Discussions

So I seen the other thread about buying a car , and it got me thinking ! New or used ? What's the pros and cons of both ?

First, lots of factors.  
 
If your handy and mechanically inclined then purchasing a used car can save literally thousands of dollars over the life of ownership. I've saved thousands by performing the maintenance on my own vehicles but I still take them in to be properly diagnosed.  
 
If you do your homework and learn how to shop for a used vehicle you can avoid purchasing the "beater" that will nickle and dime you. I looked at five cars in the fall for my daughter and although they "looked" good, digging a little deeper revealed issues that turned me away from the purchase. Due diligence saves time and money.  
 
If your not inclined to the work then purchasing new and getting the warranty is prudent but by no means guarantees that you wont end up with a headache anyways.  
 
The last thing you want to do when purchasing new is buying something that you fell in love with, then being stuck making payments after the warranty runs out. If you do then your stuck with a used car, making payments at the time when your going to possibly start to do major work on a car that you probably don't like that much anymore.  
 
What I see mostly is that people over spend and over buy, buying something that they can't really afford or don't really need. I like the new Tundra but do I really need a $50G truck for the once or twice I need to move something?  
I have friends with trucks. I would love to own a 'vette but that's a lot of cash just to drive to work.  
 
Everyone's situation is different and some are willing to spend on cars and that's great but it shouldn't be a hardship on you and it should be practical to your everyday needs not your once in a blue moon needs.  
 
Just my opinion.  
 
Marpet

Thank you very much for your response ! Very thoughtful !  
Much appreciated !

Great post! I can relate to the don't buy a car because you love it. I remember years ago when I was in the market for a new car I went to a dealership and wanted to know monthly payments on 2 different cars. I liked both cars one more than the other. The salesman actually refused to give me the monthly payment amounts. He told me to go with the one I loved and then we could work out the best deal on that vehicle. He explained that with longer term loans payments are now affordable. I told him I liked both cars and it came down to money so I wanted to know the financial side. He refused to give me that info, and again told me both were affordable. I walked out and have never returned. (This happened before the law came in that marked prices had to include everything so the price on the car wasn't the price of the car.) is there an advantage to new over used? Maybe maybe not. I say go shopping knowing what you can afford and what you need. Make sure you know over how many years you are willing to pay. For myself personally for a new vehicle I would not finance a car longer than the term of the standard whole car warranty, nor would I finance a used car that would take my entire car budget to make the monthly payments. I would have to be able to pay the loan and put repair funds aside every month. If I can't do one of those things, I can't afford the car, whether new or used.

I have never bought new. Used is always more financially wise. The critical factor is to buy the right vehicle. I once read the best situation is to buy a slightly used vehicle with low miles maybe two or three years old and keep it four or five years. It drops a lot of value in its first two years. It still retains a lot of value when you sell it in four or five under average conditions.

If you need a loan to buy a used car in my opinion you are better to look at new. As marpet said you can save lots of money buying used. You can even get warranty on used. Make sure you have an understanding of what your getting. I personally move to a new car when the old one starts to cost me money to operate or when there is something that worries me about its dependilility I have sold or traded cars that are 3 years old or 10 years old if they fit those categories. The last vehicle I bought I looked at there was one that was 2010 and abrand new 2011 model the used was almost owned 2 years and had 50 k. It had 1 year and 10 k left of base warranty the option to buy extended. The new car had 3 years base warranty. Because of the programs in place and the interest rate difference 0 on new 5 on used. Period of 3 years extra warranty for the used car it was cheaper to buy the new car not counting what the value of car at end of term. Today the used car would have 110 k compared to 60 k would there be a difference in value and dependilility. In my case when I am ready to go to another car I will look at new.

The last car we bought, we originally planned to get used (just around three years old) but the dealership had 0% interest on new vehicles, we checked out the difference between buying new at 0% with warranty and buying used through our bank and the monthly payment was pretty similar so we went with new.  
 
I think we would only buy new if we could get 0%

We bought used once, and instantly regretted it. Even with 0% interest, you lose so much the first year or two that you pay many times over what you might pay on a small loan (say, not exceeding 12 months).  
 
We have no vehicle loans, and both our vehicles are older (one is 10 years, the other is 18) but are both in good working order and reliable. We do spend more money on maintenance then we would if they were new, but the money we spend on maintenance is far, far less than car payments.  
 
We spent about $1500 for 2 vehicles last year, which works out to $125 a month we spent when averaged out. We set aside $200 a month for maintenance in our budget that goes into a bank account, so we always have cash on hand to pay for repairs and regular maintenance.  
 
We would never get a car loan again, we are faced with replacing our 18 year old vehicle soon, although we're hoping to hit 300K on it (it's a Honda). But we're slowly saving to pay cash for another "new to us" car and won't have a loan.  
 
Edited by Abbysmum, 2016-02-06 11:40:48

Thought I would throw out some figures just for the heck of it. These are educated guesses based on used values I looked up. New price is from a Ford website. The 2013 used vehicle I actually found on Car Trader at a dealer and has a clean Carfax. Ford is not advertising 0% rates right now but we'll say 0%. The 2.49% is an advertised dealer used rate. Another factor to consider is right now with our poor Canadian dollar you will soon see new car prices from the USA go WAY up. Maintainance cost should be the same.  
 
 
2016 Ford Edge SEL with tax is $45000  
0% financing 48 mths. $577pmt  
Value after 8yrs, 120km $13225  
total cost if sold after 8 years is $31775  
 
2013 Ford SEL with 26,000km with tax $27713  
dealer financed 48mths $607pmt  
Value after 8 yrs, 120km $8000  
total cost if sold after 8 years is $19713  
saved $12062  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Edited by bigmoe, 2016-02-06 14:22:51

bigmoe said "Thought I would throw out some figures just for the heck of it. These are educated guesses based on used values I looked up. New price is from a Ford website. The 2013 used vehicle I actually found on Car Trader at a dealer and has a clean Carfax. Ford is not advertising 0% rates right now but we'll say 0%. The 2.49% is an advertised dealer used rate. Another factor to consider is right now with our poor Canadian dollar you will soon see new car prices from the USA go WAY up. Maintainance cost should be the same.       2016 Ford Edge SEL with tax is $45000   0% financing 48 mths. $577pmt   Value after 8yrs, 120km $13225   total cost if sold after 8 years is $31775     2013 Ford SEL with 26,000km with tax $27713   dealer financed 48mths $607pmt   Value after 8 yrs, 120km $8000   total cost if sold after 8 years is $19713   saved $12062                               Edited by bigmoe, 2016-02-06 14:22:51"

Nice example. Most people see the bi weekly, o% interest and finance over 84 months as a reason to throw money away. better yet you didn't use a beater or 84 months vs 48 months. Great job!!  
 

Really depends on what you can afford. I didn't want to be stuck with payments for 7/8 years, so I didn't go with new. Even though the monthly payment would be cheaper. I went with a used vehicle and a loan through a bank and will have it paid off in 3 years. Financial situations change all the time, and I couldn't guarantee that I'd still be in the same place as I am now, but I can manage three years. Once that loans paid off I can save up for a year (while driving my now paid for car) and upgrade it pretty easily (: eventually if I keep this up I'll be able to get a fairly new vehicle easily off of one car loan.

Great theory if all goes well. It is a gamble as the used will have no or little warranty. you do have your 12 g to use for fixing, so it may be worth the gamble for sure. and please let me know where there is 2.99% for used?  
 
i feel used is great for the cash buyer who doesn't have to eat the extra interest. you can definitely eliminate the first year deprecation. However the incentives and interest rate will compensate for some of that.  
 
Bottom line: there are good scenarios in both new and used. And either can help someones situation. You need to do what works best for your own situation. Sometimes it will be New and Sometimes Used. Just buy something from someone reputable and hope for the best.

A lease buy back is normally the best route to go I'd say. You can get a 1 or 2 year old vehicle, let the original owner take the big hit on depreciation, and still get something with 3 to 5 years warranty on it.  
 
If you go new, when the dealership is offering 0% financing it is normally only on full MSRP. Whereas if you take finance at with interest, you've got much more bargaining power on the sticker price - you could actually save money depending on your rate and term.  
 
Here's the flip side though, you can put your money to work for you while you get 0% on your vehicle. $10,000 compounded monthly over 5 years at 5% gets you almost $15,000.  
 
I really question the real world logic behind the buy a $1500 car and sell it in a year idea. On paper, it makes sense, but can fall apart very quickly in real life. Basically you're rolling the dice that nothing major will happen to a older, miled out car before you go to sell it. There isn't even anything safetied in the classifieds for that price, so your $1500 car could be a money pit before you even license it. And if something does happen, you have a broken vehicle that isn't worth fixing. So now you're forced to sell for scrap value before you intended to for much less than you expected to get, and am back at square one, possibly with less money in your pocket than you had when you bought the vehicle.

We always buy a new car because you can get the car you want, the color you want and you are the only one who is driving that car. We have bought used twice and never again. You don't really save that much money buying used and the owners sales people always tell you the kms were highway millage or a older person driving to church. You don't really know the true history of the car when you get it. I would rather buy new make payments and be free from repairs for five years and keep it a long time. I think buying used can be a hit or miss. Repairs are expensive and a waste of time and energy. I just don't want the headache of my car breaking down in the morning. it is worth a monthly car payment to have something only we drove.  
 
Edited by winterstorm15, 2016-02-07 08:14:04

As someone already said, 0% is usually only on full MSRP. Recently an equipment dealer in town which is very similar as buying a car for anyone in business, had a large billboard on the street saying "0% for 3 years or $8500 off for cash" Hmmm, I am no genius but how much interest did you actually pay? Do your homework.

With buying vehicles or thing with engines you are buying the biggest ticket items you will ever buy that depreciates.  
 
Those that buy new and say that warranties cover them for repairs. Does manufacture warranties cover thing like brakes, suspension items, fluid changes and tires? Can you buy warranties on used vehicle? (definitely).  
 
If you believe that debt will make you rich buying products that are worth half of your initial investment in 3 years buying new vehicle ( or other similar items ) is a good option. Using debt can make you a lot of money if you know how to use it. Buying a vehicle is buying a liability ( for most people)not matter new or used. It cost you money to insure, maintain and run it .