Used cars are not good deals any more!

[jimmyle]

USED CARS ARE NOT GOOD DEALS ANY MORE. My first 4 cars are all used but my last two were new because the savings are not there. In addition, no matter how careful you are, you can always buy into troubles with used cars. Unless, you can buy from your relatives for a good discount otherwise forget about used cars.

Here is an example:
A new Prius cost $24k, a used 2007 Prius is about $13k (Kelly BB). A new Prius is about $24k. Assuming that you buy a 2007 Prius now for $13k and then sell it 5 years later for $3k, then it would have cost you $10k for 5 years while it cost the first owner $11k for 5 years. You spend $1k less driving a used car and your repair cost will more than offset this.

Let me know what you think about buying used cars and whether you agree with my calculations.

[UCGal]

It always depends on the car, whether you are buying private party or from a dealer, etc.

Some cars hold their value very well. Prius is one of them.

But a friend’s son had to sell his 2 year old prius – and took a big loss… so deals occasionally happen.

I’ve also found that dealers ask well over KBB for used cars, and offer well below KBB on trade ins. So dealing with a used car (either end) with a dealer is a bad proposition.

I’ve bought and sold cars privately – in general I’ve gotten (and sold) for below KBB because that’s the market price.

So if you want a deal on a used car – start scouring craigslist and the reader.

[scaredyclassic]

calculations change for a 25 year holding period.

[spdrun]

I paid $2500 for a car that has had under $1000 in repairs over the past two years, and which I can easily re-sell for same price. Hwy mpg is in the mid to high 30s if you drive judiciously.

CL and the local papers are where it’s at. Besides, not supporting Detroit and dealer parasites is fun!!

[heywood]

A prius is not a good example because of the batterys etc. so may have a large drop in value beyond a certain age.

Your calculation is no good for a general case though. Assume a car depreciates a constant percentage each year then apply that to the purchase price of new vs used and you will get a better idea of the real situation.

i.e.
13k @ 12% year = ~6k loss (sell for 7k)
24k @ 12% year = ~11k loss (sell for 13k)

[bearishgurl]

[quote=spdrun]I paid $2500 for a car that has had under $1000 in repairs over the past two years, and which I can easily re-sell for same price. Hwy mpg is in the mid to high 30s if you drive judiciously.

CL and the local papers are where it’s at. Besides, not supporting Detroit and dealer parasites is fun!![/quote]

Agree, spdrun, that once a vehicle gets to the $2500 PP value, then if well maintained, it could stay in the $1500 – $3500 value-range for the next decade or beyond, ESP if it has been garaged most of its life.

Many, many people want and need good running vehicles in this price range.

[bearishgurl]

[quote=heywood]A prius is not a good example because of the batterys etc. so may have a large drop in value beyond a certain age.

Your calculation is no good for a general case though. Assume a car depreciates a constant percentage each year then apply that to the purchase price of new vs used and you will get a better idea of the real situation.

i.e.
13k @ 12% year = ~6k loss (sell for 7k)
24k @ 12% year = ~11k loss (sell for 13k)[/quote]

heywood, the highest percentage of depreciation comes off the first 3-6 years of life, depending on the vehicle.

And once a vehicle is officially “old” (15 yrs?), its market value remains pretty constant, say …. $1500 – $4000 for typical mass-produced Japanese models … higher for well-maintained “Limited Edition” vehicles.

So your “constant depreciation” calculations are in error.

UCGal is correct. The “branded” dealers have a $3K+ (per vehicle) used-vehicle markup over the KBB Private Party value on their “Certified Used” vehicles. These “mainstream” dealers do not usually keep trade-ins that don’t qualify for their Certified Used programs unless they are extremely well-maintained. (The buyer won’t get the CU warranty with them, however.) With these rare finds, a buyer can score a great deal at a branded dealer if paying all cash. The same is true if a buyer is purchasing from a 2nd or 3rd tier dealer (of older used vehicles of various makes) who offers financing to the less-than-creditworthy where they carry the notes themselves. Trade-ins are normally taken in by dealers at $7K+ less than the KBB Private Party value.

The lesson here is to sell private-party and then buy private-party (in that order). To obtain the maximum-value replacement vehicle for your money, it involves paying all cash for a 6+ yo vehicle or have your own pre-approval from your bank/CU waiting and taking the seller with his/her title or registration/lien note (if a PP) in there with you to complete the transaction in front of a bank officer.

As everyone knows, in order for a PP seller to obtain the highest price for their vehicle, they must thoroughly clean, detail, possibly make repairs, advertise and show their own vehicle until it sells for a price they will accept. MOST people don’t want to bother with all of this. That’s why the masses get ripped off royally on trade-ins, new vehicles and in dealer “certified used” programs repeatedly throughout life, ESP if they let the dealer finance them or locate financing for them, IMHO.

edit: the above post assumes the vehicle traded in or sold is 6-8 years old and has a KBB PP value of $17K – $25K.

[an]

Every car is different. It might make sense to buy a Prius new, but a M5 would be an opposite example. Brand new, they’re going for >$100k. 3-4 years old CPO goes for $40-60k. That’s >$40k depreciation in 3 years. If you can get it for ~$40k, there’s no way you’ll lose >$40k on the car in the next 3 years.

[paramount]

I just bought a new CX-9, and I always buy used cars.

The price differential between certified and new was to close (by design I’m sure) to buy used.

[Coronita]

Well I feel bad. I was about to buy a used miata and turn it into a track car. But it fell through and the cost of used miatas went up….

[scaredyclassic]

i was thinking about listing my 1989 honda civic on craigslist at a king’s ransom…say, 2,350?. my wife was laughing hysterically. maybe I could get it though. it’s just that cosmetically it is veryvery very bad. and has high mileage. and smells bad. but it runs nicely.

i’m ready for a new car now… i would love to get some a/c and airbags…and upholstery. and no smell. and no major oil leak.

[creechrr]

[quote=squat250]i was thinking about listing my 1989 honda civic on craigslist at a king’s ransom…say, 2,350?. my wife was laughing hysterically. maybe I could get it though. it’s just that cosmetically it is veryvery very bad. and has high mileage. and smells bad. but it runs nicely.

i’m ready for a new car now… i would love to get some a/c and airbags…and upholstery. and no smell. and no major oil leak.[/quote]

Hatchback or sedan? Manual or sissy shifter?

[scaredyclassic]

5 spd manual hatchback. coveted DX model. dog vomited only one time in back. mouse families have nested once in back under spare tire. comes with many bumperstickers included. has all glass windows. has minor rear and front damage. dents. roof vibrates at high speeds. no radio. has glove compartment AND ashtray. Silver but peeling. also the hatchback struts dont workso you can get guillotined if not careful. i use a vise pliers to hold it open. will show buyer how.

has had 3,000 in repairs over the last 18 months with receipts.

i was thinking of maybe ripping out all the upholstery and carpeting and removing all the seats and just installing one fancy leather racing drivers seat. gotta get rid of smell.

also wondering if a well written craigslist ad could become a viral internet sensation on this car…

[bearishgurl]

[quote=squat250]5 spd manual hatchback. coveted DX model. dog vomited only one time in back. mouse families have nested once in back under spare tire. comes with many bumperstickers included. has all glass windows. has minor rear and front damage. dents. roof vibrates at high speeds. no radio. has glove compartment AND ashtray. Silver but peeling. also the hatchback struts dont workso you can get guillotined if not careful. i use a vise pliers to hold it open. will show buyer how.

has had 3,000 in repairs over the last 18 months with receipts.

i was thinking of maybe ripping out all the upholstery and carpeting and removing all the seats and just installing one fancy leather racing drivers seat. gotta get rid of smell.

also wondering if a well written craigslist ad could become a viral internet sensation on this car…[/quote]

scaredy, do you have a passport? You could take it to TJ and have the interior ripped out and redone in carpet or vinyl floors; leather or pleather … what’s your pleasure? You might be surprised how little this costs in comparison to estimates from same types of companies in SD County!

If you would like have a referral to a good auto upholsterer in SD County, pm me and I may be able to help.

You can remove the bumper stickers with “Goo-Gone” and a single-edge razor knife or sharp scraper.

hint: After you get the interior redone and trunk relined, you don’t have to mention the dog’s mistake and the fmr mice nest in your craigslist ad :=]

Or maybe since it runs decent and has an authentic “5-spd overdrive” transmission, creechrr might take it off your hands and fix it up himself! These types of vehicles are hard to find today in your price range that run decent.

I drove a clutch up until ’92 and loved them. I kept trying to shift my Camry for over two years after that, lol :=0

[ocrenter]

[quote=AN]Every car is different. It might make sense to buy a Prius new, but a M5 would be an opposite example. Brand new, they’re going for >$100k. 3-4 years old CPO goes for $40-60k. That’s >$40k depreciation in 3 years. If you can get it for ~$40k, there’s no way you’ll lose >$40k on the car in the next 3 years.[/quote]

Agree, toyota and Lexus barely depreciate, not worth it to buy used. Euro luxury brands depreciate like mad the first 3-4 years

[Author]

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