Used Cars = Someone else's lemon

[KM]

Bogleheads have had a thread on this before, and there have been a few that swear by leasing mid value cars as the most cost efficient way to own a vehicle. I would never go that route just because I don't know a lot about the process and they would screw me somehow on it.

We leased once, for a specific reason (I needed a fairly new, reliable car and we didnt really have much for a down payment).

I guess if you want new every 3 years or so, it's not a bad gig. But I wouldnt do it again. After we were done, I didnt feel it was a good overall value. Probably depends on your needs, deal and how many miles you drive.....

 

[BLS53]

I would bet that most people who think cars become maintenance hogs after 100k miles, haven't owned a car past 100k miles. Or at least not any built in the last decade or so.

On later model cars, there's not much required maintenance in the first 100k, other than oil and filter changes. So there's not much maintenance the original owner could defer that's going to affect the long term durability. I think most new car owners do oil changes. Mainly because it's inexpensive, and if nothing else, it keeps the warranty in effect. If the car has been abused, that's going to be evident with a rather basic test drive and inspection. I personally steer clear of performance oriented cars, because people buy them for a reason. They want to drive them hard.

I think the Japanese cars are better philosophy is dated. As with the 100k mile theory, most of these folks haven't owned an American car in decades, so any thoughts are anecdotal.

The proliferation of safety devices on late model cars is a drawback for me. While I don't want to go back to metal dashboards and no seat belts, I don't need tire pressure monitors and back-up cameras. All this stuff just require more maintenance as the car ages. The tire pressure monitors are a major headache, when you buy new tires. I've made it 60 years without all this stuff, and at this point, if I die in a car crash, so be it. Another thing is these complicated radios, that allow people to conduct their lives as they drive. More stuff to break. Give me an AM/FM with a CD player, that I don't have to be a tech wizard to operate.

I find 5 years old/75k miles to be the sweet spot on modern used cars. One can drive them another 5 and 75k, with minimal maintenance expense.

 

[travelover]

........
I think the Japanese cars are better philosophy is dated. As with the 100k mile theory, most of these folks haven't owned an American car in decades, so any thoughts are anecdotal........

One way to take advantage of this is to buy a used American car with just a few miles on it. They depreciate faster than Asian cars, but as noted, have nearly the same reliability.

DW bought a 2004 Taurus in 2005 for $10K with 17,000 miles on it. She is at 95,000 now with just tires, brakes, a battery and filters as expenses. It is not a car anyone would rave about, but it is a comfortable and safe commuter car for her.

 

[brett]

We had both new and used Japaneese labels(personal vehicles) at the same time as I had a new domestic model every year from my employer.

I saw a huge difference in the quality of the service. As I think back to the domestic company cars...one (a top of the line luxury sedan) was actually delivered with rad hoses that we not tightened, ie the new car leaked rad. fluid over a 600mile trip accross the Rockies. It was discovered at the other end by the dealer during an oil change. He could not believe it.

The second was delivered with a non functioning heater. We discovered this on a weekend road trip..in November. It took two trips back to the dealer to get this fixed.

The third was fine.

The fourth....well after the tranmission was replaced at 17K miles, it was given back to me with the engine light on. Another dealer figured that it was a computer module. No control modules of course because everyone had the same issue. Off the road for another two weeks. That made a total of five weeks that we had to pay for a rental. Most of our fleet cars of a certain model that year had either a defective power steering hose. We had six cars vehicles off the road.

The next year was not bad. Just a very noisy transmission and a major front end problem. As the business manager of the division, my cost center had to continuously pick up the cost of rental units while vehicles were in the shop....often more than once for the same complaint.

So for me, it was not an urban legend, it was reality. Some of the dealerships appeared to be as haphazard as some of the manufacturing processes. I would not have wanted to own any of these vehicles after three or four years.

It is little wonder that the manufacturer's market share has changed so much over the past ten years. People get tired of buying lemons. I believe the domestic labels are improving. But not fast enough and they are still well behind from my perspective

If you want to get an good indication, ask an auto leasing agent about the buyout numbers on the domestic brands vs some of the import labels. There is a very good reason why the domestic brands depreciate so much faster.

 

[HighRoller]

The last used vehicle I bought was back in the early 90's. It was a 2 year old GMC pickup that had about 25k miles on it when I bought it. I sold it about 18 months later after replacing the complete drive train. (over $10k in parts and labor), Fortunately I had bought an extended warranty on it so I only paid a small amount for each repair but it was in the shop a lot and I could never depend on it. Since then I have only bought new vehicles (GM, Nissian and Toyota) and the only problems I've had with any of them were a couple of factory recalls. (Both were minor fixes and were done free and very quickly)

 

[pb4uski]

I've only had 2 new cars in the last 30 years. Never had a big problem with used cars. I usually buy them from a reputable dealer when they still have a bit of bumper-to-bumper factory warranty left, and try to buy models that still have a longer powertrain warranty in case the vehicle has major problems.

We bought a certified truck back in 2006 and as luck would have it, the head gasket went bad after the original manufacturer's 36,000 mile warranty was past but before the added 3,000 miles because it was certified had expired (edged in under the warranty by about 500 miles) so the $3,500 repair was fully covered. Whew!

 

[JoeWras]

I would rather buy new and keep it for 10 years. The depreciation factor is offset by piece of mind knowing exactly what I've got.

+2. I keep cars at least 12 years. With that in mind, owning from new make sense. I know the exact history of this car, and maintain it like a madman.

12 years is my general minimum. It is usually keep them 15 or more. First year depreciation falls away for the most part with this kind of ownership period.

 

[leftbucket]

Try Old Japanese Luxury Cars...

If you are okay with a little elbow grease and footwork, I have found the sweet spot to be ~10 year old Japanese luxury cars.

By them for about $4500-6500 at around 10 years old.

Investigate the model thoroughly beforehand. Being 10 years old, all likely
large-scale problems will be known...engine/transmission, etc.

Haggle hard.

Do a little spit and polish if necessary, then do nothing but the necessities (oil changes, brakes, exhaust, etc.) for five years.

Chances are very good it will still be running well in five years and you can sell it for $2000-3500 or push it some more and hang on.
If it breaks early, sell it for $500-1000 and you still haven't lost much.

Meanwhile you're driving around in a vehicle that's 90% as good as a $30-45,000 car for a fraction of the price. People generally tend to take care of a luxury car and usually have decent records, too.

My wife drives an 11 year old Acura and I drive a 15 year old Lexus.
People probably think I'm overpaid.

 

[Katsmeow]

I must admit that I am a new car buyer. I do think there is more risk in buying a used car. Yes, you can get a Carfax (I certainly would) and get a car checked, etc. but that doesn't eliminate risk.

A few years ago I considered buying a used car. I had a friend who bought a certified pre-owned Lexus. It was about 3 years old and was very nice looking. However, for the car I was looking for (a Prius at the time) I found that there was virtually no discount for buying a car that was 2 years old versus a new car.

We tend to buy new cars and keep them a long time.

Another factor in buying newer cars is that cars really are improving. The newer vehicles are simply much safer than older cars. I find that matters to me. Also, after having good back up cameras I would never own a car without one. The car I am driving now has adaptive cruise control and that is a feature that you get used to very quickly.

If I am spending money for a car I usually want to get the most up to date safety features particularly since I know I will be keeping that car for a long time.

 

[ERhoosier]

Seems like many here have had great experiences (luck?) with their older cars. Just to give other side of things- 2 not-so-lucky stories from close Midwest relatives:
1. Bought used 4yr old mid-size sedan from trusted neighbor who bought it new & kept meticulous care of it with all maint records. Paid only ~$10k for this cream puff w/35k mi (preferred to sell to friend vs dealer @ trade-in value) . Car ran perfect for 18mo, then over next 18-20mo (35+k miles) needed pwr window fixed ($250), new brakes/rotors ($750), timing belt (scheduled @ 60k mi, $1100 inc water pump as it's little extra labor during TB replacement), & new tires ($600). Then tranny went (~71k mi) costing $2950 for rebuild. So almost $6k in maint + repairs plus ~$5k in (private sale-not trade-in) depreciation, or ~$11k ($3,667/yr) for bit over 3yrs/36k mi for a 4-7yr old sedan.
2. 3yr old mid-size SUV w/37k mi. Over same 3yr period- brake pads/rotors ($825), timing belt ($775, sched maint @60k), 4wd system repair ($875), and tires ($625). So 'only' $3,100 in repairs/maint but also another $9k depreciation so $12k ($4k/yr) for again 3+yr/37-38k mi.

IMHO- Annual depreciation is still surprisingly significant for 3-4yr old vehicle (unless you keep it many yrs), and many folks do not have a great repair expense experience. So for scenario of buying 3-4yr old vehicle & driving for ~3yrs, overall costs can be surprisingly similar to some better corp lease deals. Examples from recent national/regional (US mainland) car maker (NOT dealer) web ads: Total costs (mo pmts + downpmt + acquisition/disposal fee) for 3yr/36k mi lease specials included ~$8100 for Toyota Corolla sedan and ~$11k for Honda CRV SUV.

For car guys like JoeWras, I tend to agree that buying new & running for dozen yrs is prob perhaps best way to go.
And I think leftbucket's scheme can work too, although maint/repairs on luxury cars can be more expensive than for more common vehicles.

DISCLAIMER- I am not employed in auto industry, take good care of my rides, & tend to prefer mid-range vehicles. My last 3 vehicles were a 3yr lease, new purchase kept 9 yrs, and new purchase kept 4 yrs.

 

[Mulligan]

Now I admit I am on the "cheapo" end of the car spectrum, but in my state keeping older cars brings about significant savings in property tax and insurance. I easily save over $1500 a year in avoiding new car property tax expense and full coverage insurance.

 

[ERhoosier]

BTW- Some tech gadgets are getting cheaper all the time. Aftermarket back-up cameras can be easy to install & pretty inexpensive-
Back-up Camera 2.4 - product summary - Bing Shopping

 

[ohyes]

This thread has been a real eye-opener. I thought, based on what I had read, that buying used was the only smart way to go. After buying three new Fords in a row (all with expensive repairs in 2-3 years), it made sense. We have bought used since, and had good luck. Perhaps it was just luck.

A 1998 Acura RL was, hands down, the best purchase. We gave it our youngest son who showed no interest in buying a car. We were afraid we would have to taxi him around forever. Our oldest two kids saved like maddogs to purchase their first car. The Acura is going strong at 150,000 miles--with a few more dents now.

Our present car is a used Chevy Impala, purchased from Enterprise. Since purchasing it, we have heard horror stories about buying from a rental place--how renters will add water to gas tank before returning, etc. It has been a very good car, except for electronic door locks. Only one still works. We probably will not again go that route.

DH drives a a 1994 teal green Ford Ranger. Every few weeks, i try to convince him to buy newer. It's seldom used, except to haul stuff, and DH does not see the point. I get that, but feel like a eccentric old couple when we putt putt around town in the tiny thing.

Next car, if not an Acura, might be a Subaru. I like what my friends who drive them share.

Never another Ford. Funny how different folks have different experiences. My parents and brother think Ford is the only decent make for patriotic Americans, lol. And, none of them had the same bad luck we did.

 

[BLS53]

One way to take advantage of this is to buy a used American car with just a few miles on it. They depreciate faster than Asian cars, but as noted, have nearly the same reliability.

DW bought a 2004 Taurus in 2005 for $10K with 17,000 miles on it. She is at 95,000 now with just tires, brakes, a battery and filters as expenses. It is not a car anyone would rave about, but it is a comfortable and safe commuter car for her.

The 1996-2007 Taurus' are a good used car value. I've owned 2 of them, a 2000, and 2004. I ran both of them over 150k miles, with just tires, brakes, and the battery being replaced. Just traded the 04 in on a 2007 Fusion this past July.

 

[cjogo]

ohyes

Bought 1 new car since 1967 __ Buy the best rated car used

Our present ACURA RL was $45k new _ 15 years ago... we bought it used > one owner > meticulous @ $10,000 with 75k > 12 years ago.

200k now with little or no problems. Research




They don't make em' like this anymore

 

[Nemo2]

About 2 1/2 years ago we bought a 2005 stick shift Honda Civic.........no problems....we love it.

Just prior to last Christmas my wife's SIL bought a brand new Volkswagen Jetta diesel.....it died on the way home from the dealership, (and a number of times subsequently, after supposedly being 'fixed').

The dealer gave them a loaner, (interspersed with abortive attempts at making the new vehicle roadworthy); after ~ 2 months they supplied another new model, which thus far hasn't broken down.

As Chuck Berry used to sing "Goes to show you never can tell".

 

[jon-nyc]

...I usually buy new GM products ....

... The few used cars I have bought in my lifetime have invariably been lemons that the previous owners were happy to unload on someone else so I am very gun-shy about buying used.

Was it a long time ago that you last bought used? While the US manufacturers have done a good job closing the quality gap, that gap was quite real 20 years ago.


I think buying (say) a three year old Honda in 2013 is a much better bet than buying (say) a three year old Ford or GM in 1986.


edit to add: I bought someone else's lemon in 1989 - it was a three year old Ford.

 

[jayc]

If you are okay with a little elbow grease and footwork, I have found the sweet spot to be ~10 year old Japanese luxury cars.

By them for about $4500-6500 at around 10 years old.

I agree. I get 5-7 year old Acura, Lexus, even Hondas from private owners. I plan on putting $1000 in for misc repairs. These cars at 100k are just getting broke in. Why mess with GM or Ford reliability, quality or like the OP know the problems start at 100k miles. My everyday car is 1995 Honda wagon with 185k and 1996 Acura tl with 80k. Last year the Honda took me to Colorado, Tenn, and Florida.

 

[Harleybikerdom]

Many different opinions

My self, I have bought more new cars than used. Each was bought with the idea of keeping it till the wheels fall off. In my raising kids days a Plymouth Mini Van lasted 8 yrs, 215000 miles with only having to replace a fuel pump. Other than that just normal ware and tear items. My problem is that I just get tired of a car after 5 years and enjoy a change. Often you are in a different stage in your life with kids grown and off on there own, or your interested in new hobbies and a different style ride would be a better fit. I am sure I have spent more on cars than I needed too over the years but I love weekend road trips and it's worth it to me.

 

[tinlizzy]

I'm looking for a different car now. My present car is a 95 Nissan altima that I bought used from a private seller - $10k with 10,000 miles in 97. It's been a great car. New tires, 2 mufflers (bought the lifetime guarantee, 2nd one was free), valve cover gasket and most recently the o-ring in the distributor. The body and paint has not endured well.

I've been trying to find a used vehicle again, unforunately there are a lot of private sellers who want (desperately need) what they have left on the loan vs. blue book. There's no reasoning with these finance fools I've learned.

On the new car front I discovered that thru my employer I can get an employee discount on most makes of cars. Ford seems to offer the best deal on new with this scenario - for me, cost is dealer invoice + incentives on new vehicles. Here is the long list of partner companies that Ford offers X-plan pricing. Still not sure if I want a Ford.

 

[travelover]

I always buy new and keep the cars for 15 years. I done that with the last 10 cars.

 

[plex]

Worked in the auto industry a fair bit. The quality gap was quite real even 10 years ago, the car companies were extremely lazy about improving their quality when they had a firm lead on foreign cars, and even when their lead was slowly shrinking. It was not until the car companies started going bankrupt that they really started changing their ways.

The car reviews improved drastically as a result as well. The problem with the reviews though was they were rating some of the worst model years for US cars (the ones from the early-mid 90's) as pretty good, even though the US auto makers were reaching their peak idiocy point. This was about the time when they hopped on the, "lets make only SUV's and discard all our sedans because it makes us lots of money," idiocy train. Gas had been sitting at $3-4/gallon for multiple years and the only new models they had planned for the next four years at the time were SUV's at the particular company I was working for (which is the one I would least recommend buying anything from).

 

[someguy]

reliability

Consumer Reports used to have a graph of car brand reliability (as measured by average number of repairs) over time. I can't find it at the moment. Toyota brands destroyed everyone else over time. By 8-10 years old, Toyota brands significantly gapped even the Honda brands, which hugely gapped all other brands. CR has been criticized as having Toyota-mania, but their data collection methods seem more solid than anyone elses'. Certainly their stats are more reliable than the anecdotal evidence from one or a couple individuals.

Check out the two attached docs. I wish it weren't true, but it seems like there is still a huge reliability gap between Asian brands (especially Japanese) and American and European brands. In the reliability vs score matrix, obviously the "test score" on the x-axis is a very subjective measure, but the reliability on the y-axis is not.

 

[dmdunca44]

We buy three to four year old low used cars mileage cars.

But we would never consider GM, Chrysler, or Ford products. These tend to be at the bottom of the quality/reliability spectrum. I drove a new one of these every year as a company car...everything from the luxury versions, the SUV's, and the standard sedans. My experience was far too many issues and the dealer service deptartments were much less oriented to service and to quality than their foreign plate cousins-notwithstanding often being manufactured in the same country.

We have had great success buying higher end Toyota and Honda sedans. Usually with a full load. We get them inspected, etc. At four years old, we expect to pay around half of their current price. The last car we bought, a 2006 Accord EXL had 26K miles with full load/leather etc. It has been a great car.

I picked up the recent Consumer Reports New/Used car mag. It is on the stands now. Take a look at their comments and their reliablity records.

+1

In 2003, we purchased a 3 year old Toyota RAV4 with 50K miles. It now has 175K miles and we've never had a serious issue. We'll probably replace it at about 200K miles (with another RAV).

My son is still driving the 1992 Toyota Tacoma we bought new. It has well over 200K miles. I'd never consider buying a car that could give me only 100K miles of reliable use. The longer we hold onto a vehicle, the less the overall costs (assuming the kind of reliability we've come to expect from Toyota)

 

[cjogo]

Now that we are retiring ... we drive very little > maybe 50 miles a month. We walk to our center~ for gym/food/etc. The main town is a straight 6 miles down the road >> so we make a run once a week or so. This 96 Acura will most probably be our last .