Buy New or Used Car: Which is Best for You?

[Greg Bernhardt]

I've heard the all the advice and read all the articles on why to never buy a new car. However from the option I am looking at, buying new doesn't sound that bad!

Consider my current scenario:

Used CPO 2009 LX Civic with 23,000 miles = $17,600
New 2012 LX Civic < 2000 miles = $18,600Isn't the newer model with less miles worth the extra $1000?

 

[Jimmy Snyder]

2000 miles isn't the same thing as new.

 

[Greg Bernhardt]

2000 miles isn't the same thing as new.

I made the number up, just thought it would have gone through plenty of test drives.

 

[rhody]

We had the same problem about 1.5 years ago, ended up with a new Civic DX for college grad daughter, good decision. We went back and forth a few times before deciding on a new one. Good luck. BTW. What is wholesale invoice on the slightly used one ?

Rhody...

 

[QuarkCharmer]

If you get a model of car when the new model comes out, sometimes you can get a great deal on a new car. It's very rare though, because usually the lots keep their older stock priced up anticipating people wanting a "deal" on the old model cars that "must go".

In my experience, it's almost always best to buy a used car with around 5-15k miles, provided it's a decent car to begin with, has a decent, proven resale, and is in brand new condition. One other thing I noticed is that (if buying from a lot), the used vehicles that are not of the same make as the dealer are usually more reasonably priced. I think it's because people go to dealer A to buy a car of type A, and thus, they can charge a bit more.

I have owned 8 new cars and several used throughout my still short lifetime, and I took a hit on every single one of the new cars except for two, which were make B that I got from dealer A, and were going out of style. The same late model (new) cars that "must go" from dealer B were a few grand more.

Never pay more than invoice on a new car. Their "sticker price" is a joke. Their invoice prices already include profit for the dealer.

As for purchasing from private parties, I found it to be too much of a hassle. People tend to think their car is worth more than someone elses identical car. By the time I found a good deal, on a good car, that was in good condition, it would have turned out better for me to just buy it from the start for 1k more, rather than waste the months looking.

It's all anecdotal, so take it with a grain of salt.

 

[TheStatutoryApe]

As far as I know the only problem with buying new is the cost. If you can afford it I don't see why not. Used cars can be a nightmare. Every car I have owned has been used and every one of them have cost me thousands with the various problems that came up. If you know what you are doing when buying, and buying relatively new, that shouldn't be a problem apparently but its still a crap shoot. I bought a relatively new Daiwoo that turned out to have a crack in the head gasket. It was under warranty so I took it to a dealer to be fixed. It later developed an on going problem of just deciding not to start on occasion which the mechanics were never able to figure out. Then one day the car just crapped on me. Turned out the dealer hadn't fixed the gasket, only sealed the crack, so the gasket blew and the engine was completely ****ed.

I may just have bad carma though.

 

[Pengwuino]

I've heard the all the advice and read all the articles on why to never buy a new car. However from the option I am looking at, buying new doesn't sound that bad!

Consider my current scenario:

Used CPO 2009 LX Civic with 23,000 miles = $17,600
New 2012 LX Civic < 2000 miles = $18,600


Isn't the newer model with less miles worth the extra $1000?

I think the guy selling the used car is an idiot for asking that much unless the fuel efficiency is really good (which I think those are, right?).

 

[TheStatutoryApe]

I think the guy selling the used car is an idiot for asking that much unless the fuel efficiency is really good (which I think those are, right?).

That's another thing, that price seems incredibly high.

Edit: Ah! CPO is Certified Pre-Owned. So basically a used car being sold like new. That's why its expensive.

 

[Greg Bernhardt]

That's another thing, that price seems incredibly high.

Which one? The KBB for the 2009 is 17,550

 

[TheStatutoryApe]

Which one? The KBB for the 2009 is 17,550

Yeah, sorry. I didn't realize what CPO meant. Those cars aren't usually going to cost a whole lot less than new. And its a Honda Civic. They don't lose much in value.

 

[Loren Booda]

I believe 20,000 miles on a Civic is worth about $3,000 for the first mile after the original sale and $3,000 for the remainder.

 

[Greg Bernhardt]

For those who do buy new cars, how much over invoice is it appropriate to ask for? $100? $200? $300?

 

[Loren Booda]

You might want to consult Consumer Reports (April issue?) for an approximate answer.

 

[Dembadon]

Disclaimer: I'm not the most objective person regarding this issue.

I never have, and probably never will, buy a new car. One can usually find a sufficiently new, used car for a better deal.

You might want to consult Consumer Reports (April issue?) for an approximate answer.

This! A thorough treatment of Consumer Reports' reviews has never let me down. I tend to be a bit ridiculous when it comes to big purchases, sometimes spending months mulling over issues that might seem trivial to someone else. I frequently get "buyer's remorse" as well. No, not just after a big purchase like a vehicle or something, I'm talking about anything over $100. I know, I'm sick. So, knowing that the "brand new" car I just drove off the lot, for which I just paid thousands of dollars, is now significantly less valuable would probably give me an aneurysm.

 

[Greg Bernhardt]

So, knowing that the "brand new" car I just drove off the lot, for which I just paid thousands of dollars, is now significantly less valuable would probably give me an aneurism.

My point is that if you buy a new car that holds value well, then it's not that significant a loss. The difference between a 2009 and a 2012 Civic might only be $2k. A 2009 could have 25k miles and older tech.

 

[BobG]

There's a couple of things that make the used price too high.

For one thing, the 2009 LX started at $17,500 and went up (depending on options). The 2012 starts at $17,600 and goes up (depending on options). We're in a recession - new car prices just aren't rising.

The CPO price is a little high, but in the ball park (especially depending on the options). Hondas hold their price well, although trading a 2009 in would only get you about $13,000 - there's a difference in your resale value and the dealer's resale value (which is one reason dealers like used cars - they usually make more of a profit on good used cars than they do new cars).

Basically, new car prices are reflecting the reality of today's market and it would appear the used car market (or at least that dealer) isn't reflecting the reality of today's market.

It's not a good time to buy used.

 

[Greg Bernhardt]

It's not a good time to buy used.

Ah I have heard this. Is it similar to house prices falling but rent prices rising?

 

[BobG]

Ah I have heard this. Is it similar to house prices falling but rent prices rising?

One big difference.

Most people get car loans whether they're buying new or used. Making it more difficult to get a home loan means more renters, even if the cost of houses is decreasing.

 

[jtbell]

Many people have been keeping their cars longer (instead of trading them in every few years like they used to), which reduces the supply of good recent-model used cars. Also, more people who are shopping for cars nowadays are probably looking for used ones instead of new ones, to save money, which increases demand for good recent-model used cars. Bingo, higher prices!

 

[FlexGunship]

Ah I have heard this. Is it similar to house prices falling but rent prices rising?

My understanding is that there is a premium on cars which carry a discount (i.e. used cars). The type of "used" that you are considering is not strongly affected. The demand for cars below the $5000 price point has jumped astronomically.

I was looking for a beater recently and capped myself at $3000. When I looked four years ago, $3000 would buy you a car with ~100,000 miles. This time around I could only find cars with about ~200,000 miles for that price. That's a significant change in the used car market and is mostly because people are avoiding car loans, so anything that can be purchased with cash is in demand.

Your purchase is unlikely to be affected significantly by this trend.

 

[turbo]

Used compact car prices are high these days. Personally, I would go with a new vehicle with a full factory warranty. You'll take a hit from the initial depreciation, but after that, the value should hold up well, and you'll have the peace of mind of having that warranty in case a certain production run has unforeseen problems, like head gasket failure.

BTW, a vehicle inspector from Maine was just given a brand-new Honda Accord after passing the million-mile mark on on his 1990 Accord. Honda's marketing people set up a Facebook page for "million-mile Joe".

http://www.washingtonpost.com/national/maine-mans-honda-accord-rolls-over-the-1-million-mile-mark-gets-a-parade-new-vehicle/2011/10/24/gIQADrcHCM_story.html

 

[Greg Bernhardt]

Good advice all! I'm off to test drive the 2012 Elantra. Good reviews. Love the gas mileage!

 

[turbo]

My point is that if you buy a new car that holds value well, then it's not that significant a loss. The difference between a 2009 and a 2012 Civic might only be $2k. A 2009 could have 25k miles and older tech.

Good point. I bought a 2010 Honda Ridgeline instead of the 2011. Since I don't drive much, it will still be a nice low-mileage vehicle a long time from now, and it will be quite valuable. I got what I wanted for my wife's old Subaru Legacy as a trade in, since it was nice, clean and in good repair with good tires.

The difference in what I payed for the "upgrade" Ridgeline TRS from the newer base model was just $500. I would have bought the wiring harness for the base model ($300 extra), so essentially I paid $200 for the RTS instead of the RT. For that, I got a nicer sound-system, a power seat that adjusts in every way you could imagine, alloy wheels and a full wiring harness for the Reese hitch. When I was negotiating with the salesman and his boss, I kept mentioning that the 2010 was already a model year behind, and that in a matter of 6 months or so, the 2012s would be out, so it would be two model years behind current. It took a few hours of haggling, but those were well-paid hours for me.

 

[BobG]

Funny how buyer mentality varies depending on the model.

When the new Jeep Wranglers (the JK) came out in 2007, I finally decided I had to bite the bullet, give up my '91 Cherokee, and get a 2006 Wrangler before the TJs were all gone. Surprisingly, the 2006 TJs were more expensive than the 2007 JKs. People loved the TJs and I guess I wasn't the only one that wanted one before they were gone forever.

In my case, I wound up buying a used 2005 (made in late 2005 with only a year's mileage on it). I had planned on getting a Wrangler that might be just a bit more capable than my Cherokee and couldn't see forking out extra for capabilities that I hadn't used in the past. Getting a Rubicon that sure didn't look like it had ever been taken off road gave me the extra capabilities without feeling like I was paying for them. But there was a bigger difference between a used price and a new price back then.

And, as it turned out, those extra off-road capabilities are a lot of fun.

And, for the record, those JKs have turned out to be pretty good, even if I still question why they want to make their 4-door unlimiteds look like a Hummer.

 

[dilletante]

A word of advice when buying a car for your wife or daughter -- whatever you do, don't take them with you to the car lot. The price goes up as soon as the salesman hears her say, "I like THAT ONE".

 

[turbo]

A word of advice when buying a car for your wife or daughter -- whatever you do, don't take them with you to the car lot. The price goes up as soon as the salesman hears her say, "I like THAT ONE".

I don't mean to derail Greg's thread, but that is EXACTLY what happened when my wife and I put our last log house on the market. Instead of hiring a realtor, I put an ad in Uncle Henry's Swap it or Sell it guide. No phone call, no head's up of any kind. That Saturday morning, there was a Caddy from Mass parked in our driveway. I went out to find out what they wanted, only to be asked to show the house. I let the couple in, and the wife gushed "This is so cute! Buy it for me!" At that point, my asking price became the selling price. I felt bad for the guy, but not THAT bad. I hooked him up with the lawyer that had done our title search, to save him a bit of money (update and certify without extensive research), and we closed in about a week or so. When I shop for cars, my wife stays home. She is NOT a poker-player and salesmen can read her like a book.

 

[Greg Bernhardt]

Good advice all! I'm off to test drive the 2012 Elantra. Good reviews. Love the gas mileage!

Well they offered me the 2012 which I liked, for $21,600 when Invoice was $20,800. So I walked out.

 

[Greg Bernhardt]

Called a Honda dealership and they offered me a Civic EX-L for $20,300. Given the true dealer cost is around $19,990 (truecar.com) that seems almost too good to be true.

 

[turbo]

Called a Honda dealership and they offered me a Civic EX-L for $20,300. Given the true dealer cost is around $19,990 (truecar.com) that seems almost too good to be true.

That seems to be a really good price at that trim level. Car salespeople and the dealerships they work for are pretty hungry right now, so they can probably trim prices to make sales. Of course, their distribution network offers incentives, too, which is something that doesn't show up in dealer costs.

 

[rhody]

Called a Honda dealership and they offered me a Civic EX-L for $20,300. Given the true dealer cost is around $19,990 (truecar.com) that seems almost too good to be true.

No Greg, it is not, getting a car for 1.5 % above factory invoice is not impossible. Get this when I bought my Ridgeline in 2007, I purchased it in a month when Factory to dealer incentives were in effect, basically, Honda was offering dealers a bonus, unbeknownst to me the buyer, as a result I was able to buy a new Truck for 2200$ under factory invoice. Needless to say, I bought the truck. Your quoted price is slightly above factory invoice. Sounds like a good deal to me. My usual markup I have paid in the past is between 2 - 3.5% to give you some frame of reference. It sounds like they want to move the car.

My dealer showed me their factory invoice sheets as well. I did not rely on truecar.com for that number. If the dealer agrees, have him show you that number, for peace of mind's sake. Good luck.

Rhody...

 

[Greg Bernhardt]

My dealer showed me their factory invoice sheets as well. I did not rely on truecar.com for that number. If the dealer agrees, have him show you that number, for peace of mind's sake. Good luck.

Rhody...

Rhody, truecar.com reports both invoice price and true dealer cost. Invoice cost was 21,200. The quote is under invoice cost. Am I confused here?

 

[rhody]

Rhody, truecar.com reports both invoice price and true dealer cost. Invoice cost was 21,200. The quote is under invoice cost. Am I confused here?

In your post above I believe retail is 21,200, and you were offered the car at 20,300, invoice 19,990 so your offered price of 310 $ over invoice is about 1.5%. That is a good deal. I would advise taking it.

I was really lucky I got my truck about 2000 $ under invoice, Honda paid the dealer the difference. I always said from 2005 when I start looking at them they were fine vehicles but over priced by 2500 $ Apparently the sales analysis guys at Honda figured this out too. I paid what the vehicle should have been priced at in 2005, almost to the penny. Amazing... Works for me.

Rhody...

 

[qspeechc]

Here's a question that more or less fits in with the discussion. Is it worth buying a car where the warranty has expired? Repairing a car, especially with all the electronics and fancy things in them today, is very expensive. Finding a good garage (competent, reasonable prices etc.) to fix your car is difficult.

How many stories have we heard of taking a car to get fixed, they quote several thousand more than they should, you find out later, they 'fix' the wrong thing, you have to take the car back, then they 'fix' something else, you get fed up, take it to another garage, and they 'fix' it, and so on.

 

[turbo]

Even worse, when a car is our of warranty and you try to get repairs done, you may find that only the dealerships have the diagnostic equipment and codes to determine the problem. You may have trouble finding a garage that can properly reset the tire-pressure monitoring sensors in your vehicle's wheels. Vehicles are getting 'way too complex!

 

[BobG]

Here's a question that more or less fits in with the discussion. Is it worth buying a car where the warranty has expired? Repairing a car, especially with all the electronics and fancy things in them today, is very expensive. Finding a good garage (competent, reasonable prices etc.) to fix your car is difficult.

How many stories have we heard of taking a car to get fixed, they quote several thousand more than they should, you find out later, they 'fix' the wrong thing, you have to take the car back, then they 'fix' something else, you get fed up, take it to another garage, and they 'fix' it, and so on.

Depends on your mechanical ability and on the car.

You don't buy a 'cheap' luxury car with all the trimmings even if it's several years old and has a cheap sticker price.

If you're buying some basic transportation, then you'll probably be okay if you have at least a little knowledge about cars and car repairs.

But, as turbo mentioned, tossing in the evolution of ABS into electronic stability control (or similar) and you're getting to the point where basic transportation can get pretty complicated. (I love the idea of the electronic stability control, though. I really wish I could have gotten my son's Mountaineer into the mountains before he totaled it. These really should perform very well. Funny thing is that he wasn't very enthusiastic about taking that vehicle off road and trashing it, and then he wound up totaling it anyway. Just shows you where his priorities got him.)