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Crying uncle on new cars vs. used cars, going on vacation

By Claes Bell · Bankrate.com
Friday, July 9, 2010
Posted: 12 pm ET

Say uncle!

This is going to be my last post on new cars vs. used cars for a little while as I head out on a much-needed vacation. For those keeping score, used cars have won a decisive victory in the Cars Blog comments section and after numerous smackdowns, I'm crying uncle (at least for the time being). Thanks to Debra, Chris, Miguel and all the other passionate advocates of going used; it's been a great argument, with more to follow on all topics automotive.

Posting will be light next week as I attempt to unplug from the "Internets" and head up to North Carolina for a family reunion. That said, posting won't stop altogether, so stop by when you feel like it. Thanks, as always, for reading!

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2 Comments
Debra James
July 20, 2010 at 6:30 pm

Karina,

It sounds like you got what you consider to be a good deal, and plan to get long-term use out of your car. But I think it is disillusional to believe there won't be any surprises just because a car is new, have you read the headlines about new Toyotas and Lexuses during the past several months? I am not dissing on that brand, because my husband and I both have Toyotas, and would by another one when the time comes for purchasing a vehicle. The fact is that any car can experience issues and problems, new or used.

Personally, the best peace of mind is buying your vehicles out-right, and not having to worry that if your have a major change in personal finances that your car may have to be sold, given back to the financer, or worse, repossessed.

I don't know your credit score, nor your financial situation, but the majority of folks will not qualify for the 0% financing offer for a number of reasons; credit score is too low, they don't have sufficient download payment/trade-in value, they cannot afford the monthly payment of a 36-month loan. I made the following assumptions for a purchase similar to yours: 33000 purchase price + 3300 tax + fees - 7260 down payment = 29040 amount to finance / 36 payments = 806.67 per month. In my opinion that is an amount that few will be able to handle comfortably, especially since insurance, gas, maintenance and yearly registration(after the first year) are additional.

I do want to point out one mistake with your math in regards to your friends purchase. They bought a two year old car, and have had it for 1 year. According to your use pattern, they will get 2 years less of use than with a new car; not 3 years less. The example of your friends purchase is highly subjective, because clearly you have demonstrated that not everyone negotiates at the same level. It would have been a better comparison if the purchases happened in the same time frame. The economy has dramatic changes occurring almost on a daily basis, and what was a deal in 2009 may not be so attractive today. Plus, today's deals may not be so great compared to a previous time. Case in point, Infiniti offer 0% financing for 72 months on the X35 back in 2008 when the vehicle first hit the market.

I say this to a person who can afford an $800+ monthly car payment, cash is still king. If the same person had gone into the dealership with cash, it is very likely that he/she would have gotten a better deal than a buyer trying to get the 0% financing. The cash purchase would have been achievable by saving the money, because they didn't have a car payment for the past few years. However, as I have stated in a previous post, people need to look at a car purcahse as a one time transaction, and not a monthly payment. I think it would be difficult for many people to pull $30000+ out of savings to buy a car when they know it will depreciate dramatically once it is driven off of the lot. With a new car the "surprise" can be how much of an depreciation that can occur in a short while.

Karina
July 09, 2010 at 1:58 pm

I've never bought a used car and never will. If I want to be frugal I can buy a cheap new car, instead of spending the same amount of money on a "better" used car - and at least I know there won't be any surprises with my new car. Also, don't underestimate the power of incentives, cash backs, 0% financing, etc. on new cars. Just an example: I just bought a 2010 Infiniti EX35 for $33,000 (MSRP is $41,000). My friend bought a comparably equiped 2007 Infiniti last year for $28K ad some change. I always keep my cars until they die (i.e. about 10 years), so if you factor in that my friend's car will keep driving about 3 years less than mine will, who got the better deal? Makes no sense at all to buy used when there are so many great deals out there on new ones. Note: the only time I think it makes sense to buy used is American cars, especially luxury American cars (Cadillacs, Buicks, etc.) which loose about 50% of their value in about 3-4 years. But since I've only bought Japanese and will continue to do so, makes no sense to me. Thanks for reading!