I'll say for a long time I was the same way, until I bought a Prius.
A little while after I bought it, prices actually went up over what I purchased it for, and I was getting letters from Toyota dealerships offering to buy it back from me above my cost.
It's declined in value since then, but still runs well (knock on wood).
This isn't saying used cars aren't worth it -- they definitely are -- but for certain scenarios I think the choice is maybe more complicated than I thought for a long time.
Yeah. It probably depends on the brand, but I was just looking to buy my first car in quite a while and had to update my thoughts on this. Previously I'd be all for buying used. But I was looking at the prices for 2 to 5-year old Toyotas vs. new and the difference was shockingly tiny unless there was something wrong with the car or it had ridiculously high mileage.
Because everyone and their mom has been recommending Toyotas for 20 years now, the price of used Toyotas have gone through the roof. They're still good reliable cars, just not cheap anymore like they used to be.
Used cars have surpassed new car prices in the past. Generally because new cars can't actually be bought at any price. A car today is sometimes worth more than a better car that doesn't exit.
Used car prices have been pretty insane recently. I bought a new vehicle to replace my ~13 year old Toyota 4Runner with some very obvious, and not wholly cosmetic, physical damage and got a $15K trade-in for it. I was shocked.
what no one ever tells you is when you try buy a used lexus & premium toyota's you gonna pay a premium for it. since they're so reliable. the used values never really go down.
whereas a used bmw or benz after 5 years the value is in the gutter. even though there might be a good car to go on.
From what I've seen, used cars haven't been as close to a good value in the US over the last 2 years. It takes a lot of years of depreciation to get a price significantly better than a new car, and if you drop $10k on a ten year old Honda Civic you'll miss out on a decade of fuel efficiency improvements, safety features, etc.
Used cars are now just $3k USD more than new cars, on average.
There should be absolutely no reason to buy a used car anymore.
I feel like I'm living in a bizarro world b/c everyone seems to claim buying a used car is the much better financial decision. It isn't for me, by a long margin.
There is only one way buying a used car ever makes sense. If you have zero credit, no-one to co-sign with you, thousands of dollars in spending cash, find a perfectly maintained not-damaged low-mileage reliable formerly popular car for 1/10th its original value, and do not depend on getting places in a timely fashion.
I have owned about 7 used cars, so I consider myself an authority on bad decisions when it comes to cars.
There is no way to cheat the gods of autos. If you want a luxury car, you will forever pay luxury prices. If you want a fast car, it will break quickly. If you want an inexpensive car, the only one worth buying will be the one you want the least. Cheap, reliable, sexy: pick two.
Any used car you buy for $1,000 after tax tags & title, and it has no problems, is a good purchase. But don't ever repair it. Use duct tape and WD-40 and change the brakes, but never fix anything on it. When it finally stops running [which will be in 6-12 months] go buy another car. You're still paying less than for a new car.
Here are two fun stories. One about a modified sports car, and another about a used luxury car.
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The 1993 Toyota MR2's chameleon paint job gleamed purple-blue-red-orange as I walked around it to the underside of the engine, next to the trunk. The mechanic showed me where the turbo needed to be mounted up, the oil ring seal that had failed (causing turbo overheat and almost explosion) and the OEM replacement they'd tried to order. Only this turbo (and maybe engine?) wasn't OEM - not for America anyway. Apparently the old part had come from some mystery shipment in Japan and installed by a mystery tuning shop in North Carolina, and the mechanic had no idea what kind of oil seal to replace it with.
Of course, I had another car to drive, because i'm a privileged 20-year-old IT worker with cash to throw away on a ridiculous used purple sports car. So I continued on to work with my other car(s) while I researched where to find a replacement part. Finally I found it - thanks to a very helpful Toyota dealer in Australia - and had it shipped over for a small fortune.
About a month after the initial failure and my little baby was purring like a kitten once more.
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The 2004 Lexus IS300 had what you would call a "colorful history" of parts failures.
Long ago the driver side speakers had stopped working and half the speedometer lights had gone out. It had experienced no less than four water-pump-induced radiator meltdowns, with miraculously no warping of the engine. The left rear speed sensor had been replaced after the shreds of cheap drifting tires wrapped itself around the rear axle and tore the wire away. The entire front left suspension i'd replaced over the course of two weeks (at that time I lived 30 minutes walking from my job, so no biggie) after bumping into a curb.
After the bumper cover was stolen in Baltimore I collected approximately half it's value from insurance and never replaced it. After another curb-bump (due to ice) and parts replaced by a shady mechanic, the left front speed sensor suddenly stopped working, leaving the traction control disabled. The O2 sensors had long since thrown codes requiring their replacement, or possible investigation of the catalytic converter [of which a replacement is $1,000, one forked proprietary chain of three catalytic converts].
But the most pressing problem was more obvious.
The left front headlight had intermittently stopped working some years before in the coldest periods of "Florida winter". It would eventually start working again, so it was ignored until it finally stopped coming on at all; then the headlight that was out would switch places, finally going back to the first. Tried the usual fixes; replace the bulb, nothing. Get a new HID projector (because luxury cars don't come with "stupid old bulbs"; that wouldn't be luxurious), but still nothing. Fuses are all good. Final thought? Electrical problem.
No big deal, right? Could be a mystery wiring problem. New wiring harness cost? $1,000. Well screw going OEM, let's go to a junk yard. Oh... IS300s never come into junk yards, do they? Ah huh... seems the parts are so expensive and rare, people get paid to strip the parts and sell 'em on ebay for near-OEM prices, without a guarantee.
So here I am, finally paid the used car off after 7 years, in quite a state of disrepair, with a value that is thousands of dollars less than the cost of total repair of all the broken bits. All the rest of the problems can be ignored, but the police stop you for a bad headlight. And then there's the safety inspection.
I could have just bought a new car and had half this stuff warrantied, would have been paid off sooner at lower interest rate, and would have been much cheaper to replace had the badge been a large encircled "T" instead of a large encircled "L". Because the same car sold in Japan by Toyota costs thousands less.
It's counter intuitive but some vehicles are worth more as parts anyways. The market for used vehicles is only willing to pay so much for a vehicle. The market for people who happen to need a part and will pay for it is much larger.
Sure, as an individual I can always buy a used car. But that doesn't change much globally: cars are generally driven until they're uneconomic. If not by me, then by someone else.
Put another way: if too many people buy new cars, then the price of used cars falls. There are enough people who compare the value of used cars vs new ones that a lower used car price causes them to prefer used over new. This is a fundamental feature of the car market, and that's why car dealers make it easy for you to trade in your used car.
Over the last few years used cars have been selling at basically the same price as new (sometimes even more). It is no longer a big money saver to buy used, especially when you factor in increased maintenance/repair costs.
Back in 2008 when I bought my car the used Prius's were going for almost the price of a new one. This seemed like a short term fad of near zero depreciation and unwise to bet that it would stay that way. The Prius was really the only game in town at the time, gas prices were high, but it was clear that there would be plenty of new hybrids in the coming years.
After hunting around for less than the price as a Prius (used or new) I got a barely used 6 speed manual G35 with all of the bells and whistles (15K miles, very clean engine, good find). The fact that it only gets ~22MPG in the peek of expensive gas might have been part of the reason I got it for so cheap. There is no debate that a G35 beats the pants of of a Civic or Corolla any day. Doing the math of $500 savings in gas a year I still have a few more years before it would have been cheaper to buy a Prius based upon the price difference.
I have had no garage work on my G35 other than the standard oil change etc. To make things simple I will assume that the Prius would have been just as good. (How often do you have to change the battery?)
I just looked up on kbb A brand new 2008 Prius would only be worth ~$400 more than my used G35 if I sold it today. So the math no matter how I look at it worked out for me and I got a nicer car to drive the past few years.
But the real lesson I have seen over and over which is that any time someone runs the math they have different variables. If I were to buy a car today the used Prius's have actually dropped in price so that estimate is completely different that a few years ago, gas is now cheaper, I probably couldn't find that G35 again, and now there are other hybrids to compare against.
buying used is usually a very good option. the car will lose the most value in its first year. buying used tends to mean someone else is taking that hit for you.
I know plenty of people who are reasonably frugal who still go for the new car, though I think they view it as more of a slightly risk-averse heuristic than an optimal decision. I think most of them recognize that with planning, effort, and a bit (but not a ton) of luck, they probably would do better used.
The risk averse heuristic goes like this: identify a car with a reputation for value, purchase under a buyer's plan, take very good care of itfor the useful life of the car. These aren't the people who show up in a shiny new car every few years - they often keep the car for 15 years or more.
Like I said, it's a bit risk and effort averse, since with a lot of research, careful evaluation (including a mechanic inspection), and a bit of luck (more the absence of bad luck), you can definitely beat the above strategy by going used. It's a lot of effort, though. Personally, I did all the things you're supposed to do, and still ended up with lots of $$ repair bills, so I'm no longer interested in used cars. I understand that I got unlucky, but I'm just done.
I suppose I'm also particularly convinced by the argument that people generally don't sell good used cars, since I'm one of those people who hangs onto a car until it costs me more to own it than replace it.
I once read about a strategy that made a great deal of sense to me, and that was to buy a 2-3 year old used car from a new car dealer, and sell it after 2-3 years to a private party.
There were all sorts of good reasons for that, some of which may no longer be valid, but some of the reasons were that a 2-3 year old car still had a lot of value but was at the end of it's steep price depreciation curve, and that the new car dealer didn't actually know how much the car was worth, they just knew that every day it sat there was another day of insurance they had to pay for, and sort of more proof to them that the car was not worth much. Also, by buying from a new car dealer, the car was probably in pretty good shape, the worse cars they had gotten rid of, the rest they had fixed up and cleaned up at rates that you or I couldn't get.
Because of that, with good negotiation, you could, in a sense, capture much of the profit the dealer had just made by giving the former owner of the used car a terribly low resale price followed by selling them a high priced new car.
They just made 20,000 by cheating the former owner on both ends of his deal. They don't know how much the used car is worth, but they are scared of it sitting there, and if you know how to price it, value it, and negotiate for it, you can get them to go very low on the price just so they can move it off the lot. You could in fact buy it for far below market rate. That was the theory then. And my own used car purchases showed that to be reasonable.
The claim was that by buying so cheaply a good used car from a dealer, you could sell it in 2-3 years to a private party at a good market rate, but probably very close to what you had paid for the used car 2-3 years earlier.
So... This strategy has actually worked out very well for me. And kept me in some very fun, relatively high end convertibles, starting with a Saab Turbo 900. Buying used cars from new car dealers seems to be a winning strategy.
But you have to remember to flip them. And that's been hard for me to do, in part because like an idiot, I drive too many miles to work, and have no time for selling cars to private parties. But if you're going to put a lot of miles on cars, I think you do need to either flip them or drive them to death, which is one reason I recently bought a low end econobox.
A little while after I bought it, prices actually went up over what I purchased it for, and I was getting letters from Toyota dealerships offering to buy it back from me above my cost.
It's declined in value since then, but still runs well (knock on wood).
This isn't saying used cars aren't worth it -- they definitely are -- but for certain scenarios I think the choice is maybe more complicated than I thought for a long time.
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