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It's a myth that a brand new car is a bad deal. Brand new cars are way superior to used (1-2 year old). However, this is only true if you own it until it no lon
by tabeth 9y ago
It's a myth that a brand new car is a bad deal. Brand new cars are way superior to used (1-2 year old). However, this is only true if you own it until it no longer works. This is where most people go wrong. If you don't own it for its entire working life (~20 years) you're better of buying a 5 or 6 year used model and saving ~40%.
- jackmott 9y agoI'm going to need to see a spreadsheet or something for that claim. 1 year is about 19% depreciation. but only ~5% of life of car
- tabeth 9y agoI'd have to dig it up, but it's the warranty that makes the difference.
- jackmott 9y agoI see. I imagine that math is going to depend a lot on brand/model and one's skill at identifying and fixing problems themselves.
- tabeth 9y agoIndeed. I only mention the original post because Hyundai's warranty is better than average and their cars are cheaper than average (for new, anyway). Even though Hyundai's depreciate faster than say, Honda, the depreciation curve is a little different anecdotally, e.g. a one year depreciation for a Hyundai is a little less than a Honda in raw price since the car is already cheap, however a 5 year difference will favor Honda greatly.
- twblalock 9y agoJack Baruth wrote a great article a few years ago about how owning cheap used cars is a privilege reserved for people who have the skills and time to fix their own cars: http://www.thetruthaboutcars.com/2015/02/no-fixed-abode-gotta-rich-cheap-car/ http://www.thetruthaboutcars.com/2015/02/no-fixed-abode-gott... It seems that he was partly inspired to write this by "the TTAC reader whose response to Bark’s article on subprime buyers was to straight-facedly suggest that a working father swap his own minivan transmission in his apartment parking lot." I used to own beater cars when I was in college and shortly after. I never paid more than $3k for one, and I did all of my own work, including replacing all of the brakes on one of the cars myself. But I like working on things, I already owned the tools, and I had access to good public transit when my car broke down. I would not recommend beater cars to most normal people.
- wnevets 9y agoif you buy certified pre-owned like I did you get the warranty without having to buy new.
- danielvinson 9y agoIts not the same warranty with most brands - my current car has a 4-year warranty for almost everything (excludes tires and a few other things that are always excluded), whereas the similar pre-owned models have a 4-year that only covers the engine.
- wnevets 9y agoAFAIK for the Hyundai Elantra (the car mentioned and that I bought) it's the same minus the current years and miles on the car.
- twblalock 9y agoIt really depends on the brand. When I bought my Prius, I was looking at 1-3 year old used models that were only about $3-5k less than a new one, and came with a worse warranty. The two years of free maintenance that came standard with the new Prius covered a significant part of the price gap, and the new one had more life left than the used ones, which I think covers the other part of the gap. On the other hand, it rarely makes sense to buy a new Chevrolet or Ford, or Mercedes, for example. The resale value on those is terrible.
- gertef 9y agoBuying new saves on the transaction costs of the resale through a dealer and the risk of buying private used. Buying non-luxury cars is NOT expensive. Throwing away a working car is expensive.
- wnevets 9y ago>It's a myth that a brand new car is a bad deal. that's not really what I was trying to argue. I'm trying to point out the mindset of someone in her position purely thinking of monthly payments. An "extra" $100 a month doesn't sound like a lot of money and the sales people push this hard because it obfuscates the true cost of the purchase. For example my real estate agent kept trying to do this when I was buying a house, an "extra $200 a month is a small price to pay for the house you love".
- ahains 9y agoThe one that drives me crazy is comparing an ongoing expense to the price of a latte each day.
- thaumasiotes 9y agoIt's a fair comparison to make in terms of costs. But if your income temporarily stutters, you can just stop buying lattes.
- watwut 9y agoI don't buy latte each day. I know no one who does. If I would be theoreticaly buying latte each day, it would be either because I would love latte so much or because of some social reason (collegues I want to talk with are going there so I have to join etc). Compared product is usually not needed socially and is no more appealing then daily latte I am not buying.
- gertef 9y agoThe people who respond to sales tactics are the sort of people who buy lattes every day, fo rhte same reason.
- thaumasiotes 9y ago75% of the lifetime for 60% of the cost (your numbers) doesn't sound like a bad deal.
- KekDemaga 9y agoWhen you consider the time value of money it becomes an excellent deal.
- tabeth 9y agoYup! Personally I'd never buy a new car, but they aren't really that bad of a deal. I will say though, there's an uncertainty that exists that wasn't apparent in my simplification. Transmission failing out at 9 years would basically make your car useless, but if you had warranty you'd be good.