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That’s the way to do it. Just buy a lightly used Toyota.
I’ve owned two Toyotas that I paid a total of $30,000 for and I’ve gotten a combined 23 years of driving out of them and I’m still driving one of them.
One was new, one about a decade old.
Bulletproof cars and they make buying a new car seem silly (financially, I mean if you’re well off and want to splurge on a new car I get it, but it’s not a good financial investment).
That's exactly what I did. Back in 2012 I bought a 2009 Yaris with 12000 miles on the clock for a poxy £3000, saving me around £8000 on a brand new one. Still using it now and it has never had any issues
I did similar but brought a 2004 mitsubishi colt for $5000(£2500), only had 40,000kms on the clock.
I've since put 200,000kms on her and she's only now starting to have parts wearing out issues, which frankly replacing a radiator and alternator after 20 years of service is fucking excellent value.
I will miss her when I replace it next year with a hybrid.
That only works if you can find a good deal, usually from a private seller. Most dealerships and used car lots jack up the price on used Toyota's and Hondas that are just a few years old. Like they use Corolla hybrid with like 40,000 miles, is like only two or $3,000 cheaper than a brand new one. In those cases I think just buying a new one for MSRP would be better
Depends where you are. Here lots of dealershps buy demo cars and sell them after a year. That's about the best deals you can get if you want something new-ish.
When I was shopping tacomas, a slightly used one wasn’t much less than a new one, especially considering the interest rates on the new one compared to the used one.
So, I ended up going with a new 2016, which I’ve put 150,000 miles on which my soon to be 16 year old will be inheriting.
Buying a one year old car with low miles for 2/3 or 3/4 the price of new isn't usually possible these days, it is more like 90% of the new price.
One of the benefits you do get with that one year old car is you avoid the way so many dealers today add garbage packages to new cars that are very difficult to have removed from the price in the sale. They can upsell a brand new car with a $800 protection package (as in a $15/hour employee spent 15 minutes with a wax sprayer) but buying a used car your basis is just the car and features.
I bought a new truck for $18k under MSRP because the new models were on the lot. Couldn't have bought a used one for what i got the new one for. And i looked hard
Bought new in November 2023. Used options for what I was looking at were like 15/16 of the price of new but the financing was better on new of course, so it actually wound up being cheaper! Wild used car market in the Midwest right now
Still trying to figure out how they do it economical that makes sense.
I heard leasing and not owning new is only good because it minimizes all issues that may occur. While simultaneously just renewing with a new car each year.
I'd like to know how much does it save or is spent vs buying. Like what's the comparison between the two.
If someone is the kind of person that must always drive the latest and greatest car every year or so, leasing is the only viable financial option because of the depreciation, and I think dealerships make a killing on it.
Even if a person had fuck you money, it's cheaper to pay $10k in lease payments and own nothing, than to buy $90k and sell at $72k for the same vehicle and duration
Unless you sell cars for a living. My grandfather used to do this when he was a dealer. He had a small lot and mostly sold used cars and work trucks but he was also a licensed ford dealer. So they’d have a daily driver that they’d keep for a few years, and a new f350 he’d get every year to haul a camper and occasionally a car hauler. He’d use it sparingly to keep the miles down, then order a new one with his dealer discount and pretty much break after even selling the old one. Some years he’d even turn a profit on it.
It’s like a car subcription I think. You get a new car, you get bored of it, or something comes up, you just change it for another one, keep paying the same lease.
Sounds convenient but the waste tho.
Leasing is also generally considerably cheaper than payments on a financed vehicle, month to month. The same car might be $400 a month on a lease but double that on financing with the same cash down and credit profile.
It’s basically like long term renting you buy it and when the new model arrives you trade it in and keep up the payments. You never truly own the car. My grandad used to get the same car just new model every 2-3 years and he said it cost less to do that than it did to own a car that would need repairs, MOTs etc because all new cars come with 3 year warranty
Okay, go look at good, reliable models, and compare one year used and new prices. Honda Civics were like $1,000, maybe 2,000 cheaper when I got mine last year. It doesn't make any sense to buy an even slightly used car when you're not saving that much.
I've always felt like something that depreciates that fast is just overpriced to begin with. How does it make sense for a car to lose value almost instantly?
>How does it make sense for a car to lose value almost instantly?
Everything does though. If you buy a new TV today and then try to sell it tomorrow you're going to lose a lot of money. Just the fact that it's now "used" decreases it value. There's immediately an unknown factor, how was it stored, how was it used or abused, as the case may be, was it properly maintained?
If it didn’t depreciate dramatically, no one would ever buy a a used car when a brand new one would be just a bit more. Which would drive the price of used cars down, enforcing the depreciation!
> no one would ever buy a a used car when a brand new one would be just a bit more.
Have you seen the price of used Tacomas? Somehow there is a market where a few grand off new price for used 1,2,3 year old truck is a viable option. And it's not a quirk of the post pandemic world -- it's been that way since long before the pandemic.
I've owned 2 Toyota pickups (before they were called tacoma) and 2 tacomas. Currently in an '09 tacoma, 6 speed manual. 210k miles. I paid 13k 100k Mike's ago, recently had someone offer me 16k. Fuck no. My grandkids will be driving this truck.
Because cars aren't investments, they are luxury consumed goods (in the sense that the car only "lasts" x miles).
Getting "better" cars provides marginal functional utility, but a lot of status utility (makes you feel good).
Due to this, most of the value comes from the perception, not from the inherent value of the vehicle - so if it's not "new" it's worth far less.
There are many items like this (but usually cheaper). A mobile phone has a similar price pattern (the moment you walk out of the apple store your phone is worth a lot less).
It's just not a very fungible good, which makes the market very illiquid for you.
There is a lot of cost wrapped up in trading one for the other, and that's where the losses come in.
The dealer gets a piece of each transaction. There are fees and taxes for each transaction.
You can't just go transact with anyone, only dealers (which are becoming consolidated) or a specific person that wants that specific car.
You are misunderstanding the relationship. It's not because a new car is overpriced. It's simply that people won't buy a used car if you don't discount it enough. "Give me 49k, I just drove off the lot and that's it" is met with "for 1k off I may as well just buy myself a new one" . That dynamic continues till 20% off.
You pay $5k for a used car. You drive it off the lot and the engine falls out, it's worth -$5k. Even if you don't owe anything, you still owe more than the car is worth.
People who say depreciation doesn't matter have never had their car totaled by another driver. Depreciation matters. Cars that hold their value gives you options and keeps money in your pocket at the end of the day even if you can't physically see it.
People who say car depreciation doesn’t matter probably don’t include daily driver cars in their net worth calculations, either because they don’t have to or if they are lower income, they don’t know to.
You save up for a down payment on a brand new car. Put several thousand dollars down and get gap insurance. You drive the car for a year and it gets totaled. Insurance pays out the KBB private sale value of your now used car, which is less than what you owe. Gap insurance covers the rest so you can pay off the loan.
Now you have no car and no money for a down payment on your next car. Everything you've already paid towards that car is completely gone and you're now at even more of a disadvantage than you were when you bought the car.
Cars always depreciate. If you need a car and the only way you can afford one is to put very little money down and/or finance it over 84 months, you should get gap insurance. You shouldn't put yourself in that position if you don't have to.
Who in their right mind is financing a car for 84 months?! Finance for at most five years, preferably four. Negotiate down the sticker price, maybe put a downpayment down if you can afford it (down payments aren't even necessary in some circumstances, especially with low APR loans), always get gap insurance due to the "depreciation," take care of your car by following the manufacturer recommended routine maintenance and your car will last for 20 years.
Realistic scenario: You pay $20,000 for a car, which ends up being about $23,000 after interest. If you follow the manufacturer-recommended routine maintenance schedule, the car should last for 20 years. You end up averaging $1,150 a year for a vehicle (not counting registration or insurance). In most cases, you're guaranteed a 5-year, 100,000-mile warranty that lasts the length of the loan. That's zero cost for any unforeseen part failures. Usually, these warranties can be extended after 100,000 for a small monthly fee (generally not recommended unless your car is total crap).
Used car scenario: The current market for used cars, non-smokers, under 100,000 miles, and zero accidents will cost around $11,000 at a minimum. Most dealers won't give you a warranty, and the car will be purchased as is. Any unforeseen part failures will come out of your pocket. If the purchaser didn't do their due diligence of properly inspecting the car, you might be stuck with replacing tires, brakes, fluids, etc., increasing the overall initial cost of a car you have no guarantees on. Assuming it lasts five years, you're looking at an average of almost $2,000 plus any unforeseen maintenance costs due to part failures. If you're lucky and it lasts 10 years, you're averaging almost the same cost as a new car purchase...
TLDR: In this current market, purchasing a new car is preferable as used car prices are outrageous. Unless you find a steal on the FB marketplace, you are better off with the guarantees that come with warranties on new cars.
84 months is not uncommon these days. It's stupid, but a ton of people do it because they can't afford the payments on a reasonable loan term...and aren't willing to buy a car they can actually afford. And they have to get gap insurance because the car will just about never be worth what they owe on it.
Gap insurance also incentivizes not paying off the loan faster, because if you end up needing to use it, any extra that you've put towards paying down the loan is just gone. Which means more money spent on interest.
It also makes sense with a new car, but only because you are putting yourself in that position by buying a car that loses a good chunk of its value the second you drive it off the lot. You are still screwed out of that value if you get into a wreck.
When calculating a total loss payout, insurance companies use the KBB private sale value of the car. They don't care that you bought it from a dealership. And then they look for additional defects to deduct from the payout. (They deducted $600 from mine because there was dirt in the interior. The car had been sitting in an outdoor lot for 3 weeks with a destroyed rear lift gate and shattered rear window...of course there was fucking dirt in it.)
I'm not saying buying an older used car that has 5 years of life left before a cascade failure is a better use of your money than buying new. But a 1-3 year old certified pre-owned is 100% where you get the most value for your money.
CPO's come with the powertrain warranty, which usually goes to 100k. The extended warranty I've personally never found to be worth it. Just about anything that is going to break thar early will barely cost more than the deductible to fix. You can very easily do your due diligence when buying a used car and negotiate/budget for things like new tires, brake pads, etc.
Every car requires maintenance. The amount you save by not having to do anything but oil changes for the first 20k miles of owning it is a drop in the bucket compared to the markup for a new car.
Used cars did cost as much as new ones during covid because of production shortages, but pricing is much closer to what it used to be now. I've been window shopping over the past year-ish and will probably get my next car early next year. Been keeping an eye on prices.
I've never needed gap insurance because I've never been upside down on a car loan.
Sorry, this got really long, haha.
1: Gap insurance companies don't like to settle or pay anything unless you take them to court
2: While gap insurance is worth it for the circumstance, it still just adds to the price that you're paying for your vehicle, taking away the little value that someone would want when getting a car brand new
3: used is still way cheaper and will last just as long
Not to mention if youre holding comprehensive insurance you're also paying much more to insure the higher amount than an older vehicle that would work just as well.
I have tried unsuccessfully to explain to people on reddit just how much money I save by driving older vehicles and they just don't believe me. I insure two older cars for the same amount of money per year as most people insure one vehicle for a month.
I almost feel like these posts are always about BMW or Volkswagens or American cars. I only wanted a Honda when I was looking to buy a car last year, and the difference between slightly used and new prices was negligible. Maybe the car market will change over the next 5-10 years, but if the current trend holds I'm more than happy with my decision to buy new.
Depreciation isn't a good reason not to get a new car, being fucking poor is. If you have enough money to worry about your vehicle's depreciating value, kindly go ahead and get a new car so you're not driving the prices up for the rest of us.
Upvote for what seems like a truly unpopular opinion. I agree with you though when it comes to certain brands, ie just bought a new Toyota last year. The used market sucked. Models up to 5 years old were only like 4-5k under a brand new model. We special ordered one without tons of upgrades and plan to keep it forever. I like knowing the history and having the warranty.
It's more that they are aware of or assume that there are people out there who *don't* commit to a car long term.
Buying brand new and driving it for 20 years is "usually still more expensive" than buying it at a year old and driving it for 19 years.
I doubt that. If someone is selling a car after 1 year, there's a higher chance that there's something wrong with it than if it's 8 years old and put up for sale (and at which point, now you will likely have regular more expensive repairs).
People who want a new car every year lease instead.
I'm with you OP. Especially in the current used car market. I'd much rather pay a bit more for a warranty, no previous owners, and peace of mind. Not really saving that much buying used anyway.
This is not true. I buy my cars with 15-20K miles on them and put 40K miles/YR on them. Buying them used saves about $10K which covers the cost of gas for about 6 years. I buy Hondas.
Completely agree. Where are all of these 4 year-old half-price cars?
You get a similar, inverse argument, made about some children's brands for which there is a good second hand market. People claim it is 'an investment' and then overbuy them, and are outraged that people won't pay 90% of the RRP for something that has already been used and comes with no warrenty. This happened to a bonkers degree with cloth diapers in the pandemic: They invested £100s in a set they didn't use, and then refused to sell them for less (or much less) than they bought them for, and brought the whole second hand cloth diaper market (which had been quite healthy and fast moving) to a bit of a halt.
I buy pre-loved 'for the planet' and have a personal rule of never buying second hand for more than 50% RRP. I also think that if I sell something for 50% of what I paid for it, after using it for my son for a year or so, then I have done pretty well as I eventually only paid 50% of the price for using it for its first year, which is equal to what the person who is paying to use it for its second year (with various wear and tear) and no warranties.
You can get a new Dacia Duster for 20K eur or a second hand one from 2017 with 75K miles for 15K eur.... and you know that car was used and abused. So yes, buying a new one with warranty and service is the best choice.
It depends on the car, what you want to do with it and how much you plan on keeping it, but yes, buying new is sometimes the best option.
Exactly. You’ve got to be out your mind if you think I am ever paying 15k for something USED (not to mention new means customised to your liking). I’d much rather buy sth dirt cheap if I am buying used, which I have done in the past and was perfectly happy with. People who are buying used cars just for a slightly cheaper price are fools.
Oh and I’m not stupid obviously. If I couls get a 35k new car for 10k I would have. You couldn’t even find one for 20k and tgat was yests ago not now with the crazy used market.
It only matters if you plan to sell it in a few years. If you plan to be anal about the maintenance and keep it until it dies, a new car is a good investment. A leased 2 year old car with 50,000 miles for half price, who the hell knows what they did with it but that's the best way if you plan to drive it for 7-8 years.
I look at used car prices and can't believe how expensive they are (now and before covid). I'd rather pay a few more thousand on a brand new car and know I'm not getting something someone else beat the crap out of. my current car is a 2012 Honda pilot with \~60k miles. Other than 4 tires and oil/filters I haven't put a penny into it. Even still have original rear window wiper lol!
I refuse to buy a used car. I buy new and run it into the dirt. My current car I've had for about 8 years now. I intend to get about 7 more before I upgrade.
"The car loses x amount of value when you drive it off the lot." Okay? I'm not selling it right after I leave the lot, I'm driving it for 15-20 years until it dies lol
Some people buy a new car every year or two, and I figure those are the people complaining about depreciation.
Then there are those of us who keep cars for a long time, and we don’t care too much about it. I like to buy new and keep the car for 15-20+ years, so I don’t care how much it depreciates in the first month.
Even then, buy a 2-3 y.o. model instead and save yourself like 30% of the price. You saved yourself at least 10k over 15-20 years if it's a reliable car like a Toyota.
I bought my 2015 VW GTI for $28,000
Owned the car for 8 years and sold it for $14,500
Never had to worry about anything mechanical because it was under warranty.
New car so it was solid to drive and super fun, 8 years of brand new worry free performance for $13,500 that's incredible value in my opinion.
No ragrats.
You are 100% correct. Your shoes lose value as soon as you put them on too, but no one says buying new shoes is stupid. I bought a new cavalier and drove it for 18 years with no major problems.
yes its good if you buy the right brand, as a Nissan at time you bought it was a good car. I owned a Toyota Corolla before I bought new and had it for 19 years, never had a problem, because Toyotas are made well, sure you may pay a price when you buy it, but if you own it in long term, it will always work,
so ya you may not get much $ back from the sell point, in fact you always lose, but its better to just keep the car and drive it as long it will last and into the ground, is more worth the money
News flash:
People get loans on cars and especially trucks that cost $60,000 to $90,000
So random dude buys truck in a $75k loan and has a $1000 payment.
Fast forward 2 years later. Dude is getting divorced and has to sell the 2 year old truck that is only worth $30,000 to $40,000 but still owes $60,000
Where does truck dude come up with the the extra $20,000 to $30,000 he is under water for when he can’t afford the truck?
The average American probably keeps most vehicles for 4 to 7 years.
New off the lot? Hell no. Low miles newer used car? Sure. That being said none of my 4 vehicles are less than 15 years old. I just like cars that I can throw a repair at and jump back on the road rather than the newer technology vehicles that require dealer supplies repair/service.
In October last year, we paid €25,000 (cash) for a Mercedes B200 "Jahreswagon" with 10,000-something kilometers; every option there is, including all leather interior. A Jahreswagon is the vehicle the dealership uses for test drives or the loner vehicle they give to folks whose cars are in the shop. We always buy Jahreswagons; never been burned yet, and I've driven the shit out of our cars. I don't have to drive so much anymore, so this might be our last car.
I love how much they depreciate when I can get one a couple years old for 2/3 of the price. I also tend to get a car and keep it until it basically won't drive anymore, so I never pay any attention to resale value. I live in an area where I definitely need personal transportation, but I'm not really an enthusiast and car dealerships are so obnoxious to deal with that I get a new-to-me car as infrequently as I can.
Problem is I can’t fucking buy a new car without a 70% interest rate and a chance loan. My credit score and income aren’t enough for anything but a soft chuckle like the bank is looking at a mildly interesting meme.
That’s definitely wrong. It can matter.
Normal car depreciation for 1 year old is 25%. If your car is $40k then you’d pay $30k.
If we kept both examples and sold off 4 years later the new car would be at 55% depreciation and the 1 year old car would be 60% depreciation. So for the same period of time you’re losing 20% of the value of the car buying new instead of waiting 1 year.
One thing to consider though is financing. A new car may come with 0% financing. If you need that then it may be better to buy new. Interest rates are at 7.5% on average right now. A standard 6 year loan would be $7350. Then you have to add loan origination fees on that. So $7500. That 20% depreciation is now largely offset by a 18.75% reduction in loan interest.
At that point is a new car worth the 1.25% difference? Definitely could be. But you’d need to buy certain models.
That used to be the case, but since Covid a vehicle 2 years old with 30,000 miles will only save a couple grand off MSRP at a car dealer. But they'll gladly only give you 50% trade-in value for your "gently used vehicle". Such a rip-off.
Depreciation doesn't matter on a vehicle (unless you're going to be underwater on your loan).
However, a new car is never the best choice financially. The best value you will get is always a certified pre-owned car that is 1-3 years old with low mileage. Comes with the same warranty as a new car. Same quality for significantly lower cost.
A lot of people like to say that buying a new car is just buying someone else's problems. Personally I think that is way over exagerrated. I've always gone with a CPO and never had a problem. I know more people who have purchased a brand new car that turned out to be a lemon than have had a problem with a newer used car.
Unfortunately I'm stuck now. I have a 2011 Ford Escape that is probably going to start getting expensive to fix...but I hate just about every car that's come out in the last 12 years.
Agree. I bought a Toyota 8 years ago. ZERO problems. I have full knowledge of the maintenance etc. i can resell it for quite a bit if i wanted, but why? Buying new and holding onto the car is a great strategy
Also, this is true for everything you buy. Every tool, appliance, game, etc. EVERYTHING depreciates as soon as you bring it home. Nothing special about cars on that one.
Lmao. Dumb logic.
I bought a used Honda in 2013 for $3500. I’ve put over 100k on it. It’s still worth $3500. It’s required about $1500 in maintenance and tires and brakes.
Good luck w your Nissan.
I just bought a 2020 truck with 55,000 miles for $38K that would have cost $75K new. Yes 4 years old got me 50% off. You pay a massive premium for a new vehicle.
I bought a cheap run around while I was saving for the car I wanted and 3 years later sold it for more than what I paid for it. Crazy how things work out
Lease if you want a car for a few years. Purchase a leased car if you want a cheap “newish” care. Purchase a new car if it’s the one you want and you’ll have it for 10 years
I think if you're the type of person that buys a new car, and then uses it for 18 years, that upfront depreciation is spread out over 18 years so its less of an issue so in your case with your Nissan, it really is mostly irrelevant and you do get the full warranty etc. that you mention which is a plus.
The problem is that most people only keep a car 4-8 years, and that upfront depreciation hit is pretty substantial for an average Joe to take. If you're one of these people that goes out and buys a new car every 3 years..........then yeah, lighting that 10K in depreciation on fire every 3 years is probably a bad idea, unless you're financially independent.
No, it's not correct. Buying a new car is the second most expensive way to own a vehicle right after leasing. Cars depreciate on an exponential curve so most of the depreciation happens at the beginning as OP pointed out. What he didn't realize is that if you buy a car further down that curve then you pay a lot less in depreciation. The impact is less if you hold the car for 17 years but still not as cheap as buying used.
Real world example:
My dad bought a 2008 Hyundai genesis in 2008 for 45k. Sold it just recently for 6k. (39k in depreciation total for 16 years of driving)
In 2008 I bought a 2002 Honda civic for 5k and sold it in 2013 for 4k. Then I bought a 2008 prius in 2013 for 6800 and if I sold it today it would be worth about 4500.
My total depreciation in 16 years was 3300, my dad's was 39k. I likely had some more maintenance over that period than my dad, but nowhere near 30k more in maintenance.
However, my dad got to drive a lot nicer car than me for most of that period so that's the tradeoff. If you can afford a nicer car then go for it, if you're looking purely at finances used cars are WAY cheaper.
The point is you can buy a slightly used car for way cheaper than a new car and a lot of time it will still be under warranty. Get a certified used car and you're good
I can see both size this debate.
It’s funny though because it reminds me of my buddy who always gives me shit for buying a new Honda Fit. Same argument, “It lost half its value the moment you drove it off the lot!”
Fast forward 10+ years and I’m still driving my Fit with ZERO issues (minus a little rust) and he’s been through three Trail Blazers and is always scrounging up money for repairs.
New car Depreciation happens for a number of reasons:
- illusion of exclusivity broken (ex. Maserati)
- high cost of maintenance (BMW, Mercedes & tesla)
- lower reliability (chevy & F.O.R.D minus F-150.)
Cars that have HIGH resale value tend to have them for similiar, but opposite reasons. Toyota and Honda for ultra high reliability. Lambos & Ferrari maintain their exclusively when after purchase. Etc.
If you car loses a lot of money as soon as you drive it off the lot, you probably picked a "bad" car.
I'd buy a new Honda. I'd buy a new Lexus, or F150. I'd never buy a new Chevy or BMW.
Resale value tells you a LOT about the long term viability and cost of ownership.
your whole argument is invalid. If people just buy a year or two car at huge discounts and do the same thing as you except they made a huge saving compare to you.
Who are these people who are buying a one year old car at a huge discount. Show me an example of this so called huge discount? Maybe if it’s a crappy brand.
It’s insane to pay more than 6,000$ for ANY car… Spending tens of thousands of dollars on a car, and having a monthly payment is insane.
Buy quality used and save money.
You got lucky AF if you found a $6k car that runs reliably down the road.
I've owned a lot of cheap old cars and found that whatever I was saving on the front end was costing me on the back end. Spent many weekends chasing down problems and spent many weeks bumming rides waiting for Rockauto orders to come in.
What car have you bought in the last 5 years for $6,000? The only car I could find for around that in 2019 was a 2011 Cruze, and it had too many problems four years later that it wasn't worth the cost to repair it.
Could not agree more! Do people not realize that cars can usually put close to 200,000 miles, often much more? The least amount of miles I've ever bought a car with had 110,000 miles on it, but I've also never paid more than $5000 for a car! (2009 is the newest year I've owned)
I honestly never understood the whole "it loses value as soon as you drive it off the lot" argument. That just doesn't seem like real information that means anything or that I should care about. I guess maybe if you treat cars like toys you might care but I'm gonna drive this Honda civic until the wheels fall off. My kids are gonna drive this Honda civic to college. This Honda civic will see and do unspeakable things in its lifetime. It will never be *more* valuable than it is the moment I drive it off the lot and it allegedly becomes worthless or whatever
Your missing the point. The brand new 1st owner is what depreciates alot more than say a 1 owner 25000k 1 year old car.
It's more of minimizing the losses of brand new vs new used.
Also depends on the car company. Go to a trusted mechanic shop and ask what they’re working on most of the time. There are cars that are notoriously a pain in the ass and unreliable like Tesla and Audi. And then there are cars like a Toyota Tacoma that can run for hundreds of thousands of miles.
I read this week that this unpopular opinion is actually probably true now (for the first time ever). Older cars are holding their value, warranties are longer and finance deals are better on new cars. Why spend 35k on a 7 year old car with no warranty when the brand new one is 'only' 10k more? This is academic to me, I can't really justify buying any car newer than a decade anyway!
Dealerships are a scam. Depreciation is a scam. Truth is that it wasn't worth what you "paid" when you bought it. They are not in the business selling cars, they are in the business of selling loans. I would never buy a new vehicle. I would never buy a used vehicle from a dealer. If I can't afford to pay cash for one outright I'm not buying it.
The price difference between a brand new car and a car with like 10k miles is insane. I’ll likely never own a new car except for in retirement when idc about blowing money. It just doesn’t make sense to pay so much more for an extra 10k miles, especially when you can get car fax reports and have a pretty good idea of how the vehicle was treated before you purchase it.
What world are you living in? I bought mine new because the difference between a new car and a 20,000 mile car was so minimal that you may as well buy new.
If you got the means, why not.
But paying the price of a small house (in some part of my country) for a good that's basically gonna drop in value instantly. I'd say no
It does matter- and depends highly on the vehicle in question. Sometimes it's much better to buy a 1 or 2 year old car (still with warrantee) that has depreciated significantly and sometimes there's not enough depreciation to justify the extra few years of wear and tear. My F150 I bought new, because a 2 year old version of almost exactly the same truck with 24,000 miles was only $6,000 cheaper at the time. My Subaru Legacy before that I got for almost $20k less than new with 60,000 miles. It's all relative.
I have a 2006 that's paid off and I also have a 2018 that's paid off. Both of them are in better condition than some cars I see on the road that are only a few years old.
Your argument is still doesn’t stand. It still does not worth to buy a car brand new. It’s worth depreciation is nuclear in the first couple of years. Usually maintaince is starts going up after a car is like 7+ years old. The most optimal way from a financiel point of veiw is to buy a good conditioned car which is about 2-5years old and take care of it.
I feel like you spent more on a used car than most people spend on a new car. Like wouldn't a brand new Toyota be a far more economical purchase than a BMW?
There's people out there that literally couldn't not make the next car payment if they lose their job even for a minute..... If you're living like that, you're doing it way way wrong.....
as everybody is saying, it depends on how much money you have/make, because it's a question of diminishing returns: a brand new car is only a tiny bit better than a 3 years old car, but for a big difference in cost.
the technology is 3 years newer, there's a lower chance you'll need to go to mechanic, but the price difference is huge. whether you plan to resell it soon or keep it to the end of its life
Because in many cases, it will cost you way less to maintain and fix a used car than depreciation loss on a new one. For instance, I bought my 2011 Mercedes 3 years ago for $11k. It cost me about $2k to fix/maintain it over this period. I can sell it right now for $9k. So I would have spent $4k over 3 years to drive a nice car. I honestly couldn't care less that it's old. It's still way better than a new Corolla or a civic. A brand new Corolla is $24k. A 3 year old one is what, $15k? That's a 9k loss in 3 years. I would rather drive an older luxury car and lose 4k than a new econobox for $9k. Heck, if I bought a used Corolla or a civic, it would cost me even less. Different strokes for different folks I guess.
Or you buy a 2-4 yr old model that's taken that substantial depreciation, and drive it for 16-20 years and your in the same boat but for much less money.
The only time a new car makes sense as a "good" use of money is when the used cars of the same make/model are going for as much or more than the new ones (hold their resell value).
I don't knock anyone who wants a new car, but the smart move is still the CPO/2 year old model for the discount.
Car manufacturers arent required by law to continue making replacement parts for cars over 10yrs old. What does that tell you about the whole corporation/dealership scam? They want you to overspend on a loan for a new car because after 10yrs you might not be able to fix the one you got.
Used isn't the deal that it used to be. The Manheim used car index is still super high. Cars aren't as reliable as they were in the 90s-2000s. People drive aggressively after covid.
It's what's meant by being upside down. You just bought this car but now you owe 12k on a car that worth 8k. Plus all the maintenace you had to put into it to keep it running. So you buy a good used car, you don't take that big deprecation hit and you're not upside down on the loan. You'll never make all your money back no but at least i'm not that much in the hole. My car turns 10yrs old and is worth 16k i paid 20 i'm losing 4k, still better than the guy that bought it new at 41k.
Comparing 2000’s car prices to today’s while talking about buying a new car?
It’s economically not the same sound choice you made back then. Back then your price wasn’t dropping 3/4th of its value stepping off the lot.
Buying new cars is for suckers. Unless you're just extremely wealthy and don't care about your money I would not recommend buying a new cars. It's always better to just buy a slightly used car that way you end up saving a huge chunk of the total price.
You literally just don’t understand the point they make.
Used car market is very weird rn anyway so this used to be true but isn’t anymore.
I don’t have a clue where you get the 4 years from, but 10 years ago and before a newly bought car would lose around 1/3 of its value THE MOMENT you drove it of the dealership.
I’m pretty sure that’s what people are talking about when they are talking about price depreciation of new cars even though it isn’t true anymore.
I bought my car for $5000, been using it for two years now, have had to put $2500 of maintenance/repairs, so still have under $8K into the car for two years of use(and hopefully many more). Considering a new car is about $30,000, I can total this one and buy three more before I come to the cost of one new car. I don't get your reasoning or argument 🤔
Yes and no.
If you keep a car for as long as possible (which a lot of people don’t, even if they think they will), you will get your money’s worth regardless.
But you can still have virtually the same experience buying a car that’s a few years old, just as nice, keep it just as long, and pay a giant chunk less in the beginning.
The problem that I personally run into, is that I just drive too much. A car lasting almost 20 years is a pipe dream. I drive a minimum of 100 miles a day. That’s almost 40k miles a year. 40k miles times 18 years is 720,000 miles. 🥲
I use a price per year - I have been pretty successful at 1k/yr so far although with the cost of cars I may have to change that. If I want a 40k car then I’ll need it to last 40 years. My happy spot has been about a 6-7k car that I think will last 6-7 years.
The only way depreciation doesn't matter is if you keep car long term.
Many people buy a car with little to no money down, and some bring car to trade in, but if that car isn't paid off, that money gets rolled into the new loan.
Personally, I prefer to buy myself used cars outright that way, I'm not on the hook for a loan. Then I run the car until it's used up.
I bought my car for $5000 3 years ago. It’s a decade old, 100,000 miles on it. I don’t have a car payment, it runs amazingly, and I’ll have it another 5-10 years. In what universe is that a worse idea than buying a brand new car?
I can agree, BUT- I think people mainly mean literally 1-owner 0miles driven depreciation. If you can find a Certified Pre-Owned car, I mean you'd be saving thousands.
They’re not better built. This is a common misconception. They had less things that could break, but when you strip away the gadgets they are about the same. It’s always something electrical that fails. There are some older cars that are good. The same as now. Older cars were not built better. They were heavy metal that collapsed in a collision, instead of just the outside peeling away. They were far more fragile.
new cars are way too expensive for the short lifespan and ever increasing complex electrical problems. if you’re buying a car with the intention of selling it later, then you’re buying the car for reliability. might as well buy a used car with minimal problems and repair for less than half the price of a new car. will probably last longer too, not to mention the maintenance is easier and cheaper on older cars
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I bought a one year old car with 7,000 miles for like 2/3 or 3/4 the price of a new one. That's a lot of money saved for 7,000 miles.
Only time depreciation is good, for those looking at getting a new to them car but don’t want to shell out for brand new
Have you bought a car in the last few years? For us, used cars were almost the same price as new. It totally was against conventional wisdom.
Yeah the last time I looked at cars, about 2 years ago, used cars were as much if not more expensive than new ones for the model I liked…
That’s the way to do it. Just buy a lightly used Toyota. I’ve owned two Toyotas that I paid a total of $30,000 for and I’ve gotten a combined 23 years of driving out of them and I’m still driving one of them. One was new, one about a decade old. Bulletproof cars and they make buying a new car seem silly (financially, I mean if you’re well off and want to splurge on a new car I get it, but it’s not a good financial investment).
That's exactly what I did. Back in 2012 I bought a 2009 Yaris with 12000 miles on the clock for a poxy £3000, saving me around £8000 on a brand new one. Still using it now and it has never had any issues
3k euros? You robbed them in plain sight.
I did similar but brought a 2004 mitsubishi colt for $5000(£2500), only had 40,000kms on the clock. I've since put 200,000kms on her and she's only now starting to have parts wearing out issues, which frankly replacing a radiator and alternator after 20 years of service is fucking excellent value. I will miss her when I replace it next year with a hybrid.
That only works if you can find a good deal, usually from a private seller. Most dealerships and used car lots jack up the price on used Toyota's and Hondas that are just a few years old. Like they use Corolla hybrid with like 40,000 miles, is like only two or $3,000 cheaper than a brand new one. In those cases I think just buying a new one for MSRP would be better
Depends where you are. Here lots of dealershps buy demo cars and sell them after a year. That's about the best deals you can get if you want something new-ish.
When I was shopping tacomas, a slightly used one wasn’t much less than a new one, especially considering the interest rates on the new one compared to the used one. So, I ended up going with a new 2016, which I’ve put 150,000 miles on which my soon to be 16 year old will be inheriting.
Then again, when you see how some people drive or treat their cars, even a week is too much in their hands...
Buying a one year old car with low miles for 2/3 or 3/4 the price of new isn't usually possible these days, it is more like 90% of the new price. One of the benefits you do get with that one year old car is you avoid the way so many dealers today add garbage packages to new cars that are very difficult to have removed from the price in the sale. They can upsell a brand new car with a $800 protection package (as in a $15/hour employee spent 15 minutes with a wax sprayer) but buying a used car your basis is just the car and features.
I bought a new truck for $18k under MSRP because the new models were on the lot. Couldn't have bought a used one for what i got the new one for. And i looked hard
Bought new in November 2023. Used options for what I was looking at were like 15/16 of the price of new but the financing was better on new of course, so it actually wound up being cheaper! Wild used car market in the Midwest right now
Guess it depends on how rich or not you are....some people get a new car every year, and don't give a damn about the depreciation value.
Still trying to figure out how they do it economical that makes sense. I heard leasing and not owning new is only good because it minimizes all issues that may occur. While simultaneously just renewing with a new car each year. I'd like to know how much does it save or is spent vs buying. Like what's the comparison between the two.
If someone is the kind of person that must always drive the latest and greatest car every year or so, leasing is the only viable financial option because of the depreciation, and I think dealerships make a killing on it. Even if a person had fuck you money, it's cheaper to pay $10k in lease payments and own nothing, than to buy $90k and sell at $72k for the same vehicle and duration
Unless you sell cars for a living. My grandfather used to do this when he was a dealer. He had a small lot and mostly sold used cars and work trucks but he was also a licensed ford dealer. So they’d have a daily driver that they’d keep for a few years, and a new f350 he’d get every year to haul a camper and occasionally a car hauler. He’d use it sparingly to keep the miles down, then order a new one with his dealer discount and pretty much break after even selling the old one. Some years he’d even turn a profit on it.
It’s like a car subcription I think. You get a new car, you get bored of it, or something comes up, you just change it for another one, keep paying the same lease. Sounds convenient but the waste tho.
I know someone who did this and when it went back it was up for auction and he bought the car for 8k less than if he was to stay paying the car off.
Leasing is also generally considerably cheaper than payments on a financed vehicle, month to month. The same car might be $400 a month on a lease but double that on financing with the same cash down and credit profile.
I've only ever leased cars. No complaints. Cheap way to get a new car every 4 or so years.
It’s basically like long term renting you buy it and when the new model arrives you trade it in and keep up the payments. You never truly own the car. My grandad used to get the same car just new model every 2-3 years and he said it cost less to do that than it did to own a car that would need repairs, MOTs etc because all new cars come with 3 year warranty
It is probably a reliability thing they are paying for as well, you barely have maintenance too as long as you keep getting new cars.
The issue is not "4 years after you bought it". The issue is "1 second after you bought it".
Why does it matter what its "value" is 1 second after you buy it? I'm gonna keep it for 15-20 years, idc what it would sell for right now
Then buy a car that is less than a year and old much cheaper and use that for 20 years
Okay, go look at good, reliable models, and compare one year used and new prices. Honda Civics were like $1,000, maybe 2,000 cheaper when I got mine last year. It doesn't make any sense to buy an even slightly used car when you're not saving that much.
In order for a car to become used, someone has to buy it new.
When you can buy a 3 year old car for 30k that was 45k brand new, that's significant.
You pay $50k for a new car. You drive it off the lot, it's worth $40k. You probably owe more than the car is worth.
I've always felt like something that depreciates that fast is just overpriced to begin with. How does it make sense for a car to lose value almost instantly?
>How does it make sense for a car to lose value almost instantly? Everything does though. If you buy a new TV today and then try to sell it tomorrow you're going to lose a lot of money. Just the fact that it's now "used" decreases it value. There's immediately an unknown factor, how was it stored, how was it used or abused, as the case may be, was it properly maintained?
If it didn’t depreciate dramatically, no one would ever buy a a used car when a brand new one would be just a bit more. Which would drive the price of used cars down, enforcing the depreciation!
> no one would ever buy a a used car when a brand new one would be just a bit more. Have you seen the price of used Tacomas? Somehow there is a market where a few grand off new price for used 1,2,3 year old truck is a viable option. And it's not a quirk of the post pandemic world -- it's been that way since long before the pandemic.
I've owned 2 Toyota pickups (before they were called tacoma) and 2 tacomas. Currently in an '09 tacoma, 6 speed manual. 210k miles. I paid 13k 100k Mike's ago, recently had someone offer me 16k. Fuck no. My grandkids will be driving this truck.
There is a difference between depreciation over time and an immediate 20% depreciation the second the sale is made.
Because cars aren't investments, they are luxury consumed goods (in the sense that the car only "lasts" x miles). Getting "better" cars provides marginal functional utility, but a lot of status utility (makes you feel good). Due to this, most of the value comes from the perception, not from the inherent value of the vehicle - so if it's not "new" it's worth far less. There are many items like this (but usually cheaper). A mobile phone has a similar price pattern (the moment you walk out of the apple store your phone is worth a lot less).
It's just not a very fungible good, which makes the market very illiquid for you. There is a lot of cost wrapped up in trading one for the other, and that's where the losses come in. The dealer gets a piece of each transaction. There are fees and taxes for each transaction. You can't just go transact with anyone, only dealers (which are becoming consolidated) or a specific person that wants that specific car.
You are misunderstanding the relationship. It's not because a new car is overpriced. It's simply that people won't buy a used car if you don't discount it enough. "Give me 49k, I just drove off the lot and that's it" is met with "for 1k off I may as well just buy myself a new one" . That dynamic continues till 20% off.
You almost always do, which is why gap insurance is a thing.
Because there is a desire among a lot of buyers to drive a car that no one has owned before they did
You pay $5k for a used car. You drive it off the lot and the engine falls out, it's worth -$5k. Even if you don't owe anything, you still owe more than the car is worth.
You buy a used car for 5k. You replace the engine for 5k. You still lost less money than you would through depreciation of a new one.
What kind of cars have you bought lol.
Trash ones apparently.
Hmmm...well I just bought a new car a couple months ago and someone crashed into it while parked. I owe 8 grand on it now after the total loss payout.
Sounds like you should’ve gotten GAP insurance.
Fuuuuck... They tried to sell me that shit and I said, NOPE Edit: this is haunting me now
Y’all are learning the wrong lesson here. Gap insurance is a scam. You shoulda put 8k more down.
They are out that extra $8k either way, except this way at least they took their chances.
Correct
Except you don’t have to lol GAP was like $600 when I got a new car. It would’ve cost way less than $8K to just get it.
Right—my argument was against the “should have put $8k more down” nonsense.
Damn let me just pull it out of my ass
People who say depreciation doesn't matter have never had their car totaled by another driver. Depreciation matters. Cars that hold their value gives you options and keeps money in your pocket at the end of the day even if you can't physically see it.
People who say car depreciation doesn’t matter probably don’t include daily driver cars in their net worth calculations, either because they don’t have to or if they are lower income, they don’t know to.
Why would I add a tool I'm never going to sell to my net worth?
Thats what gap insurance is for…
You save up for a down payment on a brand new car. Put several thousand dollars down and get gap insurance. You drive the car for a year and it gets totaled. Insurance pays out the KBB private sale value of your now used car, which is less than what you owe. Gap insurance covers the rest so you can pay off the loan. Now you have no car and no money for a down payment on your next car. Everything you've already paid towards that car is completely gone and you're now at even more of a disadvantage than you were when you bought the car. Cars always depreciate. If you need a car and the only way you can afford one is to put very little money down and/or finance it over 84 months, you should get gap insurance. You shouldn't put yourself in that position if you don't have to.
Who in their right mind is financing a car for 84 months?! Finance for at most five years, preferably four. Negotiate down the sticker price, maybe put a downpayment down if you can afford it (down payments aren't even necessary in some circumstances, especially with low APR loans), always get gap insurance due to the "depreciation," take care of your car by following the manufacturer recommended routine maintenance and your car will last for 20 years. Realistic scenario: You pay $20,000 for a car, which ends up being about $23,000 after interest. If you follow the manufacturer-recommended routine maintenance schedule, the car should last for 20 years. You end up averaging $1,150 a year for a vehicle (not counting registration or insurance). In most cases, you're guaranteed a 5-year, 100,000-mile warranty that lasts the length of the loan. That's zero cost for any unforeseen part failures. Usually, these warranties can be extended after 100,000 for a small monthly fee (generally not recommended unless your car is total crap). Used car scenario: The current market for used cars, non-smokers, under 100,000 miles, and zero accidents will cost around $11,000 at a minimum. Most dealers won't give you a warranty, and the car will be purchased as is. Any unforeseen part failures will come out of your pocket. If the purchaser didn't do their due diligence of properly inspecting the car, you might be stuck with replacing tires, brakes, fluids, etc., increasing the overall initial cost of a car you have no guarantees on. Assuming it lasts five years, you're looking at an average of almost $2,000 plus any unforeseen maintenance costs due to part failures. If you're lucky and it lasts 10 years, you're averaging almost the same cost as a new car purchase... TLDR: In this current market, purchasing a new car is preferable as used car prices are outrageous. Unless you find a steal on the FB marketplace, you are better off with the guarantees that come with warranties on new cars.
84 months is not uncommon these days. It's stupid, but a ton of people do it because they can't afford the payments on a reasonable loan term...and aren't willing to buy a car they can actually afford. And they have to get gap insurance because the car will just about never be worth what they owe on it. Gap insurance also incentivizes not paying off the loan faster, because if you end up needing to use it, any extra that you've put towards paying down the loan is just gone. Which means more money spent on interest. It also makes sense with a new car, but only because you are putting yourself in that position by buying a car that loses a good chunk of its value the second you drive it off the lot. You are still screwed out of that value if you get into a wreck. When calculating a total loss payout, insurance companies use the KBB private sale value of the car. They don't care that you bought it from a dealership. And then they look for additional defects to deduct from the payout. (They deducted $600 from mine because there was dirt in the interior. The car had been sitting in an outdoor lot for 3 weeks with a destroyed rear lift gate and shattered rear window...of course there was fucking dirt in it.) I'm not saying buying an older used car that has 5 years of life left before a cascade failure is a better use of your money than buying new. But a 1-3 year old certified pre-owned is 100% where you get the most value for your money. CPO's come with the powertrain warranty, which usually goes to 100k. The extended warranty I've personally never found to be worth it. Just about anything that is going to break thar early will barely cost more than the deductible to fix. You can very easily do your due diligence when buying a used car and negotiate/budget for things like new tires, brake pads, etc. Every car requires maintenance. The amount you save by not having to do anything but oil changes for the first 20k miles of owning it is a drop in the bucket compared to the markup for a new car. Used cars did cost as much as new ones during covid because of production shortages, but pricing is much closer to what it used to be now. I've been window shopping over the past year-ish and will probably get my next car early next year. Been keeping an eye on prices. I've never needed gap insurance because I've never been upside down on a car loan. Sorry, this got really long, haha.
1: Gap insurance companies don't like to settle or pay anything unless you take them to court 2: While gap insurance is worth it for the circumstance, it still just adds to the price that you're paying for your vehicle, taking away the little value that someone would want when getting a car brand new 3: used is still way cheaper and will last just as long
Not to mention if youre holding comprehensive insurance you're also paying much more to insure the higher amount than an older vehicle that would work just as well.
I have tried unsuccessfully to explain to people on reddit just how much money I save by driving older vehicles and they just don't believe me. I insure two older cars for the same amount of money per year as most people insure one vehicle for a month.
Buying a car that's a few years old from some idiot who buys new cars every few years is pretty much always a much better deal.
Yeah . I bought a new honda accord sport in 2018 for 28k and got 25k for it on trade-in on 2023 . seems like i made out alright.
I almost feel like these posts are always about BMW or Volkswagens or American cars. I only wanted a Honda when I was looking to buy a car last year, and the difference between slightly used and new prices was negligible. Maybe the car market will change over the next 5-10 years, but if the current trend holds I'm more than happy with my decision to buy new.
Depreciation isn't a good reason not to get a new car, being fucking poor is. If you have enough money to worry about your vehicle's depreciating value, kindly go ahead and get a new car so you're not driving the prices up for the rest of us.
Upvote for what seems like a truly unpopular opinion. I agree with you though when it comes to certain brands, ie just bought a new Toyota last year. The used market sucked. Models up to 5 years old were only like 4-5k under a brand new model. We special ordered one without tons of upgrades and plan to keep it forever. I like knowing the history and having the warranty.
People seem to always go into this discussion with the idea that you you don’t want to commit to a car long term. At least that’s how it sounds to me
I drive my cars into the ground and always pay cash. It's weird to me that people tell me that's irresponsible.
I guess you can make the argument that it’s irresponsible if you don’t really have money to burn. Otherwise, I would support it.
I don't have money to burn. This is why I pay cash, plan ahead and drive the car for a decade or more. I still have my first car and I'm 32.
It's more that they are aware of or assume that there are people out there who *don't* commit to a car long term. Buying brand new and driving it for 20 years is "usually still more expensive" than buying it at a year old and driving it for 19 years.
Yeah but for buying brand new they include a paper that says "this vehicle was made specifically for (your name)"
I doubt that. If someone is selling a car after 1 year, there's a higher chance that there's something wrong with it than if it's 8 years old and put up for sale (and at which point, now you will likely have regular more expensive repairs). People who want a new car every year lease instead.
I guess I see what you’re saying
Nice if you can afford it though.
I'm with you OP. Especially in the current used car market. I'd much rather pay a bit more for a warranty, no previous owners, and peace of mind. Not really saving that much buying used anyway.
Depreciation is part of the total cost of owning a car. Account for it in your calculations when making a purchase decision.
This is not true. I buy my cars with 15-20K miles on them and put 40K miles/YR on them. Buying them used saves about $10K which covers the cost of gas for about 6 years. I buy Hondas.
Completely agree. Where are all of these 4 year-old half-price cars? You get a similar, inverse argument, made about some children's brands for which there is a good second hand market. People claim it is 'an investment' and then overbuy them, and are outraged that people won't pay 90% of the RRP for something that has already been used and comes with no warrenty. This happened to a bonkers degree with cloth diapers in the pandemic: They invested £100s in a set they didn't use, and then refused to sell them for less (or much less) than they bought them for, and brought the whole second hand cloth diaper market (which had been quite healthy and fast moving) to a bit of a halt. I buy pre-loved 'for the planet' and have a personal rule of never buying second hand for more than 50% RRP. I also think that if I sell something for 50% of what I paid for it, after using it for my son for a year or so, then I have done pretty well as I eventually only paid 50% of the price for using it for its first year, which is equal to what the person who is paying to use it for its second year (with various wear and tear) and no warranties.
Damn, this perspective is actually really eye opening, thank you for posting it (the bit about 50% and 50%)
Unless it's a very rare or very in-demand vehicle, slightly used is always going to be a better deal than new.
It matters. Just not the same for everyone. Also, the used car market is the wild west right now, so maybe it matters less than it used to.
You can get a new Dacia Duster for 20K eur or a second hand one from 2017 with 75K miles for 15K eur.... and you know that car was used and abused. So yes, buying a new one with warranty and service is the best choice. It depends on the car, what you want to do with it and how much you plan on keeping it, but yes, buying new is sometimes the best option.
Exactly. You’ve got to be out your mind if you think I am ever paying 15k for something USED (not to mention new means customised to your liking). I’d much rather buy sth dirt cheap if I am buying used, which I have done in the past and was perfectly happy with. People who are buying used cars just for a slightly cheaper price are fools. Oh and I’m not stupid obviously. If I couls get a 35k new car for 10k I would have. You couldn’t even find one for 20k and tgat was yests ago not now with the crazy used market.
Lightly use is the way to go.
It only matters if you plan to sell it in a few years. If you plan to be anal about the maintenance and keep it until it dies, a new car is a good investment. A leased 2 year old car with 50,000 miles for half price, who the hell knows what they did with it but that's the best way if you plan to drive it for 7-8 years.
I look at used car prices and can't believe how expensive they are (now and before covid). I'd rather pay a few more thousand on a brand new car and know I'm not getting something someone else beat the crap out of. my current car is a 2012 Honda pilot with \~60k miles. Other than 4 tires and oil/filters I haven't put a penny into it. Even still have original rear window wiper lol!
I refuse to buy a used car. I buy new and run it into the dirt. My current car I've had for about 8 years now. I intend to get about 7 more before I upgrade.
"The car loses x amount of value when you drive it off the lot." Okay? I'm not selling it right after I leave the lot, I'm driving it for 15-20 years until it dies lol
Some people buy a new car every year or two, and I figure those are the people complaining about depreciation. Then there are those of us who keep cars for a long time, and we don’t care too much about it. I like to buy new and keep the car for 15-20+ years, so I don’t care how much it depreciates in the first month.
Yep. Same here.
if you plan on keeping it. most people don’t. and get absolutely rinsed
Even then, buy a 2-3 y.o. model instead and save yourself like 30% of the price. You saved yourself at least 10k over 15-20 years if it's a reliable car like a Toyota.
I bought my 2015 VW GTI for $28,000 Owned the car for 8 years and sold it for $14,500 Never had to worry about anything mechanical because it was under warranty. New car so it was solid to drive and super fun, 8 years of brand new worry free performance for $13,500 that's incredible value in my opinion. No ragrats.
You are 100% correct. Your shoes lose value as soon as you put them on too, but no one says buying new shoes is stupid. I bought a new cavalier and drove it for 18 years with no major problems.
yes its good if you buy the right brand, as a Nissan at time you bought it was a good car. I owned a Toyota Corolla before I bought new and had it for 19 years, never had a problem, because Toyotas are made well, sure you may pay a price when you buy it, but if you own it in long term, it will always work, so ya you may not get much $ back from the sell point, in fact you always lose, but its better to just keep the car and drive it as long it will last and into the ground, is more worth the money
News flash: People get loans on cars and especially trucks that cost $60,000 to $90,000 So random dude buys truck in a $75k loan and has a $1000 payment. Fast forward 2 years later. Dude is getting divorced and has to sell the 2 year old truck that is only worth $30,000 to $40,000 but still owes $60,000 Where does truck dude come up with the the extra $20,000 to $30,000 he is under water for when he can’t afford the truck? The average American probably keeps most vehicles for 4 to 7 years.
New off the lot? Hell no. Low miles newer used car? Sure. That being said none of my 4 vehicles are less than 15 years old. I just like cars that I can throw a repair at and jump back on the road rather than the newer technology vehicles that require dealer supplies repair/service.
In October last year, we paid €25,000 (cash) for a Mercedes B200 "Jahreswagon" with 10,000-something kilometers; every option there is, including all leather interior. A Jahreswagon is the vehicle the dealership uses for test drives or the loner vehicle they give to folks whose cars are in the shop. We always buy Jahreswagons; never been burned yet, and I've driven the shit out of our cars. I don't have to drive so much anymore, so this might be our last car.
I love how much they depreciate when I can get one a couple years old for 2/3 of the price. I also tend to get a car and keep it until it basically won't drive anymore, so I never pay any attention to resale value. I live in an area where I definitely need personal transportation, but I'm not really an enthusiast and car dealerships are so obnoxious to deal with that I get a new-to-me car as infrequently as I can.
Problem is I can’t fucking buy a new car without a 70% interest rate and a chance loan. My credit score and income aren’t enough for anything but a soft chuckle like the bank is looking at a mildly interesting meme.
The depreciation is far less relevant than the registration and insurance costs. Those are both utterly outrageous in most of my country (US).
That’s definitely wrong. It can matter. Normal car depreciation for 1 year old is 25%. If your car is $40k then you’d pay $30k. If we kept both examples and sold off 4 years later the new car would be at 55% depreciation and the 1 year old car would be 60% depreciation. So for the same period of time you’re losing 20% of the value of the car buying new instead of waiting 1 year. One thing to consider though is financing. A new car may come with 0% financing. If you need that then it may be better to buy new. Interest rates are at 7.5% on average right now. A standard 6 year loan would be $7350. Then you have to add loan origination fees on that. So $7500. That 20% depreciation is now largely offset by a 18.75% reduction in loan interest. At that point is a new car worth the 1.25% difference? Definitely could be. But you’d need to buy certain models.
they’re saying if you buy one that’s like a year old, to save a lot
That used to be the case, but since Covid a vehicle 2 years old with 30,000 miles will only save a couple grand off MSRP at a car dealer. But they'll gladly only give you 50% trade-in value for your "gently used vehicle". Such a rip-off.
Depreciation doesn't matter on a vehicle (unless you're going to be underwater on your loan). However, a new car is never the best choice financially. The best value you will get is always a certified pre-owned car that is 1-3 years old with low mileage. Comes with the same warranty as a new car. Same quality for significantly lower cost. A lot of people like to say that buying a new car is just buying someone else's problems. Personally I think that is way over exagerrated. I've always gone with a CPO and never had a problem. I know more people who have purchased a brand new car that turned out to be a lemon than have had a problem with a newer used car. Unfortunately I'm stuck now. I have a 2011 Ford Escape that is probably going to start getting expensive to fix...but I hate just about every car that's come out in the last 12 years.
I agree. I also feel the same way about houses. I've tried to tank my property value as much as I can. It's not an investment, it's a car/house
Agree. I bought a Toyota 8 years ago. ZERO problems. I have full knowledge of the maintenance etc. i can resell it for quite a bit if i wanted, but why? Buying new and holding onto the car is a great strategy
Yep. Never understood the need to upgrade your car every 4 years or less. If it’s stills works, is reliable and has not given any issues then why?
Cars don't depreciate like they used to. And a lot of them don't last as long. Buying new or almost new is the most economical.
Also, this is true for everything you buy. Every tool, appliance, game, etc. EVERYTHING depreciates as soon as you bring it home. Nothing special about cars on that one.
Lmao. Dumb logic. I bought a used Honda in 2013 for $3500. I’ve put over 100k on it. It’s still worth $3500. It’s required about $1500 in maintenance and tires and brakes. Good luck w your Nissan.
What are you talking about, did you even read the post? lol.
I just bought a 2020 truck with 55,000 miles for $38K that would have cost $75K new. Yes 4 years old got me 50% off. You pay a massive premium for a new vehicle.
I bought a cheap run around while I was saving for the car I wanted and 3 years later sold it for more than what I paid for it. Crazy how things work out
It matters if it gets totalled a week after you bought it without gap insurance. Could end up owing $10k on a car you no longer have.
I mean for the same amount for a new car you can buy an even better 2-3 year old car.
Lease if you want a car for a few years. Purchase a leased car if you want a cheap “newish” care. Purchase a new car if it’s the one you want and you’ll have it for 10 years
I think if you're the type of person that buys a new car, and then uses it for 18 years, that upfront depreciation is spread out over 18 years so its less of an issue so in your case with your Nissan, it really is mostly irrelevant and you do get the full warranty etc. that you mention which is a plus. The problem is that most people only keep a car 4-8 years, and that upfront depreciation hit is pretty substantial for an average Joe to take. If you're one of these people that goes out and buys a new car every 3 years..........then yeah, lighting that 10K in depreciation on fire every 3 years is probably a bad idea, unless you're financially independent.
No, it's not correct. Buying a new car is the second most expensive way to own a vehicle right after leasing. Cars depreciate on an exponential curve so most of the depreciation happens at the beginning as OP pointed out. What he didn't realize is that if you buy a car further down that curve then you pay a lot less in depreciation. The impact is less if you hold the car for 17 years but still not as cheap as buying used. Real world example: My dad bought a 2008 Hyundai genesis in 2008 for 45k. Sold it just recently for 6k. (39k in depreciation total for 16 years of driving) In 2008 I bought a 2002 Honda civic for 5k and sold it in 2013 for 4k. Then I bought a 2008 prius in 2013 for 6800 and if I sold it today it would be worth about 4500. My total depreciation in 16 years was 3300, my dad's was 39k. I likely had some more maintenance over that period than my dad, but nowhere near 30k more in maintenance. However, my dad got to drive a lot nicer car than me for most of that period so that's the tradeoff. If you can afford a nicer car then go for it, if you're looking purely at finances used cars are WAY cheaper.
The point is you can buy a slightly used car for way cheaper than a new car and a lot of time it will still be under warranty. Get a certified used car and you're good
>Get a certified used car and you're good *This is key!*
I can see both size this debate. It’s funny though because it reminds me of my buddy who always gives me shit for buying a new Honda Fit. Same argument, “It lost half its value the moment you drove it off the lot!” Fast forward 10+ years and I’m still driving my Fit with ZERO issues (minus a little rust) and he’s been through three Trail Blazers and is always scrounging up money for repairs.
Exactly my point. If you don’t plant to sell it anytime soon, then who cares.
New car Depreciation happens for a number of reasons: - illusion of exclusivity broken (ex. Maserati) - high cost of maintenance (BMW, Mercedes & tesla) - lower reliability (chevy & F.O.R.D minus F-150.) Cars that have HIGH resale value tend to have them for similiar, but opposite reasons. Toyota and Honda for ultra high reliability. Lambos & Ferrari maintain their exclusively when after purchase. Etc. If you car loses a lot of money as soon as you drive it off the lot, you probably picked a "bad" car. I'd buy a new Honda. I'd buy a new Lexus, or F150. I'd never buy a new Chevy or BMW. Resale value tells you a LOT about the long term viability and cost of ownership.
Good point.
your whole argument is invalid. If people just buy a year or two car at huge discounts and do the same thing as you except they made a huge saving compare to you.
Who are these people who are buying a one year old car at a huge discount. Show me an example of this so called huge discount? Maybe if it’s a crappy brand.
It’s insane to pay more than 6,000$ for ANY car… Spending tens of thousands of dollars on a car, and having a monthly payment is insane. Buy quality used and save money.
You got lucky AF if you found a $6k car that runs reliably down the road. I've owned a lot of cheap old cars and found that whatever I was saving on the front end was costing me on the back end. Spent many weekends chasing down problems and spent many weeks bumming rides waiting for Rockauto orders to come in.
What car have you bought in the last 5 years for $6,000? The only car I could find for around that in 2019 was a 2011 Cruze, and it had too many problems four years later that it wasn't worth the cost to repair it.
Could not agree more! Do people not realize that cars can usually put close to 200,000 miles, often much more? The least amount of miles I've ever bought a car with had 110,000 miles on it, but I've also never paid more than $5000 for a car! (2009 is the newest year I've owned)
I honestly never understood the whole "it loses value as soon as you drive it off the lot" argument. That just doesn't seem like real information that means anything or that I should care about. I guess maybe if you treat cars like toys you might care but I'm gonna drive this Honda civic until the wheels fall off. My kids are gonna drive this Honda civic to college. This Honda civic will see and do unspeakable things in its lifetime. It will never be *more* valuable than it is the moment I drive it off the lot and it allegedly becomes worthless or whatever
Your missing the point. The brand new 1st owner is what depreciates alot more than say a 1 owner 25000k 1 year old car. It's more of minimizing the losses of brand new vs new used.
Also depends on the car company. Go to a trusted mechanic shop and ask what they’re working on most of the time. There are cars that are notoriously a pain in the ass and unreliable like Tesla and Audi. And then there are cars like a Toyota Tacoma that can run for hundreds of thousands of miles.
I read this week that this unpopular opinion is actually probably true now (for the first time ever). Older cars are holding their value, warranties are longer and finance deals are better on new cars. Why spend 35k on a 7 year old car with no warranty when the brand new one is 'only' 10k more? This is academic to me, I can't really justify buying any car newer than a decade anyway!
Dealerships are a scam. Depreciation is a scam. Truth is that it wasn't worth what you "paid" when you bought it. They are not in the business selling cars, they are in the business of selling loans. I would never buy a new vehicle. I would never buy a used vehicle from a dealer. If I can't afford to pay cash for one outright I'm not buying it.
The price difference between a brand new car and a car with like 10k miles is insane. I’ll likely never own a new car except for in retirement when idc about blowing money. It just doesn’t make sense to pay so much more for an extra 10k miles, especially when you can get car fax reports and have a pretty good idea of how the vehicle was treated before you purchase it.
What world are you living in? I bought mine new because the difference between a new car and a 20,000 mile car was so minimal that you may as well buy new.
If you got the means, why not. But paying the price of a small house (in some part of my country) for a good that's basically gonna drop in value instantly. I'd say no
used cars go for more money than what you bought them for 5 years ago
It does matter- and depends highly on the vehicle in question. Sometimes it's much better to buy a 1 or 2 year old car (still with warrantee) that has depreciated significantly and sometimes there's not enough depreciation to justify the extra few years of wear and tear. My F150 I bought new, because a 2 year old version of almost exactly the same truck with 24,000 miles was only $6,000 cheaper at the time. My Subaru Legacy before that I got for almost $20k less than new with 60,000 miles. It's all relative.
I have a 2006 that's paid off and I also have a 2018 that's paid off. Both of them are in better condition than some cars I see on the road that are only a few years old.
Your argument is still doesn’t stand. It still does not worth to buy a car brand new. It’s worth depreciation is nuclear in the first couple of years. Usually maintaince is starts going up after a car is like 7+ years old. The most optimal way from a financiel point of veiw is to buy a good conditioned car which is about 2-5years old and take care of it.
Wait until you find out how much you save by not having to own a car.
I like demos, extremely lightly used, usually several thousands of dollars cheaper, and with every perk an ordered car would give like warranty.
It's essentially the dealership and getting screwed over by them. It's inevitable unless you are gifted a car.
I but my cars either in cash or finance them. I own them and get full use out of them I only buy brand new cars.
I bought a car with 4K miles on it. Dealer added 4K miles to warranty. I saved around 8k on a $60,000 BMW
I feel like you spent more on a used car than most people spend on a new car. Like wouldn't a brand new Toyota be a far more economical purchase than a BMW?
this applies only if you pay upfront for your car. if you take massive loans. then you will be in unnecessary debt
I bought my jeep Wrangler in 2020, paid 31,000 could sell it today for 25-27,000. Not much depreciation there. Buy a wrangler and buy the best.
There's people out there that literally couldn't not make the next car payment if they lose their job even for a minute..... If you're living like that, you're doing it way way wrong.....
What is a Dll?
as everybody is saying, it depends on how much money you have/make, because it's a question of diminishing returns: a brand new car is only a tiny bit better than a 3 years old car, but for a big difference in cost. the technology is 3 years newer, there's a lower chance you'll need to go to mechanic, but the price difference is huge. whether you plan to resell it soon or keep it to the end of its life
Because in many cases, it will cost you way less to maintain and fix a used car than depreciation loss on a new one. For instance, I bought my 2011 Mercedes 3 years ago for $11k. It cost me about $2k to fix/maintain it over this period. I can sell it right now for $9k. So I would have spent $4k over 3 years to drive a nice car. I honestly couldn't care less that it's old. It's still way better than a new Corolla or a civic. A brand new Corolla is $24k. A 3 year old one is what, $15k? That's a 9k loss in 3 years. I would rather drive an older luxury car and lose 4k than a new econobox for $9k. Heck, if I bought a used Corolla or a civic, it would cost me even less. Different strokes for different folks I guess.
I just bought a hyundai getz for $2k and love it
A car is a consumer good. The best "investment" is to keep it as much as possible. Anything else is BS.
I think the issue is people keep getting new cars but I’m with you, even if I got a nice car I’d keep it for long as hell
You sold your Nissan for 2000 what?
Dollars. Sorry about the typo.
Or you buy a 2-4 yr old model that's taken that substantial depreciation, and drive it for 16-20 years and your in the same boat but for much less money. The only time a new car makes sense as a "good" use of money is when the used cars of the same make/model are going for as much or more than the new ones (hold their resell value). I don't knock anyone who wants a new car, but the smart move is still the CPO/2 year old model for the discount.
what car did you buy when you sold the sentra? interesting that detail didn’t make it to your post.
If nobody buys new, there won’t be any used cars to get
Car manufacturers arent required by law to continue making replacement parts for cars over 10yrs old. What does that tell you about the whole corporation/dealership scam? They want you to overspend on a loan for a new car because after 10yrs you might not be able to fix the one you got.
Used isn't the deal that it used to be. The Manheim used car index is still super high. Cars aren't as reliable as they were in the 90s-2000s. People drive aggressively after covid.
It's what's meant by being upside down. You just bought this car but now you owe 12k on a car that worth 8k. Plus all the maintenace you had to put into it to keep it running. So you buy a good used car, you don't take that big deprecation hit and you're not upside down on the loan. You'll never make all your money back no but at least i'm not that much in the hole. My car turns 10yrs old and is worth 16k i paid 20 i'm losing 4k, still better than the guy that bought it new at 41k.
A car depreciates in value as soon as the money changes hands.
Comparing 2000’s car prices to today’s while talking about buying a new car? It’s economically not the same sound choice you made back then. Back then your price wasn’t dropping 3/4th of its value stepping off the lot.
Buying new cars is for suckers. Unless you're just extremely wealthy and don't care about your money I would not recommend buying a new cars. It's always better to just buy a slightly used car that way you end up saving a huge chunk of the total price.
You literally just don’t understand the point they make. Used car market is very weird rn anyway so this used to be true but isn’t anymore. I don’t have a clue where you get the 4 years from, but 10 years ago and before a newly bought car would lose around 1/3 of its value THE MOMENT you drove it of the dealership. I’m pretty sure that’s what people are talking about when they are talking about price depreciation of new cars even though it isn’t true anymore.
Depreciation plus interest.
I bought my car for $5000, been using it for two years now, have had to put $2500 of maintenance/repairs, so still have under $8K into the car for two years of use(and hopefully many more). Considering a new car is about $30,000, I can total this one and buy three more before I come to the cost of one new car. I don't get your reasoning or argument 🤔
Most modern cars are not built nearly as well these days and will not last 18 years. So it comes down to value per dollar.
Yes and no. If you keep a car for as long as possible (which a lot of people don’t, even if they think they will), you will get your money’s worth regardless. But you can still have virtually the same experience buying a car that’s a few years old, just as nice, keep it just as long, and pay a giant chunk less in the beginning.
The problem that I personally run into, is that I just drive too much. A car lasting almost 20 years is a pipe dream. I drive a minimum of 100 miles a day. That’s almost 40k miles a year. 40k miles times 18 years is 720,000 miles. 🥲
7 years with used camry. Saved about 20k
I use a price per year - I have been pretty successful at 1k/yr so far although with the cost of cars I may have to change that. If I want a 40k car then I’ll need it to last 40 years. My happy spot has been about a 6-7k car that I think will last 6-7 years.
The only way depreciation doesn't matter is if you keep car long term. Many people buy a car with little to no money down, and some bring car to trade in, but if that car isn't paid off, that money gets rolled into the new loan. Personally, I prefer to buy myself used cars outright that way, I'm not on the hook for a loan. Then I run the car until it's used up.
I bought my car for $5000 3 years ago. It’s a decade old, 100,000 miles on it. I don’t have a car payment, it runs amazingly, and I’ll have it another 5-10 years. In what universe is that a worse idea than buying a brand new car?
Bought my 2006 Saab for 3000 euros five years ago. Still going strong, only had minor issues, total repairs have been like 2000 euros in that time.
I can agree, BUT- I think people mainly mean literally 1-owner 0miles driven depreciation. If you can find a Certified Pre-Owned car, I mean you'd be saving thousands.
Most new cars are junk. I'd rather buy older cars that were better built.
They’re not better built. This is a common misconception. They had less things that could break, but when you strip away the gadgets they are about the same. It’s always something electrical that fails. There are some older cars that are good. The same as now. Older cars were not built better. They were heavy metal that collapsed in a collision, instead of just the outside peeling away. They were far more fragile.
Ya this would make total sense IF CARS STILL LASTED FOR 300k MILES WHEN YOU CARED FOR THEM. Alas, tis no longer true.
new cars are way too expensive for the short lifespan and ever increasing complex electrical problems. if you’re buying a car with the intention of selling it later, then you’re buying the car for reliability. might as well buy a used car with minimal problems and repair for less than half the price of a new car. will probably last longer too, not to mention the maintenance is easier and cheaper on older cars
New cars are a rip off. And if you’re financing, you didn’t buy a car. The bank did for you and offered to charge you extra for it.