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vehicles
October 12, 2012 12:37 PM   Subscribe

new verses used vehicle and when to sale most economical

I'm looking for the way to get the biggest band for my buck. Say I were to look at how much I spent on vehicles over a lifetime.
When is the best time to buy and when is the best time to sale.
I'm thinking used, but how old, and is there a risk it will have maintenance problems or can you go through a dealer who will cover it. How long do you hold onto the vehicle. At some point are the parts costing more where you'd be better of putting it into a new vehicle.
Also have to factor in if the vehicle is breaking down a lot.
posted by mrfawcet to Technology (8 answers total) 2 users marked this as a favorite
 
Generally speaking it is always going to be cheaper to keep an old vehicle on the road then to take on payments for a new one.
posted by Cosine at 12:52 PM on October 12, 2012


There's a lot of philosophy in your question.

Vehicles are always losing propositions as far as holding value, they're depreciating right in front of you. No car is an investment.

There are some folks who buy all cars with cash, and keep them going until the wheels fall off. They go from one beater to another. It works okay if you can afford to be stranded every so often, or if you're in an area with decent public transportation.

Anecdotally, I tried to buy a low-mile Honda, about 2 years old and had such a hard time of it I bought a new Accord instead. NOW is the best time to buy a NEW car. Dealers have old inventory on the lot, 2012 instead of 2013, and there can be some really good incentives to get rid of the "old" new cars. That's how I got mine.

I did all my research online, and found the exact car I wanted, down the VIN number on a lot in Nashville. I waited until Sunday, at the end of the month, when the football team was playing and I strolled into the dealer, VIN in hand, and asked to buy the car. I got it at a rock bottom price, full warantee, and I'm still driving that car 8 years later.

You are better off dollar for dollar, selling your old vehicle in a private sale first and then rolling into the dealer cash in hand. Dealers are notorious for under-paying for used cars on trade in. But it's a hassle and the delta is about $500, and it's one more way you can negotiate with them. I've always traded in my cars, they do all the paperwork and I don't end up on People's Court. I got $1,000 more on my trade in Nashville than Kelly Blue Book said, so I'm not complaining.

New Cars have excellent warantees, so you don't need to buy and extended warantee. There are little insurance policies you can buy, Gap Insurance is one. This will protect you in case your car is totaled and it will pay the difference between what you owe and what the car is actually worth. YMMV, but if you're financing a lot of car, it's worth it not to be caught out.

Places that are good to buy used cars from: Carmax, Rental Car agencies.

Don't buy a used car from a "We tote the note" place. That's usury.

Buy what you can easily afford. Buy what makes sense for your life. (A Hummer in Philly is a BAD idea.) Buy the one with the ugly paint if it's cheaper, you rarely look at your car from the outside anyway.

Be informed, read Consumer Reports, Edumnds.com, KBB.com, and know what you're getting into.

Expect to be a little screwed over. No one gets the best of a car dealer. But do the best you can and once you have the car, drive it until it falls apart.
posted by Ruthless Bunny at 12:56 PM on October 12, 2012 [1 favorite]


What is the risk you're willing to tolerate?

For 4 years (non-consecutively), I drove two different beater cars, each bout at $2000, and sold for about $1000. I paid almost nothing in car insurance (didn't need to get the car itself covered). I was never stranded, except when I forgot to turn off the lights and the battery ran out. And they were great in terms of miles per gallon (32 mpg). I also bought and sold these vehicles in private party transactions.

However, I bought a new Prius 1.5 years ago despite planning to buy a used car. It was not bought with cash. I will probably end up paying $24000 for it. I have to pay more for insurance. BUT it's super reliable. I'm comfortable in it (which is a Big Deal if you have to spend a lot of time in the car). And the dealer just appraised it for $18000 for trade-in value without any haggling. So it actually retains its value quite well for a new car.

I'm spending much more per month on my new car, BUT I can use it to move most furniture, lumber (I'm getting into woodworking as a hobby), go skiing, and take it on road trips without worry, so I'm also getting a lot more utility out of it.

And there's always a risk you'll have to pay for maintenance. You can get car insurance for it (which is not worth it IMO). I'm a good neighborhood, and several months ago, one of my car windows got smashed (nothing was stolen) and I had to replace it.

tl;dr: There's no one size fits all, and more details about your expected usage might help. Also, just how much is comfort and reliability worth?
posted by ethidda at 1:56 PM on October 12, 2012 [1 favorite]


The sweet spot for used vehicles is about $3000-$5000 these days. Buy a car at that price point, pay cash, maintain it properly for two years -- it should not need any major repairs -- then flip it (taking about a $1000 loss) and buy another at the same price point. Rinse, repeat.

At that price point most early problems will have shaken out, but you're still several years away from major mechanical breakdowns. It won't be a beater, it won't leave you stranded, it will be easy to insure, and it will cost you about $100-$200 a month in depreciation and maintenance.

Basically, you finance your own lease. (An actual lease might make sense for you if you can write the lease payments off as a business expense. Otherwise, no.)
posted by seanmpuckett at 2:27 PM on October 12, 2012 [1 favorite]


The most economical motor vehicle choice is not owning one. If you do own one, the most economical choice is only using it on trips that make it necessary-- avoid car commuting if humanly possible, or decrease the distance you do otherwise.

If you cannot afford to purchase a car in cash, financing a new car has significant interest expense, and the availability of credit generally induces you to spend more than you otherwise would. A new car is more valuable than a used one, as well, so you are paying more for insurance.

The used car market has been pretty inflated these days, because people don't have much cash on hand & credit has been harder to get for many people lately. The market for fuel-efficient used cars is doubly inflated, since enough of the country's inventory of cars is from the pre-2005 "gas is cheap, let's be stupid" years. However, the used

Here's a pretty cogent blog post on the topic, and one with specific vehicles recommended for cheap operation.

I personally owned an '03 Pontiac Vibe for a year last year (and nothing now), and ended up having essentially no cost of ownership on the car because used car prices went up while I owned it and I made a paid relocation in it, reimbursed at the IRS average rate of 50 cents a mile for all cars, as opposed the the actual much-lower cost for the Vibe.
posted by akgerber at 2:28 PM on October 12, 2012


Also, do your due diligence when buying a used car-- shop around for one from a private seller with good maintenance records, and have a mechanic check it out. There isn't that much price difference between a well-maintained car and something beaten on, but the eventual cost difference can be thousands of dollars. It's some of the best-paid labor an ordinary person can engage in.
posted by akgerber at 2:31 PM on October 12, 2012


I've only bought one new car in my life, way back in grad school. Hated the car (a Triumph Spitfire). Hated the payments. Since then I've owned about 30 of them, all bought for cash, all about two years old. I keep them till I get tired of them and then buy another used car for cash and sell the old one to a private buyer. I've always managed to get rid of them before they turn into a liability. Cars are so well made these days--especially Japanese ones, even those built in the U.S.--that buying one in good shape carries little risk, especially if you get tired of it and dump it soon enough. Just a month ago I bought what I hope (this is a hope I always entertain although it's never turned out true) to be my last: a 2007 Honda Accord coupe.
My conclusion? Buy used, but not TOO used, treat with care, sell in time, buy used again.
Buying new seems crazy-wasteful to me.
Oh, and never buy a Spitfire.
posted by fivesavagepalms at 3:51 PM on October 12, 2012 [1 favorite]


Strictly speaking, the cheapest way to own a car is to get beater for $500 or less. Fix it when it breaks no matter what broke and be prepared to get stranded occasionally. The idea is that even if you have to make major, expensive repairs, those parts are new and won't break again.

I can't really risk getting stranded and I like something a little bit nicer than what $500 would get me so I think the next best option is to buy a two year old lease return and drive it a decade or so. This is what I do.

New cars are kind of a bum deal (and I used to sell them for a living) but the difference in cost (vs. an off-lease used car) isn't that huge if you drive it for a good long time.

A newer used car will likely still have some coverage left on the manufacturer's warranty so you could still get things repaired at the dealer for free. You can get a service contract (extended warranty) to cover you after the manufacturer's warranty runs out but those are generally not going to be a good deal unless you're getting it at the dealer's cost.

Edmunds.com is a good site for research and will show you their "True Cost to Own" that will break down estimates of the various costs associated with owning that make/model (used or new) so you can discount the things that might not apply to you.

With new cars, be very wary of special financing offers. Often times there is a choice between getting a low interest rate or a discount on the car. At current market rates, the total interest that you'd pay is about the same as the discount. In other words, if you take the discount and get a regular loan, you'll end up paying about as much as you would have if you took the low rate.

Most newer cars are VERY reliable. There are lots of cars that are just as reliable but it's hard to go wrong with any Nissan/Infiniti, Honda/Acura, Toyota/Lexus, or Hyundia/Kia.

Look at my ask.me answer history if you want some more advice about how to buy a car and get a good deal (it's a question I've answered once or twice).
posted by VTX at 7:53 PM on October 12, 2012 [1 favorite]


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