The argument for a new car.

[Bubba1235]

So I'm talking with the son-in-law about how much his old car is costing him vs. a newer car. His current car, a 2000 midsize with a small V-8 and gets maybe 20 MPG if everything is in his favor. (Going down hill with a tail wind.) It's got north of 150K miles and all the usual stuff is starting to fail, an alternator last month, a starter before that, a tranny that isn't shifting so well, etc.

He is all for finding a bit newer vehicle, meaning something with less that 100K on the clock. My take, he's much better off finding something that is only a year or two old, (no more then 25K on the clock) with a transferable / extendable warranty and 30 MPG fuel economy. In fact, I could make a fair argument for buying brand new when they can be bought with zero interest on the loan amount.

Thoughts?

 

[angus63]

Re: The argument for a new car.

You think like me. I had a 2003 Dodge Ram 1500 quad with 160K and avg 14mpg. Started needing a little regular care and replacement. Considered alot of options before getting a new 2012 Mazda3 hatch. Zero maintenance for years, 40 mpg, under $20K, saving $300 month in fuel, six speed manual fun ride with lotsa cool gadgets. After trading in the truck, the payment is less than the $300 a month fuel savings. Virtually a free new car with no headaches.

 

[oldjeep]

Re: The argument for a new car.

If you plan on keeping a car for a long time then I have always thought that new or nearly new makes a lot of sense. Getting rid of a 150K car to get one with 100K on it doesn't seem guaranteed to save you any maint.

For my vehicles I only buy new any more, I keep them for 5-8 years (100-200K miles) and then get something else. If you change cars like you change underwear then buying used starts making more sense than taking repeated depreciation hits or winding up upside down on 0 down car deals.

If you shop around enough and are not super brand specific then you can usually find a killer deal that fits your must haves in a vehicle. If you are Joe Chevy only guy then your options/deals will be more limited.

 

[britisher]

Re: The argument for a new car.

It's all down to the math really. I'm guessing his current car is paid for, so repairs are the only extra cost. Even if he buys a newer used car, he is still buying a used car, which is a they say 'someone else's problems. There is no guarantee that a newer used car is going to any less or more reliable than the one he has. I've had Extended Warranties back in the UK and they were life savers. But like all insurance policies, the devil's in the details. A brand new car would of course give him peace of mind driving with a warranty and with some of the newer models, the manuafacturers are throwing in complimentary maintenance during the warranty period. Once again, my last vehicle before departing the UK was a brand new car and the manufacturer included 3 years maintenance on top of the warranty. That truly was peace of mind motoring as my hand never touched my pocket book for 3 years.
The downside of the new car is that he will have a monthly payment, which may or may not exceed what he is paying out on repairs. I have had many used cars and several new cars. I am now back in the used car territory these days. That said, I have one guiding light and that is the vehicle should get me from A to B, without worrying whether I will get there or even if it will start. If your son's car is in that territory now, then maybe it's time to look for another vehicle.
On a lighter note, my ex-next door neighbor back in the UK had 4 cars in his drive, all used. There was just him and his missus. I said to one day, why do you have 4 used cars, why not have a couple fo new ones. His answer was that with 4 on the drive, by the law of averages one would start!! Can't argue with that logic.

 

[oldjeep]

Re: The argument for a new car.

On a lighter note, my ex-next door neighbor back in the UK had 4 cars in his drive, all used. There was just him and his missus. I said to one day, why do you have 4 used cars, why not have a couple fo new ones. His answer was that with 4 on the drive, by the law of averages one would start!! Can't argue with that logic.

I like that - but what does he do when he is at work

 

[oldjeep]

Re: The argument for a new car.

Anyone know of a site that compares cars and the real cost of ownership?

What does it cost to buy a new car and put 100K miles on it including fuel, repairs, insurance, etc. over say 5 years? (He'll drive 25 to 30 K a year.)

There is really no way to do that calculation since you don't know what a current model year car will be worth in 5 years. You could guess at the value of the car, but it varies so much by vehicle.

 

[aspeck]

Re: The argument for a new car.

In the end, it only matters what HE thinks. Growing up in the car industry, there are times for a new car, but for most people a slightly used car is a better route to go. However, if everyone thought that way, there would be no slightly used cars available, and you would HAVE to buy new, so someone has to buy the new cars and then loose half the value and trade them in for people like me to buy. My last vehicle purchase was a year ago, a 2 year old Yukon with 25K on the odometer. Still got the remainder of the warranty, and paid almost 1/2 the price of the new one equipped the same way. No amount of 0% interest makes up a $20K price difference.

I drive a vehicle for a long time ... wife's last car was 19 years old (with 80K miles) when we traded it in on a 2 year old vehicle. My vehicle was 12 years old when it was traded, and was starting to have little electrical things go bad, like the seat heaters, etc. About $700 to repair all the no-essential annoyances. At that point I decided it was time to upgrade.

A lot of what to buy and when depends on the numbers, but it also depends on the psyche of buyer, their risk tolerance, etc. Just because I was going to hold on to a car forever is no reason to buy new, but it makes more sense then buying new every 2-4 years. You just loose so much depreciation those first few years. There is also the worry of financing too much for a long period of time and then the car being totaled before they principle drops lower than the car value, requiring you to pay out cash for a totaled car you no longer have or can use.

The decision in not a black and white, cut and dry, this is better decision.

 

[jkust]

Re: The argument for a new car.

So I'm not a new car guy but after my last frustrating shopping experience for an acceptable used SUV, I see why people end up buying new. You can only take so many lying salesmen and long drives around town. Of course there seem to not be the amount of private sale cars as there once was. I think Edmunds and even KBB have a true cost of ownership tool.

 

[aspeck]

Re: The argument for a new car.

There is really no way to do that calculation since you don't know what a current model year car will be worth in 5 years. You could guess at the value of the car, but it varies so much by vehicle.

There are depreciation percentages for every vehicle made ... that is what they base leases on. However, they are not always very accurate since you don't have a crystal ball to tell you the popularity of the vehicle or the vehicle market in 5 years. So many variables come into play.

It used to be that for the "average car" (whatever that is) you lost 30% of the value the first year, 20% the second year, and 10% every year after that ... so a $20K vehicle would loose $6K the first year, $4K the second year, and $2K every year after that. With the price of vehicles escalating as they have, that formula has changed some, but not a whole lot.

 

[britisher]

Re: The argument for a new car.

Bubba,
If I were buying a new car at this point in time, my choice would the VW Passat or Jetta with the Turbo Diesel. The Passat will hit 47 mpg easily and has the room and comfort most want. Trunk space on both is cavernous. VW are also doing complimentary maintenance for 2 years too. You have total piece of mind for 2-3 years.
When Hyundai or Kia bring out a turbo diesel, that will be a killer. Their warranties are unbeatable. Their quality is improving by leaps and bouds and they look nice too.
When will they combine the economy and longevity of diesel with the battery and bring out a diesel hybrid? It will be what's a gas station?

 

[oldjeep]

Re: The argument for a new car.

It used to be that for the "average car" (whatever that is) you lost 30% of the value the first year, 20% the second year, and 10% every year after that ... so a $20K vehicle would loose $6K the first year, $4K the second year, and $2K every year after that. With the price of vehicles escalating as they have, that formula has changed some, but not a whole lot.

And that is where the formulas fall short. What do you use as a starting price - MSRP, actual price paid?

Take for example my 2009 2wd 5.7L Ram crew cab SLT which was bought during the downturn/Chrysler Bankruptcy
MSRP was 34K
Actually paid 26K after negotiating and rebates, plus it came with a free lifetime powertrain warranty (which I haven't had to use yet)

4.5 years later, clean retail on it is $21K with 90K miles on it.

So its hard to do the numbers

 

[avenger79]

Re: The argument for a new car.

I'm the same as you, drive them many years until things start breaking regularly than buy a new one. I get supplier discounts and what not on new vehicles here, so by the time it's all said and done a new one usually costs me less than one a couple years old. truck i traded in earlier this year was 13 years old, next one going is currently 12 years old (and broken again)

older vehicles you may not have payments on them but, then you're paying a "maint" payment sporadically usually when you least want to.. I'd rather make a reg payment and know I'm going to get where I'm going. I use mine for towing a camper long distance though and one tow bill for a broken older vehicle and the trailer could be quite depressing.

I did the pay cash for my new vehicle once. yeah didn't like that at all. LOL takes forever to replenish that money and todays interest rates are so low it's very affordable to finance.

 

[oldjeep]

Re: The argument for a new car.

Bubba,
If I were buying a new car at this point in time, my choice would the VW Passat or Jetta with the Turbo Diesel. The Passat will hit 47 mpg easily and has the room and comfort most want. Trunk space on both is cavernous. VW are also doing complimentary maintenance for 2 years too. You have total piece of mind for 2-3 years.
When Hyundai or Kia bring out a turbo diesel, that will be a killer. Their warranties are unbeatable. Their quality is improving by leaps and bouds and they look nice too.
When will they combine the economy and longevity of diesel with the battery and bring out a diesel hybrid? It will be what's a gas station?

Make sure to do the calculations on that one. VW TDI = $$$$$$, especially if you are comparing them to a Hyundai or Kia. If you are looking for a car, it is tough to beat a Kia/Hyundai for value. We've had 5 in the family with no complaints about any of them. My mom has 2 Souls (that is a very halloweeny thought) wife has a 2011 Optima and had a 2003 Sorrento before that, we also had a 2006 spectra for a while until I decided that I needed a truck too often to drive a little car so I gave that one to my oldest son.

 

[aspeck]

Re: The argument for a new car.

And that is where the formulas fall short. What do you use as a starting price - MSRP, actual price paid?

Take for example my 2009 2wd 5.7L Ram crew cab SLT which was bought during the downturn/Chrysler Bankruptcy
MSRP was 34K
Actually paid 26K after negotiating and rebates, plus it came with a free lifetime powertrain warranty (which I haven't had to use yet)

4.5 years later, clean retail on it is $21K with 90K miles on it.

So its hard to do the numbers

Based on MSRP, not purchase price. Trucks and SUV's, because of their popularity, have a different depreciation rate. Shucks the whole thing is comfuscating! (Yes, misspelling intentional).

 

[avenger79]

Re: The argument for a new car.

And that is where the formulas fall short. What do you use as a starting price - MSRP, actual price paid?

Take for example my 2009 2wd 5.7L Ram crew cab SLT which was bought during the downturn/Chrysler Bankruptcy
MSRP was 34K
Actually paid 26K after negotiating and rebates, plus it came with a free lifetime powertrain warranty (which I haven't had to use yet)

4.5 years later, clean retail on it is $21K with 90K miles on it.

So its hard to do the numbers

exactly, trucks hold value. the 12 year old currently broken vehicle I have is an F150 XLT 4X4, it's not running!! and I still have a list of guys who want it for a couple thousand dollars. Personally I think I'm going to try one more shot at getting her on the road. after that it's going to be donated to Rawhide. let the kids have a go at it. certainly worth a good penny once running. should help them out a bit.
Think I've spent 3 grand on it this year for parts and some labor that I didn't want to mess with...more than I spent on payments for the new truck. LOL

(for those who don't know, Rawhide is an at risk youth org that takes in vehicles. fixes them and sells them to fund the charity)

 

[oldjeep]

Re: The argument for a new car.

Well you guys have made this clear as mud. LOL

IF there were a simple answer, everyone would be doing it (Which would change the answer due to folks altering the supply and demand of new/used vehicles) O)

 

[Volphin]

Re: The argument for a new car.

I myself almost never buy new. Let some other sap take the new car depreciation hit. I usually pick them up 3-4 years old with low miles. Then I drive them until they are unserviceable. As far as resale value... cars are a depreciating asset. They bottom out about $1500.

But I would advise the young man to ALWAYS pay himself a car payment into a savings account. That way you just pay cash for your next ride... and cash is king when negotiating. I also HATE paying someone for using their money. Debt is a BAD thing, especially if you are young and digging out from a college debt. If you can't pay cash for it, you can't afford it (except the house).

BTW, look into Dave Ramsey. The guy is brilliant... and because of his philosophies that I follow, my house is paid off as are all my vehicles and other "toys" and I have a nest egg that is growing larger every year.

 

[Bob_VT]

Re: The argument for a new car.

Bubba.....give him the Camaro with the SLP package You would probably earn some HUGE father-in-law street cred!!

 

[avenger79]

Re: The argument for a new car.

it's only a depreciation hit if you sell it. If my new car lasts 3 years longer than buying a two year old one and gets me 3 more years without maint costs (by that I mean large breakage type costs)and I only pay a small % if any more than a used ....

one thing I hate about buying used, especially 2 or 3 years old, those people who sell a ride a couple years after buying it, knew they were going to do that. their idea of maint is put gas in and run it. I know a few of those guys. rode with one down to the dealer to trade in his mustang, I didn't think a car could do that many burn outs in a short trip.

 

[bruceb58]

Re: The argument for a new car.

If you are really THAT worried about maintenance, buy a one year old car that has 2 more years on the warranty. The largest depreciation hit is when it gets driven off the lot.

To me, the only people that buy new cars are people that are bad at math.