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The most egregious cost with these cars is not the thousand or two over in profit to the dealer, but rather the massive depreciation over the first two years. T

by ssharp 12y ago

The most egregious cost with these cars is not the thousand or two over in profit to the dealer, but rather the massive depreciation over the first two years. That's a substantial expense that almost everyone overlooks and one that can be easily avoided but just buying something a few years old.

ghaff 12y ago
Eh. Certified Preowned and various information sources have reduced a lot of the information asymmetry risk of buying late model/low mileage cars and therefore what was effectively a risk premium has shrunk as well. I'm not a particular expert and doubtless there are individuals who get good deals if they put in a lot of legwork and buy from individuals. However, when I've looked, at least used cars from dealers weren't any particular bargain.
- ssharp 12y ago
  Dealers don't list their used car prices at attractive prices, but they will come down. From the research of done when buying our past two used cars (in 2013 and earlier this year), the information asymmetry was still plentiful. Dealers get cars from auctions, off-lease, trade-in, etc. You have no idea what their cost actually is, unlike with new cars.
jcromartie 12y ago
When you can afford it, that depreciation is the price of getting exactly what you want, with a warranty, and being able to know that it has always been maintained and driven according to your preferences. All that said, I'm probably never going to buy a brand new car.
bkeroack 12y ago
An advantage of buying new vs used is that you make the vehicle completely fungible. Used cars are each relatively unique, and if you find one that is the "perfect" combination of model year, condition, options, color, etc, the salesperson has a considerable psychological advantage over you. With new cars, you can contact 10 dealerships within driving range and play them off each other until you get the best price.
- ssharp 12y ago
  You can go to cars.com, punch in a 150 mile radius and probably find multiple cars for sale with the specs you're looking for. When I bought the car I currently drive, I actually did have a hard time locating exact alternatives to the one I ultimately bought because the navigation package was fairly rare for the lower-end engine I wanted, but I just told the sales person that I'd be fine not getting the navigation package, which opened up a huge number of alternatives. I was also committal to the make and told the dealer so much. The best way to not give up a psychological advantage is to keep your options open. It's not always possible, but the more options you have to explore, the better.
Retric 12y ago
A lot of that ‘depreciation’ is a combination of dealer profit and sales tax. I got a good deal on a 'new' car at the end of a model year and my deprecation walking off the lot was around 5% of the car's value. However, I also got a new car with a 5 year warrantee in exactly the options and style I wanted so it's not really that expensive. Consider it’s 7 years old with 50k miles and in great condition. Assuming I keep it for another 3 years the net cost of getting the exact car I wanted will be around 10$ a month. Plus the added bonus of fewer repairs and less frequent and easier car purchases saves me time in the long run. Though, considering it's still in great condition I may keep it even longer than that. In the end it's not buying a new car that's an issue, it's buying a car frequently that's the real issue which costs people a lot of money.

by ssharp 12y ago

ghaff 12y ago

Eh. Certified Preowned and various information sources have reduced a lot of the information asymmetry risk of buying late model/low mileage cars and therefore what was effectively a risk premium has shrunk as well. I'm not a particular expert and doubtless there are individuals who get good deals if they put in a lot of legwork and buy from individuals. However, when I've looked, at least used cars from dealers weren't any particular bargain.

ssharp 12y ago
Dealers don't list their used car prices at attractive prices, but they will come down. From the research of done when buying our past two used cars (in 2013 and earlier this year), the information asymmetry was still plentiful. Dealers get cars from auctions, off-lease, trade-in, etc. You have no idea what their cost actually is, unlike with new cars.

jcromartie 12y ago

When you can afford it, that depreciation is the price of getting exactly what you want, with a warranty, and being able to know that it has always been maintained and driven according to your preferences. All that said, I'm probably never going to buy a brand new car.

bkeroack 12y ago

An advantage of buying new vs used is that you make the vehicle completely fungible. Used cars are each relatively unique, and if you find one that is the "perfect" combination of model year, condition, options, color, etc, the salesperson has a considerable psychological advantage over you. With new cars, you can contact 10 dealerships within driving range and play them off each other until you get the best price.

ssharp 12y ago
You can go to cars.com, punch in a 150 mile radius and probably find multiple cars for sale with the specs you're looking for. When I bought the car I currently drive, I actually did have a hard time locating exact alternatives to the one I ultimately bought because the navigation package was fairly rare for the lower-end engine I wanted, but I just told the sales person that I'd be fine not getting the navigation package, which opened up a huge number of alternatives. I was also committal to the make and told the dealer so much. The best way to not give up a psychological advantage is to keep your options open. It's not always possible, but the more options you have to explore, the better.

Retric 12y ago

A lot of that ‘depreciation’ is a combination of dealer profit and sales tax. I got a good deal on a 'new' car at the end of a model year and my deprecation walking off the lot was around 5% of the car's value. However, I also got a new car with a 5 year warrantee in exactly the options and style I wanted so it's not really that expensive. Consider it’s 7 years old with 50k miles and in great condition. Assuming I keep it for another 3 years the net cost of getting the exact car I wanted will be around 10$ a month. Plus the added bonus of fewer repairs and less frequent and easier car purchases saves me time in the long run. Though, considering it's still in great condition I may keep it even longer than that. In the end it's not buying a new car that's an issue, it's buying a car frequently that's the real issue which costs people a lot of money.