New vs used

[Beev]

All my life I've always heard that one should never buy a BRAND new car (unless money just flat out isn't an issue for you) because it's just really financially stupid. Is this still true today? I have a pair of friends who are a couple, and yesterday they went to get a new car and instead came back with two BRAND new cars. They both make under $40k a year (he might even make less than $30k) and they both have a TON of student loans.

Now, far be it from me to tell someone they should or shouldn't do something, but it seemed like a really stupid decision. I would never impulse buy a car. Apparently their interest rates are 4.69% or something, too.

I've had my current car for ten years now, so I'm admittedly out of the vehicle loop, but I've always told myself I would simply buy used if I needed a new vehicle.

 

[Oil]

If you intend to keep a car for >7 years then you might want to buy new. Of course, as you mentioned, it all depends on your financial situation.

If you want to get a different car every few years then used would definitely be the way to go

 

[bruceb]

I like new myself, when I can afford it. Otherwise I would look at a 1 or 2 year old vehicle. And I try to keep it as long as I can. That can be until it is no longer sound or if my needs change.

 

[RedRooster]

The only hang up I have is giving banks free money, via interest. So if I can find a new car I like with 0% financing rates, like my current one was, I'll go that route. Otherwise, there aren't many used cars that I can see myself almost emptying my bank account for by paying cash.

 

[vi edit]

5+ years ago...sure. You could get a lightly used domestic midsize for almost half price of a new one.

Resale prices on cars have gone retarded though. Interest rates are dirt cheap so it doesn't cost as much to finance. 10 years ago financing a used car could have been 8% or more. Now you can get it for under 3% or 4%.

Gas prices are through the roof and a 4 year old Honda Fit with 100,000 miles on it is only $4,000 less than a brand new. That's just lunacy.

Buying a new car that's reasonable for your income and driving it for 5+ years isn't financially dumb. Buying a new car and trading it in after 2-3 years while costing you 10% or more of your monthly income is.

 

[ViviTheMage]

5+ years ago...sure. You could get a lightly used domestic midsize for almost half price of a new one.

Resale prices on cars have gone retarded though. Interest rates are dirt cheap so it doesn't cost as much to finance. 10 years ago financing a used car could have been 8% or more. Now you can get it for under 3% or 4%.

Gas prices are through the roof and a 4 year old Honda Fit with 100,000 miles on it is only $4,000 less than a brand new. That's just lunacy.

Buying a new car that's reasonable for your income and driving it for 5+ years isn't financially dumb. Buying a new car and trading it in after 2-3 years while costing you 10% or more of your monthly income is.

higher MPG vehicles are the only ones with this 'issue'.

 

[vi edit]

higher MPG vehicles are the only ones with this 'issue'.

Not really. Go look at something like a Honda or Toyota minivan and compare new vs. used. A year or two old van with 20k-30k miles on it is still only a couple thousand less than a new one.

Luxury cars, expensive SUV's, and some models with high rental sales that flood the used markets will be cheaper. But overall used prices are much higher than were 5 years ago.

 

[Mursilis]

Not really. Go look at something like a Honda or Toyota minivan and compare new vs. used. A year or two old van with 20k-30k miles on it is still only a couple thousand less than a new one.

Luxury cars, expensive SUV's, and some models with high rental sales that flood the used markets will be cheaper. But overall used prices are much higher than were 5 years ago.

If you can land some factory incentives or the like, you can do even better buying new than used. When we bought our Odyssey in December of 2007, Honda was offering $4000 off, and dealers were offering nearly $3000 more off sticker just to close out the old model year vans. We looked at used ones, but I'd have to get one at least 4 years old and with 50K+ miles to get a used one at the same price I was being offered for a new one. If we'd gotten one only 1-2 years old, with 10-20K miles, we'd have paid more than for a new one. Obviously, we went with the new van.

 

[Alienwho]

5+ years ago...sure. You could get a lightly used domestic midsize for almost half price of a new one.

Resale prices on cars have gone retarded though. Interest rates are dirt cheap so it doesn't cost as much to finance. 10 years ago financing a used car could have been 8% or more. Now you can get it for under 3% or 4%.

Gas prices are through the roof and a 4 year old Honda Fit with 100,000 miles on it is only $4,000 less than a brand new. That's just lunacy.

Buying a new car that's reasonable for your income and driving it for 5+ years isn't financially dumb. Buying a new car and trading it in after 2-3 years while costing you 10% or more of your monthly income is.

This man speaks the truth. I never thought I would ever buy a brand new car. Well due to a bunch of worldwide crazyness like the Japanese Tsunami, gas hikes, etc. used car prices have gone way up. I needed a new vehicle and I could either spend 17k on a several year old car with 40,000+ miles or just a few thousand more to get a brand new car that I actually wanted with 0% financing and a bunch of other incentives.

I'm not pro buy new car, but right now it actually kind of makes sense if you know what you're looking for.

 

[Baked]

My current I bought brand new shipped from Japan 7 years ago. I don't like to buy used, and I intend to keep everything forever.

 

[unokitty]

All my life I've always heard that one should never buy a BRAND new car (unless money just flat out isn't an issue for you) because it's just really financially stupid. Is this still true today?

No. There are too many variables to make blanket statements like that... Here's a blog post about why to buy a new car...

The value of a car is impacted by many variables.

One variable is how long you intend to own the car. If you are going to own it for seven to ten years, the financial difference between new and used won't be large.

Another variable is the desirability of a car. A desirable car will not depreciate much in the first few years.

Since I only buy a car every seven to ten years, I just buy what I want. Sometimes used, sometimes new. In retrospect, there hasn't been a clear financial advantage either way...

With a new car, I get a warranty. And I feel that that is a good way to manage the risk of a breakdown. (Only a manufacturer's warranty - no third party warranty.)

Also, when I buy new, I have the comfort of knowing that I have what I want rather than what is available. For me, that's a worthwhile value.

Whatever you decide, hope that you enjoy your new (or used) car.

Uno

 

[Blieb]

When I purchased a vehicle 2 years ago I was looking 1-2 yrs old.

However, with invoice pricing and rebates ... I ended up paying a few thousand more (~10% difference) ... and I know the history from day 0, tires were new, full warranty, etc.

I will still try used first, but it just didn't make sense when the #'s were so close.

 

[WackyDan]

higher MPG vehicles are the only ones with this 'issue'.

Really? I bought a 2012 F-150 brand new... because everything I found that was 2 to 3 years old was only 4-5k less than brand new ordered the way I wanted it.

 

[mvbighead]

Had a co-worker who brought in one car, and worked out a deal to buy two new. His wife is a stay at home mom, and he was working.

They ended up with an Equinox and a Cobalt. Equinox being the family car, and the Cobalt being his commuter. I believe he was still making payments on the vehicle he traded in, and the new payments were equal to that of his old, or just slightly higher.

In any case, two brand new cars with warranties and little reason to suspect future failures, for him, was worth it.

For me, I have enjoyed tinkering with cars for the past year or so. I do have one newer vehicle, and one older (2000). I doubt I'll buy much brand new anymore, but I do think that when the time comes to replace the wife's commuter, if there is a 0% interest offer that we can get, I'll definitely consider it. Otherwise, if used is considerably less expensive, I'll probably grab another vehicle with around 30k on it and consider it new.

 

[CraigRT]

I do not agree with brand new.
I recently bought new and it has been a struggle for me to justify keeping it, but I think it's sorta paying off. I have had to do zero to my car since I got it in April of 2011 and that is more or less why I wanted it. If I was not commuting close to 50 miles one way to work I would still be driving one of my older cars I paid a few hundred for. If I were ever to get a job in town again first thing I'd do is put my 2011 car up for sale. Payments are lame.

 

[VtPC83]

I just bought a brand new Jeep Liberty, with their incentives it was only 1k or so more than the used 2010 I was looking at with 30k...

The only thing I don't like about new vehicles are the expectations of maintenance by the dealerships - they typically expect you to stay right on mark with mileage based services otherwise they can/will revoke your warranties. Jeep didn't do that to me so it was an easy choice, not to mention 2.9% financing...

 

[CraigRT]

I just bought a brand new Jeep Liberty, with their incentives it was only 1k or so more than the used 2010 I was looking at with 30k...

The only thing I don't like about new vehicles are the expectations of maintenance by the dealerships - they typically expect you to stay right on mark with mileage based services otherwise they can/will revoke your warranties. Jeep didn't do that to me so it was an easy choice, not to mention 2.9% financing...

2.9% is used car territory.. Although I've definitely seen worse!
I've bought 2 new cars in my life and both were 0%. If I have to finance, that's the way to go!

 

[Viper GTS]

You can get 1.99 from PenFed on used cars, regardless of age. My local credit union actually cold called me and asked me to buy a car at 2.49.

So 2.9 is well into used car territory.

Still though, the argument for used is far murkier now and many people would be better served by a new car.

Viper GTS

 

[homercles337]

What if you cant find what you want used? My last two cars were bought new. 2002 GTI 337 (1,500 brought to the states), and a 2012 Golf R (5,000 to the states). I reserved it back in October and took delivery a month and a half ago. For some cars used does not equate with the desired timing.

 

[Throckmorton]

5+ years ago...sure. You could get a lightly used domestic midsize for almost half price of a new one.

Resale prices on cars have gone retarded though. Interest rates are dirt cheap so it doesn't cost as much to finance. 10 years ago financing a used car could have been 8% or more. Now you can get it for under 3% or 4%.

Gas prices are through the roof and a 4 year old Honda Fit with 100,000 miles on it is only $4,000 less than a brand new. That's just lunacy.

Buying a new car that's reasonable for your income and driving it for 5+ years isn't financially dumb. Buying a new car and trading it in after 2-3 years while costing you 10% or more of your monthly income is.

A 2006 Mustang with the horrible 4.0L engine commands asking prices around $14000 on Craigslist. Seriously, 7 year old car with the most undesirable engine, for 2/3 what a brand new 300hp Mustang V6 costs. Are people actually paying these prices?

I bought my 1999 Jeep in 2008 for $3500. If I look for an equivalent age car now, which would be a 2003, it costs at least $7000. I don't understand why used car prices have skyrocketed so high

 

[ss284]

New with good incentives is the way to go.

 

[Jumpem]

New. Buy or lease every three years. Keep payment at 5-10% of monthly net income. Purchase one vehicle per couple, and commute to work together.

 

[power_hour]

Think of a car like an appliance. Then decide how often you use that appliance is my approach. Driving it daily, little time for repairs and don't want to worry about previous owner's abuse then new is the way to go. But if you have more free time, can afford a few trips to the garage and don't mind a bit of wear and tear then used will save you a tonne of cash. I prefer used but often finding a good one is becoming really bloody hard. It never use to be that way either. Times are changing.

 

[woodie1]

I think the cash for clunkers program has changed the whole market along with the problems in Japan. You have to search long and hard to find anything reasonable in a 1-2 year old car now. With most of them only a few grand less than a new car I'd go with a new one if there's good financing terms.

 

[JulesMaximus]

All my life I've always heard that one should never buy a BRAND new car (unless money just flat out isn't an issue for you) because it's just really financially stupid. Is this still true today? I have a pair of friends who are a couple, and yesterday they went to get a new car and instead came back with two BRAND new cars. They both make under $40k a year (he might even make less than $30k) and they both have a TON of student loans.

Now, far be it from me to tell someone they should or shouldn't do something, but it seemed like a really stupid decision. I would never impulse buy a car. Apparently their interest rates are 4.69% or something, too.

I've had my current car for ten years now, so I'm admittedly out of the vehicle loop, but I've always told myself I would simply buy used if I needed a new vehicle.

What idiot told you that?