Where's the sweet spot on a car

[HadEnuff]

I chose to replace a truck I loved exactly a year ago. Partly because it needed a lot of repairs and partly because I felt I needed more of a road trip vehicle. I found, as others expressed, that the "discount" for "gently used" was not nearly what I thought it should be.
I was comparing Hyundai Santa Fe with Toyota Highlander, and what I really loved about the Hyundai was that it cost about 7K less. What I didn't like about it was that whenever I test drove it, my left butt cheek went numb. No matter what I did, or how I adjusted the seat, I could not get comfortable in the Hyundai.
The Highlander was great from the moment I sat in it, I new it was the perfect fit for me.
So I spent the extra jingle for the Highlander.

Also, the truck I was losing was a Toyota that had served me well for 14 years, so I had confidence in Toyota.

My point is that cost per mile is one thing, but for what these things cost, get something you like, if you can.

 

[pb4uski]

..... The major reason for that is that I always go for the lower end trims (fewest extra gizmos) when I buy new, while most of the used cars tend to be more decked out versions that started at a much higher price. Since I don;t need all those extras, I'm better off buying new, stripped down models

Our last two new vehicles (in last 9 months but that is a whole different story) were ordered and we waited 4-6 weeks for them to be delivered. That way we were able to get the trim level, colors and options that we wanted and valued but skip the options and trim packages that are commonly loaded on vehicles on dealer lots that are expensive but nothing that we are interested in.

In the case of my truck, it was a mid trim level but with no options other than a dealer applied spray-in bedliner but I was able to get the colors that I wanted. In the case of our SUV, we were able to get the trim level, colors and options that we felt were worth the money.

 

[braumeister]

Some cars (Toyotas, Hondas, etc) depreciate so slowly that it's almost the same price to get a new one. And they routinely run for 200K miles before they start to decline in reliability.

I've noticed this more and more lately.
Comparing a certified used model with a new one, I've been seeing such small differences that I'm amazed.

 

[Big_Hitter]

I've noticed this more and more lately.
Comparing a certified used model with a new one, I've been seeing such small differences that I'm amazed.

very true for subies, as pb4uski mentioned - new ones are just a better deal if you can work one on the stealership

 

[pb4uski]

True for small pickups as well in my recent experience.

 

[Big_Hitter]

True for small pickups as well in my recent experience.

I sold my 2011 4x4 ranger for $25 less than I paid for it last month

crazy

 

[samclem]

I've noticed this more and more lately.
Comparing a certified used model with a new one, I've been seeing such small differences that I'm amazed.

One significant cost savings for going "recently used" would be avoiding the sales tax by buying from a private party. If a person lives in a place where sales taxes are high and he/she is willing to go through the extra bother of dealing with private sellers and knows how to reduce the risk of getting a dud, then I suppose the purchase of a 2-3 year old used car from a private party might offer worthwhile savings vs purchase of a new car. Since we keep ours for 20 years or more, I've rationalized that it's okay to pay a bit more for the "bare bones" new car and start with a known quantity. To us, even the base models seem pretty nice.

 

[pb4uski]

You don't avoid sales tax by buying from a private party. When you buy from a dealer you pay sales tax when they do the registration papers. If you buy from a private party you pay sales tax when you register it.

I've never lived anywhere where it was different from that and you could avoid the sales tax.

 

[samclem]

You don't avoid sales tax by buying from a private party. When you buy from a dealer you pay sales tax when they do the registration papers. If you buy from a private party you pay sales tax when you register it.

I've never lived anywhere where it was different from that and you could avoid the sales tax.

Ahh, thanks. I know some folks do cheat on this, but I'd forgotten about the tax paid during registration of newly purchased used car.

 

[Walt34]

We buy new (our history with used cars was not good so we stopped that) and just drive them until either reliability or parts availability become issues. I kept my last pickup truck for 18 years and the 2003 GMC pickup at 95k miles is just broken in. The 2014 Honda Accord might still be around in 20 years, maybe we can trade it in on one that drives itself.

 

[Totoro]

I'm setting up what hopefully becomes a disruptive rental/lease car business right now (yeah, call the FIRE police).

Can confirm - a good deal on a new car can be just as good as young & used. The time based depreciation curve has become a straight line. Sometimes even inverted: You can find deals now (rarely) where a new car is actually cheaper than a used one. Market inefficiency in your favor.

I'd only advise buying old if you can do some repair and maintenance work yourself, and save money that way.

Otherwise, buy cars that are very common, get rid of it at least one year before most warranties expire. That minimizes tail risk - they don't fluctuate as much in residual value. Look at both new and nearly new, and take the best deal on offer in that moment.

And to add to that: leasing as a private individual doesn't usually make sense if you have the cash outlay. Although sometimes, the price is right. Usually it isn't (certainly not if you go via a dealer-allied lease company).

 

[braumeister]

Another reason to buy new (we almost always have) is to consider your usage. I've averaged about 24,000 miles a year for decades -- no difference before/after retirement. I start getting nervous about even a good reliable car around 150K, so six years is my limit.

Last three have all been completely repair-free for that period -- just routine maintenance.
They were all Honda CR-Vs, so I definitely have a warm fuzzy feeling about that model.

 

[karen1972]

Food for thought, I'm leaning less towards the "keep till they drop" mentality. Mostly because technology is changing so much. case in point, its really annoying not to have Bluetooth and USB ports in the car which my 2011 doesn't have, so we are looking at getting a 2013 which would. Also the 2013 comes with a backup camera which I didn't think we needed but as I get use to it, it seems like a good idea.

As we age, upgrading to get the latest technology may be the best option. My father as he turned 80 started having problems turning his neck as far, which meant his blind spots were more an issue, but if he got a car with blind spot monitors on it, that would make him feel much safer to drive. I just don't see keeping the car as long as I once did because technology would drive the desire to upgrade thus making sure I buy a car with the most amount of resale is now my driving factor.

 

[check6]

You don't avoid sales tax by buying from a private party. When you buy from a dealer you pay sales tax when they do the registration papers. If you buy from a private party you pay sales tax when you register it.

I've never lived anywhere where it was different from that and you could avoid the sales tax.

Come to AZ, no sales tax when buying from a private party.

 

[Music Lover]

As we age, upgrading to get the latest technology may be the best option. My father as he turned 80 started having problems turning his neck as far, which meant his blind spots were more an issue, but if he got a car with blind spot monitors on it, that would make him feel much safer to drive.

With correctly adjusted side mirrors, the blind spot is virtually eliminated.

 

[medved]

You don't avoid sales tax by buying from a private party. When you buy from a dealer you pay sales tax when they do the registration papers. If you buy from a private party you pay sales tax when you register it.

I've never lived anywhere where it was different from that and you could avoid the sales tax.

This is not "avoiding" the sales tax, but in some states if you trade in a car to the dealership, when buying a car from that dealership, you get taxed on the "net" purchase price, which saves some taxes.

Someone might respond that you will get a better price selling your car privately rather than trading it in. And that may be right. But the tax savings, in those states that allow for "net" taxation, is a benefit to the trade-in approach (as is the reduced hassle).

 

[mpeirce]

Wow. I'm so glad we are FI.

One of our cars we ordered so we could pick out exactly what we wanted. The bonus was picking it up at the factory and [-]racing[/-]driving it safely it around Europe before shipping it home.

The other we bought off the lot because it was only offered in a few packages and that was fine.

FI means we can get what we want.

 

[pb4uski]

This is not "avoiding" the sales tax, but in some states if you trade in a car to the dealership, when buying a car from that dealership, you get taxed on the "net" purchase price, which saves some taxes.

Someone might respond that you will get a better price selling your car privately rather than trading it in. And that may be right. But the tax savings, in those states that allow for "net" taxation, is a benefit to the trade-in approach (as is the reduced hassle).

medved, you need to follow the thread. My response was to a post #32 that suggested that a benefit of buying a car from a private party is that you don't have to pay sales tax. My response was that in most states that is not the case because you either pay sales tax to the dealer or when you register the car. At least in our state, in both cases it is net or trade in or if you sold the car in the past 90 days (or if you sell it in the next 90 days you can get a refund of any sales taxes paid). So whether you trade a car in with the dealer or buy it outright and sell your trade privately, in all cases you are taxed on the net purchase.

Interestingly, Arizona assessed tax if you buy a car from a dealer but not if you buy from a private party according to post #39.

 

[target2019]

Yes, but I don't think they were talkies, yet.

Moving pictures and Thelma Sue...

 

[doneat54]

I've never bought a brand new car, nor will I ever. I buy 2-4 year, one owners with known service history. I do all my own maintenance, oil changes, brakes, etc. I either keep them until they are worth nothing, or sell them before they hit that "second hump" on the depreciation curve, usually 100k miles or less and maybe 5-7 years old. My goal is $1500/yr in depreciation or less, I have done it with couple Camrys and get pretty close with VWs.

 

[Jerry1]

Wow - thanks for all the responses. A lot to consider. Putting money aside, I guess my pleasure would be to change out cars more often than not. I'm thinking like buying new and driving to 100K - 150K. Say 6 years or so. However, the factor I'm most concerned about is money and retirement. In order for me to retire early, I need to be very tight with my money. Not Mr. Money tight, but certainly not a new car every couple years. That's partly why the cost accountant in me keeps coming back to a cost per mile. But I do understand that with retirement and the change in driving (mileage) the formula changes.

 

[Koolau]

However, the factor I'm most concerned about is money and retirement. In order for me to retire early, I need to be very tight with my money. But I do understand that with retirement and the change in driving (mileage) the formula changes.

I too have often thought in terms of cost per mile. We own three used cars (2 in HI and one in the midwest.) Total miles per year is probably 13,000 on average. On that basis, our per mile cost (of ownership/with non-routine repairs) is probably higher than if we could just own one new or fairly new car. It's mostly in the denominator for us.

To keep depreciation low, we have gone with a much different "sweet spot". We typically buy 7 to 12 year old cars with "relatively" low mileage (last one was a 12 year old Buick with 60K miles.) In all 3 cars, we have "invested" less than $20K (about the cost of a really small new car today). True, we have had a number of repairs (struts on one, a computer chip in the Buick, fuel pump on another, etc.) Thinking in terms of monthly payments (lease or buy) we figure we are still way ahead. Depreciation wise, it's very low - maybe $1000/year each until they reach about $2000 value. Any well running, not too beat up car with less than 150K miles can fetch almost $2K on a good day - on the open market.

The biggest issue is reliability. Indeed we have had some issues with that. We take the (less than $3/mo) rider for towing on our insurance and have come out ahead on it. Now that we are ERd, we figure we can trade some "down" time for the savings in overall costs. There is a certain amount of "luck" involved as well. So far, we've been average on luck, I think.

Clearly, if cost for transportation is a big issue, having fewer cars is probably as important as new vs used. We could save a lot (insurance, tags) just by ditching one car. But, we like the flexibility (two used cars means at least one is always working, heh, heh.) Of course, we could use THE BUS and get rid of both cars, but, fuggiddaboudit!

So it's all a bit of a crap shoot, but we think the older cars serve our needs almost as well at a significantly lower cost per mile. We do give up a lot of the new tech, but honestly, I do NOT want an "Infotainment" package. I could live with crank windows, but all our current used cars have electric, which by the way, can be a significant source of repairs.

If I make a quick calc. of 100K miles driven on our 3 used cars and figure them all at $2K current value and throw in about $5000 for all repairs/replacements so far, I get about $.20 per mile. (I've excluded things like brake jobs/tires as even "new" cars will need those if kept for 30K to 60K or so.) That's a little better than a "new" car, but we have 3 cars - not one. So, pay your money and take your choice. I think our way is less expensive and yet more flexible, but I would not criticize anyone else's choice. And as always, YMMV.

 

[FUEGO]

We went with a 7 year old minivan that had slightly above average miles (112k) for $8200. We also drive very little, so didn't mind the higher mileage to start with. It's a toyota, so should still run pretty well in 10 years and we still won't have 200k miles on it, so might be able to sell it for several thousand dollars.

I picked seven years because that seemed to be the inflection point between depreciating by a couple thousand $ per year to around $1000 per year. We paid about a third of the brand new price and I'm pretty sure closer to 2/3 the useful life of the vehicle remains.

 

[brett]

You did well. I believe that van has a Camry engine in it.

 

[medved]

medved, you need to follow the thread.

Actually I don't need to follow the thread; doing that is optional.

My response was to a post #32 that suggested that a benefit of buying a car from a private party is that you don't have to pay sales tax. My response was that in most states that is not the case because you either pay sales tax to the dealer or when you register the car. At least in our state, in both cases it is net or trade in or if you sold the car in the past 90 days (or if you sell it in the next 90 days you can get a refund of any sales taxes paid). So whether you trade a car in with the dealer or buy it outright and sell your trade privately, in all cases you are taxed on the net purchase.

Interestingly, Arizona assessed tax if you buy a car from a dealer but not if you buy from a private party according to post #39.

My point is that when one compares buying a car from a private party to buying a car from a dealer, one consideration -- in SOME states -- is that if you buy a car from a private party, you will pay tax on the full purchase price, when you go to register that car, whereas if you buy a car from a dealer, and trade your old car into that dealer, you will pay tax only on the "net" purchase price (that is, the price of the new car less the value given for the trade). This is not the case in every state. And there may be countervailing considerations that suggest it is better to buy privately. But in at least some states, it is a potentially relevant consideration.