Buying a vehicle

[happygirl]

We're going to need a new(er) truck soon. I've started doing my research and I've figured out what kind I'd like (I've chosen 3 so I can find the best deal) and roughly how much I want to spend. We'll be paying cash. I don't ever want payments again other than mortgage and I don't even like paying that. I've heard Sept is the best time to purchase a vehicle since the new year models are coming out and they're trying to get rid of the old ones. I'm already keeping an eye out though in case I come across a good deal.

I was reading a thread about inflation and if prices do go up soon, this probably is the best time to purchase our truck. I want one with fairly low miles so it will last for many years. Any pointers, advice etc. for me? I wondered if I should touch base now with salesman at a few local dealers that sell the trucks I want to let them know I'm looking for a great deal on these trucks.

I am good at negotiating. If they aren't able to give me what I want, I'll walk away. There's always going to be another truck out there somewhere and I don't negotiate from a position of desperation.

I'm really glad I found this site. So many people have good advice and explain it in a way that even I understand! Thanks!

[disneysteve]

It sounds like you are on the right track and know what you are doing here. In fact, several things you said could be useful to others.

- paying cash
- researching the models in advance
- having more than one option in mind
- buying used
- being prepared to walk away if the offer isn't good enough

Sounds to me like you should be the one giving advice in this case.

[LivingAlmostLarge]

Right now it appears the difference between used and new is minimal. It might even be cheaper to buy new right now with all the incentives.

[happygirl]

Disneysteve, thanks for the kind words.

Livingalmostlarge, I agree that new may be the way to go depending on price. I was thinking a 2009 new in late summer/early fall when the 2010s come out might be where to get the best deal.

I'll be looking into all possible options.

[FrugalFish]

We recently bought a new Honda. We got a new car with all the options DH wanted for less than what we could have gotten a used 2 year old vehicle of the same model. Dealers are hurting right now and need to move cars- especially true where I am in California as we are being hit with 2 sales tax increases this summer, as well as a doubling of vehicle license fees. That's killing car sales here and forcing dealers to work very hard for their sales.

[maat55]

I would not rule out finding one on craigslist or your local
auto-trader. You may find a great deal buying from an individual.

[LivingAlmostLarge]

maat, Not right now. Like frugal fish, for some reason I was looking at hondas and toyotas and new ones are less than the 2 or 3 year old used models. Wild.

[maat55]

maat, Not right now. Like frugal fish, for some reason I was looking at hondas and toyotas and new ones are less than the 2 or 3 year old used models. Wild.

Car prices are relevent, if they are cheap at the dealer, they will still be cheaper elsewhere. Shopping both will be diligent.

[LivingAlmostLarge]

For some reason people refuse to sell them for less. I think a lot has to do with the fact they hold their value well. But now, the new prices are just so much lower.

[poundwise]

It is laughable that people think any new car holds its value.

The typical new car loses around 65% of its initial value in the first five years. SOURCE

Even those vehicles that hold their value the best still lose about 50% of their value. SOURCE

Depreciation is the single greatest expense in vehicle ownership and the biggest hits come in the first few years. Opt for a 2-4 year old vehicle and you'll instantly save thousands while still gaining many of the benefits of newer car ownership.

An additional benefit - you also get an opportunity to learn about any early issues or even recalls a vehicle may experience if you wait a few years to buy.

[disneysteve]

Depreciation is the single greatest expense in vehicle ownership and the biggest hits come in the first few years. Opt for a 2-4 year old vehicle and you'll instantly save thousands while still gaining many of the benefits of newer car ownership.

This is generally true, but as a couple of people have pointed out, right now we are in strange times. Some 2-year-old cars are NOT selling for 20-25% less than comparable new cars, as has been the norm. They might only be selling for 5-10% less, and sometimes not even that big a difference. Which would you buy - a 2-year-old model with 24,000 miles for $20,000 or a brand new one for $22,000 and full factory warranty? I'm always in the used car camp, but I realize that there can be exceptions to that philosophy.

[LivingAlmostLarge]

Right now it's the only time I've ever seen it. And some cars don't lose 65% of it's initial value in 2 years. Look at Honda Accords or Toyota Camrys.

[JinCO]

I bought a car a few months ago for $17K off of MSRP. We were originally looking for a 2 - 4 year old car but the brand new car was about the same price as a 2 year old car so we opted for new.

[poundwise]

And some cars don't lose 65% of it's initial value in 2 years. Look at Honda Accords or Toyota Camrys.

In my previous post, I stated (and referenced) that the typical new car loses 65% of its value in five years. That's typical, meaning that some lose less and some lose more.

The best vehicles, in terms of retaining value, only lose around 50%, as opposed to 65%, of their value over that same time-frame.

These are facts that are supported by sources like Edmunds, Kelley Blue Book, Forbes, and CNN.

[poundwise]

This is generally true, but as a couple of people have pointed out, right now we are in strange times. Some 2-year-old cars are NOT selling for 20-25% less than comparable new cars, as has been the norm.

You're right. My comments have been based on what has happened, not necessarily what is happening right now. You are also correct that these are strange times and I certainly believe you (and LivingAlmostLarge) that some new cars are selling for a price comparable to the two year old versions of the same car.

In my view, however, that still doesn't justify, financially, buying the new car. For one, that this is true is some cases does not mean that it is true in all. I think, in particular, if you buy used from a private-party, as opposed to a dealer who has both used and new on his lot, you'll find the values more in line with what has been the norm.

Whether that is so or not, it may certainly be that (a) you may have to shop more for the fairly valued used car, rather that it being an automatic given that it is a better deal, (b) you may have to step out to four years instead of two to find the vehicle that has adjusted pricing corresponding with reasonable depreciation, or (c) you may have to shop a different make/model or simply wait to purchase.

Which would you buy - a 2-year-old model with 24,000 miles for $20,000 or a brand new one for $22,000 and full factory warranty?

Looking at your proposed scenario, I certainly would not buy the used car at $20,000 when the new model is $22,000, however, that doesn't mean I'd buy the new one at $22,000 either. I have every reason to expect that five years from now, that $22,000 car is going to be worth less than $11,000; possibly much less. That $20,000 used car is going to be worth even less, so I wouldn't buy it either. Each simply represents too much of a loss. I'd either shop until I found the two year old car at a greater discount, compare a four year old car with 48,000 miles to the two hypothetical cars already in the picture, find another car, or just wait.


I don't suggest that there is a never good deal to be had. Only that I choose not to take the hit that is new car depreciation. That hit is not imagined but is real and measurable. When the best cars on the market retain only half of their value over five years, I'm not interested in what they are selling for new, no matter what the market conditions. I tend to think, frankly, that many people during 'these times' are using the idea that they can get a new one for nearly the price of a two year old one as justification for buying new. When it may, in fact, be justification for not only not buying new, but not buying a one or two year old car in this environment either.