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Someone told me repair cost will make a used car "payout" about the same as what a new car would cost. I'm wondering how true that is? So there justification starts with Edmunds... (I'm going to compare the Ford Fusion)
This says that you save roughly 2k, by going with the older car. Now, my last used car had 3 high price repairs. Other than that, I didn't have much trouble. That being said, in the last few years I owned it, I payed 2.5k to keep it up and it was only worth 5k. Now, I'm wondering how much does it really cost to own a used car and if it's cheaper or the same to buy a new car?
i think with the Ford Fusion, the older model (before the redesign and inclusion of the buggy MyFordTouch digital interface) will prove to be much more reliable. The system on my friend's current Fusion Hybrid freezes & reboots itself at odd intervals. And the screen on another co-worker's '13 Explorer doesn't respond very quickly & has a hard time interpreting commands when her kids are talking. If you're going to consider the newer model check to see what the warranty covers. Electronic repairs can cost a lot. fwiw I think the prior Fusion was one of CR's top-rated sedans in the family sedan segment.
It's going to depend on the car, but in general the depreciation will greatly exceed repair costs. Average depreciation over 4 years on a $30K car is $15K, after that you're maybe looking at $7500 over the next 4 years. Few cars really need $7500 in repairs over 4 years to make that break even with 'new'.
In the example you gave, it's going to be extremely difficult to find a new car that loses anywhere close to only $2500 in value over 'a few years' - more like $2500+ per year. Buying new makes sense if the cost is worth the convenience, but generally 2-3 year old cars have the best convenience/cost value.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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I agree, even a transmission rebuild at $3,200 is not even as much as a down payment on a $30,000 new vehicle. New cars eventually will need tires and brakes, the other stuff on a used car is not that expensive to repair/replace.
The only real advantage to new is the first few years of warranty, and the smell.
Unless you keep a car for 6+ years (boooooring!), then lease it.
Lease a nice $30k car for $350/month with $0 down.
10 years you will spend $42,000 ($350x120) in car payments. You'll be on your 4th new car.
Guy buys a new car for $30,000 and drives it for 10 years. Car will have around 150k miles and will be worth $5,000. Cost him $25,000 to drive it 120 months. Doesn't include a couple sets of tires, spark plugs, batteries, brakes, coolant flush, tranny flush, etc. No risk of engine or tranny blowing up and costing you thousands of dollars when leasing. No tires to buy. Just oil changes and tire rotations, which are usually free at most dealers when you buy a new car for 2-3 years.
Here's the kicker. Let's say the guy that buys his car with cash wants a new car finally after 10 years. He forks over $25,000 in cash after he got $5,000 for his 10 year old trade in. At the 120 month mark, he's now paid $55,000 for his two cars and whatever maintenance/repairs (thousands of dollars). So the guy leasing $350/month is up while the cash buyer needs to keep his second car 5 years years to catch up to the leaser, while the leaser is now on his 4th car.
In the end, it's not that much more expensive to lease and be in the latest and greatest every 3 years. It's worth looking at, sometimes it makes more sense to buy for some people. To me, I'd rather put a little more money into a new car than spending money on an old one.
All I can tell is I had 87 Taurus, bought for $1100, and it cost me $4700 in repairs.
Fix Or Repair Daily.
Oh, and I was stupid enough to buy a 91 Mercury. Was less hassle. But 1st owner, insurance agent, bought it for his daughter. He gave me "all repair receipts". Damn thing totaled $16000 plus in all those, which was more than its' new car dealership cost.
To be practical you have to include the other expenses of owning a new or newer car. First is the license plate yearly costs. The yearly renewal expense for any of my older vehicles is less then $50. Second their is the insurance expense. If you have a car worth some money it would be smart to have full coverage. I only have liability insurance on all of my vehicles and most that I pay is $220 a year. I have gone years without any repair expense so the real expense is $270 a year for license and insurance. The last time I had a new car it cost $2500 to put plates on it and the full coverage insurance was $1400 for a total of $3900 a year just for the right to drive it on the road. For you monthly expense thinkers that's $325 a month for a new car and $22.50 a month for an old car and this is in addition to car payments on the new car.
Unless you keep a car for 6+ years (boooooring!), then lease it.
Lease a nice $30k car for $350/month with $0 down.
10 years you will spend $42,000 ($350x120) in car payments. You'll be on your 4th new car.
Guy buys a new car for $30,000 and drives it for 10 years. Car will have around 150k miles and will be worth $5,000. Cost him $25,000 to drive it 120 months. Doesn't include a couple sets of tires, spark plugs, batteries, brakes, coolant flush, tranny flush, etc. No risk of engine or tranny blowing up and costing you thousands of dollars when leasing. No tires to buy. Just oil changes and tire rotations, which are usually free at most dealers when you buy a new car for 2-3 years.
Here's the kicker. Let's say the guy that buys his car with cash wants a new car finally after 10 years. He forks over $25,000 in cash after he got $5,000 for his 10 year old trade in. At the 120 month mark, he's now paid $55,000 for his two cars and whatever maintenance/repairs (thousands of dollars). So the guy leasing $350/month is up while the cash buyer needs to keep his second car 5 years years to catch up to the leaser, while the leaser is now on his 4th car.
In the end, it's not that much more expensive to lease and be in the latest and greatest every 3 years. It's worth looking at, sometimes it makes more sense to buy for some people. To me, I'd rather put a little more money into a new car than spending money on an old one.
i think with the Ford Fusion, the older model (before the redesign and inclusion of the buggy MyFordTouch digital interface) will prove to be much more reliable. The system on my friend's current Fusion Hybrid freezes & reboots itself at odd intervals. And the screen on another co-worker's '13 Explorer doesn't respond very quickly & has a hard time interpreting commands when her kids are talking. If you're going to consider the newer model check to see what the warranty covers. Electronic repairs can cost a lot. fwiw I think the prior Fusion was one of CR's top-rated sedans in the family sedan segment.
i don't think the 'problems', which have been much overhyped by certain magazines, with MFT should count against reliability unless it makes the car unoperable. CR's reliability assesments can be highly inaccurate.
Each car is different and unique, but in general it is far cheaper to keep a car and keep repairing it then to buy a new car. As stated above, the initial couple of years of depreciation on a typical new car will be more than the car's typical, lifetime repair expenses.
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