New vs. Used
I have a little situation. The question is should I buy a new car or a used car? I know there are pros and cons for each.
It is my last semester at school, I graduate in December and will have a job in either January or February (depending on when I want to start). I have enough money for a down payment right now and will make more than enough money to make payments for these last 4 months and thereafter. My question again, new or used? I don’t want a tiny car. I don’t want an SUV. I was thinking something like a Scion tc or something. Good value. What do you guys think?
Comments
honestly? if you’ve done your number-crunching, and can definitely afford it, and you really want it, get the new car. or at least one that’s used, but is new enough that “pre-owned” doesn’t sound like the fakest marketing adjective possible.
i’ve been driving my free crappy-crap-ass cars for all these years, and while i appreciate their freeness and everything my parents have done for me, i hate that they suck. if i could afford it, i would totally buy a new/pre-owned car. i don’t think i’ve driven a car that was less than ten years old when i got it.
of course i am terrible with money but whatever. bill bought his subaru brand new (in 2007). it is nice but i have to admit i feel no more warmly toward it than i do my own thirteen-year-old honda.
I’ve been thinking about it, and I’m totally on board with the new car route. Get a new one and swear to yourself that you’ll drive it for like 8-10 years and be satisfied with it.
I think that’s the way to go.
PS – if you do get a Tc, don’t let your Akita scratch up the bumper and tear up the rubber around the hatch. It will start to piss you off when the car gets to be about two and a half years old.
PPS – and get the CZ.
What? No more CRX?
I remember the CRX!
Rod, I would go with buying a pre-owned car. A brand new car loses up to 20% of it’s value the minute you drive off the lot. And if it were to get totaled, you may not get all of your money back through insurance. My friend got certified pre-owned car through a dealership last year and it is working out for her. Except that they sold her a stolen car. But now that that’s worked out, she is pretty happy.
good post. kevin is probably going to start driving my car in september and we’ll park the van. however he hates my car and wants to start looking around for its replacement. i never saw the point of buying new unless you’ve got incredible cashflow and the desperate want of being the first owner. pre-owned sounds good to me.
Yes, the CRX is gone. It’s been gone for a while now. It has been my favorite car so far. It makes sense to buy a preowned car. Here’s the pros and cons. Pro: sticker price lower than new car. Con: higher interest rate on your loan which could in some cases be close to the price of a new car. Pro: most cases, cheaper than a new car. Con: It could be someone else’s problems. The car I’m looking at right now as mentioned in the post is the scion tc. Buying one that is a couple of years old comes with a few problems.
1. buying the first year of a car is not always wise. 2. buying a used tc is almost the same price as a brand new one.
If I buy a brand new car I don’t really care about depreciation. I want to be the car’s first and only owner. I don’t want a stolen car either. ;)
Rod has a point. A Dealer once told me (and him) that the Scion Tc is the only car that actually increases in value when you drive it off the lot. Therefore Rod would pay more for a used one than a new one.
The Scion Tc also loses no power when you turn on the A/C.
How could you go wrong?
Ya know what’s funny about this? You actually ended up buying! I feel partly responsible.
Dude, when a West African car salesman tells you a car only goes up in value? Yeah, that’s when I buy.
You should also check out some real estate investments I made 18 months ago. I got some sweet loans…
i bought a pre-owned 2002 accord in 2005, and i couldn’t be happier with it. i agree with anyone who said pre-owned, but newer rather than older.
Definitely go used. Again, if you want something that looks new, you could always go a year or two old.
So long as the car is in great shape (i.e. you’re not buying from a spoiled 17 year old boy or girl who beat the piss out of it – I’ve been there) you’re basically getting the same thing (same body style, same engine, etc…) for a hundred or so bucks less per month.
I could go into number crunching, but I won’t, but at the end of the three or four years it’ll take you to pay it off, you’ll have saved a couple thousand dollars and will have had no less a car.
Unless you have the money to burn, of course…
I bought a new Mazda 3 in ‘05 with the expectation of driving it 10 years or 200,000 miles. So far, I don’t regret it. Rod is correct about interest rates being higher for used cars. Do your research and choose a car that retains value. The extra money I spent for Year 1 will pay off in the post-warranty years when I have a well-maintained vehilce that I don’t have to pour a ton of money into.
Rod, whatever happened to the CRX? Is it still sitting in Chuck’s backyard?
Dude I sold the CRX on ebay years ago. Some black dude came and towed it from Chuck’s house. As a sidenote, Chuck has 3-4 kids now and lives in Utah.
A mormon with lots of kids living in Utah? Get out.
True story. John, you’re the only one that hasn’t commented on this post. You always have something to say, even if it’s uneducated. I want to hear your opinion.
Julia, please go into the number crunching. I’d like to hear what you have.
Rod said:You always have something to say, even if it’s uneducated. I want to hear your opinion.
Oh I have an opinion for you…
Ok – Let’s say for hypothesis sake that you’re looking to pick up a TC – Base price, if memory serves me right, is around 16, and with options, you’re looking at around 18,000 – 18500.
With 2000 down, on a four year loan at about 6.5% interest – you’re looking at $390 Monthly.
Total cost at the end of 4 years $20,720
Now say you get a used one about a year or two old for $15000 – Same body style same engine, same features same rates, you’re looking at $305 monthly
Total cost at the end of 4 years $16,640 – Total savings of $4,080
Now if you could do one better and find one for $14,000 which will still be a pretty solid car – you’re looking at $283 monthly
Total cost at the end of 4 years – $15,584
Total savings from brand new – $5,136
To break it down, it’s about an additonal 100 bucks a month for brand new. I don’t think you’ll really have to compromise anything by going with used, If taken care of, you can still get a good 8 or 10 years out of it, and at the end of those 8 or 10 years, the 2006 will look just the same as a 2008.
Everyone’s saying the interest rate on used is higher, though. How much higher?
Figure at least 2 points, double or more if you have awful credit and go to a shady dealer who does their own financing.
Used cars have a higher rate becasue there is more risk (two fold – more risk in the asset holding it’s value becasue its useful life is already shortened, and more risk in the person you are loaning to, the average person who is buying a used car is doing so becasue they cannot afford a new one and are thus less well-off).
I like run-on parenthesis.
Generally about 1 – 1.5 percent. A nice savings, but it only would lower the new car payment maybe about 15 bucks or so. $20 or so if it was a 2 percent savings.
Also, I’d suggest using a credit union if you have access to them. They tend to offer the best rates available.
Julia, I think you didn’t put a down payment in the used car examples. Let me work this out…
Yeah, I used $2000 in all of them – I just stated “same terms” because I was lazy and didn’t want to type it all out. Now I have. So there.
Yeah, I used $2000 in all of them – I just stated “same terms” because I was lazy and didn’t want to type it all out. Now I have. So there.
OK here are three scenarios. I added a 5 year term to the new car since it would be a common option.
$18,500 new, taxes, title, everything included. 5 year term at 6.5% interest, $2,000 down. Payment = $323. Sum of payments in present dollars = $21,370.
$16,000 used, all included.
4 year term at 8.5% interest, $2,000 down. Payment = $345. Sum of payments in present dollars = $18,564.
$18,500 new, taxes, title, everything included.
4 year term at 6.5% interest, $2,000 down. Payment = $391. Sum of payments in present dollars = $20,782.
So the range is about $2,806, and the difference in payment amounts is $46 per month (comparing only the 4 year terms). So Rod would be paying $46 more per month for the piece of mind and satisfaction.
Or if he added a year of payments on the new car, he’d be saving about $20 per month for the first 4 years with a car payment in the 5th year he wouldn’t otherwise have.
I would think that in the 5th year, Rod would be making a lot more money, though…
Oops, my bad Julia. Yeah, your math works out.
We may be estimating low. I just looked at my Toyota account and the total price was higher.
In Feb ’06 I bought a Tc with side airbags, iPod radio, rim insurance ($300), and a strut bar for a total of about $18,500. I put $5,000 down, and they financed $15,520 for 5 years at 6.3% interest. I guess that means the tax, title and tag crap came to about $2,000.
So add $40 to any potential payment…