Because new cars tend to lose value rapidly, the conventional wisdom is that it usually makes more sense to buy a used vehicle instead of a new one. But is this rule of thumb always true? Has it changed in the past few years? That’s what Lily wants to know. She writes:
Time Moneyland recently reported that used vehicle prices have hit a 16-year high. On the radio, car companies are asking people to trade in their used cars because their inventory is low. When I look at used cars, I can’t believe how much they’re selling for. For example, one car dealer is selling a 2010 Honda Civic LX with 44,000 miles for $17,575!
If I were to buy a new Honda Civic (with no miles, without any discounts, and using only the features I care about), its MSRP would be $17,715 (including destination charge) for a 2012 version! (Or $18,925 MSRP for the DX.) I keep hearing that if you want to save money, you should only buy a used car. But is this only true for some makes and models?
I’m looking for a reliable, standard, low-cost model that will last for ten years. I don’t care about adding a lot of features to my car. Is that why some of these used cars cost so much? Because they’re loaded with extra features I don’t care about?
I guess my question is: When looking for reliable transportation in a standard low-cost car, is it better to buy new or used? And if used is better, do you have any advice on getting the prices down and finding a good car that isn’t a lemon?
In general, new cars do lose value quickly. But due to a variety of factors, prices on used cars are indeed high right now. As with many personal finance rules of thumb, the “new cars drop in value the moment you drop them off the lot” guideline isn’t true all the time. Your specific circumstances may differ. In your town, the car you’re looking for might hold its value better (or worse) than average.
Also, a new car isn’t always a bad idea. If you intend to own the car for many years — to drive the thing into the ground — then a new car can often be a good choice. My wife prefers to buy new cars, and I think they’re a fine choice for her. My next Mini may be purchased new, too.
The key to making a smart choice is to take your time and crunch the numbers, just as Lily is doing. If you’re in the market for a vehicle and not sure where to start, do some online research. When I was shopping for a used Mini Cooper a couple of years ago, I spent a lot of time playing with web tools like these:
- MSN Auto has a list of best and worst depreciating vehicles. (The best? The Mini Cooper, which holds 67% of its value after three years. The worst? The Ford Freestar, which loses 75% of its value!)
- Consumer Reports has an even more detailed list of the best and worst used cars. If you’re considering a used car, this is a great place to start your research.
- The Edmunds True Cost to Own calculator lets you see how much it costs to own and operate an average vehicle. You can enter the year, make, and model of the car you’re looking at, and the calculator will break down a number of costs, including depreciation.
- Kelley Blue Book can help you determine whether the price on the used car you’re eyeing is too high (or if it’s a steal!). The site also now has a perfect car finder tool.
Once you’ve picked some candidate cars, you actually have to make the purchase. It’s here that even the best-laid plans can fall apart. Buying a used car can be filled with all sorts of pitfalls. It helps to do be as prepared as possible. Last December, Consumer Reports posted a step-by-step guide to buying a used car. Once you’ve done your initial research, use this guide to help you score a good deal on a used vehicle. It’ll help you be aware of common car-dealer tricks and better negotiate a fair price.
All of this is theoretical, though. Lily wants to hear actual reader experience. Where do you come down on the new car vs. used car debate? Have you purchased a used car? What was the process like? If you bought one recently, did prices seem high? Do you have any hints or tips to help Lily find a good used car at a fair price?
GRS is committed to helping our readers save and achieve your financial goals.Savings interest rates may be low, but that’s all the more reason to shop for the best rate.Find the highest savings interest rate from Ally Bank, Capital One 360, Everbank, and more.
This article is about Ask the Readers, Cars
Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.
Discover is a paid advertiser of this site. Reasonable efforts are made to maintain accurate information. See the Discover online credit card application for full terms and conditions on offers and rewards.
SEARCH FOR RECENT ARTICLES
I just wanted to chime in to say that Minis are a money pit and I’ll never buy one again. Save up for a real BMW if you want quality (sorry JD!).
Minis have a low starting cost, but are a lot plastic and break often, which is a real pain. Repairs are as expensive as any other German car– except that they are more frequent. $700 for a windshield? $1600 for a new set of tires? $3,000 for the labor to change some gasket/seal/rubber part because you have to remove the whole transmission to access the thing even though it’s not a transmission repair? No thanks!
loading....
I have found that 2-3 yr old cars w/ low miles generally don’t have enough of a discount over new cars. My experience is with Hondas and Toyotas. I actually found some used cars more expensive than new ones because they came w/ features I didn’t want (sun roof, leather etc). I think most of the studies are done w/ sticker prices of new cars. I doubt anyone reading this blog pays that.
I have an easy new car buying process that works great.
1. Research cars you want (I look for reliability and safety)
2. Go to local dealers and test drive the cars you like and pick the one you like best.
3. Come home and go to Edmunds.com and pick out the car you want w/ the options you want. Then select to get quotes from local dealers.
4. Buy the car from the lowest price dealer. (I actually gave the dealer where I test drove the car the opportunity to match the price, which they did, because they helped me with the test drive.)
Note: If you have to borrow money for the car then plan on keeping the car for at least 2x the finance period. 1st 1/2 of the period you pay for the car, 2nd 1/2 you put the money in the bank and the car is paying you back. Then you can buy your next car w/ cash.
loading....
My husband & I bought a Golf TDI in May. This is a turbo-diesel & averages 43 miles/ga. He does a lot of driving. We went to one car for 2 1/2 yrs & will get rid of our second car when we retire in a couple of years. We intend to keep the car 10 years; its economical and a pleasure to drive in and to ride in. Since we have a few aches & pains in our middle age – a good ride is a lot more important than it was a few years ago. I think we might have overpaid by about $1-2K – not a perfect decision but a good one. With a major purchase like a house or a car, or a once in a lifetime trip – getting the most economical thing isn’t always going to be the best choice. Settling for less or overpaying by a lot, are I think, two reasons people often have buyer’s remorse.
loading....
I think the best advice is to exercise patience if you have the time to wait for the right price/car. I have bought used and had bad experiences with costly repairs for each one (had a pre-purchase inspection done too!). THe next car I bought brand new because I wanted piece of mind that I wasnt going to break down somewhere and/or deal with costly repairs. I did however take my time to find what I wanted and could afford. I conducted research about how much the car models I was looking at depreciated over time, how much my insurance would be on the car, etc. I chose the car that depreciated the least and it also cost less in insurance than the others…it also helped that I really liked it too. It was the best decision for me. I am now on year 7 and have only paid for routine maintenance at the dealership and replaced a dead battery. I am so thankful and I love my car and the peace of mind I have with it knowing that I am not inherting someone else’s car issues.
loading....
I go used from a private party all the time, but I’ve always been in a situation where I didn’t need to unload my old car to purchase another vehicle. And having time on your side is the biggest factor when buying used, because you need to do your research to find what models, trim packages, and years are right for you and what maintenance issues they have and when these maintenance issues typically arise. If you’ve done good research, you’ll probably have a narrow selection of cars that you’ll be looking at.
It took me about 7 months to find my most recent car (2002 Subaru Outback LL Bean edition, not because I cared about leather, but because the 6 cylander engine doesn’t have the head gasket issues that the 4 cylander does and it has a timing chain instead of a timing belt, which avoids another common problem for outbacks). That is the sort of research and patience I think it takes to get better odds at a great deal out of a used car. Of course, if you don’t have the time, and a dealer can give you better financing on a car you’ll keep for 10+ years, maybe new is the way to go.
I think it is also worth considering insurance costs when buying any vehicle, new or used.
loading....
I have a 2005 Dodge Neon that I bought from enterprise, and before that bought 2 1994 Saturn’s from private dealers. The only issue I have had was that I when bought the Neon, in December, I forgot to check to make sure the air conditioning worked (it didn’t). Once I realized it didn’t work, I had already owned the car for 6 months and at the time I didn’t have the $$ to fix it…so I didn’t fix it, and I still haven’t (I live in New England).
I would recommend getting a used car, I am currently looking to buy my next car through Hertz. Most of the used cars you buy at the dealerships are either returned leases or former rental cars, so many of the rental companies are starting to shut out the middle man (dealer) and sell the cars themselves. So Hertz allows you to “rent” the car for 3 days to make sure you want it, and then if you decide to buy it you just call them up or click “buy” on the website. If you don’t want it you are charged for a 3 day car rental. Its the perfect amount of time to take the car to your mechanic and make sure you love the car before you buy it. I haven’t done it yet, because my car is still running, and I’m taking public transportation to/from work. But I’m putting $$ aside so when the Neon breathes it’s last breath (or doesn’t pass inspection this year) I’ll be ready to purchase a new (to me) car.
loading....
This interesting trend in used car prices has been very beneficial to my husband and I for another reason entirely: It allowed us to re-finance our 8% APR dealership loan on our car.
When we bought our new car, we bought it for all of the reasons people have listed for buying new instead of used, not the least of which was the amazing, non-transferable warranty (10 years/100,000 miles powertrain). The only problem was that we had no down payment (Mistake #1), we were not pre-approved for a loan (Mistake #2), and we didn’t haggle as much as we should have on the actual price (Mistake #3).
These mistakes have been weighing heavily on me in the last few years. Several times since we bought the car in 2008, I have tried to re-finance, but because of the original purchase conditions, we were underwater on the loan and therefore ineligible.
BUT, thanks to the wonderfully high prices on used cars these days, our car “re-appreciated” some of the value that it had lost when we “drove it off the lot.” In 2009 when I tried to refinance, our car was worth $13,000 compared to the $19,500 (incl. taxes and fees) we paid for it. Now it’s worth $15,400, which is $300 more than we owe on it (*whew*), so we can refinance for a much better 3.2% APR.
loading....
My son and I were just discussing drive free retire rich slideshow yesterday. It assumes some negotiating skills. But not a bad goal to grow those skills anyway.
Like the prices at car lots on the used car Lily describes. It’s “asking”, they will take what they can get I’m thinking. But don’t let them know you have a narrow scope of just Honda Civics, they should think you’d be fine in a Camry, Corrola, or whatever Acura models are called too.
loading....
I think the rule of thumb should change from buying a car “used vs new” to buying a car “dealership vs individual”, and by dealership, I mean a branded car store (Ford, Chevrolet, Carmax). An individual could be someone who owns a small sales lot, and will sale the same car much cheaper than the branded dealership, even though they pay the same price at auction.
At this point in my life (42), I don’t think I’ll ever buy a used or new vehicle from a branded dealership ever again, unless it is something I just have to have…there is just too much extra added to the price, not to mention the lousy service and aggressive sales tactics.
loading....
Agree. I just feel uncomfortable at a dealer. I like to go and test drive their vehicles, but I haven’t ever bought a car from a big dealer. Just the thought of sitting at a desk with a slick salesperson makes my skin creep. I’d rather haggle with a dude in his driveway.
loading....
You are the perfect mark for some unethical “individual” car seller. If I were some guy with good-looking a piece of junk sitting in my driveway I would be praying for you to come along.
loading....
The similarity in price could be explained by disparity between model years. I don’t know much about the Civic except that the 2012 is a new ‘generation’ of the model. Could the similarity in price be explained by disparity in the specs?
I know other models have been ‘dumbed down’ in recent years, probably due to the economy (so they don’t have to raise prices) and due to demand for more fuel efficient vehicles (slower, smaller engines are more fuel efficient and cheaper).
loading....
loading....
Lily,
I think you’re right to be scratching your head over what is obviously a weird discrepancy between what you know (used cars are cheaper) vs what you see (the cost of a used Civic which barely reflects any discount).
There’s a couple of things going on here which is contributing to this situation:
1) since the financial panic, a move towards austerity is gripping the country. For this reason, used-car shopping is in vogue and it’s pushing up prices.
2) rising gas costs are putting a premium on fuel-efficient models like the Civic.
3) new car sales are still sluggish, and given the anemic economic recovery to date (what, with unemployment still hovering around 10%), it’s not clear what impetus exists to drive new car sales. I think there’s a lot of channel stuffing (manufacturers forcing dealers to take on too much inventory) which will put downward pressure on new car prices for the next 12 months (thereby maintaining the shrinking gap between the price of new/used cars).
4) There is a popular misconception that Japanese care are better than domestic. I think that’s more fiction than fact, but that is my opinion. Thus, when searching for a used car, it would follow that certain high demand brands (Toyota, Honda) will cost more, sometimes much more, than their domestic counterparts. Again, this is 95% perception over fact. IMO.
In short, if you only drive 7,000 miles a year, look for a 5 year old domestic with good gas mileage. You can’t go wrong, you’ll pay pennies on the dollar for a solid car, you’ll win the war against future depreciation, and upkeep will be considerably cheaper (usually lower depreciating models = a buttload of cash to fix/maintain).
Best of luck!
loading....
There is plenty of good advice here, but my reaction whenever I read this sort of article is “How used of a car are we talking?” A 2010 model barely counts as used to me. The discussion of used cars seems to start around $15,000, often ignoring that many cars are priced lower.
Due to credit issues, loans are not an option for my family, and our combined income is under $25,000. Our real options are to go without a car or to buy the oldest, cheapest beater we can find, as that’s what we can afford. As you might imagine, we end up pouring money into fixing car problems and still have to buy a “new” one every year or so.
loading....
My wife and her family almost always buy cars at a local credit union used car lot. The salespeople there do not work on commission, so there is no sales pressure or hounding customers. They will let you test drive anything on the lot, and they will not go with you unless you ask them to. You can even leave your car there and take their car home overnight! Very very friendly….not your typical used car lot atmosphere. There is no negotiating the lot’s sticker price, so no haggling and no “let me check with my manager” games. I think their way of doing business has more to do with my in-laws loyalty than the prices, but the prices are pretty good too!
The lot has cars of all kinds that were usually rentals (5K-20K miles, always inspected for defects). So the cars don’t have too many miles on them. Financing is done through your preferred credit union, and they will take trade-ins.
We have bought two cars at the lot….the most recent was a KIA Borrego with 11,000 miles on it for about $20,000. Blue Book puts it at $25-$28,000. I really like the Borrego, no problems in six months. My in-laws have bought at least three cars there that I can think of, including a 2010 Mustang GT that they got “for a steal.”
loading....
The fact that used cars are more expensive is balanced out by the fact that their resell value is also higher. If you’re going to drive the car into the ground, then resale value is less relevant.
Adding to that, there are more peaches on the market when used prices are higher (the lemons aren’t driving out the peaches so much), so the average quality of the used cars on the market is higher. You’re ok buying either new or used– it evens out. http://nicoleandmaggie.wordpress.com/2010/09/27/how-the-used-car-market-is-like-health-insurance/
loading....
That’s the article I had in mind in comment #91
loading....
We recently purchased a used car. We had several criteria:
must be a sedan
get good gas mileage
hold its value (somewhat)
good rating according to Consumer Reports
great safety record
be less than 10 years old
have low mileage
get all of the above at a great price
So, the search began! We first grabbed the Consumer Reports 2011 cars report which showed vehicles of all types and their ratings since 2004. From there, we chose the best sedan that fit most of the above requests. We looked at the Kelley Blue Book to get an idea of price. We then checked prices for this car at dealerships (online). We also looked to see how many owners the vehicle had and the repair record. We called dealers and negotiated for a car (it was several states away) and pending the test drive, we would buy IN CASH. We ended up getting a newer BMW that was treated well by its only owner and got it for a STEAL. We drove to Vegas to get it. We are very happy.
We like to buy used cars over new because we put alot of miles on them. We keep them a very long time as well. We try to find something that fits the above criteria (not easy, I know) but they ARE out there. Cars depreciate quickly so we can usually get a deal somewhere!
loading....
I got a ’97 Saturn SC2 for $1200, put about $200 into it (maintenance), and get 30-40 MPG.
They’re notoriously reliable if you keep them filled with oil and coolant and do basic maintenance.
It runs like new at 154k miles. I’m expecting another 100-300k out of it. Someone on one of the Saturn forums has 700k on one.
loading....
My folks (80 y/o) just bought a used car to replace their second car that a grand-daughter totaled on loan (accident not her fault, airbags meant she was unhurt vs. dead if no airbags, we are all very grateful).
16,000 miles, 2002 Mazda Protege hatch-back. Perfect for their hiking/snowshoeing/camping activities. Bought from another resident in their retirement community. Don’t worry, they had their mechanic check it out first & have already updated the lubrication!
Makes me think a postcard campaign to a retirement apt complex or 55+ community of “do you have a gently used vehicle that you might be willing to sell? I am looking for a reliable used car” might be a viable car purchase strategy for some of us.
loading....
I would never waste money on a new car.
I’ve lived the statistics. I bought a brand-new Nissan in 2006, and indeed, it lost 25% of its value when I drove it off the lot and 70% within 4 years.
We may be in a “bubble” with used car values now, but that bubble will eventually burst.
After filing bankruptcy and beginning my new, debt-free life, I’m currently driving a 10-year old car with less than 100,000 every day and banking $475 a month into a mutual fund that’s been averaging 12%.
In 5 years, unless the ecnonomy totally collapses, in which case everyone will be screwed and not just me, I will be driving a free “slightly” used car every 5 years just off the interest.
New cars will put the average person in the poor house.
loading....
The chances of that mutual fund maintaining a 12% annual rate of return are just about nil unless it’s being run by Bernie Madoff #2.
loading....
I bought a car back in February, and in addition to Edmunds, Consumer Reports, etc. I found a tremendous website called http://www.truecar.com. (I have no affiliation with them)
True Car shows you the best deal you can get in your local area for the exact car (and features) you want. I used it as a check against used car prices, since I was planning to buy yet another used car (from Hertz, which has terrific deals).
True Car shows you the spread of prices being paid locally, and also gives you three low anonymous offers from dealers. If you like the deal, you click on the price, provide some basic info (name, etc.) and it identifies the dealer and prints out a certificate guaranteeing that price. You don’t have to use it, but if you do, the dealer must honor it.
In the end, the new car price shown was a better deal. I printed the certificate, and the phone began to ring. Five dealers called, each one lowering the price still further. In the end, the bidding stopped at $3500 UNDER INVOICE for a 2010 Mazda 6. It’s the only car I’ve ever owned that was literally driven off the showroom floor.
The internet is now a car buyer’s best friend. As a lifelong purchaser of used cars, I did find a better deal new this time around, and I plan to drive the car for a decade or more. JD’s right — crunch the numbers, do your homework, and have fun. It’s a buyers market!
loading....
The only deals are on the undesirable cars! The ones that are not that economical. My friend wants to sell me an 4 year old Infiniti G35 for $12K. This is where the bargains are.
loading....
Sixteen-year high! Geez.
My husband and I share a 1989 Volvo with about 400,000 miles on it. The mileage amazes people, but there are Volvos that make it to a million. The car looks fine and runs great. Our insurance is very cheap, and our taxes on it are, too. We put in a nice stereo. About once a year, it’ll start to sound a little funny when it’s running, and we will have to get something fixed to the tune of $600-700. I’m always a little peeved until I remember that that’s about two car payments of the average car, and that’s what we’re paying all year!
When I graduated from college and got my first ‘real’ job, I bought a new car–a 2003 Saturn, fully loaded. (I’m so sad Saturns are gone. My family has driven several, with many years of good service from them.) I was fortunate to get 0% financing from the dealer then; I rather rashly got a 5-year loan to get all those bells and whistles, but at least I wasn’t paying interest. When we decided to become a one-car family and I sold it three years later, I made about $1500 on top of what I owed from it, which I considered a good deal, since I had thoroughly enjoyed the car and gotten good use from it. Plus, many of my friends were upside down in their car loans.
Now that we live in SoCal, I think sometimes about getting a convertible, like an old MG, and maybe we will eventually. But after having a car with no payment where I don’t stress over the possibility of getting dings in it . . . I guess I feel spoiled by it. The money that would go toward that goes to things like our trip to the UK next year. Like so many things, car choices are a matter of priorities.
loading....
In 2004 I bought a used Honda Accord for $5000. I realized I had paid too much, but it was in great shape with 100K miles. I use it for driving around town. 7+ years later, it has almost 40K more miles, requires little maintenance and runs great. It’s cheap on insurance and very satisfactory. I’m one of the ones who “drives their car into the ground.” Everyone is different, everyone has a different need and different solutions.
loading....
SwampMan just bought a “new” truck that is 11 years old to replace his 20-year-old truck. The “old” truck ran great and, indeed, he just rebuilt the front end, but there wasn’t room enough in the extended cab for the new granddaughter’s car seat along with the grandson’s car seat and the other grandson, so he needed a slightly larger truck. I’m driving my 20-year-old vehicle on a daily 60+ mile commute and, indeed, we will be replacing the A/C unit today and it will be getting a new paint job as soon as I pick out the color.
SwampMan is a high school teacher that rebuilds engines (large and small) for fun. He has a completely equipped shop along with a hydraulic lift bought from a garage going out of business. There’s not much that can go wrong with our vehicles* that he can’t fix pretty cheaply** over the weekend.
Our insurance is very inexpensive!
*American-made vehicle parts are widely available and inexpensive.
**Less than $200.
loading....
I’d look at older used cars. My husband and I don’t care much about our car since we ride our motorcycles and bicycles more often. So the most important thing to me is that I can pay cash.
We recently bought a Tundra (01) because we had the idea we were going to haul things, but the truth is that we didn’t use it as often as we thought we would. I love it, but we’re going to sell it (probably for not much less than we paid) and buy an older Miata for the fun of it (they’re cheap!). Go figure.
The way I see it, you can do as much research and haggling as you want and still get a lemon – new, from a dealer, and from a private owner. The less investment you have in a vehicle, the better. Again, I don’t drive much – my motorcycle gets 80 mpg.
loading....
Don’t buy from a dealer. Everyone here is comparing the cost of new to a dealer used car- dealers mark up cars 30-40% easily! Most studies I have read have found that the long term costs of used cars are lower. While annual maintenance may be slightly higher, in the end, the lower depreciation more than compensates.
loading....
Having bought both new and used, I’m glad to say that emotionally I’m open to either option depending upon my circumstances. Being as these days both options seem too pricey for me, I’m back to maintaining my 2001 Chevy Impala which I bought from my son who bought it used as a 2nd car. I have put some money into it, but I keep very detailed records and never has it been a monthly cost more than a car payment. And, while not a fuel economy dream car, it does manage to get a consistent 25-27 mpg and this on a 6 cyl engine with power everything. While I don’t love it, fortunately cars are not that important to me, so I don’t really care what it is as long as it starts in the morning and gets me where I’m going. What I do love, however, is not being beholden to a finance company AND having an emergency fund to take care of any unforeseen repairs. I think I’ve done about everything on it, though, so now it’s just routine stuff, and no, the inside lights will never be perfect, but I’m used to it…LOL. this from a person who used to buy a new car if the battery died. My how things can change.
loading....
I have come to the conclusion that the used argument at the moment does not hold water for single people. We don’t have the resources or the safety net families do (Extra cars, multiple friends with extra cars) so we’ve got to have a car we can fully rely on and use. The benefit of having new is having multiple years worry free. At this stage in the market a couple thousand more dollars seems well worth it to me.
loading....
When I got my first car, I was a substitute teacher! Not having a reliable car meant not working, and could possibly have cost me my job if I’d get the rep of being unreliable. I was newly out of school and while I had no debt, I didn’t have much for a down payment let alone to pay cash for a cash! It was hard to find decent used cars back then, so I went new.
If I’d been asking people on a personal finance blog what to do, I’m sure the advice would have been to take my meager savings and buy a beater. Given my job, that would have been the worst thing I could have done given that I didn’t have spouse to fall back on or friends who could loan me a car at 6:30 in the morning.
Sometimes the best thing to do flies in the face of frugal advice, but really, it isn’t until hindsight if you ever know you’ve made the right choice or not.
loading....
We have always purchased new cars and then driven them forever. We currently have a ’92 Honda Civic with over 220,000 miles, and a Toyota Sienna with over 120,000 miles. We purchased new in order to get the fabulous warrenties which came with the cars – they are even better now. We do regular maintenance and thus far have put little money into them other than that. On the cost/ benefit analysis with the Toyota we are reaching the point of diminishing returns because we are putting in so much money with repairs that we could be making new car payments instead. However I am just not ready to accept a car payment at this point. I’d rather drive an old car with issues.
loading....
If a car is less than two years old, and is “used”, that usually raises a huge red flag. Maybe someone returned it within X days because they wanted a different combination of accessories, but maybe no.
You need to look back 5-10 years for your car.
I come from a family of car experts, a family with a father who test drives a new car every week for his radio show about cars, but also a family who has bought cars new and driven them into the ground 17 years later, leased a car and then gotten another when the lease was up, and bought and sold used cars. When my dad was in his teens and early 20s, he drove antique cars that he fixed himself.
The trick of it, really, is to know car models, which makes and models will last a while if well-mantained. My dad, who worked for Toyota in the 80s, trusts the brand as reliable (in spite of all the recalls) and encouraged family members to buy Corollas, and failing that, their Geo and Chevy knock-offs. His brother says that there are particular years of (I think) Oldsmobiles and Buicks in the early 90s that are very very good. They find Fords to be a terrible deal. But your mileage may vary.
The price of used cars is more defined by their age than their features. You can buy get a fully loaded car for not terribly more than the non-fully loaded version in the same model year. Or, for the price of a cheaper new car, you can drive a luxury car that’s a decade old.
It’s not like all safety features were introduced yesterday. Airbags appeared in nearly EVERY car by the mid-90s, though ABS is a lot spottier. Pick features that are your deal breakers, and use that to narrow down your search.
With getting a deal on used cars (and reselling them) you are trading your new car savings for the time it takes to research what model will meet your needs, what repairs a car might need to get, as well as waiting for what you want to pop on the market, and taking the time to see cars that turn out to be not what you want. People who actually understand frugality will have to determine if the time and effort added to the price difference will be worth the hassle, as well as the costs of not getting your car RIGHT AWAY, by holding out for a perfect car. The answer is probably yes, though the prospect of the work is daunting. You will also gain knowledge of the used car market and cars themselves that cannot be taken away from you. You can use it to help friends going through the same problem. It is unlikely that this car purchase will be your last, so when the time comes to do it again, you will come into the process wiser and more comfortable and it will be more efficient.
My parents currently have 3 cars that they drive. One is a mini-van that they bought used about 8 years ago, and is almost unsafe to drive, My parents use it when the other two cars are not available, there is a need for 7 passengers that can’t be met by two drivers (rare now) or my dad needs to haul stuff (the seats are perennially missing). The other two cars are Priuses. The first is a leased Prius that he decided to lease one March when Toyota advertised an exceptional deal on a model they never made deals on, but they needed to make a sales quota, so for about two weeks they had this really great deal. Dad always wanted a Prius, Mom and Dad knew enough about leasing to know that they would do better than purchasing the car outright, including if they bought the car at the end of the lease. When the lease expired, it was the height of the acceleration pedal recall crisis, and Toyota was giving away its new cars, and the current lease terms were even better than the original lease, but they did the math and saw that it made financial sense to lease a new car (they had to negotiate to get that deal). The car they got did have the pedal problem, but my dad had it fixed within days of signing the lease. The other Prius is one they found used and was a steal for what it was.
loading....
I always search the make, model and year and “recall” and “technical bulletin” and “problems” and similar terms. I see what the usual problems are on the car I’m considering, and if I think I can live with them, I go for it. Of course, the individual car gets inspected by my mechanic, who does it for free for us long-time, loyal customers.
loading....
Unfortunately in the past 1-2 years, used car prices have skyrocketed while folks trying to “save money” are skipping new car lots.
Example: I bought a 3 year old Saturn Vue 5 years ago for 10,000 with 65,000 miles. Today a 3 year old Saturn Vue is $17,000 with 80,000 miles. A brand new Hyundai SUV off the lot is $18,000.
loading....
I was reading an article recently about the same topic, and the specific example was of Toyota Priuses only a few years old that can sell used for at or above what their sales price was new. I am sure there are some good deals on used cars, but you really need to do your research.
My dad is the most creative person I know for getting a deal on a new car. My parents live in New England and ten years ago or so he got his Nissan Maxima in Canada to save $5000 on the best price he could get in the states. Now that they are in the market for a new car, he is ordering a Volvo straight from the factory in Sweden, for $2000 less than the best price he could get in the states, including airfare and factory tour to pick it up in person and shipping it across the Atlantic.
loading....
I was thinking the same as Melissa above (#86)
How used are we talking??
Of course if the plan is to finance and have a payment then looking at a 1 or 2 yr old car may not make a lot of sense compared to new with low rates.
But if we are talking more like 5+ yrs old then that is a whole other ballgame!
As others said, skip the dealers with high overhead and look to other options.
I feel like odd man out here, but our last 2 vehicles were bought at auction. Both were over 5 yrs old and we ended up paying about half KBB value. Did have a few $$ to put in, like new tires on one, and a little brake work, but with a total still well below what the going rates were via private or dealer sales. (and who knows if we’d have had to put $$ into those as well).
I’ve got a loaded Chrysler Town & Country Limited, and DH has a loaded Mercury Mountaineer, so more perks than what we would have gotten if we paid the same $$ on the street.
Just another option to consider in the used car market.
loading....
The thing about used is that there is often so much more room on the sticker price. When I got married my husband knew the used car manager of our local Ford dealership so we got $500 over cost on any used vehicle on the lot. So if he got a steal on a trade he would pass it along, which is how I got my current car.
We got DH’s truck when the gas prices skyrocketed a couple years ago and people were panicking and they could barely give those larger vehicles away. Another great used find.
But we found a Fit through Costco for my best friend a few months ago. Couldn’t do anything better at her price range.
It is so dependent on situation and individuals that there isn’t much point in arguing. New was great for my friend because she isn’t mechanically inclined. Then I can do okay because I understand how cars work but wouldn’t do the work myself, and others prefer beaters because there aren’t as many bells and whistles to work around.
loading....
hey everyone love the comments and getting some great advice. just want ideas on my particular situation. i have 1999 mits montero sport truck 227,000 miles hubby has 2000 honda accord 240,000 miles. of course looking to replace at least on. btw honda running pretty good have been having problems with radiator caps not working gone through 3 finally bought one from honda so keep fingers crossed. anyway mits pretty good small leaks and tranmission trying go out for last 2years but still driving well. ok friend has 2003 honda oddessy leather capt seat thrid row 163,000miles 5500. i think i offer 4500 no more than 4800 sale my mits and continue to save for the car i really want oddessy it ok but would rather have suv like tahoe or armada but i know one my current cars is going to go out soon so i think i should get this more reliable car while i can since honda is more reliable. btw i have 15,000 save for new car so far. all advice welcomed asap as the car will go fast if i dont make a decision. thanks
loading....
My wife and I both drive used cars that we paid under $5,000 for. This is actually an upgrade as the last two we had paid less than $2,500 for. The key is to buy from a reliable manufacturer. I personally like Honda, Nissan, and Toyota. Yes you will have some money in maintenance but it will be NOTHING compared to the depreciation of a new vehicle.
I had a brand new Nissan Altima that lost about $5,000 in a little over a year in value. It also cost more to insure, register plates, and fix if you get in an accident. I vote USED car all the way. The way I see it, if you have $22,000 and only use $5,000 to buy a car, then that leaves you with $17,000 to do whatever you want with. I don’t know about you, but there is a lot I can do with $17,000.
loading....
From a dealer perspective, Kelly Blue Book is a pipe dream for both buyer’s and sellers. I would recommend NADA Black Book, Manheim history report or even Ebay selling prices over KBB.
loading....