When does a used car make the most sense?

[MKKShah]

I have been re-thinking my auto purchase philosophy. I have always believed, and practiced buying a 3 year old car and keeping it until the wheels fall off.

But is this true anymore?

Let's take a look at a specific model which is known for it's resale value. Toyota Camry, 4 door sedan, w/ Auto transmission, model (LE).

I can get a brand new 2015 car for $23,000.

I can get a 2012 car, same model for: $17,500 w/30K miles.

Is the $6,000 difference worth it? what would you choose in this case. Same car, same model, used in mint condition as well?

Now, if I look for an even older car, then we get this:
2009 model year, 100K miles, $8,500.

Now Toyota's and Honda's are legendary for how long they last. So my theory is that if you are keen on saving money by buying used, then get a 6 yr / 100K mile car for the best bang for buck. You could drive this car for 8-10 years (at between 10-15K miles a year), and dispose for part for 1500, bringing down the cost of auto ownership to about $70/mo excl. maintenance. You will save a ton on insurance as well.

I have a car that has 180K miles on it, and beyond 100K miles I haven't done anything special. Just the regular stuff, timing belt, transmission fluid flush, coolant flush, oil changes, tires, brakes, struts, a power steering pump, a water pump, battery, all for a total of $4000.

So even if we include the maintenance cost it comes out to about $110/mo in Auto owner ship cost.

Does this make sense? What do folks here think?

[greenskeeper]

The best deals are finding cars around 80k-120+k miles. For some reason the general public still thinks that a car is "worn out" at 100k miles.

Hardly the case and properly maintained practically any car will go 200k miles or more.

[disneysteve]

I can get a 2012 car, same model for: $17,500 w/30K miles.

2009 model year, 100K miles, $8,500.

I can't help but notice that you aren't comparing apples to apples. The 2012 averaged 10K/year. The 2009 averaged 16.7K/year.

I'd suggest you keep looking until you find the older car with lower mileage.

In 2012, I bought a 2006 Camry with only 26,000 miles. The price was low based on age even though it had super low mileage. That's an extreme example but finding one with that 10K/year average should be possible. That gives you the lower price of an older car without the higher mileage, meaning the car still has a lot of life left.

Each of my last two cars had over 150,000 miles on them when I got rid of them, so even buying a car with 100K should still get you at least 5-6 years if you drive 10K/year.

[keelerjr12]

I own a truck because I will never own anything but a truck again, but have you considered owning one?

I bought a 2007 Chevy Silverado about 2 years ago with 45,XXX miles for $16K. Trucks hold their value much better and last a lot longer than cars these days. I do believe that older cars were the best bang for buck. I owned a 94' Bonneville that just wouldn't quit even with 200K+ miles on it. They just don't build them like they used to, especially those 3800s.

It's hard to say what is the optimal used car age for someone to own. It depends on the vehicle itself, how many miles, how handy the individual is around a car, where the car has spent most of the time (north vs south...), previous work done, etc.

If you're someone that doesn't know how to do your own brake job, then a newer car might be better.

[jIM_Ohio]

I have been re-thinking my auto purchase philosophy. I have always believed, and practiced buying a 3 year old car and keeping it until the wheels fall off.

But is this true anymore?

Let's take a look at a specific model which is known for it's resale value. Toyota Camry, 4 door sedan, w/ Auto transmission, model (LE).

I can get a brand new 2015 car for $23,000.

I can get a 2012 car, same model for: $17,500 w/30K miles.

Is the $6,000 difference worth it? what would you choose in this case. Same car, same model, used in mint condition as well?

Now, if I look for an even older car, then we get this:
2009 model year, 100K miles, $8,500.

Now Toyota's and Honda's are legendary for how long they last. So my theory is that if you are keen on saving money by buying used, then get a 6 yr / 100K mile car for the best bang for buck. You could drive this car for 8-10 years (at between 10-15K miles a year), and dispose for part for 1500, bringing down the cost of auto ownership to about $70/mo excl. maintenance. You will save a ton on insurance as well.

I have a car that has 180K miles on it, and beyond 100K miles I haven't done anything special. Just the regular stuff, timing belt, transmission fluid flush, coolant flush, oil changes, tires, brakes, struts, a power steering pump, a water pump, battery, all for a total of $4000.

So even if we include the maintenance cost it comes out to about $110/mo in Auto owner ship cost.

Does this make sense? What do folks here think?

Most people compare the price of the car to the value of the car once driven off the lot.
This has as much to do with the sales compensation (25% commission on a new car) as it does with the value of the asset (if you sell it, you don't pay yourself a commission, do you?).

I compare the cost of the milage per year. In most suburban locations a person NEEDS a car, and there is a cost associated with this.

If I did not leave my suburb, I could likely pay $2500 for using a car for one year- meaning I would pay $2500 cash, and expect car to last 12-15 months without any major expenses. I would rather pay $2500 for a replacement car than $500 for a repair, for example.

I do leave my suburb, A LOT and there is a cost to this. Because I go longer distances, there is risk a junker has to get towed, so I want something more reliable. I travel for work and the cost of not showing up to a customer is expensive, so I would rather pay $6000-$9000 per year for a reliable car and peace of mind to not worry about it.

Which is the issue you see on the Camry- for $6000 more you can likely get two more years out of the new Camry, and that looks like a good value (to me). The issue is the peace of mind is tough to put a price on- the moment my truck cannot get me to a customer I need to make a quick decision which will cost me money, and avoiding that is peaceful. Tough to measure that in dollars and cents or sense.

[Drake3287]

I was just talking to my neighbor who's a Toyota Salesman the other day and he was talking about how little money they now make on new vehicles vs used vehicles. He was very honest about the fact that it's sometimes cheaper in the long run to buy a new car vs a used one. Why buy used Camry for $15,000 when you can buy a new one for $18,000? Plus with many places offering low or 0% interest it's something to think about.

Of course this thinking all depends on which vehicle your looking at so you have to compare Apples to Apples.

[disneysteve]

He was very honest about the fact that it's sometimes cheaper in the long run to buy a new car vs a used one. Why buy used Camry for $15,000 when you can buy a new one for $18,000?

In recent years, this was often true, especially after the cash for clunkers period. Used cars were in short supply and prices spiked up to where it was sometimes virtually the same price to buy a new model intead of a used one. In those cases, the new car was almost a no-brainer.

Used car supplies and prices have been trending back down to normal ranges though so the gap between new and used is getting wider again.

[greenskeeper]

In 2012, I bought a 2006 Camry with only 26,000 miles. The price was low based on age even though it had super low mileage.

I wish you luck with the Camry but I personally would shy away from a low mileage, older vehicle just because with any piece of machinery if you let it sit you are more likely to have more problems.

[disneysteve]

I wish you luck with the Camry but I personally would shy away from a low mileage, older vehicle just because with any piece of machinery if you let it sit you are more likely to have more problems.

So far, so good. I've had it for almost 3 years with no significant trouble. I figure anything that happens at this point isn't going to be due to it sitting. I saw the service records when I bought the car and it had been in regularly. I don't think it was just sitting - it was just being driven very little, about 5K/year.

[rennigade]

I wish you luck with the Camry but I personally would shy away from a low mileage, older vehicle just because with any piece of machinery if you let it sit you are more likely to have more problems.

So what you're saying is its better to drive 100 miles a day vs 10 miles a day? Nice logic....makes total sense.

[Scanner]

I know it's a high commission item, but why not the extended warranty if you are THAT worried about repairs during a certain time period/prescribed mileage? (and I admit a high repair item would bum me and stress me if it was 6 months after I purchased).

In NJ, it's considered an "insurance policy" and they refund you a pro-rated difference of what you didn't use with the mileage/prescribed time, that is, if you trade it in, sell it.

Now you sort of own a "new car", at least on the warranty side of things. Yes, I always keep mine past the extended warranty but I never have that huge initial outlay for a new car.

Just bought a 2006 Chevy HHR for $8900 w 45K on it. . .warranty goes up to 91K.

I dunno. . .I am aware when dealing when you put an extended warranty on the table, car salesmen salivate, but you know. . .I want it. And I use that to my advantage. I am aware that they think they are doing YOU a favor if you finance through them but I know they get commission on THAT as well. . .so I know what's on the table and what's not. And it's a transferable asset and able to be financed. (I still assume most of us are paying a small car payment at least for a little while)

Not for everyone I know. . .I am aware standard financial concept is a car repair is an emergency fund item. And I won't challenge that.

But add in a furnace repair, a major roof leak, fridge goes kaput and now a bad transmission. . .when it rains it can pour. Why risk your method of earning income?

[disneysteve]

I wish you luck with the Camry but I personally would shy away from a low mileage, older vehicle just because with any piece of machinery if you let it sit you are more likely to have more problems.

So what you're saying is its better to drive 100 miles a day vs 10 miles a day? Nice logic....makes total sense.

No, I think greenskeeper's point was that a car that old with so few miles may not have been used for an extended period of time. Could have been sitting in someone's yard or garage because of illness or long military deployment or whatever. When a car sits totally unused for a long period, it isn't good for the car. Belts and hoses dry out. Tires wear unevenly. Stuff like that.

In my case, I was able to tell from the service records that it was in regular but limited use. It wasn't sitting undriven for long periods.

My MIL's car is like that. She only puts 4-5K miles per year on her cars. She drives regularly, just not very far. Just around the neighborhood, out to dinner, to the supermarket, etc. Actually, at this point, my mom's car is the same way. She rarely goes anywhere more than 20-30 miles from home.

[Save24]

used cars are the way to go

Especially if you are buying something reliable like a Toyota or Honda for a car, a used vehicle has been my choice for over 20 years. I got over 200K out of my 1995 Camry. And 3 years ago I purchased a 2010 Camry from Hertz Rent2Buy program. I liked it so much, I purchased a RAV for my wife a few months ago the same way. If you get the vehicles right from the rental location, you save like $1,500 to $2,000 before they go to the hertz car sales lots. And I got a 12 month powertrain warranty for free, yeah!

As far as a daily driver, they work great and both have been impeccably reliable.

[disneysteve]

I know it's a high commission item, but why not the extended warranty if you are THAT worried about repairs during a certain time period/prescribed mileage?

We've done the extended warranty on our last couple of purchases.

Negotiate the price of the car first.
Then talk about the price of the warranty.

I don't remember the exact numbers but by the time I was done, I got the warranty on my car for $600. One or two repairs covered that.

[greenskeeper]

So what you're saying is its better to drive 100 miles a day vs 10 miles a day? Nice logic....makes total sense.

Wear occurs during cold startup and operation. Once the engine/drivetrain is at operating temperature very little wear occurs. The less heat cycles you have the longer an engine will last.

Ever wonder why OTR trucks last for literally hundreds of thousands of miles, many passing a million miles without a sweat?