I think buying new makes sense if you are the type to keep your car for as long as it lasts. If that’s the case, you’ll want to squeeze every ‘good’ mile out of it you can get, and that clock starts ticking with mile 1. The more miles it has on it, the sooner you’ll be on the downhill side of having to fix this or that every so often. If you change cars as soon as you can, then I can see why buying slightly used makes sense. By the time you’d start seeing problems you are already going to be getting rid of it.
The early miles cost more, though. Sometimes a lot more.
Ideally, you want to buy a very low mileage used car, where you’re getting a big discount due to the age of the car, not the actual wear. If you can get, say, a 10% discount for a car with 1000 miles on it, you’re clearly coming out ahead, since the “good” miles are definitely a lot more than 10,000. I chose a Honda Accord as a random example, and found 7 for sale within 75 miles of me on Autotrader than matched both criteria. Up it to 5000 miles, and you can find discounts of up to 20%, again still cost effective since you can expect more than 50,000 “good” miles.
Let’s say we’re talking about a $25,000 car. 10% off means the used version is a $22,500 car.
Over 8 years, assuming you’re a ‘run the car till it dies’ type of owner, that’s $26 a month in savings. Tickets for two at an Imax movie cost more than that. The longer you own your car the less impact your ‘savings’ have too. AND you still paid over 20k for a used car. That’s why I think it makes more sense if you only plan to own the car for a 4-5 year time frame. You maximize the impact of what you saved that way, so that you might actually feel the benefit. Plus, if that $26 a month savings IS that meaningful, perhaps you shouldn’t be spending that much on a car to start with?
That kind of statement is why ridiculously low mileage used cars get sold at a meaningful discount, even though there’s no functional difference.
Parsing it as a monthly cost is how car salesmen hide real costs. 10% is a meaningful discount. If you don’t think 10% is a worthwhile discount, why bother haggling at all? Just pay MSRP for every car you ever buy. “If you care about getting a good price, you shouldn’t buy it” is not a valid argument.
Well, the times I’ve bought a car I’ve haggled in order to get the going price. That is, if I know this car can be bought for X dollars then I’m buying it for X dollars, regardless of what they’re asking. That takes haggling.
My point is not that the used discount is in and of itself insignificant, it can be very significant. My point is simply that how and when you get that used discount determines whether is is significant or not.
As to the new car/used car thing, well that’s not dollars and cents. It’s more personal comfort and satisfaction. Otherwise there’s no reason you shouldn’t buy everything used is there? Keep in mind that for me warranty coverage isn’t everything. Yeah it’s great it’s covered under warranty, but that doesn’t mean much when you have to get to work and the car won’t start. So you know the car will be fixed, so what? You still can’t get to work on time now. When the car has been driven even 1,000 miles you have no way of knowing what the hell has happened in those 1,000 miles. When it’s a car only you have driven you know what the deal is.
The difference between a new and used car isn’t as bad as the old chestnut that they “lose 50% of their value when you drive it off the lot”, but it is significantly more than 10%.
I looked up a local Toyota dealership and checked the prices of their new and used cars. As a random example, a 2014 Corolla was $20,500 while a 2013 with similar engine/options and less than 10K miles was $15,500, a 24% discount. Balancing that out a bit are a few things: if you’re financing, the interest rates on the new car are better than that of the used car (all else being equal), and you’ll get one less year of free oil changes/maintenance with the used car. It also apparently varies by the class of car - a used luxury car can have a massive (like 30%) price drop while a one-year-old economy model may end up being just 5% less than new. And changes in body type can make a HUGE difference: it turns out that the Corolla example above, they changed body styles between 2013 and 2014.
I did find a pretty good article (albeit four years old) on the differences between new and used, and his conclusion was that it’s not a radical difference in price (if you buy a warranty to make up for the lost year). His conclusion is one that I’ve seen mirrored elsewhere - that cars are of higher quality now, and so the old math about mileage doesn’t work out like it used to. Because of that, used cars are keeping their value longer and are a more viable choice… and that is driving new car prices downwards to compete.
Unless it’s been driven into a wall, the answer is “nothing meaningful.” Your point about downtime is valid for high-mileage used cars where repairs are likely, but irrelevant to used cars with a few thousand miles on them. There really aren’t any good arguments against low-mileage used cars in principle. They get discounted due to emotions and paranoia, not anything material.
The main reason for not buying low-mileage used is when you can’t find one. Either the model you want is uncommon, or you just don’t like the colors available. If you can find two directly comparable cars, same model and color, and one has under 10,000 miles, the used car will be a more cost effective purchase.
I wasn’t aware that Toyota bundled maintenance with new cars these days. I only recall BMW doing that. Times have changed.
Oil changes are a fairly trivial expense. 30k and 60k mile maintenance are the big ones, but even so you’re talking ~$500.
That article deliberately kills the price difference by adding an extended warranty. Those warranties are big profit items for the dealerships that sell them, because they’re much more expensive than the expected cost of repairs. There’s no way in hell you’d rack up $1742 in repairs in the 50k miles covered. My experience is you’d probably run up zero repairs beyond routine maintenance. He doesn’t specify starting mileage, so we don’t know the range covered, but on a 2 year old vehicle he’s probably talking about the period between 30k and 80k miles.
Beyond that, 30k miles is personally more than I like to see on a used vehicle. The discount between 0 miles and 1000 miles is significant, as is that between 1000 miles and 15,000, but the discount between 15k miles and 30k isn’t nearly as much of a savings. Somewhere in the there it starts getting linear with the life of the car, so the point of buying 30k miles used isn’t cost efficiency, it’s how much car you can afford right now.
Again, I’ll use a Honda Accord LX as an example. It’s a reliable brand with relatively low depreciation, and it’s neither an entry level car nor a luxury car. I’m quoting lowest asking prices from Autotrader - real price will be lower, but presumably the negotiating room is similar.
New price: $23,545.
500 miles: $20,900, $5.29 / mile, 88% of new
10,000 miles: $17,400, $0.6 / mile over 500, 74% of new
15,000 miles: $15,000, $0.48 / mile over 10,000, 64% of new
30,000 miles: $14,000, $0.06 / mile over 15,000, 59.9% of new
The car has probably 100,000 “good” miles on it new, miles where you really don’t expect any problems at all. By that standard, it’s $0.23 / mile new, or $0.18 / mile used at 15,000 miles. The 100k figure is something I completely pulled out of the air. It’s a rule of thumb I grew up with, and it may be low now.
100k figure is probably still a good starting point for domestic big brands. Not as valid for the brands with the high reliability ratings.
I’ve had good luck with used cars, but I tend to be picky. The thing to keep in mind with a used car is that with todays vehicle history information reports one can assess the history of a vehicle better than was previously possible. I used to buy used cars based purely on mileage and reliability rating of the vehicle. I just assumed whatever story the selling me was incomplete/made-up/whatever. With a vehicle history report though you can really verify that a vehicle really is one owner or has never been in a major accident and never been repossessed. I really value that as it’s quite likely that a one owner vehicle hasn’t had its maintenance neglected like a vehicle that’s changed hands 5 times in the last 3 years.
My last vehicle purchase was a 10 year old vehicle with 75k miles on it. I normally wouldn’t have considered it, especially at the price asked, but I got a really good feeling from the vehicle history showing I’d be only the second owner. Three years later I still have the same vehicle and aside from routine maintenance I’ve only had one repair of note. At around 100k miles an exhaust gas recirculation blower failed and it cost ~$500 to get it repaired. Really annoying repair too as the failure had no effect on the vehicle beyond lighting up the check engine alert since the blower only runs when the car is cold and only for the first few minutes. Since my state doesn’t do emission tests I paid $500 to turn off the check engine light.
I could have fixed that for less than a tenner!
:)
Pfft my check engine light has been on for over five years. Apparently it’s from the engine running lean.
Heh. I thought of that but I really want to know if something serious happens so I didn’t get too creative.
Without reading the entire thread, I just read the OP statement, and thought I’d just warn him quickly.
I’ve been buying cars for a while, and when it comes to cheap used cars, DO NOT UNDER ANY CIRCUMSTANCE BUY CHEAP BMW,MERCEDES, OR ANY PREMIUM brand cars. When you get your hands on a really cheap one, it will have almost NO lifespan left, and the repairs will be HUGE and VERY costly…please stay the heck away!!!
If you are going to buy a cheap used car, you buy TOYOTA YARIS and you will be VERY happy with it.
It is THE most sturdy little car you will EVER get your hands on, there is simply no competition.
I hope it helps :)
EEK, took time to read the thread, jesus guys, car auctions is the best way to get royally screwed, stay away, you usually don’t have the know-how to understand what is a deal, and what is junk, you WILL end up with junk.
Also, again, BMW for 1000 dollars?
You may want to be careful with your definition of “cheap” here. Something under going price for it’s year/mileage is a definite red flag but it’s quite possible to get a quality 10 year old premium car with some careful shopping. It takes patience.
Agreed, car auctions hold many perils for the un-initiated in the ways of assessing and repairing automobiles.