Buying New (cheaper car) vs Buying Used (more expensive)

bonita8

So my lease is about to be up in February... I absolutely hate my car and cant wait to give it back (2013 Chevy Cruze Base model).
My question is this: I have saved up some money (from leasing above so cheap) and I am thinking do I:
Buy a 2016 Honda HR-V all cash
Buy a USED (CPO) 2013-14 Acura RDX also all cash
Any help would be appreciated and yes I know most ppl dont like to pay cash for a car bc of the opportunity cost, and the low rates but even with the cheap loan rates, 1.49% at my Credit Union to me it makes more sense because my money is not even making a lousy 1% interest rate and I know NOTHING about the stock market...
Thanks
God's Peace

Michaell

bonita8 said:

So my lease is about to be up in February... I absolutely hate my car and cant wait to give it back (2013 Chevy Cruze Base model).
My question is this: I have saved up some money (from leasing above so cheap) and I am thinking do I:
Buy a 2016 Honda HR-V all cash
Buy a USED (CPO) 2013-14 Acura RDX also all cash
Any help would be appreciated and yes I know most ppl dont like to pay cash for a car bc of the opportunity cost, and the low rates but even with the cheap loan rates, 1.49% at my Credit Union to me it makes more sense because my money is not even making a lousy 1% interest rate and I know NOTHING about the stock market...
Thanks
God's Peace

My suggestion is that you take an extended test drive in both vehicles to see which one you like more. As you've learned, driving a car you don't like is not fun at all.

Lots of people pay cash for their cars, but I agree with you that the cheap money available to borrow makes it hard not to go that route.

I'm sure that with a bit of investigation you can find an investment program that will get you a better rate of return, albeit with more risk attached. If that is the choice you want to make.

stever

I just checked out the HR-V a few hours ago. Assuming you like the test drive, you'd wind up with a new car that'll hold its value well for a few years. So if you didn't like it, you probably be able to trade it without taking as big a hit as you would on the RDX.

We have a houseguest this month and her Cruze is in the driveway. Not sure what trim it is, but it seems more plush than the HR-V. So I suspect the RDX is likely going to hit your "more car for the money" buttons more than the HR-V.

I like paying cash too - something about those monthly bills coming in bugs me.

chrisbrown2

When some people picture a used car, they think of a yellow clunker sitting in the corner of an auto lot with rusted rims, chipped paint, and a “for sale: $2,000” .you have get some advantage for used car:
Better Price
Depreciation Benefits
Potentially Avoiding New Car Fees
You can buy any make or model year

karhill1

Chris -

What are the new car fees which can be avoided? You will pay sales tax and registration for either a new or used vehicle. If you are considering those document "fees" dealers like to charge these days, those are not real fees. They are simply the selling price separated into two parts to deceive unsuspecting buyers to believe they paid less for the vehicle than they actually paid and to increase profit for the dealer.

The interesting thing about a buying a new vehicle or a late model used CPO vehicle, is many times you can buy the new vehicle for less than the CPO or at Carmax. Example, a few years ago we bought a new Corolla for less than Carmax sold a lower trim, same year Corolla with 8K miles.

Recent example, I helped my daughter buy a new Toyota Tacoma for only $1,500 more than Carmax was selling a year old Tacoma with 12K miles and fewer extras.

You do need to know how to price a vehicle and how to negotiate.

Regarding paying cash or financing a vehicle it depends on each person's situation. For many people having the cash available should an emergency occur can be a real benefit. A low interest car rate, sometimes zero percent, is much less than the interest which would be incurred should an emergency require use of a credit card or other loan source.

Often times those low rate interest loans are either or with a rebate. Usually, if the loan is paid over the full period the difference between the two is negligible.

Personally, I avoid paying cash when low interest financing is available. Having the extra cash is worth paying the relatively small amount of interest coming out of a low rate car loan. I simply set up automatic payments from my checking account, for a bit more than the monthly payment which pays off the loan quickly.

As an additional benefit, having some installment loans "paid as agreed" on your credit report can do wonders for your credit score. A high credit score has many benefits, not the least of which is lower auto insurance costs. I get a 35 percent reduction on my auto insurance due to my credit score. That is $700 a year which more than makes up for any interest I may pay on my car loans or leases.