Buying New vs. Used Vehicles

cccompson · January 2007

Fix what you have and drive it. You've already taken a big hit on depreciation. With the exception of a Celica, the models you've listed are more expensive to buy and repair than what you have now. Toyota hasn't made a Celica 'vert since the last century. They are excellent cars but examples tend to be pricey and have lots of miles on them.

You might also consider a Mustang or Toyota Solara, whether new or late model used.

lexusdriver · July 2007

There is a reason why almost every car manufacturer has two divisions

1. Regular: Honda, Toyota, Nissan, Ford, VW etc.
2. Luxury: Acura, Lexus, Infinit, Volvo, Audi etc.

If you are willing to spend $25,000 on a car then the choices are pretty clear it's either a new [Regular] car or a used [Luxury] car.

Other than that it's all a matter of personal choices because while some might view a used car as taking over another person's problems other view it as a tested and economy buy.

I think mostly female drivers opt for newer cars and male drivers for used ... but I could be way off on this too.

yaffi · July 2007

yaffi · July 2007

ok. my 2003 sebring covert is off warantee now for a year.
In addition i see that a new convertible top and window will cost around 2000. I owe almost 10,000 on the car which is the break even pt. I know i can get 9,000 for it to trade it in. I am wondering if now is the time to get a used audi with low mileage, a 2004,5, or 6 and with a warantee of at least 3 -4 years.

dtownfb · July 2007

why not keep the car until you pay it off? Does the car need a new convertible top and window? Since you are considering a late model Audi, I'm assuming money is not the issue.

Eveythign I have read on these forums points that Audis are not the most reliable cars and can be expensive to repair so the warranty is probably a good idea.

leomort · October 2007

I'm thinking of trading my 2001 Ford Explorer for a more fuel effecient vehicle. There's nothing mechanically wrong with the Explorer. I was driving a '99 Chevy Prizm back & forth to work, roundrip 56 miles,but now wife will be driving and I'll be left with the Explorer. It's paid off and I have ~$10,000 saved up to put toward a new(er) car.

What's your thought? Get new(er) more fuel effecient vehicle or keep the Explorer and pay at the pump?

Leo

tidester · October 2007

From a purely business perspective, which is cheaper - paying a little more at the pump (Explorer) or making monthly payments to the bank (new vehicle)? If you opt for keeping the Explorer then you can continue to save up for a new car that you could buy without financing.

I'm guessing your Explorer has something between about 72,000 and 84,000 miles on it so you likely still have plenty of miles left on it.

tidester, host
SUVs and Smart Shopper

leomort · October 2007

Tidester,

Good guestimate. The Explorer has 83,3xx miles on it. So let's do some math. Roughly 4gallons a day per commute. Multiplied by three days. So roughly filling up twice a week. 30gallons/week * ~$3/gallon= ~$90/week. Which would equal ~$360/month.

So to get ahead or break even, I'd have to get my car payments AND gas for the month to below that figure. Pretty close call but it looks like I'm at the break even point. Might as well keep the Explorer. Just amazed at how expensive new cars are and how little you get for trade-in!!

Leo

tidester · October 2007

Just amazed at how expensive new cars are and how little you get for trade-in!!

Really! I suppose the good news is that your Explorer's depreciation will now be slower in absolute terms.

tidester, host
SUVs and Smart Shopper

leomort · October 2007

Tidester,

I had Volvomax give me guestimate on my Trade-in value for the Explorer. ~4K. I was also surprise to see how high the interest rates are for new (and used) vehicles. Many loan institues have certain borrowing minimums and minimum lengths. For example, I was expecting to borrow ~3grand and wanted payment terms at 2yrs. I guess I'm in the minority for such requirements.

Still can fill the pain in my wallet during fill-ups for the Explorer. Even the compact Prizm cost more to fill-up than it use to!

Leo

qbrozen · October 2007

well, sounds easy enough to me. If you sell the exploder for say $5k, you could easily buy a used gas miser commuter car for that much or maybe even add some of your savings. If you can cut your gas bill in half, that's $180/mo savings (plus maybe cheaper insurance?). In a year, that's a bit over $2k. So let's say sell the exploder for $5k, chip in $2k for a $7k car, and it pays for itself in a year.

baseballmom97 · October 2007

Our lease is up in two months on our 2004 Sequoia. I will be replacing it with a GMC Acadia. However, my husband is thinking of replacing his 1999 Acura RL sedan with 93,000 miles. He is hoping to sell this for $8,000 - $9,000. He really needs something that is good in snow and on ice because he is an ER doctor and works very odd hours when the snow plows aren't always out yet.

We are considering whether we should buy the Sequoia at the end of the lease. The residual value is $24,178. Leasing company will not negotiate on the price, however, after researching on Edmunds and some local Toyota dealership sites, this looks to be a fair price. The 2004 Sequoia will have 37,000 miles on it at the end of the lease. It will probably need all new tires as the tires are worn and the brake pads need to be replaced soon.

Should we buy the '04 Sequoia which needs all new tires and brake pads or should we lease a new car for him or an'06. We are considering either an Infiniti FX35 althought the gas mileage is only a little better or some other smaller SUV?

I know this is a lot of questions at once but we are really struggling with whether to buy or lease used or new. It seems that buying cars is a losing battle no matter what...

leomort · October 2007

qbrozen,

If trading in the 2001 Explorer, I'd pefer something newer. Looking for 3yr vehicles, either compact or midsize sedan. I'd like to get 5k out of the Explorer, but more like 4K. Willing to put an additional 10k of my own $$$ into the mix. So 14K has to be the OTD price on 3yr old car.

Any recommendation in this price range? Has to be reliable and good gase mileage---high 2o's mpg, mix driving.

Leo

qbrozen · October 2007

You could easily get a mazda3 in that range. Even a mazda6, if so inclined. The 6 is probably a better buy used since the 3s are so popular. It would have to be the 4-cyl, though, to get the mileage you want. Mazdas aren't the most efficient vehicles.

You could get a used civic in that range, too, but used Civics are not good values, IMHO. Accords seem to be a bit better in this regard, although not much. Considering new 4-cyl accords are under $20k, I would imagine a 3-year-old would fall in your range, too.

My personal choice, if I wanted 3 years old or newer and high 20s mpg, would be a mazda3 hatchback.

leomort · October 2007

qbrozen,

Thank you for the help. I hate the idea of trading in a perfectly good vehicle, Explorer, and taking a bath on trade-in. I typically keep my cars a long time, usually at least 150K miles before considering trading them in. I can't imagine how people trade-in their vehicles every 3yrs or so! They must take a beating financial or more well off than I!

After crunching the numbers, I'm going to "make a go" of keeping the Explorer. This year could have been a "break even" year financially speaking, but after that the economics favor keeping the Explorer. There's nothing mechanical wrong with the vehicle thus no real need to trade-in aside from the desire of wanting better gas mileage. Deciding factor for me of when to get a new(er) vehicle is when the vehicle's age causes reliability and repair issues.

Leo

joel0622 · October 2007

I was also surprise to see how high the interest rates are for new (and used) vehicles

Don't let the rates scare you. The difference between borrowing $3000 for two year at a 8% and a 12% is only $144 over the course of the loan. The reason you are finding higher rates on the small amount is because at that amount of money it really is not worth it to the bank to even service the loan. What you pay them pobably does not even cover set up cost.

Hell for $3K get a CC with a 0% introductory rate and put it on there. But the difference between 8% and 0% is till only $289.

leomort · October 2007

Joe,

Yeah, the lenders probably don't want to be bothered by a small fish like me. The like the big loans with high interest rates. Gotta be careful with that type of thinking, that's what got the housing market in trouble!LOL

joel0622 · October 2007

I am finding that right now a good used car rate on 60 is between 6.5% and 7.5%, there are still some Credit Unions in my area offering around 5.8% on a loan that does not exceed 100% of NADA Retail, there is one that will do a 4.99 if you are at loan value, which is basically 80% NADA trade in.

leomort · October 2007

joel,

There was a car salesman on this site, believe his name was Rich and went by the handle audi- something. A good rule of thumb for financing a vehicle that I picked up from him is that if you can't afford the payments of 48 months or shorter you can't afford the car. That keeps you from being upside down and a bad financial situation.

Another salesman here on this site by the name of Terry, he use to do the "Real Trade In Values" on Smart Shopper, whose opinion I value and respect turned me on to giving used cars a try. With proper research, 2yr to 5yr old used cars can be a good value. This way I can either pay outright cash for them, or very short-term repayments---3yrs at most with 2yr perferred.

Before running into this site and the advice from Rich and Terry, I'd only buy new cars, usually at 60months just to afford the payments.

joel0622 · October 2007

Sounds like good advice if it works for you. Not every ones situation or thought process is the same. There are those who would say they would be crazy to pay cash for a used car when they can buy a brand new one for 36/48/60 months at 0% and continue to let there money sit and grow for them. As long as you are not borrowing against your house to buy a car (second mortgage, home equity line, etc) then I say you are going about it in a very good way. me personally, I would pay 10% interest before I would ever use my house to buy a car.

If it was a set in stone transaction every time with no variables I would be unemployed right now

or at least doing something that actually could be considered work.

leomort · October 2007

Like you said, it depends. Have the money sit and grow where & w/ how much interest? and how liquid is it? Good saying in theory, but not too many practice it. Not a knock against you. Just I find many people talk the talk, but few walk it, if you get my drift.

As to those longer terms and low financing, I've found that they often fool people into not putting any money down. Combine this general trend of trading their vehicle every 2.5 to 3 years and you are NOT doing yourself any financial favors. When it comes to cars alot of people tend to let their emotions dictate things instead of logic and finance.

Now when your young and just starting out, you usually have to take out longer loans w/ higher interest. That's just part of paying your dues. Plus its a learning experience as well. Most of us been there, done that. Just try not to repeat the same mistakes of youth

leomort · October 2007

Oh, just to let you know, I'm not against buying new cars. I was actually debating about trading in my '01 Explorer for an '08 Toyota Corolla. As long as the numbers make financial sense, loan terms are short and interest rate not too outrageous.

Leo

dtownfb · October 2007

Good decision leomort. While the Explorer is a guzzler, it's paid for. You can continue to save money with no monthly payments and the depreciation on the vehicle should flatten out at 100k miles. As long as the Explorer stays reliable, ride it into the ground.

Good luck.

leomort · October 2007

dtownfb,

That's my generally philosophy regarding cars: as long as they remain reliable, run them into the ground.

Crunching the numbers, I'll pay around $264/month on gas for the Explorer. I'll break even with new Corolla; about $140 monthly payment + $120/month gas = $260/month. This only takes into account driving to work (weekend travel excluded), also downgraded mpg on Explorer to take into account winter fuel blend which decreases mileage.

scottinky · October 2007

you will miss the versatility of the SUV. I wish I had kept my 95, sold it and
my Mustang GT a few years back for my Pathfinder, which is soon paid for.

jintorcio · October 2007

Got a chance to buy a Demo vehicle with 1200 miles on it. What's you advice on buying a Demo? What should I look for in terms of discount, warranty extension, pre-sale maintenance, etc???

jipster · October 2007

What make and model you looking at?

jintorcio · October 2007

Mazda CX-9

jipster · October 2007

Those are going for around invoice. A little more for 08's and a little less for 07's. At about $35k for the CX-9, I'm thinking a discount of around $1,000.

Honda had demo Odysseys on sale a while back. They had them certified and drivetrain warranty up to 7 years/100,000 miles. Mileage was about the same. But, the asking price wasn't much less than new.

You're demo doesn't really have that many miles, so it hasn't needed any maintenance yet. I'd ask for maybe a couple oil changes be thrown in.

jintorcio · October 2007

Thanks - good advice. I'm curious about this comment: "Those are going for around invoice." EDmunds TMV puts them at about $500 below MSRP - or about $2,200 above invoice. You have contrary data?

jipster · October 2007

Thanks - good advice. I'm curious about this comment: "Those are going for around invoice." EDmunds TMV puts them at about $500 below MSRP - or about $2,200 above invoice. You have contrary data?

humm... on the "CX-9 Prices Paid and Buying Experience" discussion there were a number of posts stating they got the car around invoice up to $500 over...with a few under. One guy was about $$1,500 over invoice, but he said he thought he could have done about $1,000 better. Sorry if I misinformed you. Go over to the browse by vehicle in left hand column and check out the prices paid discussion. Perhaps there is a rebate or other incentive that is no longer available.

I really like the CX-9 though, a great choice. We have a 04' Mazda MPV and have been very happy with it.

shifterz · January 2008

I'm trying to figure out, which would be the best for me to do in my situation.

I am in the market for a new car in the next year. My old Kia isn't going to last as long as I'd like it to, plus I hate the body style. Basically, this will be my first car by myself, and I want to know which of these do you think would be the best idea:

A brand new car, Scion tC or xD, or a Mazda3 hatchback with warranty
A newly used car, Scion tC or xD, or a Mazda3 hatchback...
An old car (like an old BMW or Camaro) that's really cheap, under $10k with probably high mileage.

I can't decide which way to go! My commute isn't a big one, 10 minutes each way, I don't put a lot of wear and tear on my car. Would a new car be worth it?

roadburner · January 2008

In your case I would go with option 2-
A newly used car, Scion tC or xD, or a Mazda3 hatchback...
You'll have a car that is just as nice and reliable as a new one without having to absorb the first year or two of depreciation.
As for option 3, I love BMWs and have owned Bimmers ever since 1983. However, unless you have decent DIY skills and know a good independent BMW tech you will likely find that upkeep costs will negate any savings. And don't even think about skimping on maintenance requirements; BMWs are not designed to be abused(as are most utilitarian automotive appliances).
I'd go with a used Mazda 3; they are stylish, practical, and most importantly- fun to drive. Especially the 2.3 manual.

guss · January 2008

If you should decide on the Mazda 3, look at 2005's over 2006's because the length of Mazda's warranty changed in '06 from 4 years to 3 years. So you should be able to get the same amount of warranty to you for a few grand less.

qbrozen · January 2008

well, from what I've seen, mazda3 hatchbacks don't sell for much less used than they do new. Plus, mazda often has great lease deals. So I suggest option 1.

jeffparker · January 2008

I own a 99 VW Passat GLX that's starting to turn into a money pit. I do not have any payments on it. It has 80k miles and I bought it new. So far I have spent about $4000.00 in 8 1/2 years on repair outside of regular oil changes. Now, I'm looking at another $2000 to replace the timing belt, water pump and fix oil leaks in 3 different spots.

The question is do I continue to pour money on this sorry excuse of a car or look at buying a used 06/07 Lexus GS 300/430? I like the GS and given Lexus's great reputation for quality I'm thinking it might be a better deal financially to get $8000-$9000 on the Passat than to lose another $2000 and hope the car runs without any major problems for abother 3-5 years. ............. Or just jump into the Lexus? :confuse:

isellhondas · January 2008

Dump the Volkswagen. It will only get worse...much worse.

We are almost to the point where we will never sell another used VW unless it is still under warranty.

It just seems that everytime we think we took in a good one, it bites us.

As the miles add up the troubles will just increase.

yaffi · January 2008

Hi all,
happy new year.
To give you an update, I did trade in my 2003 sebring for a 2004 Audi cabriolet with 15,000 miles on it in august. I hope its a cream puff cause it sure looks like it.
I got good financing and a full warantee. At first it was awkward, coming out of the sebring, drives totally differently and feels different. I got used to the 1.4, has great gas mileage, got new tires, and it was good to go. But it is nothing like any car i have ever had.I love it!! So....that's my good news~

joel0622 · January 2008

If you get $8K-$9K on a 99 Jetta that needs $2K in work call me, I will hire you on the spot.

"Imports are superior"

isellhondas · January 2008

I was thinking the same thing.

Where do these numbers come from?

jeffparker · January 2008

It's a 99 Passat GLX (V6). KBB value is 8-9k for the same with 80k miles.

jeffparker · January 2008

kbb.com

cccompson · January 2008

The problem, jeffparker, is that KBB doesn't buy or sell cars and, in most cases, their numbers don't reflect reality.

I would be surprised (indeed, shocked) if actual trade value of an 80K '99 Passat exceeded 5K.

You might try posting it over on the Real World Trade-in Value thread.

jeffparker · January 2008

cc - trading in will be my last resort. I'm planning a private sale.

exb0 · January 2008

jeffparker, to answer your original question, if you can unload your '99 Passat that requires 2K in repairs for 8-9K, then do it. It will be the best investment you will ever make. Please keep us posted.

isellhondas · January 2008

Well, good luck trying to get what Mr. Kelly is telling you.

KBB numbers are usually high and any reconditioning needs have to be deducted from whatever those numbers are.

People tend to be afraid of Volkswagens that are getting up there on miles and for good reason.

greenmax · January 2008

2 VWs I took on a trade this week, not exactly what you have but should give you the general trade range:

1. 2002 VW Passat GLS with 68k (decent shape, needs a windshield) $5500
2. 2000 VW Jetta GLX with 56k miles (very clean) $3500

Both were well behind KBB trade-in and if I were the customer I would have sold them privately.

colloquor · January 2008

Some advice from an ex-car salesman . . . always sell your car privately, you will realize much more profit than by trading it in. I've never traded in a car in over 40 years of driving.

Remember, for the new car or used car dealership, there is more profit per unit in selling a used car, than a new one. And, the salespersons love it too, as there is a higher sales commission on a used car than a new one.

Bottom line . . . don't trade it in, sell it yourself. It's not that difficult, especially with all of the online venues today.

isellhondas · January 2008

Except...

There is risk involved in selling your own used cars.

Some people feel uncomfortable having strangers come to their door.

Also in states that allow a sales tax credit on the value of the trade in, it just might not be worth the time and trouble.

jeffparker · January 2008

Thanks colloquor! That's what I plan on doing. I will sift through the phone calls/emails and try to get the most desirable person to deal with. I'll probably set up meetings/test drives a mile or 2 from where I live so that I don't have to have strangers coming to my door step.

BTW, I have already sold a car this way in the past - about 2 years ago - sold a used Corolla to a very nice young couple. Went about as smoothly as you could imagine.

Buying New vs. Used Vehicles

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