View Full Version : Is it EVER a good idea to buy a new vehicle?
Car or truck that is.
Most (all?) financial planning articles seem to say, "no". Are they right?
Opinions?
Car or truck that is.
Most (all?) financial planning articles seem to say, "no". Are they right?
Opinions?
My opinion is, no. So much depreciation, very overly priced.
I buy lightly used vehicles that were single owner and maintained or single owner dealership trade-ins and I have had great success with saving tons of money versus buying new.
It kind of depends on what is important to you also, I don't need a NEW vehicle, and I can do all the maintenance work myself, so the warranty doesn't light a fire for me as I can do all the work for a fraction of the cost as a shop can.
Some people are going to pay for the service to their vehicles and that's where the maintenance cost can make a difference on overall investment versus buying new with a warranty that covers maintenance costs. You've gotta break it down.
Lifecycle maintenance costs are vastly different for different manufacturers and vehicle types and intended uses.
I like Toyotas for this very reason. They are easy to maintain (They need more than oil changes and brake jobs as most like to posit) and easy to work on. They have great resale value. They last a LONG time when properly maintained.
If you're going to want a new vehicle and beat/drive the shit out fit it would actually be cheaper to buy it, drive it to the end of warranty and sell it and then move on to the next one than it would be buy used and put all the maintenance costs into it; unless you plan on maintaining it yourself and have the investment of time to do so.
Outlander Systems
03-19-19, 15:39
Absolutely not.
Both vehicles I’ve bought have been new. I’d rather buy used but for the two I was looking at, the prices either weren’t that different or there was a major reason to buy new, like a vastly improved transmission.
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Whiskey_Bravo
03-19-19, 15:50
In most cases no it's not worth it.
The only exception I have seen has been diesel trucks. They tend to hold their value very well(at least here in Texas) especially with low miles. The last diesel I purchased(F350) I ended up buying new. For what I was looking for I could have saved a little buying used but the difference wasn't enough to make it worth it at least in my opinion. I would have had 2 years less warranty, miles(albeit very low), and the difference between that and a end of year new purchase wasn't enough for me.
FromMyColdDeadHand
03-19-19, 15:55
Toyota Landcruiser and 4Runner, and Jeep 4door wranglers seem to hold their value to the point where used isnt’t Much of a discount especially when you consider how they could have been treated.
Car or truck that is.
Most (all?) financial planning articles seem to say, "no". Are they right?
Opinions?
The vehicle you are buying and what you use it for makes a difference. My wife has a thing for Volvo wagons and she only drives 6,000 mile a year. She trades every 4-5 years depending on when the warranty expires. The last one she traded was 4 years old and had 22,000 miles on it. She paid $34,500 for it originally and traded it for $25,000 after getting a $2,500 discount on the new one. It helps by buying at the end of the model year when the new models are already on the lot. When you roll over that kind of equity into a new car, are able to deduct the mileage for her job and get a $600 per month car allowance it make little sense for her to drive a used car. Moral of the story... If you need a pickup to use up hauling rocks, drive 50,000 miles a year and are able to handle unexpected repair cost you are better off driving used. What kills me is the person that buys a cheap Kia that is worth nothing when 5 years old!
Car or truck that is.
Most (all?) financial planning articles seem to say, "no". Are they right?
Opinions?
Why would it ever be a bad idea?
So the vehicle you want/need is sitting there on the lot, new. But you do not buy it till someone else has owned it for a few years? Makes no sense to me. Buy what you want, when you want.
BuzzinSATX
03-19-19, 16:51
There are some pretty significant warranty benefits for buying a certified used vehicle. Most power train warranties are much higher.
For example, my daughter bought a certified used 2018 Forester in Feb. had 20K miles and 10 months old. She got remainder of factory bumper 2 bumper, PLUS a 7 year, 100K powertrain (from new). For $1600, she put a “wrap around” B2B warranty good through 100K.
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We have a few vehicles...different purposes and seasons. Fun, work/hauling, transportation. We always buy new, keep them about 45,000 miles and buy new again. It doesn't make financial sense...it's an indulgence.
Only if you are very, very wealthy and are buying it through your business as a deductible business expense.
Only if you are very, very wealthy and are buying it through your business as a deductible business expense.
IRS rules for that are very arcane and not at all practical except in some rare circumstances.
We have a few vehicles...different purposes and seasons. Fun, work/hauling, transportation. We always buy new, keep them about 45,000 miles and buy new again. It doesn't make financial sense...it's an indulgence.
Me for years. I had a run of a decade where a new car was my annual treat. That said, I now live in a tax environment that discourages owning high end cars, and as such, I have had my current ride for six years. I will still buy new as I prefer to be able to know exactly what every minute of my vehicles lifecycle has been.
BoringGuy45
03-19-19, 17:45
If you're going to do brand new, I think leasing is a better option that outright buying. If you're going to buy, certified pre-owned is often the best choice for all the reasons listed here.
Toyota Landcruiser and 4Runner, and Jeep 4door wranglers seem to hold their value to the point where used isnt’t Much of a discount especially when you consider how they could have been treated.
Exactly. Toyata Tacomas are the same way. You don't save much until you get into the really older trucks.
Me for years. I had a run of a decade where a new car was my annual treat. That said, I now live in a tax environment that discourages owning high end cars, and as such, I have had my current ride for six years. I will still buy new as I prefer to be able to know exactly what every minute of my vehicles lifecycle has been.
Yeah, I bought a GMC 2500HD about 4 years ago. That truck only gets about 5000-6000 miles/year and tends to be pretty durable so we'll likely keep it for awhile. And I leased a Z-car about 5 years ago, then bought it out at the end of the lease. That car only gets about 5000 miles/year too and is holding up pretty well, although it only has about 25,000 miles. OTOH, my wife just picked a new Murano Platinum when the previous one hit 45,000 miles.
I agree with leasing. Well-suited to someone who wants a new car every 3 years or so and views a monthly car payment as a perpetual part of their life. I do it both ways, depending on the vehicle and its use. Vehicle leasing gives my financial guy the cold sweats.
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Depends on what you are buying.
When we special ordered a 16 Tacoma for my wife.
It was cheaper the buying used.
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Can you really put a price on new car smell?
Can you really?
I don't work on vehicles. I don't want what someone else beat to hell. I don't like unhappy, expensive surprises.
My wife and I buy new. We both work at the same place, albeit different shifts. It's about a 50 minute one-way trip (75 miles round-trip). She works 3 days per week, I work 5. We put beaucoup miles on vehicles. I have a GMC Sierra, she has a Dodge Caravan. We jointly have a Nissan Versa that is our "work car" (obviously with our schedules the truck and minivan get used a little each week). The Nissan gets about 25K miles per year, the other two maybe 12K or 13K. Once that Versa is paid off we will roll it into another new "work car". Of course it'll have probably 75K on it by that time but oh well.
Learned my lesson about buying used. I always heard "Buy a Honda Civic, they run until the wheels fall off". About 6 or 7 years ago we bought one used for $7,000. Paid for it with a cashier's check from our savings account. It had 110K miles on it. Drove it for a while and the temp gauge kept going up to the red zone. I was like "WTF?". Took it to a shop and found out that apparently Honda Civics had been known to have cracked heads, which was the problem with this one. Was going to cost $1800-1900 to fix a $7,000 car. I said "F**k that" and traded it in to a dealership for a Chevy Spark.
I will NEVER buy someone else's problem (read: USED vehicle) again in my life.
A lot depends on the car and your expectations of ownership. If you're not the type to swap cars often and drive them for decades then buying new is a good idea. If you like a new car every so often then not so much.
Some cars used are barely cheaper than new but without some of the benefits. For example, I want to buy my mom a Subaru Crosstrek but a lightly used off lease one is only about $3k cheaper than a brand new one yet has mileage and not all of it's factory warranty. For the extra $3k I'd rather her driver a brand new car with a brand new warranty.
Otherwise I personally buy used. Sometimes well used. My first and only new car was a two year lease in 2005. When the lease was over in 2007 I bought a 6 year old car and drove it to 2014 when I sold it and bought a 4 year old car which I still have but plan to sell. Late summer of 18 I bought a 11 year old used SUV.
I buy new personal trucks, but I drive them until the wheels fall off. My biggest problem is that used diesel pickups, which I need, are completely overpriced and most people who unload them have way more options than I need. I just order my trucks the way I want to, pay for them from my business, and take the depreciation.
What kills me is the person that buys a cheap Kia that is worth nothing when 5 years old!
If you're the guy to drive it for the next decade it makes more sense and it's still worth a few grand in the end.
With interest rates going up, if you can get a new car with 0% interest it will make sense to do the math.
Yes, if you’re willing to put in the work. Bought my Chevy Colorado ZR2 new last year. They were offering about $3,500 off msrp locally. Used ones with 8-10k on the odometer were about $6-7k off msrp. I went on autotrader.com, put in exactly what I wanted on it and searched nationally. Then I sorted by lowest price first, boom. Found exactly what I wanted new on the lot for $8,350 off msrp.
$280 Southwest one way flight and an 1100 mile road trip later, I literally could’ve flipped it and made money.
Yes, if you’re willing to put in the work. Bought my Chevy Colorado ZR2 new last year. They were offering about $3,500 off msrp locally. Used ones with 8-10k on the odometer were about $6-7k off msrp. I went on autotrader.com, put in exactly what I wanted on it and searched nationally. Then I sorted by lowest price first, boom. Found exactly what I wanted new on the lot for $8,350 off msrp.
$280 Southwest one way flight and an 1100 mile road trip later, I literally could’ve flipped it and made money.
Damn, that's dedicated!
It depends on what you want.
I get off on running old cars into the ground, running them hard, but maintaining them.
A new car is only new for a month, so if thats your thing, id think a lease is best- but havent researched in a couple years.
Almost exactly 2 years ago I had to replace my first car, an 04 Honda Civic, after some idiot in a minivan turned left in front of me. That Civic had a full tank of gas and new windshield wiper blades too :mad:
I went with an 06 RAV4 V6 with 84k miles on it. It only had 1 owner who had the vehicle serviced religiously every 5k miles. I'm at 115k now and overall my experience has been positive. No problems whatsoever on the road trips I've taken, including a round trip from Chicago to Ft. Collins. One thing I'll point out is that I'm very glad I opted for the 2 year, 25k mile service package for an extra $1200 or so. It ended up paying for itself a few times over, but then again the Civic was also bought used (69k) with a service plan that paid for itself. I would say Toyotas & Hondas are pretty low maintenance overall, but not maintenance free.
For me new vs used is a decision that depends on a few things, but make & model are probably the deciding factors. I probably wouldn't buy a used truck or sports car unless the mileage was crazy low because chances are the previous owner(s) beat the hell out of it. With proper maintenance I hope to drive the RAV4 until 2026 or 250k miles, whichever comes first.
Damn, that's dedicated!
Yeah, but $4,500 is $4,500 dollars! :D
Depends on the car and the deal quite frankly. 3 stories to illustrate.
1. Bought daughter new on the lot Corolla on an end of year sale. Paid 11.5 in 08. Daughter drove it two years and 45k miles... then totaled it. Insurance paid me $1500 more than I originally paid for it. Taxes included.
2. Bought an 04 Dodge diesel for $12k off sticker mid year (June). I had it for about 2.5 years before I noticed the used ones (same year) started selling for less than I originally paid for it. So almost like the first 2.5 years for free.
3. I buy strictly used 2-3 year old Mercedes and Audi's. They are usually selling for 1/2 original price by then. Two examples: bought wife's E350 Bluetec, 2 years old and 19k miles for 38k. Originally sold for 63k. My Audi A8, 3 years 31k miles. Originally sold for 89k. I paid 42k.
Just keep in mind, it depends on the car and the deal.
IRS rules for that are very arcane and not at all practical except in some rare circumstances.
I meant AS an actual business vehicle. My friend owns a limo service, for him it makes sense because it's deductible.
Toyota Landcruiser and 4Runner, and Jeep 4door wranglers seem to hold their value to the point where used isnt’t Much of a discount especially when you consider how they could have been treated.
ditto about the only ones :) and ditto the treatment
regular cars mini vans and luxury etc.. never buy new
unless you want it and can afford it ? then its more a matter of something new that others do not have etc..
Lots of times manufacturer promotional discounts and apr makes new versus used very close in price.
ThirdWatcher
03-20-19, 06:27
For me it has made sense to buy new. As others have said, diesel pickups and Toyota Tacomas really hold their value (and I’ve purchased both new in the past) so it doesn’t make sense for me to buy used. The other issue is all the fraud out there (altered odometers, cleaned up and re-titled flood cars, etc). Cars depreciate dramatically but I bought my bride a new car anyway before I retired because I won’t take a chance with her safety. I guess I’ve just seen too much bad stuff happen to good people so I just won’t take the chance.
I think used makes more sense if, like me, you change vehicles every few years just for something different and can read between the lines on a Carfax. A whole lot of hurricane and east coast cars bought at auction being sold in other states. And a lot of nice cars driven by rich housewives who trade in often.
The longest I ever owned a vehicle was my 2000 Land Cruiser, bought 12 years old with 98K miles. It took 3 months to find one that looked to have never been off-road, with early oil changes in W. Texas. Wonderful, trouble-free gas hog. Paid $12.8 and sold 6 years later for $10.
I recently replaced the LC with a 2016 Acura RDX with 17k miles for $17,000 less than new. I bought new pickups when they were the cheapest you could get in the early eighties. But with the crazy pricing now, I would only buy used. Luckily it’s easy to find used trucks in the suburbs that haven’t done a lick of real work.
For me it has made sense to buy new. As others have said, diesel pickups and Toyota Tacomas really hold their value (and I’ve purchased both new in the past) so it doesn’t make sense for me to buy used. The other issue is all the fraud out there (altered odometers, cleaned up and re-titled flood cars, etc). Cars depreciate dramatically but I bought my bride a new car anyway before I retired because I won’t take a chance with her safety. I guess I’ve just seen too much bad stuff happen to good people so I just won’t take the chance.Can't retitle flooded, salvaged or TMU titles. Unless that car was never reported to the insurance
I meant AS an actual business vehicle. My friend owns a limo service, for him it makes sense because it's deductible.
That’s different than, say, a physician having his business lease a Corvette and trying to deduct the lease payment as a business expense, or buying a Corvette and depreciating it. I did that many years ago when the IRS was much less specific about it. I can still do it but I can only deduct the portion of the vehicle that is used for business. The rules for that are very specific and have to be meticulously documented. A limo company owner buying a specialty vehicle like a limo isn’t nearly such a controversial issue. It’s like an excavating company buying a dump truck.
I have a friend that’s an accountant in Atlanta. He owns a Ferrari and keeps it at his office, drives his Kia to work, and drives the Ferrari the rest of the day, drives the Kia back home. He gets audited every year and that Ferrari is always the focal point of the audit.
I'm considering a new Mustang, Challenger, or Camaro. V8, manual.
By the time they are several years old theyve often been modified/possibly abused. If just one to three yrs old there is still risk of abuse but they are $5-$10k less than new.
Also, I never see just the group of options I want.
I've had several powerful cars so that is nothing new. What would be new is buying a new one and losing 50% of its value in 6 yrs or so.
I drive 15k a year.
I'm considering a new Mustang, Challenger, or Camaro. V8, manual.
By the time they are several years old theyve often been modified/possibly abused. If just one to three yrs old there is still risk of abuse but they are $5-$10k less than new.
Also, I never see just the group of options I want.
I've had several powerful cars so that is nothing new. What would be new is buying a new one and losing 50% of its value in 6 yrs or so.
I drive 15k a year.
Rapid up-front loss-of-value buying a new car is the nature of the beast. It’s a price I’m willing to pay so that I don’t have to hassle with investigating and buying a used car.
The Murano that my wife just bought was from a dealer 90 miles away. We never even set foot in the dealership. We negotiated it by phone, they delivered the car on a flatbed, took the old one away, did the paperwork in the kitchen. Like ordering a pizza.
In most cases no it's not worth it.
The only exception I have seen has been diesel trucks. They tend to hold their value very well(at least here in Texas) especially with low miles. The last diesel I purchased(F350) I ended up buying new. For what I was looking for I could have saved a little buying used but the difference wasn't enough to make it worth it at least in my opinion. I would have had 2 years less warranty, miles(albeit very low), and the difference between that and a end of year new purchase wasn't enough for me.
I definitely agree when it comes to diesel trucks. I've bought both new and used and they hold their value. I bought a used 2004.5 GMC 2500 on 06 for $28K and sold it in 2016 for $19K and it had 210K miles on it. I put that on a 2016 new Chevy 2500. I'll keep that for a couple of hundred thousand miles also. One thing that shocked me was the technology difference between the 2 vehicles. It's like coming out of the stone ages. Although I hate all of the new emissions crap added to the vehicle.
The vehicles I drive have always been purchased used. We generally keep vehicles 6+ years, but I hate the idea of the huge depreciation hit.
We bought my wife's last car new because she has never had a new car.
Andy
Outside of an enthusiast want of a new car, the most logical reason to buy new is the boon of safety tech in the last few years. Modern cars are more safe then they have ever been. Lane departure, blind spot monitoring, crash avoidance braking, heads-up-displays etc., just off of the top of my head.
Maybe Im wrong headed about the whole thing but this is a topic I hear about all the time, mostly regarding trucks. Is it really useful or realistic to think of a vehicle as an investment, an attitude I very commonly encounter. I think its more an expense of living. I presume you could walk and carry your sh!t everywhere for 100k+ miles. Wives and kids would love the exercise!
Its like a tool for travelling. Ive never heard someone buy a nice new table saw and mention the great resale value. Use it take care of it for max benefit and be ready to buy another of your liking when its time comes.
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My next vehicle will likely be my last land vehicle purchase, so Im going with new. If we both make it 12 years Ill be happy.
I personally doubt I will ever buy a new vehicle again. Vehicles being manufactured today just seem to be to disposable to be considered long term investments, plus the pricing on cars today is becoming borderline ridiculous.
From a wealth perspective, if you have low net worth and want to grow it, don’t buy new. Buy what your most trusted mechanic in town recommends. That’s who you will be with you in the long run.
If you have some net worth, Don’t finance a depreciating item. Standard financial planner advice. If you can get 0% financing on a good final price, that’s a great way to go.
Most banks balk at financing over $10k.
Outside of an enthusiast want of a new car, the most logical reason to buy new is the boon of safety tech in the last few years. Modern cars are more safe then they have ever been. Lane departure, blind spot monitoring, crash avoidance braking, heads-up-displays etc., just off of the top of my head.
yup
sadly making worse drivers out of these people who rely on them for everything
our issue is lack of driver education about distances and reaction times and of course distracted driving idiocy now and so on
As someone who lives in MI, I have a hard time investing much in vehicles. We put so much salt on the roads that I see vehicles that are around 4 yrs old rusting out.
I am also a mechanic, so I buy used and drive them Into the ground.
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Since I'm not a "motor head" and don't work on cars the idea of breaking down on the way to work or on a 700-mile road-trip for vacation isn't appealing. Generally speaking, new vehicles don't do that.
Suzy Orman always says no....but if you keep cars for a long time it’s not as bad. My last new car was purchased for $100 under invoice. I desperately needed a car and specifically wanted that model. They had to order it for me. Kept it for 7 years until it started to shit the bed.
I never bought a used car for myself until two weeks ago. Got a 2019 Escalade with 10300 miles on it for $18000 under the MSRP and probably $13000 less than I could have got it new. Went looking for a Yukon but this was a better deal than what I could find. I have 3 1/2 of 4 years and 40k of 50k of the warranty left. It was an GM executive car just turned in. It still smells new and doesn’t have a scratch on it.
I've generally had good luck with used cars with high(er) mileage.
Not counting my highschool car and my mom's passed down car I never had any serious issues and I used to drive everywhere.
94 Camaro bought in 1999 with 115k. Sold in 2003 with 167k. One rubber radiator hose burst while driving.
1998 Ram 1500 bought in 2004 with 167k sold with 190k. Headlight switch and water pump went bad on my way home from work. Towed to work the next day and had it fixed.
2001 Toyota Solara 4cyl bought in 2007 with 81k sold in 2014 with 300k. Car had previous front end damage. Did a lot of preventive maintenance but never stranded. Took it to Canada and back to PA several times. Every 100k timing belt and water pump. Several sets of spark plugs. One radiator at 250k. Two struts and two thermostats. That's it. Even the starter, alternator and rotors we're original.
In 2014 bought a 4 year old car that's been in the family since new.
Had a few other used cars but not long enough to really matter. 88 Bronco II for one winter season. A 99 Camaro V8 but crashed within 6 months
56505
Horrible use of money...I drove older but reliable trucks & SUV's needed for all the hunting, shooting & fishing I do for the first half of my life being responsible, got my mortgage paid off & became debt free. So, after getting a company truck I can use for personal & having always being an enthusiast of performance vehicles in general I went out & purchased my mid-life crises rocket. Sometimes you just gotta say to hell with it & do something foolish. Didn't make my financial advisor very happy & admit I do have some buyers remorse from time to time when I look her just sitting in the garage, but man does that go away everytime I get to jump in, which is only once a week if I'm lucky. After all, who doesn't really need a 650HP that can reach 200mph?? Next on the bucket list is COTA, getting an instructor & romp on this for gal what she was made for.
Evel Baldgui
03-20-19, 22:26
Leasing a vehicle for me is not realistic, drive about 20-25k mi/year. A dealer demo Mercedes/Lexus works out quite well. Almost new (avg miles +/- 5k) outright purchase, no monthly payment and just replace every 4 years or so.
ramairthree
03-21-19, 02:52
It is an absolutely fantastic idea.
Debut of the new Challenger? New 5.0 Mustangs? Return of the Land Rover Defender, diesel JEEPS, or introduction of a mid engine Corvette?
Do it.
Just don’t try to justify it financially.
Just go with it’s a fantastic idea.
sundance435
03-21-19, 13:49
I've owned new and used. Last 2 trucks were bought new, one prior to those was certified used, and numerous used cars before that. As others have said, a lot of it depends on what you're buying. Toyotas in general hold value well (exceptions being Lexus, Tundra, and Avalon), some models more than others (4Runner, Tacoma) and so do most trucks (except Japanese). Good luck finding a Tahoe/Yukon for an appreciable difference between new and used (with low miles). As for lease vs. buy, it really depends on how much you drive. I usually put on 15,000 in a year, so leasing has never made sense for me. I've always received really good trade in value for my (American) trucks, but I'm trading them in well before 100,000, too.
Another important consideration for me is my local, small-town dealer. They treat me well and I like to stay loyal to them.
The vehicles I drive have always been purchased used. We generally keep vehicles 6+ years, but I hate the idea of the huge depreciation hit.
We bought my wife's last car new because she has never had a new car.
Andy
Well, crap. I was looking for a used late model 4x4 truck when I found out a new 2018 Silverado K1500 LT Z71 is $14k off MSRP. Pacific Blue, sitting in the driveway now.
Andy
Most banks balk at financing over $10k.
Sounds like you need a new bank.
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Considering the depreciation of a new car coming off the lot, cringe worthy aside, I would buy used. A great deal to be had could be worth buying used. The only vehicle I would by new would be something high performance, a corvette, a cobra mustang, Porsche, etc... as I wouldn’t know how the previous owner treated it. Buying with cash also makes financial sense as well.
Sure. If you can afford it. By "afford it" I don't mean 8 years of $600 a month payments. I mean CASH. If you have enough cash to buy whatever vehicle you want- buy what you want and don't worry about it.
Sure. If you can afford it. By "afford it" I don't mean 8 years of $600 a month payments. I mean CASH. If you have enough cash to buy whatever vehicle you want- buy what you want and don't worry about it.
Unless I find exactly what I want used I'd be financing about 20% of the cost. Would pay that off in less than 2 yrs.
For me it's more about saving / investing (more) money to retire early or buy a depreciating fun thing like a car I'll enjoy driving more.
Unless I find exactly what I want used I'd be financing about 20% of the cost. Would pay that off in less than 2 yrs.
For me it's more about saving / investing (more) money to retire early or buy a depreciating fun thing like a car I'll enjoy driving more.Only you know your financial situation. If it were me I'd save that money vs a fun car. But, I've been around so many cars in my life that at this point it's just another 4 wheels
Only you know your financial situation. If it were me I'd save that money vs a fun car. But, I've been around so many cars in my life that at this point it's just another 4 wheels
Only you know your attitude toward cars, but for many of us, they're a lot more than just 4 wheeled transportation.
In Ron3's example, a $40,000 car with a 5 year loan and no down payment at current interest rates would cost him about $3000 in interest over that 5 years. If he's only financing 20% of the vehicle cost, that loan would cost him about $900, or $180/year average. Only Ron3 knows Ron3's financial situation, but for someone who sees their car as something more than just 4 wheeled transportation, that seems like a pretty affordable way to drive a car that he enjoys. For me, that money saved by buying a used junker would let me retire about a month or two earlier. Assuming that I wanted to retire early (that ship has sailed).
Only you know your attitude toward cars, but for many of us, they're a lot more than just 4 wheeled transportation.
In Ron3's example, a $40,000 car with a 5 year loan and no down payment at current interest rates would cost him about $3000 in interest over that 5 years. If he's only financing 20% of the vehicle cost, that loan would cost him about $900, or $180/year average. Only Ron3 knows Ron3's financial situation, but for someone who sees their car as something more than just 4 wheeled transportation, that seems like a pretty affordable way to drive a car that he enjoys.
Yes sure but when one mentions the possibility of putting "$900" towards retirement makes me think it's that important to where maybe he's weighing the pros/cons. For some people $900 or $180/year is not even a drop in the bucket, for others it's a substantial amount of money. If he hadn't mentioned putting it towards retirement I wouldn't have thought twice about it
Yes sure but when one mentions the possibility of putting "$900" towards retirement makes me think it's that important to where maybe he's weighing the pros/cons. For some people $900 or $180/year is not even a drop in the bucket, for others it's a substantial amount of money. If he hadn't mentioned putting it towards retirement I wouldn't have thought twice about it
Yeah, it's true. This whole thread/discussion has a complicated overlay because individual attitudes vary so much relative to what they like to drive vs how much they'd rather have the money they'd have to spend.
The OP's original premise asserts that financial planners would all recommend against buying/financing a new car. That's absolutely true. You (the client) are hiring them to help you invest wisely, so their focus is recommending against unnecessary expense such as a new car and new-car auto loan interest. You didn't hire them to accommodate your lifestyle now, you hired them to manage your money wisely so that you can retire comfortably. To them, that $900 is completely unnecessary expense when you could have paid cash for a 6 year-old Hyundai and for them, recommending otherwise runs counter to the reason you hired them in the first place. That "lifestyle-now vs lifestyle-in-retirement" balance is something that is always a tricky balance for financial planners.
Excellent points.
My current car is "ok" to drive. Its 6 yrs old and has 85k miles. It's not like I "need" a new car. But what I want is going to be around $40k. (The small portion I'd finance would be paid off in about 18 months) I'd guess the rate would be 0-1.9%. Great credit.
So it's either drive what I have (for now) and not spend the money or get something I want.
Neither. I prefer to lease but it only makes sense of very cheap or very expensive cars.
My wife leases a VW Tiguan. 0 down, 210/month all in with 10k mile/year. That includes all maintenance and brake pads when needed. Trades it in for a new one every 3 years and they waive small wear and tear fees. No way to buy and maintain a car for that cheap.
I also leased a high-end sports car for a year just because. I knew I wasn’t going to keep it longer and the economics of paying through the nose for a short term lease on an expensive car still made sense when comparing buying then selling at a loss.
If the lease payment comes close to a monthly payment then leasing loses its appeal. To me, it doesn’t make sense to lease for 500/month if the payment to buy it would be 600.
I buy new any more, I found I wasn't good at diagnosing some troubles. I could remove and replace clutches, transmissions, and spark plugs, but little else. I have a 2009 with 65,000 bought new, I take it in to dealer for all scheduled and unscheduled maintenance. 2012 with 33,000. 2014 with 44,000. Same maintenance plan. Two newer are always garaged when not in use. Engine bays are clean I trade after 90,000 to 120,000 in the past. Driving less these days so who knows. I only have a couple new cars left till I quit driving.
hotrodder636
03-25-19, 02:51
This pretty much sums it up. Financial planners look at an “investment” that will have a significant loss (depreciation)as a bad investment. But for many, car buying is much more than just a way to work. There are pros and cons to new vs used based on use. Personal financial situation plays a huge role too.
Yeah, it's true. This whole thread/discussion has a complicated overlay because individual attitudes vary so much relative to what they like to drive vs how much they'd rather have the money they'd have to spend.
The OP's original premise asserts that financial planners would all recommend against buying/financing a new car. That's absolutely true. You (the client) are hiring them to help you invest wisely, so their focus is recommending against unnecessary expense such as a new car and new-car auto loan interest. You didn't hire them to accommodate your lifestyle now, you hired them to manage your money wisely so that you can retire comfortably. To them, that $900 is completely unnecessary expense when you could have paid cash for a 6 year-old Hyundai and for them, recommending otherwise runs counter to the reason you hired them in the first place. That "lifestyle-now vs lifestyle-in-retirement" balance is something that is always a tricky balance for financial planners.
This pretty much sums it up. Financial planners look at an “investment” that will have a significant loss (depreciation)as a bad investment. But for many, car buying is much more than just a way to work. There are pros and cons to new vs used based on use. Personal financial situation plays a huge role too.
That's me. I was a gearhead before I became a teenager. I was driving on the ranch by the time I was 13 (would've been sooner, but the clutch on that 71' Jeep was STIFF!). Could I drive the same beige Corolla or Camry for 15 years and 200-300K miles? Sure, but I wouldn't want to live to retirement if that's all I had to look forward to at the end of my long work days. :(
Could I drive the same beige Corolla or Camry for 15 years and 200-300K miles? Sure, but I wouldn't want to live to retirement if that's all I had to look forward to at the end of my long work days. :(
Yup. I'd drive that Corolla too, if I had to. But...I don't have to. And I don't want to be the guy who scrimps all his life so he can retire in comfort, and dies the day after he retires. I want to use at least some of that money now, while I can enjoy it.
This pretty much sums it up. Financial planners look at an “investment” that will have a significant loss (depreciation)as a bad investment. But for many, car buying is much more than just a way to work. There are pros and cons to new vs used based on use. Personal financial situation plays a huge role too.
Funny thing is, my old financial planner (he retired, I didn't hire a new one) had zero issues preaching to me about how I was spending money on my fun stuff and he was travelling the planet spending a ton of money hunting animals (which is fine by me). All of us have to balance out our mental health with having enough money to retire. I buy plenty of stuff that depreciates. Hell, a couple of my AR's have depreciated significantly. I spend more on ammo every year than I give my kids for college. We all make decisions based on our lifestyles.
I wouldn't even know what to do with a car. They don't fit in my life, but I get it when a guy likes to drive a car. I just happen to like to drive fast and powerful snowmobiles and spend my extra money on that.
Bought a used Chevy Colorado Z71 for 26k with 36k on it. Same truck with all the same gizmos? 41k. I think I made out well. I won't buy new again.
ramairthree
03-26-19, 15:24
I forgot to add,
Depending on what brand/model,
Discounts, etc. sometimes you will find warranty, etc. when buying new to be of benefit.
In my adult single life, then married life, then vehicles for kids, etc. I have bought
Used,
Used,
Used,
New,
New,
Lease new,
New,
New,
New,
New,
New,
New,
Used.
turnburglar
03-28-19, 12:10
My first 2 cars as a kid where used. The first one was a pontiac bonneville that was a hand me down from my familly. Late one night a drunk driver hit her in a parking spot and the insurance caughed up a little coin. With that coin; 18 year old me went out and bouhgt my high school dream car: e36 BMW 3 series. By the time I put my own 80k miles on the car, it cost me 3x what I paid for the thing. And that car never went to the dealership. I did most of the minor jobs myself being a poor E2, and then had my friends help with the jobs I couldnt do. Sure I did crash it a few times racing throught the canyons, but I swear every single sub system and componet on that car needed to be replaced between 120-200k miles. Sure the care retailed for 31,000 brand new and I paid a 1/10th of that 18 years later, but the whole experience really salted me.
Fast forward to my mid twenties when it was time to replace the BMW and I decided that I wanted to get a Chevy Silverado. I picked Chevy because in the military we had a ton of Fords, a few Chevy's and rare Dodge's. The Chevy's handily outlasted the Ford's, and had nicer interiors. Also my cousin had a silverado that he put 50k a year in work miles so that also made me a believer. When it came down to buy the actual truck I was willing to look at trucks even 5 years old with up to 60k miles on them. I even went to a Car Max and looked at all of their trucks. Spoiler Alert: I found MULTIPLE vehicles on the car max lot that had evidenece of a major accident; you know exactly the kind of wreck they advertise their cars as never being in? When it came down too it, even the older trucks with no warranty and 60k miles on them where not more than 7k cheaper than a brand new one (with applicable discounts). Based on this evaluation of the used market I decided buying new wasnt such a bad idea. I got 0.9% on my loan, and put nothing down. Fast forward 3 years later, and the truck has more than 10K in marketable equity in it, and has never needed a repair from the dealership or otherwise. I doubt I would have that kind of position if I had bought used though.
When it comes down to it, I noticed that the car life cycle has two expensive sides too it: the depreciation in the beggining then you get stuck with repair costs in the end. With that said: paying top dollar for a used tacoma is a terrible idea. To me you end up paying for both sides of the negative cost. Chances of you reselling your tacoma with 250k miles for a decent amount? zero. Chances you will replace most of the mechanical systems? High! Maybe you wont have to go through the car line by line replacing items like a BMW, but to me if you have to do any serisous service to the vehicle you better not be paying depreciation at the same time. I always laugh when I see the asking prices on civics, camrys, and tacomas. They are still cheaply made imports at the end of the day, despite their reputation for being made of indestructiuem. Every deal needs to be weighed on its own merrit by the party in the deal. Outside 'advisors' rarely have a clue about you or anything specfic. Shit if you listen to some of these advisors you will get caught in every single financial bubble that bursts.
. Chances of you reselling your tacoma with 250k miles for a decent amount? zero. .
There's many different options and obviously years so I'm sticking with basic 6cyl 4x4 and close to your stated mileage. Also I'm sticking with 2007 simply because that's what my 4Runner is
I can only tell you what was sold and not what was for sale however....
This was all sold at auction this month
3/11/19 Phoenix. 233,660 miles $10,600
3/7/19 New England 302,298 miles $3k
3/1/19 Pa. 233,626 miles $7k
For mileage high mileage under 250k
3/5/19 Denver. 188,346 miles $10,200
3/7/19 MD. 217,225 miles $8,900
3/19/19 Statesville 173,263 miles $10,200
3/20/19 Milwaukee. 186,564 miles $8,500
3/21/19 MD. 170,620 miles $8,500
The most expensive this month was sold on 3/12/19 in Portland with 137,415 miles for $14,000
If I look at 4cy 4x4 for the same year
3/14/19 NY. 226,247 miles $3,500
2/28/19 Utah. 258,875 miles $5,100
1/31/19 S. Cali. 233,864 miles. $5,600
1/8/19 Baltimore. 153,224 miles $7,800
Now, while this is a dealer only auction.... meaning the cars are bought by dealers for resale not all of these cars are sold in the US. Depending on the country and their import laws shippers have no problems paying to the hilt because wherever it's going chances are it's worth double or triple
MountainRaven
03-28-19, 13:35
When it comes down to it, I noticed that the car life cycle has two expensive sides too it: the depreciation in the beggining then you get stuck with repair costs in the end. With that said: paying top dollar for a used tacoma is a terrible idea. To me you end up paying for both sides of the negative cost. Chances of you reselling your tacoma with 250k miles for a decent amount? zero. Chances you will replace most of the mechanical systems? High! Maybe you wont have to go through the car line by line replacing items like a BMW, but to me if you have to do any serisous service to the vehicle you better not be paying depreciation at the same time. I always laugh when I see the asking prices on civics, camrys, and tacomas. They are still cheaply made imports at the end of the day, despite their reputation for being made of indestructiuem. Every deal needs to be weighed on its own merrit by the party in the deal. Outside 'advisors' rarely have a clue about you or anything specfic. Shit if you listen to some of these advisors you will get caught in every single financial bubble that bursts.
The Honda Civic is assembled in Indiana, with 65% of its components made in the US and Canada.
The Toyota Camry is assembled in Kentucky, of 70% American-made components.
The Toyota Tacoma is assembled in Texas and Mexico, of 75% American-made components.
(55% of your Chevy Silverado originated in the US, compared to 75% of a Toyota Tundra or 75% of a Ford F-150. And some of those Silverados are imports.)
So... your Chevy is, in fact, the cheap import of the group.
The Honda Civic is assembled in Indiana, with 65% of its components made in the US and Canada.
The Toyota Camry is assembled in Kentucky, of 70% American-made components.
The Toyota Tacoma is assembled in Texas and Mexico, of 75% American-made components.
(55% of your Chevy Silverado originated in the US, compared to 75% of a Toyota Tundra or 75% of a Ford F-150. And some of those Silverados are imports.)
So... your Chevy is, in fact, the cheap import of the group.
And that "All-American Red White and Blue!" Dodge Challenger with 6.4L V-8 is made in Canada! But at least not that great Hemi, right? Of course not. The engine is made in Mexico. What was that you said? Oh, yes. "Yippee Ki-Yay, madre Fukker".
turnburglar
03-29-19, 16:49
Honestly I only figured out my truck was made in Mexico when I checked the door frame for something completely unrelated.
I was super pissed for a very long time.
I STILL would rather drive a Chevy than a Ford though. Heard that eco boost V6 the other day. No Thanks.
platoonDaddy
03-29-19, 18:56
Bought a used Chevy Colorado Z71 for 26k with 36k on it. Same truck with all the same gizmos? 41k. I think I made out well. I won't buy new again.
Did you finance or pay cash?
Both vehicles I’ve bought have been new. I’d rather buy used but for the two I was looking at, the prices either weren’t that different or there was a major reason to buy new, like a vastly improved transmission.
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Toyota Landcruiser and 4Runner, and Jeep 4door wranglers seem to hold their value to the point where used isnt’t Much of a discount especially when you consider how they could have been treated.
Yea to both of these comments. Depends on the vehicle. When I bought a wrangler a year and a half ago the used ones were just way too overpriced. It really didn't make sense to not buy new.
So I left out a Key ingredient, I financed for 6 months the New 2009 Escape XLT. Paid cash for the new 2012 F-150 Lariat, Paid cash for the new 2013 Lincoln MKX.
I would say it depends on how long you keep your cars and what brand they are.
I would say it depends on how long you keep your cars and what brand they are.
Or....maybe one just wants to drive a new car, regardless of whether or not their investment advisor thinks it’s a good idea...
Car or truck that is.
Most (all?) financial planning articles seem to say, "no". Are they right?
Opinions?
That tends to depend on some factors. If you buy a new car and drive it till the wheels fall off, where you have some years of no payments and a free car, I believe that one considered a good financial decision car wise. But it's not just $, as I find driving older cars gets stressful as you wonder if/when it's gonna leave you stranded for example. There's no amount of $ savings that offsets piece of mind in my experience. I recall well the first time I purchased a new car and realized right there I would never buy a used vehicle ever again if I had the choice. I guess best $ is buying a car that's a few years old with low mileage as that's where the biggest depreciation takes place. Me, I will spend the $ on that new car smell and feelz. Trick to me is, don't buy a car that puts a major stress on your wallet. I could afford a nicer car, but I like to keep payments low as I can.
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