How to buy a car?

Unit74

Unit74

Final Approach
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Unit74
Wife's car is just about beyond repair. 223k on a Honda Odessey.


What's the general consensus about purchasing new or used? I've always said let someone else take the depreciation hit.

Kids will break, dent, scratch it up within weeks for sure. but I also want this one to last for at least 6 years or better.

Thoughts?
 
I have had very good luck buying lease-return vehicles through a local dealer who specializes in them. I visit with him, tell him what I'm looking for, and he examines the upcoming auction lists for appropriate vehicles. He eliminates a great many of them for various reasons, based upon their history, establishes a budget estimate and, with approval, will buy the car for us. He charges a flat $500 over the auction price, and the final price typically ends up several thousand dollars less than similar vehicles are being sold for on dealer lots.

Before delivery, he inspects the vehicles for any possible warranty-covered issues, and arranges to have them taken care of.

I have bought two cars this way, and been very pleased with the process.

On the other hand, there are new car dealers from whom I would certainly be willing to buy cars, but probably only if I were buying a new car; ever since the egregiously-stupid program called "cash for clunkers," used car prices have been somewhat out of balance. In many cases, if you are buying at a dealer, you might as well buy a new car anyway.
 
I have bought new, nearly new, and nearly junk. If you plan on driving the car until it dies, new isn't a bad deal. Everyone likes to talk about depreciation but that only matters if you sell it when it's 3 years old and lock in your loss. Financing these days is ~0.0%. Take purchase price and divide by 223k miles. How much is depreciation really costing you? I'd probably look at this differently if I bought expensive cars. I've yet to spend more than $23k on a new car.
 
Personally I like to buy 2-3 year old vehicles. I also have had good experiences with rental vehicles but that's been awhile. I recently bought a 2006 Tundra in excellent shape w/ 85K on it and plan to keep it for a long time. If you plan on keeping it a long time and your wife will be driving it, I'd consider new. Just go down to the docks there in Brunswick and take one off the boat when they aren't looking!

If she wants an Odyssey though, c'mon to Alabama, they build them just east of Birmingham in Lincoln. I have wire cutters you can borrow. ;)
 
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I bought a new car once.

Craigs list and/or various car trader sites work for me. I usually buy from private owners. Nothing like meeting a guy in a parking lot somewhere with a wad of cash to give you the satisfaction of an honest deal done right.
 
If you intend to put high miles on it, you cannot go cheaper than a reliable 2 - 4 year old car. Best bang per mile long run with no initial maintenance costs.

AG
 
Recently my wife and I found that new was actually cheaper than recently used when financing a purchase. Primarily because of incentive rates offered on new vehicles. We keep vehicles until they die so new doesn't generally hurt us on depreciation as it does on if we were to sell at 4 or 5 years.
 
Used, and I like private party, you get a good idea of how the car was cared for just by talking to the last owner.
 
Scott Adams at Dilbert.com wrote 3 great pieces on his attempt to buy a new truck. It is worth a read if you're in the market for a new vehicle.
 
cgrab said:
Scott Adams at Dilbert.com wrote 3 great pieces on his attempt to buy a new truck. It is worth a read if you're in the market for a new vehicle.
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Great ... [sarcasm]thanks a WHOLE bunch [/sarcasm] after scanning thru a bunch of new Dilbert's, I once again have affirmed that Dilbert is a documentary and he's been doing research at my company. :)
 
If you have the money get a new one. Call the dealership and work a deal over the phone. Have another car at another dealer that you are looking at. Offer 500 over invoice (you can find invoice online I think). Deal from there.

If you want to save money, buy a 2 year old car with 30k or so miles on it.

Skip the extended warranty, insurance and undercoatings. Pay cash, only carry liability and be careful. Thats what wealthy people do. Good luck!
 
Shop hard for a new one. Might even be cheaper than a 1 - 2 year old vehicle from a dealer. Now is actually a good time to buy a 2016 model year vehicle, as dealers want to get them off their lots.

Always negotiate cash price before talking about a loan / a lease, so that you have a basis to compare the 'amazing' 0% financing against. A colleague of mine recently bought a Chevy for almost MSRP, but with 0% financing. Thought this was a great deal. :rolleyes:

Do you already know what kind of car you want next?
 
If I buy used it has to be 5-7 years old or more for me to see it worth the money. Right now dealers are offering such huge incentives and low interest rates that you can get a new car for less than one that is only a few years old especially when it comes to trucks.

If you are paying cash it probably matters less. Best bet by far is finding someone who financed a new car and wants out of it and you can pay cash.
 
Right now, a lot of new car dealers are offering incredible incentives to unload 2016s at what I have to believe are not much over break-even prices. One even persuaded me to buy my first new car in many years. They made it almost impossible for me not to.

Another thing to consider, depending on where you live, may be the insurance cost. I'm not sure how much had to do with the new car versus my driving record, age, vehicle use, and so forth, but USAA just reduced my premiums by about $175.00 / six months. That's with comp, collision, full glass, and maxed-out liability and "people protection" coverages. That puts my total annual premium at a bit over $900.00, which is about $350.00 less than I was paying before and well under my state and county averages.

Maintenance costs are also considerably less with a new car, especially with the extended warranty that the dealership threw in, which extends the 10 year / 100K warranty to the whole car rather than just the power train. Things like brakes and such aren't included, but things like wheel bearings, CV joints, and other stuff that starts to go after ~ 75K miles are.

When I did all the math, I really couldn't come up with a good reason not to buy new this time around. But it was because of the confluence of factors: Time of the year, dealership needing to move 2016s, salesperson was hungry for a sale, good driving record, new car insurance discount, available rebates and promotions at that moment in time, 0.0 financing, anticipated resale value on the model, and others. With all those things considered, it worked out for me this time around. Other times I've considered buying new cars, it didn't.

So really, the best advice I can come up with is to do the math for all options available at a given moment in time, factoring in how long you'll own the car and what you'll want from it, and go from there.

Rich
 
I buy my cars used just like my planes. I buy private party, and just like buying my planes, I don't get in a hurry. I actually judge the car as much on the owner's house, garage, attitude, etc, than the car itself. I buy 3-5 year old vehicles with low miles, then keep them for over 7 years myself. Saves a ton of money.

Oh, and I particularly like cars that are "out of favor"...like models that ended 3 years ago, etc. They tend to be cheaper, because everyone wants the newer model. Like a Trailblazer when Chevy switched to the Traverse.
 
Certified pre owned. cheaper than new, but with factory warranty.

Also check for know issues that might not be covered.
 
Two good options: buy a leftover, new 2016, or a gently used 1 or 2 year old vehicle. One year used should be at least 20% below new price! I've done this three times, usually around 25% discount vs. new. Never bought last year's leftovers, in the ads they are usually priced almost the same as new.

When you're at the dealer, look up whatever models you like at www.kbb.com and see what it's really worth. Did that at the bargaining table, and the price magically fell almost $3000 below "the best we can do."
 
I just send PM's to people in this forum. Easiest way to buy cars :)
 
I have great luck in buying lease back or dealer deod,or executive cars. Usually get a good warranty .
 
Daily drivers I buy new and drive them until the wheels fall off.
The two 'nice' cars in my fleet were used. One was 3 years with 25k miles, the other was 22 years with 22k miles.
 
We buy slightly used, negotiate a great price, & then pay cash. We did buy a new Tundra in 2012 & paid cash for it. We sold it when we bought the 182 because our needs had changed & we rarely drove it. Bought in new for $34,000 & sold it for $30,000 four years later. Not too bad.

We've had best luck with Toyotas as far as low depreciation. Although, we bought a certified 2008 Mercedes E320 in 2009 & sold it three years later for nearly what we paid for it.

I hate depreciation & interest.
 
I had always bought new. Then I let people convince me that used made more sense. But I found out that the used car depreciated just as much as a new one would have. The only advantage was the the purchase price was lower. So I went back to buying new.
 
The way to make used cars really sing is your buy one in decent shape with 150K miles. People think it's done, but if the oil cap isn't full of sludge and it drives reasonably, it should last twice that. Maintenance is out of line only if it has been neglected, and you can buy a hell of a lot of radiator hoses for $10K or more. Most I've paid for a used car is $3000, and that includes the BMW. I bought exactly one (cheap) new car, and drove it for 300K miles. I still could have bought six used cars for what I paid, each with half the lifetime.

Old cars do tend to be dinged up, but who cares?
 
protip: If you trade in your old car to buy your first new car, the dealer may ask you if you need temporary tags. As it turns out, "No thanks, can't I just move the tags off my old car?" is not the right answer.
 
GeorgeC said:
protip: If you trade in your old car to buy your first new car, the dealer may ask you if you need temporary tags. As it turns out, "No thanks, can't I just move the tags off my old car?" is not the right answer.
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It is in Colorado. Tags stay with the person, not the vehicle.
 
Depends, to some extent, on the type of car you're buying. Want a Jeep Wrangler? Buy new, as the used prices are just insane. Want a BMW, Mercedes, or similar luxury car? Buy 1-2 years old, those cars suffer a pretty big initial depreciation hit you can take advantage of.
 
bradg33 said:
Depends, to some extent, on the type of car you're buying. Want a Jeep Wrangler? Buy new, as the used prices are just insane. Want a BMW, Mercedes, or similar luxury car? Buy 1-2 years old, those cars suffer a pretty big initial depreciation hit you can take advantage of.
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This is the best advice yet. Trucks, Jeeps, Toyota's.. are all better off being bought new unless you buy one with a whole bunch of miles. Any luxury car, or domestic passenger car is better bought used.
 
gkainz said:
It is in Colorado. Tags stay with the person, not the vehicle.
Click to expand...

They do in New York, as well, but you have to visit the DMV (or have someone else visit on your behalf) with the title and bill of sale to pay the sales tax and make the swap to the new car unless you buy it from a dealer. DMV can also issue temporary transit tags in some cases, but in general they still require an in-person visit.

When buying from any NYS dealer, the dealer can both collect the taxes and transfer the plates.

Some out-of-state dealers can collect NYS sales taxes, but they can't transfer the plates. If you need plates to drive the car home, they issue temporary ones from their own states. Then you visit the NYS DMV to get the NY plates transferred (and pay the taxes if the dealer couldn't collect them).

In any case, you have to insure the car first.

Rich
 
Unit74 said:
... Thoughts?
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New cars make no economic sense. The primary reason IMO for buying a new car is if your ego needs propping up, and that problem will need more help than a car salesman can give you. You don't sound like you have that problem.

You also, as others have said, should only buy a car that you can afford to pay for. Cash. Consider your lack of a car loan to be a source of pride. Going into hock to buy something you can't afford is nothing to be proud of.

Once I bought a new pickup with a six-week production wait because the 1-year-old, available-for-instant-gratification used ones actually cost more than the new one. Very unusual situation.

Other than that I have always bought cars I could pay for and, in the beginning, cars that were older. As my paychecks improved, the cars got newer. But never brand new. One option I have used a couple of times is to buy a "new" car of the previous model year that was still in dealer inventory. If you negotiate hard, you may be able to save almost the full amount of the first year's depreciation. We did this with my wife's Mini Countryman a couple of years ago because used Minis were practically nonexistent in our market. To get the local guy's price down, I contacted and negotiated with two other dealers who were an hour away by plane. It worked quite well and I got good price offers from them, too. Often, maybe always these days, the manufacturers' web sites will let you search local dealer inventories and find these old-but-new cars.

Once recently I did have a loan. Mazda offered $2500 off the (previous model year) RX8 price if the buyer financed with them. I took the loan, waited 6 weeks for the title to get issued to the lender, then paid it off with no prepayment penalty. That $2500 cost me maybe $300 in interest. So watch for that kind of rare deal.
 
airdale said:
New cars make no economic sense. The primary reason IMO for buying a new car is if your ego needs propping up, and that problem will need more help than a car salesman can give you. You don't sound like you have that problem.

You also, as others have said, should only buy a car that you can afford to pay for. Cash. Consider your lack of a car loan to be a source of pride. Going into hock to buy something you can't afford is nothing to be proud of.
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So even when the finance cost is less than your opportunity cost for cash, and when the new costs less than used, you should still pay cash for used?
 
mtuomi said:
So even when the finance cost is less than your opportunity cost for cash, and when the new costs less than used, you should still pay cash for used?
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Yes, always buy used unless your ego needs a boost. If you read carefully airdale has allowed himself a fair number of ego boosts over the years. Retail therapy!
 
mtuomi said:
So even when the finance cost is less than your opportunity cost for cash,
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TANSTAAFL. We're talking used here; the real cost of money is priced into the car and you will be paying it. Re opportunity cost, let's talk about risk. Paying cash for the car is riskless and income tax free. If you instead borrow money on the car in order to make this more-profitable investment you are also taking on risk and almost certainly paying income taxes on your profits. I don't borrow to gamble. Maybe you do.

If your "opportunity cost" scenario is just a little bit of interest rate arbitrage, then you're looking at 50 or 100 basis points of (taxable) profit. Personally I wouldn't fool with it, but YMMV.

mtuomi said:
... when the new costs less than used, you should still pay cash for used?
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Nope. That was my point about buying the brand new pickup. There was sort of a price inversion in the market. Every used car dealer in town had one, one-year-old, pickup of the type I wanted. All were priced higher than the $500 over invoice I paid for the new one. Apparently the average pickup buyer doesn't understand delayed gratification and is willing to pay too much to get immediate delivery.
 
noobJohn said:
... If you read carefully airdale has allowed himself a fair number of ego boosts over the years. ...
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:) Certainly. But not from wasting money on new cars. Maybe the best ego boosts were the cars that won me trophies at places like Road America. On the street, maybe it was the Shelby 289 aluminum roadster. ... or maybe the Lotus Elan SE Coupe. ... or maybe the Jensen Interceptor Coupe. .. or the Mustang GT500 KR Convert. All except one race car bought used. All bought with cash and for personal enjoyment and/or to turn at a profit. Ego effects optional. Of those four, only the Lotus didn't sell at a profit.
 
airdale said:
:) Certainly. But not from wasting money on new cars. Maybe the best ego boosts were the cars that won me trophies at places like Road America. On the street, maybe it was the Shelby 289 aluminum roadster. ... or maybe the Lotus Elan SE Coupe. ... or maybe the Jensen Interceptor Coupe. .. or the Mustang GT500 KR Convert. All except one race car bought used. All bought with cash and for personal enjoyment and/or to turn at a profit. Ego effects optional. Of those four, only the Lotus didn't sell at a profit.
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I understand completely..... I could tell from your prior post.

YOU ARE THE MAN!!!! :cool:
 
coloradobluesky said:
If you have the money get a new one. Call the dealership and work a deal over the phone. Have another car at another dealer that you are looking at. Offer 500 over invoice (you can find invoice online I think). Deal from there.

If you want to save money, buy a 2 year old car with 30k or so miles on it.

Skip the extended warranty, insurance and undercoatings. Pay cash, only carry liability and be careful. Thats what wealthy people do. Good luck!
Click to expand...

That.
 
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