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Interest rates as low as 0% offset a lot of other things when used car rates are like 7%. But only if the car is new enough to be high dollar. A $4,000 loan will not accrue all that much interest even at 7%.
If we are considering a nearly new vs. a new car insurance rates and registration fees and not significantly different. If you buy a $30,000 car and compare it to he the same car that is 1 year old and worth say $27,000. You will not see much difference. Resale value is not that different either because the new car deprecates must faster the first year while the used car already took the big depreciation hit. Depreciation is a curve the levels somewhat over time. Thus, the newer car will always be depreciating faster than the older car.
I always snicker when people claim to be master car purchase negotiators. First off the difference in sales prices is in the hundreds, not thousands, so it does not make a ton of difference. Second in this age of information, pretty much everyone knows what a car can be purchased for and knows what a decent deal is. There is no secret trick. The car is going to sell within a certain price range and most buyers know what that price range is. Then it becomes a matter of how stubborn and patient you are that will determine where you fall within that price range. I defy anyone to negotiate a better deal than my daughter was offered minutes after simply walking in the door. Apparently they thought she was nice, or cute or something because they simply handed her about the best price that could be negotiated for that car, all she had to say was I like that one.
when you see 0%, that is put into the final price of the car.... thats why its always better to get financing through the bank or credit union.... you negotiate the price of the car further.
Used might not cost more, but there are definitely times where it is close. Jeep Wranglers for instance. You will see a 2-3 year old wrangler with 30something thousand miles and it will only be a few thousand less than a brand new one.
Out here in Colorado, the same applies for some models of Subaru.
Yep. It really depends on the car. Beyond Wrangler & Subaru, most Honda/Toyota models don't depreciate much.
My girlfriend drives an S80 she bought as a 4 year old trade with 30k miles on it. Those depreciate like a stone so a European luxury sedan for the price of a similar age/mileage stripped Cam-Cord out of the rental fleet. She's had it for 2 1/2 years and done nothing but oil changes. Like most cars, it should go 125,000 miles without needing anything expensive done to it. There's some risk that something expensive will break but amortized over 7 or 8 years, it's still a good value even with some repairs.
I always buy new, pay cash, and put the 7 year/100k mile warranty on the car to bound the cost of ownership. I place really high value on 'turn the key and go'. I can afford it.
Depends on car, depends on location as well. Doubt a RWD convertible is going to hold it's value like a Jeep or Subaru will in Butte, Montana, as an example.
New cars suffer from depreciation. Cars are a depreciating asset (for 99% of them). Subprime lending has made new cars easier to buy for those who shouldn't be buying them, and in turn, cratered the used car market. Why? Because buyer Joe who went to look to buy a used Chevy, ended up being talked into a new Chevy, and all buyer Joe is thinking about is his monthly payment. Not the amount of time. Buyer Joe figures he'll just get rid of the car at some point anyway.
Here's a real world example of why buying new is NOT cheaper than buying used. Me.
Last summer, was going to replace my car for a new car. I bought my car new 2 years earlier. Had 33k miles on it, in perfect condition. Found the car I wanted. Negotiated the price, was happy and ready to do the deal. Then came my trade value, which was less than 50% of what I paid for it from this same dealership (same salesman actually), and was 40% of what the new one sitting behind me that was the exact same car (just 24 months newer) was listed for. Salesman told me what the subprime world has done to the car game.
So, I kept my car (love it anyway) and went shopping in the CPO world.
Ended up with a 3 year old Mercedes Benz with less than 22k miles with 4 years of MB warranty, 2 years of free service, and 5 years of wheel and tire coverage - for....... less than 50% of what the car sold new just 28 months prior to. I paid $32k. It sold for $64k and was driven less than 10k miles per year. Car is flawless.
So, for the price of just one new car (actually less than the price of the one I was going to buy initially), I have TWO with plenty of warranty coverage left. A 2015 VW GTI and a 2014 Mercedes Benz E350 4matic sedan, all for about 85% of what one new and heavily discounted VW Toureg Executive was going to cost me.
Broken link for me, but yeah. That's why the last two cars I bought were new. Cash for Clunkers + Carmaggedon in 2008 when I bought the Mazda3 made used cars terrible buys. Prius in 2014 was more situational. High gas prices meant they were extremely expensive on the used market as lots of people were flocking out of their SUVs. At the same time Prius sales weren't good so it was easy to get $5,000 off a new one making it only $6,000 more than a four-year-old Prius with 100,000+ miles. I mean, it's reliable but no car as infinite life span.
when you see 0%, that is put into the final price of the car.... thats why its always better to get financing through the bank or credit union.... you negotiate the price of the car further.
It's set in stone and non-negotiable factory promotions. You either take the cash on the hood or the 0% finance. You can't negotiate more cash on the hood from the factory. Often the cash on the hood is better, particularly if you can't low-interest finance elsewhere. I don't have verifiable income though, so it's harder to get that. Most lenders won't look at tax returns to verify income. Too much work for them to want your business. Plus it's not like I'm going to give someone my tax returns to save a couple bucks. That's not worth it to me. Factory financing in my experience is stated income more often than not.
I thought this was common knowledge. I first became aware of this phenomena about 10 years ago. Dealers realized that most people don't cross shop used and new cars, so they started jacking up the price of 1 or 2 year old cars to close to that of new cars. I personally sold a pickup for more than I paid for it brand new only a year earlier.
"Buy used and save on depreciation" is an outdated mantra, much like "Always pay cash". Research and math are your friend.
Nope... a new Range Rover is $80k. A 2015 Range Rover can be had in the $45k range used -- that's $35k in depreciation. If you keep the used Rover for 5 years the repair bills are not going to add up to $35k, no way. You come out way ahead buying used.
It might.
Doug Demoros' saga with his is pretty amusing. Over $15,000 in warranty claims plus it's depreciated another $30,000 or so. Almost cheaper to lease a new one.
Moral of story is don't buy a Range Rover unless you've got a ton of disposable income and really want it. Any way you go about it, it's gonna cost you.
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