The Ancient Debate: To Buy New . . . Or Used?

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There are plenty of good reasons to buy a new car. . . and just as many good reasons to buy a used one.

Also, there are some not-so-great things about buying a new car – and exactly the same goes for buying used.

In between somewhere lies the balance.

If you decide on new, you won’t have to worry about the car. That is probably the biggest tangible upside.

A new car is new; it has zero miles – so no wear and tear. And it is completely warranted, tires to roof.  If anything turns out to be wrong with it, you won’t have to pay for it.

Which is a load off. Peace of mind. 

Also: One new car is also exactly like every other make/model new car of its type and trim/color. Identical in absolutely every way.

This includes the one on Dealer X’s lot and the one on Dealer Y’s lot. Whether you buy here or there, you end up with the same car.

This leaves you free to worry about the price of the car.

With used cars, it is the opposite.

You have to worry about the car, most of all.

This one might be good. . . and this one might be a water-logged, bent-framed disaster.

Each used car is unique – with a unique history. Even if they are the same year/make/model/color/trim.

One will have more – or less – miles on the odometer. Another will have more – or e less – wear and tear. One will have been garaged all its life and taken exceptionally good care of by its previous owner. Another will have coffee stains on the seats or been parked outside and neglected.

After it’s been detailed by a dealership, it will be very hard to tell the latter car from the former.

This makes buying any used car inherently more risky.

There are things you can do to reduce the risk – a thorough inspection, the purchase of an extended warranty – but risk is always there by dint of the fact that a used car has been used.

It is a machine, after all – and machines that get used wear out, no matter how well they’re treated. This is even more true today because cars are also laden with electronics and suffused with software.

Out of warranty, replacing electronic parts (they are never repaired) gets pricey. Sometimes, it’s hard to figure out what’s ailing the car because electronic/software problems can be intermittent. They come – and go.

The car doesn’t work right when you’re driving it but – shazam! – it works just fine once it’s at the dealership.

That gets annoying – as well as expensive.

As far as mechanical wear and tear, there are the obvious things: brakes, tires and (if it has a manual transmission) the clutch. But you will also want to take into account things that aren;t necessarily obvious but nonetheless potentially BigTicket, such as major scheduled service items. For example, timing belt replacement. Many new cars with overhead cam engines have to have this done every 75,000 miles or so. This isn’t something you can ignore without consequences. If you skip or delay the getting it done and the belt breaks, the engine will stop and you will be stuck.

As this is a major repair, you don’t want it to become necessary when you’re not ready. Like when you’re on a road trip and the belt fails in an unfamiliar town and now you’re stuck and at the mercy of whatever shop is nearby.

If the car you’re looking at is going to need a timing belt replacement soon (check the owner’s manual; scheduled service intervals according to mileage will be listed in the appendix) or any other major service, find out what it will cost and try to haggle down the price of the car accordingly.

The other issue with buying used is that there is pressure on you, the buyer, to snap up a car you found that speaks to you, is the color you like, hasn’t got too many miles on the clock, seems to have been well-cared for – and so on.

Because it may be the only one just like it that you can find. You may have to make a snap decision. If you wait until tomorrow, someone else may have bought the car.

This gives the seller the advantage. He’s go the only one in stock.

With a new car, it is possible to order exactly what you want it – color, trim, equipment. You may have to wait for it – and you will probably pay more for it (dealers tend to be less haggle-friendly on cars that are special-ordered because they want to sell you a car in their inventory, on the lot right now) but you will end up with everything you wanted and nothing you didn’t.

Like the peace of mind that comes with zero miles on the clock and a full-coverage warranty, being able to get exactly what you want may not have an exact dollar value but it’s definitely worth something.

Conversely, with a used car, you generally will have to . . . compromise. You can’t special order one the way you want it to be fitted out. You will probably have to accept one with most of the features you want but some you might not.

A color that’s not your favorite – but the mileage is really low.

Some door dings – but it’s got the sunroof.

Someone smoked it in  . . . but the price is really attractive.

Etc.

But you’ll pay less.

Watch out for:

  • Turbocharged engines – These used to be found almost exclusively in sports cars but have become commonplace in family cars as the car companies try to squeeze more mileage out of cars while maintaining power/performance buyers expect. Turbos provide the on-demand power/performance of a larger engine with the fuel efficiency of a smaller engine – but the downside is more Stuff to potentially break or need repair as the car ages and the miles go by. While a larger engine without a turbo (such as a V6) might use a bit more gas than a turbocharged four, the V6 might cost you less to own over time, due to lower repair/maintenance costs.
  • Direct injection – This is a very high-pressure form of fuel injection that almost all cars made after about the 2016 model year now have. It boosts fuel efficiency by about 3-5 percent, but the downside is the complexity of the system as well as potential down-the-road maintenance issues – specifically, carbon build-up on the engine’s internals. Cleaning that off can require partial disassembly of the engine, a not-cheap job. The car companies are attempting to deal with this by adding an additional port-fuel injection circuit (the fuel spray keeps the internals from crudding up) but this means you’ve now got two fuel systems to potentially worry about, post warranty.
  • Auto-leveling suspensions – Many higher end cars have suspensions that can raise or lower the car’s ride height; often via pneumatic springs at each of the car’s four corners. Be very careful if you are looking at a used luxury car that has such a system as the repair costs can be brutal.
  • Certain automatic transmissions – Some late-model cars have automated manual (also called “dual clutch” or “direct shift”) transmissions that operate like traditional (hydraulic) automatics, but are hugely complex pieces of technology and when they fail, the cost to replace (not repair; they are throwaways) can run to as much as $5,000 or more, parts and labor. I won’t mention any names (VW DSG transmission . . . whoops!) but do your research before you buy a used, especially high-miles car equipped with one of these.
  • LED lights – You’d think a bulb would be no big deal. Think again. Sometimes, those little bulbs cost big bucks. If you are looking at a used car that has a few burned out LED lights (especially the LED lights in the third brake light, or Center High Mounted Stop Light) find out what they cost to replace before you agree to buy the car – and factor that cost into the price you pay for the car.

And if you’re careful, do your due diligence – including a careful inspection of the car by a competent, trustworthy, independent mechanic (not the dealership’s mechanic) prior to purchase, or as a condition of the purchase, you can improve your odds of not getting stuck with big bills.

New cars, on the other hand, will always come with a big bill.

Not only do they cost top dollar – they lose value like the Titanic lost buoyancy after it hit the iceberg. We are talking about an average 30-40 percent drop in retail value after about five years from new.

Ten percent, the first year. 

That is a huge discount  . . . for you.

If you buy it used.

And while there will always be some risk involved when you buy used, this is compensated to a great extent by the much longer service life of late-model cars (that’s anything made during the past ten years or so).

75,000 miles on the clock of such a car is functionally equivalent to 15 or 20,000 miles on a ’70s-era car.

It’s more than that, actually.

Because a ’70s (or even ’80s) car with 20,000 miles on it had fewer miles left on it. Most of them became unreliable money pits right around the 75,000 mile mark and often began to need major work after 100,000 miles or so.

Almost any car built within the past decade or so has a useful life (defined as the period before which it begins to develop regular problems) of 150,000-200,00 miles and it’s common for some to go 250,000-300,000 without needing major repairs.

You will of course have to spring for maintenance stuff – things like tires and brakes, maybe even a timing belt change – but the major, kill-the-car stuff (such as an engine failure) is not likely to happen until the car is more than 20 years old and has at least 200,000 miles on the odometer.

Rust is also less of a worry today than it used to be. Which is a huge plus.

This doesn’t mean you shouldn’t still look for it. It means it’s less apt to be a serious (as in structural) problem unless the car is 15 years old or older and was driven for years in severe winter weather, in a part of the country where lots of road salt is used to keep the roads clear.

….

All of the above may not have answered your question – should I buy new, or used? It wasn’t meant to. Because it’s a personal decision, based on your needs, your comfort level and, of course, your budget.

But hopefully, this will have helped give you some things to think about – and help you figure out which fork in the road makes the most sense for you.

This is an excerpt from Eric’s new eBook about the car buying process – which will be given out free to all EPautos subscribers. If you’d like a copy, please join our little group of Libertarian-minded gearheads! The sign up button is on the main page, top bar.

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49 COMMENTS

  1. Hi Eric, et al,

    I have bought about an even number of new and used cars. I’ve also had pretty good luck….the truck I drive now, a 2002 Toyota Tacoma bought new, has been the most reliable vehicle I’ve ever owned. I have supplemented it with a used 2007 Avalon for my “nice” vehicle. The reasons I’d never buy a new car at this point are as follows:
    1) New cars are absurdly overpriced. I simply cannot justify such an expenditure at my age.
    2) New cars are mostly butt ugly and getting more mundane.
    3) New cars are complicated which introduces more potential points of failure and limits the amount of work I can do on them myself. I don’t see myself doing engine or tranny overhauls anymore, but brake jobs and normal maintenance items are within my scope.
    4) New cars are flimsy due to the opposing demands of safety and fuel efficiency. Even my Avalon has lots of, expensive, plastic parts as I found out after running over a dead deer at 72MPH and it’s ten years old.
    5) New cars have “features” that tend to be non-optional and sub-optimal. One of these is the trend towards adding LCD panels that include radio, GPS, A/C and heating control and so forth. It’s both a distraction and a potentially expensive point of failure. And boy do the designers of such have piss poor human interface designs.
    6) New cars have too much computer technology. Mercedes was bragging a few years back about having 300 networked processors in their cars. To me, as a former fault tolerant OS programmer, that was a huge red flag. Not only does such complexity present a huge wad of potential failure cases, it also allows the manufacturer a degree of control that I find distasteful.

    There are probably more reasons, but that’s just one dude’s take. BTW, Eric, sorry to have delayed donations….said Avalon repair actually put a hit on my budget.

  2. i have acquired them new and used. and i have leased them.

    over the years.

    mainly benzes. but a wonderful vw scirocco i purchased new. and then the original honda crx. both were bulletproof. and a lotus europa big valve twin-cam. much fun.

    in 1971-72 leased a m-b 220 and a 240d. wonderfully reliable vehicles.

    replaced them with a pair of 450sel’s. great cars.

    in 1986 acquired the most bulletproof benz i ever owned, as well as the most fun to drive, a 560sel.

    by 2000, and 252,000 miles, the 560sel was needing a very important and difficult and expensive to find part[power steering pump].

    ordered up the successor sonderklasse sedan and the new ml500. when they arrived, checking them out, i refused delivery because of the electronics. my dealer friends thought i was crazy.

    turns out, i wasn’t, these electronified cars were garage queens.

    so, in the interim, i started to acquire used benzes. my first was a 1987 560sec. 43,000 miles arctic white, blue leather interior[original benz racing colors]. one owner. a widow in pelham manor ny. all service records from the m-b dealer in manhattan. a great car until it started smoking really badly within 15,000 miles. pulling the cylinder heads was a real revelation. the seller apparently only drove the car from her residence to her country club for an afternoon of bridge. engine never got warm. so, valves and guides, cleaning the piston crowns. and the timing chain while we were at it. had i borescoped the cylinders, i might have been spared this level of fix-it.

    still have this car. it is immaculate.

    a couple of years later, i stumbled on a 1997 s500coupe just as the san antonio m-b dealer put it on the market. owned by an elderly couple, it only had 20,300 miles. but it was starmarked[cpo’ed] at the time.
    immaculate. first time in my local m-b dealer, they determined that many suspension components needed replacing. all on m-b. that was nice.

    my next find was a 1995 e320cabriolet. 4,100 miles. owned by a dealer. never titled. i am the first registered owner. also arctic white, blue canvas top, and the last of the blue tanned leather interiors. i replaced the passenger side sodium azide bag and installed a glove box. a splendid find.

    then in 2009, i went looking for a new benz coupe[216 seriess]. not elegant and with the shift lever on the steering column so that cup holders could be fitted to the center console.

    what i wanted was the very elegant 215 series[last of the sacco design bureau coupes].

    found one that had just come off lease. a 2006 cl500. 21,000 miles. cpo’ed by a benz dealer. a great price. lessee had left his service papers in the glove box. discovered that he was a doc and only drove the car from his residence to his office. it was virtually new.

    since it was a sonderklasse car, i expected it to be loaded. little did i know until i started perusing the owner’s manual that benz had started to offer options for sonderklasse cars – and this one had only one, keyless go.

    so, i started looking for other 2006 215 series that were cpo’ed. found a real sweet one in monterey, ca just coming off lease. a cl55amg. though it had 46,000 miles, it was immaculate. silver with a non-standard java interior. loaded. a remarkably sweet car. perhaps the last of the real benz coupes.

    i could never find another supercharged 215 series, loaded, in suitable colors, but i did find a naturally-aspirated 2006 cl500 in 2011 with 38,000 miles from a dealer so it was cpo’ed. acquired it. also immaculate.

    then in 2010, i acquired a porsche cayenne turbo with 2,100 miles from a dealer in nj. it was the gm’s special car. complete warranty. i am the first registered owner. a wonderful machine.

    i have driven the new benz, porsche vehicles. i think i shall not add to my collection with any of the new stuff.

  3. I found a great way to buy a new car without having to deal with pesky salesmen and without ever having to name a price: Test drive cars to find out what car you want and with which options, go online and find emails for all dealers in your area which sell that car, then ask them to give you a drive out price for one. When a dealer gives you an offer, email it to all the other dealers asking them how much they will beat it. Keep doing this until none of them will offer a better price. I have purchased 3 new cars this way – has worked well.
    I do think new cars are getting more and more undesirable with all the snooping, nanny, and driver assist B.S. that are being put on them.
    In January of 2014 I got a good deal on a 15 month old 2013 Ford Focus SE hatchback. It had 11915 miles on it and no scratches or dents. The owners had small children, so I found some french fries here and there, and it certainly did not have that “new car smell.” Other than that, and a little tire wear, it looked new. I purchased it for $14,728 including TTL. I believe the MSRP on that car was somewhere around $21,000. Right after I bought it, Car Max offered me $13000 for it, so I think I did pretty well. Plus the previous owner had a sub-woofer professionally installed in it, so the sound system is really good. A very good thing about getting a car that is only about a year old is that you still have the factory warranty for almost 2 more years, so almost as good as buying a new car but saving about 33%!!

  4. Hello Eric, as an owner of a couple old cars and one newer one, (2005 Sebring) which I use a lot for travel, I am constantly debating the new vs old car issue. Perhaps I am a little off topic with my commentary, because my idea of “old” is something from the 80’s or earlier. But anyway, one of the things that keeps coming up in debates is the durability issue, and in my experience, the older cars are probably just as durable, or nearly so, as anything on the road today. Furthermore, in the event of major engine or transmission failure, they are much cheaper to fix. Consider your TA. How much would it cost you if you blew the 455 under the hood? A grand? Maybe? My guess is it would also be fairly simple to find someone with the mechanical expertise to fix it also. But back to the durability question; I have used as a daily driver over the years a 75 Elite, a 71 Bel Air, a 70 Fury, a 79 Caprice, an 89 Mustang, and an 88 Bronco II, and each of these vehicles had over a 100k on the clock when I wrecked, sold or traded them with no major mechanical issues, with the exception of the Fury which needed a new transmission to the tune of 300 dollars. The Caprice had 150 plus on the odometer and was using a quart of oil about every 3500 miles when I sold it. It was one of the best cars I ever had, as during the 6 years I used it I only replaced an alternator, in terms of repairs. The only real issue with it, being, that when I bought it, it had a slight roof leak, which probably could have been cheaply fixed in the beginning. But being a twenty something at that time, it got neglected. In additon to the above, I have used a 68 Firebird, a 70 Challenger RT and a 72 GranTorino as part time drivers, with the Torino being mostly all original with 100K on the odometer. I change the oil on the Torino every 3k miles and it uses no oil between changes. The transmission has a slight leak (a quart every year), and the wiper switch is broken with the AC and blower motor also not working. Other than these things, the car is mechanically sound, and I think I could have the car, excluding the AC, on the road as a daily driver for probably a couple hundred dollars. With the current state of affairs with the engine, I think the engine could go another 100k miles without rebuild. The big issue with this car as with most carburated V8s is they use more gas, but with your earlier suggestion of an overdrive transmission the gas use might be mitigated. My Sebring, in contrast, has been pretty dependable, but with 96k miles the engine is starting to need to have oil added before the 3k mile interval oil change, so I am worried about the engines durability at this point. So with the idea that cars are mechanically sounder today then in the past, I remain a skeptic.

  5. At 71 I know a few things because I’ve seen a few things.
    I purchased two new cars in my life and had problems with both almost immediately.
    Never again!
    Remember the song, “Wreck of the old ’97”? True story about an engine losing it’s air brakes on the three mile down hill grade from White Oak Mountain into Danville, Va.
    When it reached the trestle crossing the river which curves the road to follow the river bed, he was doing close to 100 mph. The posted speed for the trestle was 5 mph. Needless to say, it jumped the track and went down into the river bed.
    Point is, 97 was the number of the train. The engine was 1102. It had been delivered to the Southern Railroad Line by the Baldwin Locomotive Works just 36 days before the brakes failed.
    As we used to say back in the 60’s when we got a lemon, “Must have been made on a Monday.”
    Look it up, Eric. This happened in your neck of the woods.

  6. I have noticed on almost all the comments that people go used.
    These same people have a good automobile mechanical education.
    After buying a truck I went through a dealer and he was charging $90 an hour to fix their brand of vehicles. He did not fix my vehicle because I wouldn’t let him touch it.
    I do not have a good automobile mechanical education. I have found a good mechanic that works at a reasonable rate. We trade services sometimes.
    One of my brothers-in-law used to keep three of the same kind of car. One was parted out. One was being overhauled. One he drove. But he lived far from where he worked and often put over 100,000 miles on a car in a year. He preferred a small farm in the country.
    But he was an exceptionally talented mechanic. (He worked in accounting) He also bought small sedans. Easy to work on.
    That was many years ago. Last I heard he was experimenting with heating the fuel to get better gas mileage on the cars. Lost touch with him after my first wife and I divorced in the 80s. He should be about 70 now.
    I fully expect the government to buy up old cars to take them off the market. The new car market in this country is almost strictly on a lease basis right now. And the dealers have way too many new cars more than a year old.
    The cost of new transportation is far too high and the depreciation per year makes it economically unfeasible for an average person. Your used fleet cars are also getting older as businesses struggle to survive the current depression in inflated prices.
    SO what do they look for in a car?
    CHEAP and easy to repair . . .
    As EPA rules complicate things, that is getting harder and harder to find.

    • I completely agree, David!

      I’ve been on both sides of the coin. When I was in my mid 20’s, I still didn’t know squat about cars. I had managed to find a good mechanic who worked cheap, but still….paying for labor which is more expensive than what you get for your labor, is a losing battle! I read a book and did my first brake job c. age 26, and just progressed from there. Half of working on cars is just having the confidence to do it. Next I did a water pump, zand it wasn’t long before I rebuilt an engine (with many borrowed tools).

      Today’s cars? It’s getting to the point where even the best independent shops can’t do many things on them. Some of the software issues and computer diagnostic tools are dealer only. And as they computerize/electronify more and more parts of the car, the more they are getting untouchable by independent shops- to the point where on some you can’t even change a simple brake master cylinder anymore, because the electronic components in the system now require an electronic reset in order just to bleed the stupid thing properly.

      Instead of freeing us, technology is being used in such a way so as to further enslave us, now.

      Ditto about the gov’t using our money to buy up the old cars; or maybe they’ll just do like in Europe and just decree them illegal, or impose such ridiculous inspection standards that no car more than a few years old can pass. It’s already like that in some states. My Excursion is from MA. It was at the salvage auction. It wasn’t in an accident or anything, it just needed exhaust manifold gaskets and a full brake job. In an expensive blue state like MA. that could cost several thousand dollars, with no guarantee that it would even pass emissions after that. So this MINT, babied, like-new vehicle end up at a salvage auction. Good for me…but if I were the original owner who pays all of those high taxes to live in MA. I’d be letting off shots- which i guess is why those blue states are so into “gun control”.

  7. In horse trading and used car buying there is a terrible penalty for ignorance.
    Every car and truck I have ever owned from age 26 until the present time of age 74 ignorance is the number one factor I have had to deal with.
    First I think all new car reviews are prejudiced. The trend is to think in idealistic terms.
    Seldom do you see a background check as to the reliability of the vehicle based on previous models.
    Even prestigious consumer magazines are guilty of this. And it is not just cars. Appliances also have faulty reviews.
    Each year. Consumer Reports surveys records of repairs amongst their subscribers. Each year, any car I have bought falls into the same pattern of repair that this survey shows.
    If they black mark an electrical system, an engine, brakes, transmissions, etc., that is what is likely to go wrong with the vehicle and year I have purchased.
    Consumer Affairs has a little known but active group of car owners that have publicly complained about
    a vehicle someone has owned and had less than satisfaction from the car dealer they dealt with.
    This on-line service is free. It also has any number of complaints about a vehicle. Anything over 100 complaints means there is a serious issue here.
    The government agency handling recalls is overwhelmed with people complaining about vehicles and as far as I can see they do nothing about it most of the time.
    So a Nissan Truck might have a recall on one year and the very same vehicle a year later has no recall on it even though both vehicles are basically identically engineered the same way with the same problem.
    Something seriously wrong with an agency dealing like that.
    All of that said, I still feel a car company with a decent record of repairs over 5 years is a better deal than going into a used car market blind.
    What is a scandal? American cars with numerous black marks against their name in the Record of Repairs every April in Consumer Reports. By the way, the reviews often ignore their own records of repair on a vehicle name.
    I still think taking your mechanic with you to used auto lot makes a lot of sense.
    If you are ignorant of what goes wrong with the model you are looking at, I suggest you go with one of the top cars that have performed well in the past as a new car buy.
    Ford, GM, Chrysler, KIA, Nissan and some others have a lot of black marks over the years.
    Said companies also have a notorious habit of hiding behind the American Built logo. The one thing you can be sure of is these companies have no love for their customers. The theme being a fool is born every minute and we will sell him or her a car.
    The last sedan I bought was a 1995 Toyota Camry LE with 60,000 miles on it in 1999. It wasn’t the best car I have ever owned. It also had a number of poorly engineered designs. Like a weak front wheel drive transmission that gave out in a foot of snow in the about 2001. Had a friend put a used transmission in it 3 years later. It now has 147,000 miles on it in 2017.
    It smokes a lot. But several oil supplements are keeping it running. Also went to a hotter plug.
    I still own a 1985 Toyota 4 cylinder truck with a 169,000 miles. Needs a fuel pump. But the engine is still practically new. With about 40,000 miles I ran it to Florida and back. On the way back I used a Slick 50 treatment on it. It was a good $20 investment.
    Sometimes you just get lucky.
    What I think has to happen next? I think we need to administer discipline to any company that claims they are American Made when all the parts come from overseas. When they claim American they better put some quality into the product and reduce the record of repairs considerably or I don’t want to hear about them being made in America anymore. When the claim to be American they are using our good name on a product that has normally been lose to junk.
    I certainly do not want to hear about a Ford made in Mexico. And I have a poor opinion of Ford ever since the Ford Escort came out with junk.
    That was the last American-made new car I have ever owned and I have never been sorry to go to a Toyota. That Ford did not even make it through 3 years of gentle use.
    One thing has not changed. They are all a bunch of crooks. And they have definitely taken the place of the good old fashioned Horse Trader with all of its crooked deals.

    • HAhaha! Yeah, you gotta LOVE those car and consumer magazines! Looking back at many of their “top picks” or “Car Of the Year”s, is like looking at a list of the cars that were the biggest turds and ended up in the scrap heap before all others and had the highest depreciation. Some that come to mind: The Ford Fairmont- LOL- heralded as “the car of the future” ROTFL!!!! The Dodge Omni (ditto)….PT Crusier; Renault Alliance; Prius… (You could do a stand-up comedy routine just standing on stage and reading the list of “Car of The Year”…)

      I have a copy of Consumer Guide’s Used Car Guide from the 70’s. What a difference. They’d give high marks for tried & true drivetrains, and caution against new ones of unknown durability, etc. It wasn’t long after that, that they switched gears, and started giving highest marks based mainly on high MPGs, with a total disregard to durability and performance, etc.

      Cars that got the highest marks in that old book, like the Buick Electra (hailed as “bulletproof”) were dismissed a year or two later, just because they got poor mileage, while little flimsy econoboxes were lauded as the best thing since sliced bread, even though you could buy one new and it would be on the scrap pile a few years later, while the old Electra was still holding it’s own.

      Now the reviews all seem to focus on how much luxury, or how many tech features you get, or how “advanced” the car is. (With no mention of the fact that more “advanced” it is, the more there is to go wrong, and the more expensive it will be to get fixed).

      I think Eric’s reviews are the only honest reviews I’ve seen in decades. And what does he get for it? Blacklisted by GM, and tossed out of their review vehicle pool.

  8. One factor in Not buying a new car is the problem of hacking! New Cars have NO Protection against it. You car could become your tomb. Think about that in you New Vs. Old comparison.

  9. Here is what you do. Purchase second hand and only vehicles of one brand (OK, if something really interesting comes up and you want a hobby car you can purchase another brand for that one). So, all the daily driven cars in the family are the same brand. Now you collect parts from the wrecker, from U Pull It, from other people who advertise parts for your brand and from friends (join a club, get on a forum, etc., you will meet some very good people and make amazing discoveries about the World). From time to time you purchase an end of life vehicle and part it out. Keep as many of the parts as you can. Sell what you cannot store away.

    Here is one example from a friend’s personal experience.

    She got a Peugeot 406. It has a V-6 with auto transmission. The transmission was failed when the car was obtained.

    What happened was that car was being parted out by commercial repair company when the company owner decided to get out of the business due to failing eyesight. The new owner of the company did not want to bother with buying and selling cars, let alone selling second hand spares and parting out cars. So, 406 was sold for $400.00. Terms were payment on or by 20th month following sale. Car was purchased as is.

    I had a spare auto transmission which I had obtained from a wrecker. It was attached to an engine I wanted for a project (stick V-6 into Peugeot 205 or if possible into 106). Engine and transmission assembly with loom cost $300.00 (no-one wants French cars around here- sometimes choosing an orphan brand has advantages and is helpful). I separated the transmission from my engine and gave it to her. Refreshing the transmission cost me some 5 hours labour. Big deal. As she is a friend no doubt she’ll help me out with some project or other some time in the future.

    Swap transmission cost one Saturday on the driveway. Fill with oil, test and drive around block. Test again by burn-out (easy with front wheel drive) and quick trip down the motorway. Check computer etc. Sit on porch and murder one crate of beer. Project also cost all day Sunday recovering from sore head and uneasy guts. You get that sometimes.

    406 also needed a tail light, speedo computer and replacement windscreen. All these were obtained from club members and wreckers. Screen was fitted by professional auto-glazier who lived nearby and enjoyed the Saturday evening’s goings in which IIRC he partook enthusiastically.

    Total cost of up and running car = $670.00. A new equivalent would be a 508 and it would cost minimum of $38,000, far more if up to the same spec as this one.

    She has since collected a number of spare parts such as body panels, engine and transmission parts, switches, trim and all sports of bits what can break. I do exactly the same thing. Anyway, they are stored in boxes under her house. If anything goes wrong she has the parts for the repair or, if not, she can swap them with other people to get what she wants.

    Social. Cheap. Reliable. Full 100% equity and no debt whatsoever. Fun times.

    Try it and see.

    Si

  10. I’ll be 55 soon, and I’ve never bought (nor will I ever buy) a new car. Even when they made cars good, buying new wasn’t a smart move unless you were in a business where you drive insanely high miles every year. Today, with planned obsolescence and cars being so ridiculously complicated that they will be financially unfeasible to own after the warranty expires, it just doesn’t make any sense at all to buy new.

    As other commenters below have said, just the taxes and insurance alone are enough to queer the deal.

    Let someone else eat the depreciation!

    “Warranty” they say? Warranties don’t last very long, and I couldn’t even imagine the hassle of having to always take my vehicle to the stealership; drop it off; pick it up; rinse and repeat, for numerous things, from minor features to major mechanical issues.

    ‘Least if something minor breaks on one of my old trucks, I may fix it, or I may not (Oooo! The heated seats in my Excursion don’t work! Who cares? But if that were a new vehicle, I’d have it fixed just to keep up it’s value, and because I had paid for the privilege. Not that I’d buy heated seats, though- but you get the idea)

    And new vehicles aren’t new for very long. I don’t care if it’s a Ferrari- in a few months, it’s just another car. The newness wears off; you get used to it; little quirks manifest themselves; problems develop, and before long you’re saying “I paid all of this money, and I still have problems!”.

    Get an old vehicle in good mechanical shape, and all the bugs will have been worked out long ago, and the original owner will have eaten the hassle for it. (One of the reasons I like high-mile vehicles. If she’s running good with 200K miles on her, someone took good care of her, and all the bugs were worked out long ago. Anything that’s gonna fail has been replaced already; and what ever is still working good, is likely bulletproof.

    And if you have to finance the car (and to get anything halfway decent these days, you most likely will have to), add in the interest as yet another cost.

    I see so many people at the lower end of the economic spectrum who buy new or late-model used cars, and it is killing their finances. They’re literally making themselves poor for their cars. A 20 year-old 4-door Chevy would be plenty to shuttle them from their apartment less than a mile away to the factory where they work at $10/hr., but they don’t have the discipline to even save a lousy $2K to buy that Chevy, so they go and finance a car for many times that (+taxes, reggie, full coverage ins.) and the damn thing sits there in the parking lot of the factory all day. (These are the dumb cattle that Illuminati know so well! Right, Eric? )

    Sad thing is, that even these old vehicles are getting to be worth so much, that it’s getting to the point where you want to carry full-coverage on them. I’m currently doing so on my ’00 Excursion. (Neighbor wished he had been, when he wrapped his ’99 4×4 F350 supercab dually powerstroke around a tree last year!)

    I like my old vehicles just fine. Never had a car payment in my life. Takes a little effort to find a good’un, but it’s worth it, as I almost never have a problem. (Glad I don’t live in the ‘burbs anymore, where I always had to shuttle new-car driving friends to the service department/mechanic’s. Yeah, your car with 2,760 miles needs to go to the shop three times in a month and a half. Thank goodness for my old car with 276,000 miles on it to take you there!)

    And ya know? Even with my ancient vehicles, I worry about where i park when I go to the store; don’t want no shopping carts rolling into me, etc. I couldn’t even imagine if I had a NEW vehicle!! I’d have to bring someone to stand there and guard it.

    • It did make some sense to buy new back in the good old days – IF you were smart and got exactly what you wanted or needed, in the long run.

      I bought a brand new 1973 Chevy K20 and might still be driving it today if I hadn’t been a dumb kid and ordered it with an automatic instead of a four speed manual transmission.

      • Very true! I used to lust over those trucks when I was a kid. They were indeed a good deal, too! Simple; bulletproof (as long as ya didn’t live in the rust belt), reasonably-priced, and REAL trucks, with vinyl on the floor and bench seats! Would have bought one new when I was a teen in the late 70’s if I could have afforded it.

        And you COULD get what you wanted. You wanted A/C or a tach, you got it. Today, to get one thing, you have to order a “package” with a bunch of crap that you don’t want or don’t care about.

        I used to pass this place when I was a teen:

        Not sure if we can post images here, so if that didn’t show up, just see this:
        https://c1.staticflickr.com/8/7213/7176600900_1ed910a79b_b.jpg

        I’d take any one of those…to this day!(except that damn Caballero- get that outta there! -apologies to Eric 🙂 )

    • Shuttle less than a mile to a factory. Can’t imagine living less than a mile from a factory but no matter what my work place might be, a mile is a nice walk in the morning…..two miles is better.

        • When I lived in the city, I’d walk everywhere (Man, it kept me in good shape!). I wouldn’t even dream of driving only a mile! That’s a <20 min. walk. I liked bad weather. I'd have the streets to myself then. It sure beat sitting on some stuffy bus with a bunch of clowns who waited longer for the bus to come than it would've taken them just to walk.

          • My last 5 years in the Dallas area I lived only a mile to a mile and a half from work. Rode my bike unless it was raining. Saved money on insurance also since I was not commuting.

            • In my early 20’s, when I lived in the city, and [one of the rare times in my life] I had a 9-5 actual J.O.B. Ic used to enjoy my c. 1.5 mile walk to work. Helped me to wake up and gave me some time to think, and a little freedom and enjoyment before going indoors; and then the walk home was great, as it gave me the opportunity to get out of miserable work mentality. The walk was the high point of my day. 30 years later, I still remember many of those walks- the cars I saw parked along the way (A ’65 Tempest!); the scenery; my thoughts; the weather. Instead of just the utility of getting to work, the walks gave me some pleasure I would not have otherwise had.

  11. Other costs for a new car/truck are outrageous license fees and full coverage insurance premiums.

    You can make a lot of repairs to a used car just on what you save on license and insurance.

  12. I live in Arizona. The annual license plate fee is based on the car’s value. On a $25k new car, the buyer will pay a first year license fee of $600 plus sales tax. So add maybe $1200 to the new car price. In year 2, the license plate renewal will be over $525 and so forth. It’s brutal. There’s no sales tax on private party sales. Buying a five year old car saves a lot of tax. I’ll never buy new here again.

  13. Why do either? If you have to drive a new car for 15-20 years to amortize the upfront costs to a reasonable level then why bother?
    1. Wages are stagnant or dropping
    2. Car prices are rising. 25 years ago the average price of a new car was $16k. Today $33k. They do essentially the same task.
    3. It’s easier to re-arrange your life to never, or rarely need, a personal vehicle than to keep buying them.
    4. Benefits of not owning a car: Better health, longer life-span, safer, no hassle lifestyle, cheaper(8-10 work years), more time, promotes discipline, time management, and a massive ego boost when you realize you never have to worry about: the car not starting, roads not plowed, insurancetaxesgastiresoilrepairsmaintenanceDMVpoliceparkingcarpaymentscrashesscratcheschipscracks

    Even the cheapest car in the world still costs you more than its worth in time, money, stress and health.

    • Hi Andy,

      I’m in general agreement – but one pretty much has to have a car unless one lives in the city hive or suburban hive. And then you are dealing with other costs, monetary and otherwise!

      I personally buy used vehicles for about $8k or less and then drive them for at least ten years. I then sell them for about a third of what I paid originally – so my cost for an $8,000 car is about $5,000 (plus gas an oil, etc.) which works out to not much.

      People get into trouble when the buy into a $35,000 car and then buy another one six or seven years later, rinse and repeat…

      • I’m with Eric. It’s disingenuous to act like there are no costs to not owning a car. Unless you are a monk who spends their life sitting in the same place meditating 12 hours a day. Assuming you go anywhere or do anything (like the other 99% of us) you likely pay bus fare, train fares, delivery fees, and even airfare on accession. All things offset by owning a vehicle.

        In Eric’s model, even if you only spend $1 a day on said ‘fares’ you’re not even close to the economics of buying an $8k car and driving it for 10 years when you factor in time and opportunity costs. That $1 bus fare also includes $10-20 of your time, waiting for the bus then waiting through 15 stops before you get to yours. And if the bus doesn’t stop right at your destination then you spend more time getting there. Your time may be valueless but most people’s isn’t. It’s the most precious commodity humans have and you can’t ignore it. A 10 minute car ride can easily be a 30 minute bus ride when you factor in all the walking and waiting. That’s a huge cost that IS real.

        I have 2 BMWs. Paid about $15k each for them used. Paying $300 a month I paid off the first one in 3 1\2 years. That was 2009. Since then I’ve spent maybe $400 total on water pumps brakes and belts. And about $400 a year on insurance and registration. The car still runs like a banshee and looks like it was built yesterday. There is no cost analysis on a new car or no car that can touch this.

        My ‘newer’ one (2006 530xi wagon) was bought in November 2013. Paying $300 a month I am just over $1000 from payoff(which will happen this week), at which point I will have no car payment and two perfectly running luxury cars, immaculate inside,out,and under the hood, neither of which has hit 150k miles yet.

        As Eric states, you have to pick well and having a little mechanical skill goes a long way. But it’s not rocket science, and I hardly spend any time doing repairs, even though I know how to. But even if I did it would be worth it. People, without thinking, end up upside down in cars then pass it down the line with the next car and the next one, never realizing the net effect on their finances. My neighbor pays $425 a month for a grey market Kia Soul bought new that doesn’t even have child seat latches (totally illegal). I drive a luxury BMW 5 series for half the price. And will pay it off sooner. And can safely strap my daughter’s a car seat to it. For their $425 a month they’re still on the wrong side of a $3k gap. Because they got an equally bad deal on their last car that still haunts them. It’s crazy from where I’m standing.

        Eric is being diplomatic. There really is no upside to buying new. Years of debt slavery is never worth the cost of a CD changer or sunroof. Not that I’m mad about it. The dupes that buy new are my personal hedge fund. Hedging my losses at their expense, so I can enjoy financial freedom in the same car they were enslaved to. Even after they sold it. I drive 2 luxury cars for less than many families cellphone plans. Think about that while you’re freezing nuts waiting for the bus in January.

        • I agree mostly, Dutch. I bought a 2005 Yukon Denali XL in 2011. Paid $17,000 including all the taxes and fees. It had 102,000 miles when I bought it. It now has 165,000 miles. Outside of a water pump 2 years ago, I have done nothing but routine maintenance. I just returned from the construction expo in Las Vegas yesterday. 1300 mile round trip for me. I’ve never had a problem with the old brute. People pay $70,000 plus for the cheapest Denali XL’s now days. When mine hits 250,000 miles or so, I’ll take another 6-7 year old 100,000 mile Denali off of someones hands for $15-$18k. Works great for me.

          I also have a 2008 Lexus ES350. Bought it 3 years ago with 64,000 miles. Paid $16,000 for it. I love the luxury it provides–without all the new safety bullshit and infotainment systems that come on new luxury cars after 2012 or so–minus the luxury price.

          I have a business pickup that I trade out of every 5 years or so. It’s either that or pay taxes to the thieves in government. I pick a payment over that.

          Where I live, there are no cattle buses, sidewalks, uber/lyft, etc. I have to drive 12 miles to the north or south to get to that. It is below zero many days Mid Dec through Mid Feb. Not having a car is not very feasible for my family. Even without that being the case, there is a level of freedom that one can only have with an automobile. I can go where I want, when I want. Sometimes that is on mountain roads where the cops don’t dwell. Me, my car and a bottle of bourbon.

        • My new cars were ordered the way I wanted them. They came with nothing to be fixed. Used cars have stuff I have to fix. I’ve had the first one over 20 years now. It is now down to slightly over $1K per year for the purchase cost without considering what it is still worth.

          Used cars cost less because they need things and their expected remaining service life is less. Also the risk of the previous owner’s care or lack there of has done to it.

          The dupes are people who buy new and then buy new again three later.

  14. Used pickup prices, well, 90’s GM pickup prices, are already waaay up. They were a steal when the patch was booming and now the new pickups that are 3 years old are likely to be on their second owner and the original owner back to that sweet spot. I found it amazing when 0% money was available to everyone there wasn’t a used pickup to be found in the patch except for some 05-06 GM’s and the old 90’s GM pickups. Entire fleets of the big 3 were common and the old stuff stood out like a diamond in a goat’s ass….cause that’s what they were. I knew of several used that were in this category but sitting waiting for some major part but now they’ve all disappeared and it’s common to see them with a different color door or fender or endgate and running just fine.

    • Eight,

      I bought a great condition 97 Chevy back in Dec. 197,000 miles. Extended cab 4×4 350 w/ 5 speed manual–the whole reason I bought it–for $2000 cash. My boy is 4 years old. He will learn how to drive that in another 5 or 6 years.

  15. Eric, a gentleman I know suggested leasing to avoid the depreciation cliff, especially if you drive lower miles and are not a gearhead. I like owning things clear, but had never thought about that. What say you? Thank you.

    • Hi Eric,

      Leasing can be a financially good move – but there are several variables, including how many miles you drive annually, whether you are comfortable with an ongoing rental payment and no equity and whether you can write off the lease as a business expense… for me, leasing would be a bad deal. But it might be a good deal for you!

  16. Depreciation is a lot for some models and slight for others. Looking at replacing my wife’s car with AWD. Subarus are expensive to start, and expensive used. Compared with, say, Dodge Journey AWD, those are coming off rental fleets dirt cheap. And pickup trucks… well don’t get me started. Looks to me that the fastest depreciations are SUV’s, sedans & minivans (pretty much anything in the rental fleets). Trucks and cars not in the rental fleets hold their value more, and make less of sense for used car purchase.

    • Huyndais are good to buy used, IMO. The smaller models are durable and easy to fix for a shade tree guy. I bought my daughter an Elantra w/ 30k but it had a rebuilt title. The seller had bought it as a total from a front end collision, replaced hood, fenders and headlights himself, the fenders and hood from a matching wreck and the headlights new, and had given it to his daughter. She wanted to sell it because she was moving to LA to go to college there and needed the Blue model instead of the basic.

      He had pics of the car starting with it being on a rollback, delivered to his house, showing the front clip off and the state of the frame, etc. I got it for $3400 under book value. Buying used can be time consuming, but sometimes it’s the only option when you’re strapped for cash.

  17. I like new cars myself, but then I keep them for a long time. I like that because i know exactly what the service history has been. I never factor in resale value of the car because it is really irrelevant to me since I usually have no plans to sell it any time soon.
    For example my 2009 Touareg. I really do not care what the resale value is. I bought it cash, had no payments or interest. It is currently at 176,000 miles, I have had no repairs on it, brakes, tires etc, but at this point the resale value means nothing to me as I will drive it until the wheels fall off which is not going to happen any time soon.

    But my point it, I bought it new and overall cost per mile as as low as anything out there, in fact right now it is amazingly low cost per mile. I really do not believe I’d have really saved anything buying a car with an unknown history even at a 30% discount.

  18. A major consideration should be who will be taking care of the car and how long it will be kept.

    Someone who is not familiar with car maintenance and repairs might be better served with a new car, or a low mileage used car which has a good maintenance history.

    At the other end of the spectrum would be someone with years of dyi experience, the tools, and a private, climate controlled garage.

    This person could replace or rebuild the engines and do over 95 percent of the work.

    For such a person, an older, simple car with a major mechanical problem which costs 500 to buy, and a similar amount for parts could mean that the 1000 car could provide 5 to ten years of reliable transportation.

    • Even without a major mechanical issue, you can do extremely well. I bought my daughter a $2500 car over ten years and 110k miles ago. We’ve had no major mechanical issues, and it’s still going strong.

  19. It is without a doubt, better to buy used. I found a 13 year old Lexus ES300 with fewer than 100,000 miles in excellent condition for around $5500. Maybe I paid too much maybe I didn’t. All I know is that this car is a lot easier to drive than the 2010 Subaru Legacy that it replaced. My Subaru was a rare lemon and I just never got on board with the marble can sounding engine and the CVT transmission. I wan’t in love with the suspension repairs either along with the fact that the AC compressor was starting to go as well. In addition to this, I didn’t like the high decklid and the larger blindspots (and this car wasn’t the worst of them either). From now on, I will not buy anything newer than 2009. Early Bush era cars are the best in my opinion. Up to about 2007, the year before the government started mandating stricter safety and emissions standards. Pre 2007 cars, are mostly not “connected” as todays computers (I mean cars) are. Parts are largely available and I believe will be for some time.

    • In addition, even if the car gets totaled or I drive it three years, I have lost less depreciation than a new car does in the first year. Never buy new.

      • Yep, totally agree. A new car buy is just a vanity purchase, plain and simple. My family does well with really crappy cheap cars for $1200-$1500. So what if they break down after 6 months? Whats a car payment these days, $470 or so? So for the price of 3 or 4 car payments we can get a running vehicle that might get us a few extra months.
        Our recent purchase: a 1990 with 180k miles and in crummy condition. $1000. Bought it October 2016. Runs good, no trouble yet. Looks like a steal. Those new cars, or late model used, what a joke! Full coverage, maintenance, financing! Imagine having to borrow money to get around, my grandparents would laugh at that.

  20. A big factor to determine whether to buy new or used for me (in addition to all the ones you mentioned) is market conditions at the time of purchase. Back in 2012, good used cars were in short supply. Due to the effects of the “carpocalypse”, production levels for the years 2009 – 2012 were nearly half of normal levels. There was also a hangover from the “Cash for Clunkers” insanity. In that case I bought new. Last month I bought used (1 year old car with 12k miles), because there are plenty of good used cars available. New car production has been humming along and even setting records for the last few years. It’s all about supply and demand.

    • Hi Robbie,

      As Ed used to say: You are correct, sir! I do expect used car prices to go up steeply soon, though – because new cars are becoming impossibly expensive as well as hopelessly expensive to repair. When word gets out….

      • “I do expect used car prices to go up steeply soon, though”

        Agreed. Besides the cost of all the insane regulations, I expect we’ll start seeing the effects of all the money printing that’s been going on the last 10-20 years in a big way.

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