New Vs. Used Car?

June 28, 2005 11:00 AM

I am in the market for a new car. Does anyone have some remarks on Pro’s and Con’s of buying new vs. used? I am looking to replace my 95 Subaru wagon which was totaled last weekend. I am considering buying a used Subaru outback (99-04) range or a new 05 outback. Some Pro’s I see for buying used are price obviously, Con’s being unknown history, no warranty, won’t last as long etc. Pro’s of buying new would be Warranty, one owner etc. Anyone else have some insight on these pro’s and con’s and maybe what else should be taken into consideration? Also, I read a thread a while back about tricks to prevent overpaying at the dealer for a car, anyone know where that is? Thanks,
posted by retro88 to shopping (23 comments total)

There is no other major expense that depreciates as quickly as a new car - just driving it off the lot generally means it loses at least 15-20% in value! That buys a lot of oil changes.
Seriously - buy used. All of the major brands have a "Certified Used Car" thing they use for their most lightly-used cars, and that can help you get around the unknowns and risks of buying used. Also, newer cars last longer, and are generally well cared-for.
Your Subaru situation could be an exception though. I've been in the market for just such a car and noticed two things:
1. People tend to hang onto the Outback and Forester much longer than with other brands.
2. The cars that did turn up on the lot tended to be beat.
So the strategy I would use is:
* Get pre-approved for a loan at your bank/credit union. DO NOT tell this to the dealer until you have arrived at a price for the car you want to buy.
* If you decide to trade-in your old car, DO NOT discuss this until you have arrived at a price for the car you want to buy.
* DO NOT discuss payments (size of them) with the salesman. What you want is the price of the car - period. They will try to work you over with payments, financing and trade-in value (these areas are where they make the most money). Don't worry if you seem aggressive - you're there to buy a car, not make a New Best Friend.
* Check out Cars.com (from the Car Talk guys) for more tips.
* Check the paper for a like you want being sold by a private party. Ask to see repair records. Make a deal to take it to a mechanic for a check-over (hopefully you know a good Subaru mechanic. If not, many dealerships will perform this service for a small fee). DO NOT skip this - it is the only way to know if there are major problems with the car.
* Check the recommended maintenance (in the Owner's Manual) schedule, and if the car is nearing its x,0000 mile mark, ask if it's received that service. If not (and especially if it's a biggie, like the 75K service), negotiate the cost of that out of the price (you can do this with a dealer or a private party).
* If anything seems hinky (with a dealer or a private party) - walk away. There a loads of cars out there, no reason for you to get a bad one.
Good luck.
posted by dbmcd at 11:19 AM on June 28, 2005

IMO, it's wise to purchase a car that is used but still has a few years warranty left. Any manufacturing or maintenance defects should show themselves before the warranty runs out. And you save a bundle in the process.
posted by five fresh fish at 11:19 AM on June 28, 2005

The car talk guys have a nice summary of the pros and cons of new vs. used.

Since new cars depreciate the second they are driven off the lot, it makes a lot of sense to buy a late-model used car. And you can obtain almost all of the perks of buying new (warranties, wider selection of colors and styles, etc.) in a used car by shopping around a bit and buying from a dealer.

The "tricks" that worked for me in buying a car were:

1) Do your homework ahead of time. Find out what the list price (or blue book value if used) is, and decide on which options are important to you and which aren't. If you can walk into a dealer and say exactly what you want, you are less likely to get talked into unnecessary but costly add-ons.

2) Wait as long as possible before naming a figure. Make the dealer give you a quote and then ask them if they can reduce it. Don't name a price until you absolutely have to, or unless you are presenting one dealer with another's quote and asking if they can beat it.

3) Be prepared to walk out if you don't get the price you are looking for. Seriously. There are a lot of dealers out there.
posted by googly at 11:24 AM on June 28, 2005

Does anyone know how to figure out a reasonable price for a "Certified Used Car"? Is it just the blue book value for that model year ... ?
posted by lbergstr at 11:40 AM on June 28, 2005

1.5 years ago when I was in the market for a car I had every intention of buying used. After going to the dealer and looking over tha Honda Civics they had and the best interest rates I could get, I decided to buy new.

The big reasons were that I was buying a Honda, which is well known to retain it's resale value. I got a great deal on a new Honda over a deal I could have gotten on a certified used Honda. After years of buying used cars I decided I wanted to go with a new one for the "one-owner" aspect.

I say make the best deal you can on a used car and if you can make a comparable one on a new car, you might as well go with the new one and take great care of it.

This, of course, is assuming that you're financing. If you can afford to buy something outright then I say get used.

Kelley Blue Book Has all kinds of "appropriate" pricing information based on mileage, condition, trim levels, etc. You'll probably want to add a little extra in there for the warranties, but it's something to go on.
posted by FlamingBore at 12:20 PM on June 28, 2005

I used this site when I bought my last new car. There's a lot of good information in there between the ads for the online loan companies. Quite a few people in my office have the same car and agreed that I indeed negotiated a good deal for myself.

Scroll down to the bottom of the page and read the chapters. Chapter 3 was most helpful.
posted by superkim at 12:21 PM on June 28, 2005

I had great luck using CarMax. They offer a free 30-day warranty, and you can buy an extended warranty. When I got my car there a few years ago, every car they had was on the Consumer Reports recommended used-car list, and within (though at the top of) the suggested price range. You also get a 3-day no-questions-asked return guarantee, which gives you time to take the car to your own mechanic.
posted by MrMoonPie at 1:04 PM on June 28, 2005

The "won't last as long" con is based on false premises. Yes, if all cars last X years then buying one N years after it is made you will only get X-N years out of it. The caveats to this are near infinite, however.

Almost nobody keeps a car till it dies, so total life is irrelevant. Implied in the statement about how long they last is that you pay more, which couldn't be farther from the truth; the cost of owning a car is almost an inverse bell curve. In the beginning you pay a lot (no really, a LOT) for that newness, offset marginally by warrantee service. In the middle years you pay less and have some minor service costs. At the end you have larger service costs (though even those are less than new purchase).

On the CarTalk website you can buy their booklet set and one of the talks about the costs of car ownership at various ages. Their conclusion is that buying a 3 year old car is the optimum deal over the life of the car, although that does presume you're not a total skinflint like me who will drive that ancient vehicle around with minor and cosmetic problems rather than fix them.

"Certified" is meaningless unless there's some guarantee behind it. Don't get fished in by dealerships claiming they checked something out who will then only cover it for 30 days. I could make your Aunt Gladys' 1954 Ivanovsky (that she imported from Russia where it was made from mud and berries) run for 30 days. You're far better served buying from an individual AFTER you take it and the worksheet from the car guys' "How to buy a great used car" to a mechanic and having them do a complete inspection.

Another great way to buy a used car is by calling your local specialty shop for the car make you want. They know their customers, probably have a corkboard with cars looking to sell and they know the car inside and out. They don't want to hook you up with a piece of crap since that means you won't come to them for service.

As far as reasonable price, I firmly believe the right price if the one you're happy paying. If you can't get what you want at a price you feel okay about you should look at something else. If you get a price you're okay with and some bozo does $5 better next week that's no cause to be unhappy. For rough ideas I'm a fan of looking through the old craigslist.org listings to see what stuff was listed at. You can identify the crap prices because they're relisted week after week.
posted by phearlez at 1:06 PM on June 28, 2005

Ostensibly, another smaller pro for new is that you can buy the car you want. If you want an unusual set of options (or lack thereof) and trim level, you might find little alternative to ordering.

I may end up in that boat since we're generally looking at the middle trim level for small sport-utes (Forester, CRV, etc) or wagons, with side airbags if those are optional, --but-- with a stick instead of auto. Seems there's precious little like that used for 300+ miles. And little enough new-on-the-lot, for that matter.
posted by ROU_Xenophobe at 1:31 PM on June 28, 2005

I just bought a used car from carmax. It was a great experience, I didn't get ripped off, and they offer an bumper to bumper additional 6yr/ 60000 mile warranty for $1500 - i.e. on car with 40k, the warranty lasts until 100k.
posted by forallmankind at 1:47 PM on June 28, 2005

Like I told ROU_Xenophobe in an earlier thread, Saab is practically giving away the 9-2x, which is a rebadged WRX available in wagon form.

As a general rule, a car will lose 30-40% of its value every three years. So if the car you like costs $20,000 new and you can buy it three-years-old for $13,000 and sell it three years hence for $8,000, you've avoided much of the maintenance hassle associated with older cars, and kept most of the benefits of a newer car for about $1,700 per year. My example doesn't include inflation and TVM, but it's something to think about.

Also, remember that most used-car warranties have big margins in them, and that they can be both haggled and comparison-shopped. A friend in the business once claimed that 70 cents of every extended warranty dollar went into the dealership's pocket.
posted by Kwantsar at 1:59 PM on June 28, 2005

Just to follow up with what phearlez said regarding "certified" cars, make sure you verify what that means. If the dealer is certifying it, it's probably as phearlez said. If it's the manufacturer that's certifying it, you'll likely get a factory warranty, but the terms of that warranty will vary widely from manufacturer to manufacturer. Having said that, you should expect to pay a small premium over Blue Book value for a certified car, since Blue Book doesn't take into account the value of the warranty you get with such vehicles.
posted by EatenByAGrue at 2:05 PM on June 28, 2005

I've been burned, to various degrees, twice when buying a used car. Then I bought a new car, which has more problems than some of my previous used cars.

My advice: buy a bus pass or a bike. Cars are evil, sinister devices and should be avoided if at all possible.

And as I said in a previous thread, Saabs are especially bad.
posted by darkness at 2:07 PM on June 28, 2005

It's so easy to say "buy used, it saves you the depreciation." But new cars also provide longer, more comprehensive warranties and (usually) fewer maintenance headaches. I was always taught that buying a used car means you're inheriting someone else's problems. Who knows if the car you bought was in a fender-bender, had the electrical system replaced twice, etc.? Certified used cars from a dealership limit those questions, but of course a dealer charges a premium over blue book, limiting the savings of buying used in the first place.

Buying new gives you the chance to customize the car to your exact spec, as noted above, and presents a greater sense of ownership--and wow factor, let's face it--than buying used. Whether that matters is up to you.

I've gone the new and used routes, and had a very good experience with the used car I bought, but on par I still love that new car smell.
posted by werty at 2:55 PM on June 28, 2005

Absolutely great advice and suggestions--from a sheer economic point of view it is always (yes, always) better to buy a used car and set aside the difference ($) between new and used for repairs/replacement. This assumes you are prudent--so many cars come with transferrable manufacturers warranties and are trade in on leases that I firmly believe "buying some elses problem" is no longer significantly applicable--Even mediocre cars have a reasonable life span of 100,000 + miles and some warranties are wonderful, even when transferred--a bit of prudence and attention to many of these suggestions should get you to where you want to be (sp check temp. down so here goes)
posted by rmhsinc at 4:07 PM on June 28, 2005

It's so easy to say "buy used, it saves you the depreciation."

Because it's true. Sure, there are specific examples where something goes wrong, but in general it's one statement that you can take to the bank (the rest of your paragraph doesn't change that fact). Money wise, buy used, period.

Buying new gives you the chance to customize the car to your exact spec, as noted above, and presents a greater sense of ownership--and wow factor

There it is, the only reason to buy new (the wow factor; I've bought new and used and neither came with a greater sense of ownership. I owned both, just got the used vehicle much cheaper).

If you simply care about what others think, buy new. I'd prefer to spend the saved money on a vacation.
posted by justgary at 4:47 PM on June 28, 2005

Getting the car you want and getting some sort of "wow factor" are two different things, and people might buy a new car for reasons other than impressing their neighbors.

I've looked around in the area, and as near as I can tell there aren't any used Matrices with side airbags, or used midline Foresters with a manual tranny, and so on.

Neither of those things are like installing cruise control in a car that doesn't have it factory, or swapping out a crappy stereo. And at this point, buying a car without side airbags seems like buying a car without ABS, and having to go back and forth between a stick and automatic seems like its own hell; neither is very optional as far as I care.

If you want more-or-less exactly what lots of other people wanted 1--3 years ago, you're in the used market. If you want something a little different, you might not find a used car even if you'd prefer it.
posted by ROU_Xenophobe at 5:30 PM on June 28, 2005

Thanks for all the discussion here-- I am not the original poster but as I also need to be getting a hew vehicle in about a month or so I found this all very enlightening.
posted by synecdoche at 5:46 PM on June 28, 2005

Seeing as how your previous car was a 95, you tend to hang onto your cars like I do. If that's the case, buy a new car, and know that it won't be worth more than a thousand or so dollars in ten years.

I've gone both ways and here is the way I see it: *Some* used cars are fantastic deals, were maintained properly and never abused. The problem is that it is hard to tell these from the rental cars that were caught in floods, then sold to a second owner who never changed the oil. Both clean up real good.

That depreciation hit of a new car has another name: It's called peace of mind. When you buy new, you never have to worry about your car's past life. If you treat and maintain it properly, you don't have to worry about whether it's covered under warranty.

I am driving a 1995 Ford Aspire. I am also looking to replace my car this year, and have even Asked MeFi for advice. I plan on buying new and advise you to do the same. (If you were the "trade it in after a couple years" kinda guy, I would probably advise buying used or leasing your next car.)
posted by Doohickie at 6:41 PM on June 28, 2005

Off-topic:

ROU: yah, get the manual. I've a Forester with auto and, coming from a lifetime of stick, I don't much like it. Great in town, sure, but I never know what the hell the engine is up to. And that lag between stomping the gas and the tranny kicking down is just plain aggravating.

Good luck: there really aren't many used Subies out there. The buggers seem to last forever. FWIW, I paid about C$18K for a '91 L version. And make sure it's got disc brakes at the rear; the drums suck.

I've owned three used cars over the past twenty or so years. They have all be superlative. I've no fear buying used, so long as I can get 'em thoroughly checked over, or have some remaining warranty.

I also have almost no ego when it comes to cars. I don't give the least shit about what colour it is, whether it has shiny mag rims, is new or used, whatever.

Keep this in mind: Your car is not an investment: it's a dead loss, and a mighty big one at that. Between the initial purchase and the yearly insurance, gas, and maintenance costs, you're pissing away a ton of money on what is essentially a convenience: IMO, you are very likely to save money by taking a taxi instead of owning a car.

Put your money and ego into something that really counts.
posted by five fresh fish at 7:55 PM on June 28, 2005

*Some* used cars are fantastic deals, were maintained properly and never abused. The problem is that it is hard to tell these from the rental cars that were caught in floods, then sold to a second owner who never changed the oil. Both clean up real good. That depreciation hit of a new car has another name: It's called peace of mind.

Exactly. I have no desire to spend weeks researching and going to different dealerships and playing mind games with used-car dealers and worrying about what's been hidden beneath the paint job. My wife and I got a Saturn new for about $13,000, with zero-percent financing and five years to pay (they were introducing a new model and trying to get the 2002s off the lot), and we've been very happy with it.
posted by languagehat at 6:58 AM on June 29, 2005

Another thing that comes to mind: when people talk about depreciation, they often bring in percentages. I think that's the only sane way to do it, yet... if you buy a "value priced" car, you may suffer the same absolute depreciation as a higher priced vehicle, but you still have the money in your pocket that you didn't spend on the more expensive car. For instance, a Hyundai Elantra might cost $17,000 and lose $6000 of its value the first few years for a disturbing 35% depreciation. A Honda Accord might cost $24,000 and suffer the same $6000 depreciation, for only 25% loss. But the person who bought the Elantra has an additional $7k in his pocket the whole time.
posted by Doohickie at 9:28 AM on June 29, 2005

Buying new gives you the chance to customize the car to your exact spec

Note, Customizing a new car to your exact specification reduces your bargaining leverage.

Also, remember that the value of used cars depends a lot on the price/value of new cars. The heavy discounting and free financing many (but not all) manufacturers have been resorting too has really hurt the resale value of similar models, so you might be able to pick up a used car for a price that's even lower than what you'd expect with typical 1st year depreciation.
posted by Good Brain at 12:32 PM on July 3, 2005