Buying a car

[Inigo_Montoya]

We're looking into buying a new car this fall, maybe early next year. We want a Rav4 or a CRV. The new ones are running in the $24,000 range, with the certified used 2 year olds with 20-30K miles running in the $20,000 range. Given that there is only a $4,000 price difference between brand new and used for those vehicles, would it be acceptable to just bite the bullet and spend the extra $4K to buy a brand new one? I'm always cautious of the new car because of depreciation and payments. It just seems like $4K is negligible if it's the difference between brand new vs 2 yr old used with 20k miles.

[skip17py]

I would spend the additional $4k assuming the only difference in vehicles is the year.

[ua_guy]

I'd look at a used one. There's generally more margin in used vehicles, so you could presumably save more than $4k. If they're certified and come with the remaining factory warranty, I wouldn't hesitate to check out a used vehicle. Do check in to the current offers on new models. Sometimes a dealer incentive can make the difference almost zero depending on what you're buying.

[corn18]

I see what you mean on used. Both the CRV and RAV4 certified used run $20k for a 2012 with 24k miles.

But there is a pretty big price difference for a 2014 RAV4 vs. CRV. Edmunds says the RAV4 is $24k and a CRV is $23k. KBB says a RAV4 is $23k and a CRV is $22k. If I could get a 2014 CRV for $22k vs. a 2012 RAV4/CRV for $20k, I'd get the new car.

Tom

[rennigade]

Most cars will depreciate over time...but if you're like some people who keep their cars till it "dies," depreciate has no meaning or value.

I think its silly when people say..."the second you drive off the lot the car is worth less." Hmm...interesting. I never plan on selling so that magical loss never happens.

If you're one of those people who buy cars every couple years then yes...you need to factor that in.

As for the $4k difference...I personally would buy new.

[isaac]

You'd probably be able to low ball the Used one for less than $20,000. They price used vehicles for A LOT more wiggle room than New. So you'd realize a savings of more than $4,000. Plus I know "Certified Used" vehicles sometimes come with a warranty even longer than the new vehicles. So if you could buy a RAV with 20,000 miles but a 100,000 mile warranty (New RAV only has 30,000 mile warranty) and save maybe $6,000-$8,000 after some negotiating I would think that would be worth it.

[bjl584]

There is probably more than a $4000 difference. There are lots of factors to consider besides the window sticker or what KBB is saying. When you start getting into negotiating, trade in values, taxes, fees, incentives, etc. the numbers are going to most likely change dramatically. I'd research further before deciding.

[sniper260]

I guarantee if they want 20k for a car and you flash cash that price drops... I'd say 15k take it or leave it... they want to make a sell... they come off the price.. last time we looked i told the guy "look, I know how this works, you can give me a better price..." after feeding them some flap we were out the door for 15k on a originally 20k car.... still didn't buy it though...

[autoxer]

Most cars will depreciate over time...but if you're like some people who keep their cars till it "dies," depreciate has no meaning or value.

The depreciation still has a cost. It doesn't matter what timeline you amortize it over. When your car dies, do you just park it in the junkyard behind your house or do you trade it in for a new car? When you trade in a dead car for $500, you are then realizing a ton of depreciation loss.

I think its silly when people say..."the second you drive off the lot the car is worth less." Hmm...interesting. I never plan on selling so that magical loss never happens.

It's not a magical loss, you are handing them your money and you never get it back. The fact that you never plan on selling the vehicle means you are assuming 100% of the loss right when you buy it. If you always bought 3 year old cars and drove them until they died, then you would come out ahead of the person that always bought new cars.

Suppose your car is in an accident after three years and gets totaled, the insurance company is going pay what the car was worth. The more value it retained over those three years, the better off you are. Who's better off? the guy that spent $25k on a new car, that is now worth $15k, or the guy that spent $15k on a used car that is now worth $10k?

It just seems like $4K is negligible if it's the difference between brand new vs 2 yr old used with 20k miles.

I don't see why $4k is negligible, it seems like a lot of money to me. Would a $4k raise seem negligible? How many hours would you have to work to make $4k after tax? Does the newer vehicle give you $4,000 more of enjoyment than the used vehicle? I'm not completely against buying new cars, I actually just bought one last year, but I'm not trying to rationalize it and pretend it was the prudent thing to do. I could be driving a much less expensive car.

[Singuy]

The depreciation still has a cost. It doesn't matter what timeline you amortize it over. When your car dies, do you just park it in the junkyard behind your house or do you trade it in for a new car? When you trade in a dead car for $500, you are then realizing a ton of depreciation loss.


It's not a magical loss, you are handing them your money and you never get it back. The fact that you never plan on selling the vehicle means you are assuming 100% of the loss right when you buy it. If you always bought 3 year old cars and drove them until they died, then you would come out ahead of the person that always bought new cars.

Suppose your car is in an accident after three years and gets totaled, the insurance company is going pay what the car was worth. The more value it retained over those three years, the better off you are. Who's better off? the guy that spent $25k on a new car, that is now worth $15k, or the guy that spent $15k on a used car that is now worth $10k?


I don't see why $4k is negligible, it seems like a lot of money to me. Would a $4k raise seem negligible? How many hours would you have to work to make $4k after tax? Does the newer vehicle give you $4,000 more of enjoyment than the used vehicle?

You do have to factor in a couple of things. Did the original owner abused the 24k miles that he/she drove? You'll never know unless you were the one who put those 24k miles on the car. A lot of people abuse their cars because it's a lease. The extra 4k gives you additional reliability. The ONLY car I know that lasted past 100k miles without a single fix is my car that I bought new. All other cars I've owned died on us in some way or another under 100k miles(and I'm talking about Toyota and Mitsubishis). Reason?..maybe it's because I don't rev my car past 4000 rpm.

[snafu]

Inigo, I don't view $ 4K as a negligible sum and I don't see any value in being able to tell someone I bought a new car at the end of the season. More importantly, someone else has dealt with [Toyota plethora] recalls and small annoyances common with new cars. In my experience, the advertised new 'price' doesn't include a slew of dealer charges. I look for small upgrades like better tires and improved Blue Tooth & sound system.

my 0.02 cents

[Permanent Temp]

As some one else had stated I would buy the certified used Toyota. I know they have a really good warranty. And there is wiggle room on the price. You can call in and ask for a better price. Once you get that price point though it might be the lowest and there is little you can do to negotiate at that point. Either way I think the used one is a better deal especially if it is certified. It takes a lot of paperwork to get a vehicle certified.

[dawnwes]

We just bought a new Toyota. We paid almost $6,000 less than the sticker price of $28K. We read Toyota has had a bad few months in sales AND in addition to the online pricing guarantee, they were offering another $2K in rebates (or discounts.)

Since the 2 year old vehicle of the same make/model was still listed as $24,000, and we got the new one for $22K, I think we came out just fine.

If you are financing any of it, used cars have a higher percentage rate of interest, so be sure and amortize your loan too.

Dawn

[autoxer]

We just bought a new Toyota. We paid almost $6,000 less than the sticker price of $28K. We read Toyota has had a bad few months in sales AND in addition to the online pricing guarantee, they were offering another $2K in rebates (or discounts.)

Since the 2 year old vehicle of the same make/model was still listed as $24,000, and we got the new one for $22K, I think we came out just fine.

The listed price on the used car is about as useless a number as the sticker price on the new car. They'll negotiate that number down also.

[dawnwes]

I understand that.

When we were looking years ago, the cost of financing was significantly higher than a new car, making that two year old car more (even with some negotiating of the initial price) by the end of the 4 year loan.

My point was to make sure and round the numbers before buying. You may very well end up with a closer gap in price than you think between a 2 year old car and a new car.

Dawn

The listed price on the used car is about as useless a number as the sticker price on the new car. They'll negotiate that number down also.