Cars with low depreciation -- when to buy new

[BuckyBadger]

Two of our favorite car brands are Honda and Subaru. We currently have one of each. Our next car purchase will be a Subaru to replace our current Subaru. This isn't going to happen right away, but I do keep an eye on prices and it made me wonder --

When dealing with a moderately priced car know for having low depreciation, when would you buy new? At what point is a new car warranty and a newer model year worth it over a 3 year old car?

The two brands I looked at were the Subaru Legacy sedan and the Honda CR-V. When buying a 3 year old model, you're only saving about $3k-$4k. A new CR-V goes for about 26 to 28k. A three year old one goes for about 22 to 24k. A new Legacy is 21 to 24k. A used one goes for just under 20k. For that price I'd probably buy the new model.

Thoughts?

[bjl584]

In that scenario, a new car makes sense, so long as you can afford it. Another thought would be to look at vehicles a little older, say 4 or 5 years old and buy an extended warranty.

[Robert742]

If buying a new car will get you to keep your car 3 years longer, and that is the best price you can get on a used Subaru, I would opt for the new car. This makes even more sense if you put a lot of mileage on your car.

[papa_squat]

I was in this exact same position as you two months ago. My 1997 Honda Civic is in okay shape (leaky with peeling paint and a dying alternator, but still drives nicely with 140k miles), but we live out in the boonies and after an ice storm stranded me on a hill last November, the husband and I decided we needed a AWD vehicle for me. Originally I planned to find a 2008-2009 Legacy, but after looking at specs and total cost for a 2011, buying new was cheaper. We had $13k to put down. Best financing offer we got for any "used" vehicle (2008 or newer) was 4%. Subaru was running a deal for .9% for 36 month buying new. I have never in my life bought a new car and never planned to until I read that. No regrets.

Oh and we didn't trade in the Civic. He replaced the alternator and decided to drive it during the summer while gas prices are high (his Toyota Tacoma is a bit of a lemon and guzzles gas badly). If the Civic didnt reek of mold, I'd drive it during the summer, too!

[thekid]

Wife and I are in the exact same situation.

We were looking to buy a CRV to replace her civic.

We started out looking for 2-3 year olds and have found the depreciation to be straight linear (so there is no advantage to buying a used car). Also, since we were going to make a cash purchase, buying new makes even more sense (since there is additional no financing cash rebates on new).

So right now, we are just waiting until we are closer to the new model year to come out in the fall (will be a complete redesign) to try to snatch a new of the outgoing model with added manufacturers rebates.

[rj.phila]

fyi, when i bought my honda pilot in 2004, the acura mdx had literally the highest resale value of any used car. 1 yr old used models were selling for within 1k of new models at some locations. IIRC, acura was across the board very high as far as "minimal depreciation" goes.

[LivingAlmostLarge]

Bought a 2010 subaru outback. Didn't make sense because a 2009 outback was the same price. Ridiculous. Depending on where you live they can be very desirable. Plus 3 year old cars were only a couple of grand less. Not worth it. But then again I'm still driving a new 1999 corolla so I see a lot of value in buying new and keeping it forever.

[greenskeeper]

the joke that was "cash for clunkers" has removed perfectly good used vehicles from the market. I'm not talking 3yr old vehicles but ones that had plenty of service life left that were sent to the crusher.

What's next? "cash for broken windows"?

[Shewillbemine]

The "best" times to buy new cars will be towards the end of the day, the end of the month and the end of the year, particulary when a revised model comes out.

Subarus absolutely hold their values quite well almost to a ludicrous point. There are used Subarus that are priced at the the same number as new, especially if you consider that in 2008 Subaru was offering $7000 cashback for certain models. In essence, some Subarus are actually selling MORE as used vehicles than the actual prices they originally sold for!

If you are looking at Subarus, note that you should join the Subaru VIP program (Google it). You have a choice to join one of several charities for a paltry sum of $20 or so for a lifetime membership. The VIP program allows you to get up to 2% off the MSRP with no haggling whatsoever.

This is a little bit of insider info from those of us who love Subarus.

[wincrasher]

If you of the mind to buy a car and drive it until it's ready for the junk yard, then depreciation is irrelevant. If you are the type that trades every few years, then it is a big consideration.

Right now, prices for used economy cars are going up. Gas guzzlers are seeing prices collapse. You can get a great deal on a new gas guzzler, not so hot a deal on new 40mpg cars. Reliable brands like Honda and Toyota are always good deals over time because the repair frequency is generally low. Another consideration is how much money you are tying up over time. Yes an Acura has lower depreciation than a Honda, but the price of the car is almost double in some cases. Is it worth committing a bunch more money just to save a little in anticipated depreciation?

I've had great luck with Hondas and Hyundais. Hyundai has the best warranty in the business, but the dealers are generally knuckleheads. My local Honda dealer treats me so well it's almost embarrassing.

I've always been leary of buying a used car. I like the peace of mind of owning a new car and the warranty protection.

[steveaz67]

How many miles do you drive? With the low depreciation you see in Honda's, they usually have pretty good lease deals.

[thekid]

Originally Posted by wincrasher

If you of the mind to buy a car and drive it until it's ready for the junk yard, then depreciation is irrelevant.

I don't quite see it the same. Financially, I see cars as a cost per years of use. So, [purchase price - resale price] / years of use. You can also add financing costs if any and expected maintenance (especially for more unreliable makes or older cars) to purchase price to make it more precise.

So, while I understand that resale price is not immediately pertinent if you are driving til it's ready for the junk yard...it is pertinent in your comparaison of available options (ie. buying newer and reselling). For cars with low depreciation/low maintenance, your cost per year may not be much more than that of an older car you drive til the end. It most probably will be more expensive, but the actual difference (maybe just 500$ a year) may not be enough to justify driving a significantly older car (or it may, depends on the person, but I think it's important to view it this way to compare "apples to apples" and make a decision based on that).

[shanecurran]

I have read a couple of articles recently that have said that the cost of used cars has risen in recent time (along the scale of 10% last year). Right now I think it actually makes sense to buy a new car.

[LivingAlmostLarge]

So does that mean that since I bought my toyota corolla new, and am still driving it, that it's cost per year is very, very low?

[nick__45]

The car with the lowest depreciation is the one you never have to sell. Apparently, it is also the cheapest car to acquire too as you already have it.

[maat55]

I would not buy new unless I were buying a very cheap(10k to 12k) new car. There is not much room for depreciation in these.

IMO, all cars have sustantial depreciation from their new cost. A two year old Lexus, BMW or Mercedes is still much cheaper than a new one.

[dawnwes]

Just do your homework carefully and run the numbers.

In 2004 we bought a Toyota Sequoia (back when we really didn't care about debt).

The sticker price was $35,500. A 2 year old model of the same car was around $32,500 give or take a thousand.

Interest rates on a new vehicle were 1.9% while interest rates on a used car were around 6% at the time. That alone made it about the same price to purchase new over a 5 year loan.

However, we went online and searched for "fleet pricing" and were able to get the same vehicle at the same dealership with fleet pricing for $31,900 and still get the 1.9% interest rate. That made it actually cheaper to get a new vehicle.

Today we would not choose that expensive of a car and we hope to never finance again, but the good news is that the 2004 car is our newest car, has almost 100K miles on it, and is still running very strong.

Dawn

[Ima saver]

This is my husband's motto for cars and he is sticking with it! "Life is too short to drive an ugly car"