used vs new car

twisty4678 · #1 07-29-2009, 06:31 AM

Hey- I just got my license two days ago. I didnt ever really care about getting it so i got it two years later than i should (i'm 20 now). I got it because my job is starting to require it and my friends are sick of driving me around. anyways, i need a car. I'm fine with driving an ugly car, minivan, etc as long as it would last me two years or so. My dad on the other hand INSISTS on me getting a new ca. He refuses to help me unless i get a new car.
I think it's stupid because A- people are selling used cars pretty damn cheap, and B-what if i crash a brand new car?
I have about 1500 saved up, and have this month left to work before college. I could probably have 2500 by the end of august. I also have 300 in matured savings bonds. If i go new my dad said he will help pay for it.
What should i do? I think it's stupid for me to have a brand new car. Thanks guys!

Nedmundo · #2 07-29-2009, 07:38 AM

If your dad will help pay for it, why not? Going new, you'll have several advantages. The most important are the warranty and advanced safety features, such as stability control and rear side curtain airbags. And of course you're more likely to get an iPod interface, or at least an aux input for the stereo.

Besides, with the amount you have available, you won't be able to get a used car that will match something like a new Mazda 3 or Honda Civic. I don't know if your dad will help you to that extent, but if so, it's an easy call. The Mazda is a fantastic car.

Brad Johnson · #3 07-29-2009, 07:41 AM

Tell your dad you appreciate the offer to help pay for a new car but at this point in time you'd rather not have a debt that large for something that will depreciate that quickly and would rather save that money and invest in yourself. If he still doesn't seem the wisdom in your approach, which frankly is great to see for someone your age, I don't know what to tell you. Why does you dad want you to have..

1. A car payment and
2. An immediately depreciating vehicle?
3. You're working to make money and overspending on a new vehicle isn't really a priority at this point... even if some or most of the money is his.

Buying a reliable vehicle that's already depreciated typically means that should you decide to sell it you'd see a far smaller loss in value than buying new. And you could use the funds you didn't blow on a new car, which obviously isn't a priority of yours anyway, on other stuff... like living expenses. Yes, new vehicles come with warranties but you pay for that with the purchase price. OTOH if you spend less on the vehicle, that leaves you more that you could spend should you need to do repairs.

My son was in the same situation a few years back when it was time for him to get his own transportation. He didn't want a new car because he didn't want that big a debt and mainly because he's paid attention to me and watched me buy for example a car that cost over $40k new for $11.5k used after it was a few years old. His first car is an 1999 Acura 3.0 CL Coupe and it's been running great. He paid for it the summer he got it and has been dilligent about doing regular maintainence. He's still very happy with his decision and he still has a free and clear vehicle that he owns outright.

There are lots of tools to help make a wise used car purchase decision. Do the research, get a pre-purchase inspection for any car you're serious about and you should be fine.

And don't tell your dad that you think it's stupid to buy a new car... be more diplomatic.

Webtroll · #4 07-29-2009, 08:00 AM

Quote:

Originally Posted by Brad Johnson

Buying a reliable vehicle that's already depreciated typically means that should you decide to sell it you'd see a far greater loss in value than buying new.

Aroo?

playinpearls · #5 07-29-2009, 08:04 AM

ugh! I would never buy a new car....unless i knew for sure that i was gonna drive it until it was dead...whcih you never know...

i was gonna explain, but this sums it up pretty good:

from bankrate...

Depreciation for Dummies
Let's start with some basics. Here's a standard rule of thumb about used cars. A car loses 15 percent to 20 percent of its value each year.

A 2-year-old car will be worth 80 to 85 percent of its 1-year-old value. A 3-year-old car will be worth roughly 80 to 85 percent of its 2-year-old value.

Let's say you have a 1-year-old used car worth $12,000 that loses 15 percent of its value each year. At 2 years old, the car would be worth $10,200. At 3 years old, it would be worth $8,670.

The depreciation in a car's first year tends to be even steeper. A new-car owner feels the sting immediately. A new car loses a big chunk of its value as soon as you drive it off the lot. Here's why.

When purchasing the car, you paid a retail price -- the price a dealer charges for a car. As soon as you're off the lot, the car is worth its wholesale price, the amount a dealer would be willing to pay for a car should you turn around and head back.

So a brand-spanking-new car or truck loses thousands of dollars of value as soon as you drive it home. Whatever money you spent on taxes and licensing is gone for good as well.

"Just the difference between wholesale and retail prices is a large amount of what goes away right away," says Charlie Vogelheim, editor of Kelley Blue Book.

Let's look at an example. The base price of a brand-new 2002 Ford Taurus is $19,035, according to Kelley Blue Book.

The wholesale price of a 2002 Ford Taurus with just 100 miles on it is $15,390, a drop of $3,645 from its transaction price.

The wholesale price of a 2002 Ford Taurus with 13,000 miles, roughly a year's worth of driving, is $14,665, nearly 23 percent less than its original transaction price.

-----------------

on top of that....stay out of debt! it sucks!....(i'm about 50 grand in the hole...with no new car)

vene-nemesis · #6 07-29-2009, 09:32 AM

Yeah stay out of debt, best advice ever given!

Buy used, buy something not too complicated wich spare parts aint too expensive and specially do a research on common problems the vehicle model youre about to buy tend to have.

Jumbotron · #7 07-29-2009, 09:39 AM

The best thing you can do to maximize value is get a used car with about 40k on it. Also, it's savvy to pay Consumer Reports $20 or whatever they charge to get access to their car database, which can give you unbiased quality records for pretty much any car you can imagine.

liljawn · #8 07-29-2009, 09:54 AM

as long as you arent going to be in debt and your dad can afford to throw down the cash for you to have a new car do it.

jojobean39 · #9 07-29-2009, 10:06 AM

Buy used. Your approach is perfect. Don't go into debt on something that is going to depreciate rapidly. Don't go into debt at all really, but something like a house is a little different, as it eventually be an investment.

Your dad is concerned about a warranty. You can buy "certified" used cars from dealers that have better warranties than new cars. A lot of dealerships offer 100k mile warranties for used cars, which is better than most new ones.

If you get a new car you are probably going to have to have a car payment. They are the worst idea ever, IMO. More people are car poor than you could imagine. Paying several hundred dollars a month on something that just rapidly goes down in value is a bad idea.

With that said, if your dad is going to cover the rest of the price and just pay for the new car, then why not take advantage of it? However, don't do it if you are going to have a payment. I guess it depends how much your dad is willing to fork over.

Nedmundo · #10 07-29-2009, 10:19 AM

Quote:

Originally Posted by jojobean39

With that said, if your dad is going to cover the rest of the price and just pay for the new car, then why not take advantage of it? However, don't do it if you are going to have a payment. I guess it depends how much your dad is willing to fork over.

Yes. I could have been clearer about this. If it means you will personally owe something for the new car, don't do it.

Deluge Of Sound · #11 07-29-2009, 11:41 AM

I'm going to say buy used.

KeithBMI · #12 07-29-2009, 12:27 PM

Buy used. Once you walk out of the dealership the value of your new car is cut in half.

Bassguy61 · #13 07-29-2009, 12:50 PM

By all means, go used! Especially if that means not having a car note hanging over your head. My dad was a mechanic for 30+ years, and he always stressed to us to go used. First off, as others have mentioned, due to the depreciation. The other reason he gave was that with a used car, anything likely to go arong while under warranty has likely already been taken care of by the previous owner.

sobie18 · #14 07-29-2009, 03:26 PM

I have to disagree with most of y'all.

I would buy new if you plan on keeping the car past the financing. Drive that sucker into the ground, unless you like flipping things and buying used every time.

A new car will be maintenance-free and the warranty will cover any problems you might encounter. Pay that sucker off and drive it like no tomorrow. Get the options you want in the color you like.

When you buy used, you usually end up buying somebody's problems. You'll find those out after you drive away and they strat to crop up on you. Gremlins...

MatticusMania · #15 07-29-2009, 03:35 PM

For $2500 yo ucould get yourself a decent used car and not have any payments at all, or you could put that down on a $7000 used car and have pretty minor payments.

If you do go new, definitely get gap insurance. If you go used, try and find something with relatively low mileage.

Brad Johnson · #16 07-29-2009, 03:54 PM

The idea that if you buy used you're just buying someone else's problem is pretty quaint. And definitely no more of a given than a car will outlive it's usefulness by 100k miles. Those are mindsets from another time.

People let perfectly good vehicles go for all sorts of reasons and they don't have to be negative ones. My daily driver was purchased used, has required little besides regular maintainence and the icing on the cake is... it's worth more now than when I bought it three years ago.

Do your research. Most people I've talked to are clueless what kind of deals are available these days, it's almost unbelievable what you can find.

popinfresh · #17 07-29-2009, 06:42 PM

So you want to buy a brand new car with $2500?

No.

alapantera · #18 07-29-2009, 06:45 PM

I would buy used. I ended up getting a 2 year old dealer certified used vehicle, with approx 35k miles, about 8 months ago. I was still able to get a nice 5 year bumper to bumper warranty for it, and avoided the bulk of the depreciation associated with buying new. If I weren't planning on driving this vehicle for any significant length of time, I would have probably looked for an older vehicle.

Since you're looking for something to last maybe 2 years, I would definitely check the used lots.

tplyons · #19 07-29-2009, 06:46 PM

How about a compromise? Certified Pre-Owned?

You get the warranty and relative reliability of a new car, and the lower price of a used car without immediately losing value off the lot.

I picked up a $24,000 car that was two years old with 27,000 miles on it for about half that. The best deal in the world if you ask me, and I still have three years left on the warranty.

kanonfodr · #20 07-29-2009, 07:19 PM

Dude, go used unless dad is going to foot the bill for the car completely. I drive a 14 y/o truck right now and have a decade-old motorcycle - not that bad. The only reason I'm buying a new motorcycle in a few months is because I want fuel injection and my current bike is carbureted. And I'm still not going to get the baddest bike on the lot, just a nice ride.

Peace,
Greg