased so here's a quote from a 2012 article:


> By Mr. DesRosiers’ calculations, about 18 per cent of Canadians leased their vehicle last year, while the vast majority financed.


http://www.theglobeandmail.com/glob...orst-financial-option-for-most/article551390/

Moneysense in May 2014 provides an update where 20% lease, 13% pay cash and 2/3 of Canadians go the loan route.
http://www.moneysense.ca/spend/auto...tion-but-canadians-prefer-to-own-their-wheels

Interestingly ... 2005 is quoted as the peak for car leases when it hit 45%.


Cheers


----------



## sags (May 15, 2010)

m3s said:


> Many people view the stock market the same way, Sags. You are free to buy bonds and GICs but don't come on CMF claiming they out perform other investments! If you like new cars fine, but they are not cheaper.
> 
> It takes various skills to invest in the stock market. There is a risk involved for a reward. It takes various skills to buy used cars and look after them. There is less risk for the reward, while the skill set is much easier to obtain than investing in the shark infested water imo. We live in a competitive capitalist society.
> 
> Same thing for warranties and car insurance. You pay someone else to assume the risk. Having the skill set to not drive like an idiot and assume your own risk of self insurance is the best payoff of them all. That and reading a few magazines to reduce the majority of manufacture defects. Even if there is a real manufacture defect, that's what recalls are for..


Where did I say new cars were cheaper ? Of course used cars are cheaper.........they are used.

What I said was the difference between the cost of a new car and an older one is less than many people believe.

I also said that 0% interest rates narrow the difference.........that should be obvious.

Tell you what......

Calculate the difference in payments it makes on the interest rate for a loan on a used car versus the 0% for a new one.

Calculate the difference between the cost of a new car (50% discount) and a new one over a 10 year period.

As I pointed out........I think you will find it is about $120 a month based on a $30,000 vehicle.

I worked in an auto parts warehouse.........and we shipped millions of replacement parts all over Canada every year.

We were only 1 company.........there are many auto parts suppliers in Canada.

If all these used cars are performing so well......need so little repair.........who is buying all these parts ?


----------



## sags (May 15, 2010)

Eclectic12 said:


> Good to know you are not confused between a loan and a lease. :biggrin:
> 
> I am surprised that you think most lease as in just one area at work, there's five people with ten cars (or vans) purchased using loans and zero leases.
> 
> ...


The reason lease ownership ran up in those years, was because the auto manufacturers (especially GM) over valued the "residual" values of luxury cars, SUVs, and trucks. The ridiculously high residual values made the payments unbelievable low and people scooped up the deals. GM got stuck with a ton of end of lease vehicles worth less than they thought and took deep losses.

It was one of the many screwups GM did.............that put them into bankruptcy.

I leased a new executive driven GMC Yukon fully loaded...........for one year. With my employee price, the discounts, and the high residual value........the cost to me was 0......and they gave me unlimited mileage and a cheque for $1200.

They virtually paid me to drive it for a year.

Sweet deal...........others were grabbing the same deal on Cadillac STS models.

Small wonder GM went broke.......that and the Aztec and Impala disasters.....and having GMAC give out subprime mortgages.


----------



## LBCfan (Jan 13, 2011)

I'd say the answer depends on your knowledge of cars and your ability to fix them. If you can get a 1 year old 20K mileage car for 75% of new, buy it. If you are looking at a 4 year old 130K mileage car for 50% of new, you'd better know what you're doing.

I do a lot of repairs on my family's cars, I also search far and wide (read USA, although we live in Canada) for cheapest parts. Here are a few examples why you can do well if you can fix them. Following are parts prices DIY vs garage parts and labor, your labor is assumed. None of these require much more than basic mechanical skills and a $100 code reader.

- 2007 Mazda 3, shocks and struts. Independent garage estimate - $1100, my cost $230.
- 2003 Ford Escape, 2 coil packs and two catalytic converters. Independent garage estimate - $2,000, my cost $600
- 2007 Mazda 3, oxygen sensor. Garage - $250, my cost $65

I can come up with more examples, these are just from this summer.


----------



## m3s (Apr 3, 2010)

sags said:


> If all these used cars are performing so well......need so little repair.........who is buying all these parts ?


People who own cars, whether they bought them NEW or USED.

The depreciation in the first few years is far greater than my cost to maintain a reliable car. I'm fairly confident an average person would also come out ahead buying a 2-3 year old car with reasonable mileage/price. Like ETFs are a reasonable investment risk/reward for the average joe. For me, there is no contest at all. I buy my parts online but that is moot because new cars need maintenance as well. Actually, most original parts are inferior to what is on the aftermarket, so I'm fine with skipping the first few years on mediocre tires and brakes.

Most of the depreciation is in the first few years. There are lots great deals on used cars if you really look, especially with today's 0% loan mentality.


----------

