By: Revanche

Your take: used or new cars?

July 18, 2016

You might remember we just spent half the year on dealing with car stuff so when I spotted this comment over at Dad is Cheap it jumped out at me.

After working in the auto industry for 16 years, I’ve seen just about everything. Some of the things I’ve learned: 1) Never buy used from a private party. 2) When you buy used from a dealer, know that they almost always “pack” the car by at least $2k-$3k. In other words, start your negotiations by taking off at least that much and sometimes more depending on the model. 3) If you get a great price, know that the finance department will do their best at charging you high interest (they get a bonus) to make up for the loss. Don’t let them get away with it. Ask for the lowest “buy rate” if you need to finance it.

The commenter went on to explain why:

It’s more or less general rule of mine because I’ve rarely seen private sales work out in the long run. Unless you are car savvy or take it to a trustworthy auto technician to be examined, it can be difficult to detect a maintenance nightmare and unfortunately, I’ve seen far too many private party sales end up in court battles with little or no recourse.

In my personal opinion, an exception to the rule would be if you know the car and where it’s coming from, and you are able to make a determination that the car was maintained properly. Maybe from family member or friend. I most certainly would not take a chance on purchasing a car from an unknown party.

Rules 2-3 are useful, but Rule 1 directly contradicts ours. My first car was new, but since PiC and I joined forces, we have never bought new since and we avoid dealers like the plague. The convenience has never been worth the price padding for us.

On cars: are you a used or new car person? Come tell me why!PiC’s rules for buying cars (& approved by me)

Rule 1: Always buy used from a private party.
Rule 2: Always buy from an original owner or a 2nd owner.
Rule 3: Always review the owner’s paperwork and maintenance history, making sure that it all matches up. Don’t take their word for it.
Rule 4: Always take it to a reputable mechanic for a PPI (pre-purchase inspection) before making any decisions. You can, and we often do, negotiate a lower priced based on the recommendations from the inspection.
Rule 5: If you have car savvy friends (we do), don’t be too proud to consult them. Our very car savvy friends know certain makes inside and out, and were able to advise us to avoid certain model years due to known maintenance issues.

Together, we’ve purchased three used cars in the past ten years and they have all run smoothly and reliably. We budget for and pay regular maintenance costs every year, and we still spend less than the cost of a new car (financed or paid for in cash) and all the normal maintenance associated. We’ve never broken down due to mechanical issues, though we have had some random unfortunate incidents.

As an aside, this is why my parents insisted that I buy a new car in one of my earliest wastes of money. They didn’t realize that it just takes being more selective, and more legwork to save 50% or more on a used and just as reliable car.

It’s not that we don’t like new cars – we do! But believe it or not, we like cars that are quite expensive. Way too expensive for a family of four, and way too expensive for a family who intends to retire early and do some good in the world. And that stuff is more important to us anyway, so even though we might LIKE the idea of the super shiny techy, we choose not to go that route. Instead we pick cars that fit exactly our needs today, in excellent condition, and keep them that way as long as we can. Which, considering the JuggerBaby, takes a little extra work, but it’s worth the satisfaction of winning another battle against entropy.

And someday, when I hit the bigtime, PiC can have his Porsche. Any kind, any color. 🙂

:: What are your car buying rules? Does “used” make you think of a clunker or someone else’s lemon?

21 Responses to “Your take: used or new cars?”

  1. Jon and I have had very different car experiences and car buying strategies. That’s mostly because he knows a lot about cars, and I don’t. The one time I bought a used car, it had an improperly sealed engine and that got expensive. Since then, I bought new cars so I knew the car history and had something reliable, even if I paid more.

    My husband has had all kinds of used cars where he bought something cheaply that didn’t work, fixed it, and after a few years sold it for more than he paid for it. He can spot a deal, and he can usually fix whatever goes wrong. There’s no reason for him not to go with a private sale. The next time we need a car (hopefully many years from now) I’ll let him do his thing.
    Emily @ JohnJaneDoe recently posted…5 Ways to Protect your Kid against MaterialismMy Profile

    • Revanche says:

      Fingers are crossed you don’t have to worry about this any time soon! I came from a new car buying family myself so I had to learn how to make embracing the used car side a good decision.

  2. We buy new and then drive forever. So, in the past 10 years we’ve bought 0 cars. (Which is a little misleading since in the past 12 years, we’ve bought 2 cars. Of course, in our lifetimes we’ve also bought exactly 2 cars, the previous (beater) cars we had being purchased or handed down from our parents.)

    Neither of us are car people and we hate taking time to deal with maintenance issues. Before we left for paradise my car (the older of our two) started having regular maintenance problems and with each one we’d think it would be the last for a long time, but then something new would crop up. If that keeps up when we get back, I will probably get a new car just to stop having the hassle of having my car constantly in the shop.

    We buy pretty low-end new cars. Mine is a Hyundai Accent and DH’s is the nicest car we’ve ever owned, a Honda Civic Hybrid (it even has power locks!).
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    • Revanche says:

      Keeping a new car forever is pretty awesome. PiC tends to buy higher end used cars now but we were both in very basic cars before this.

      Our car buying statistics are skewed because I also footed the bill for my family’s cars.

  3. Shelley says:

    I’m no expert, but what I have done in the past is: a) take my husband’s hand-me-down’s (before that, my dad’s, my uncle’s and my aunt’s cars). We had separate money and I let him pay the depreciation, since he volunteered… I drove each car until either he passed me a new one or in one case an excellent mechanic told me I’d be better off getting a different car that got better mileage (this was back in the 1980s). b) took mechanic’s advice and bought a demonstrator model of my dream car (a cute little Mazda). I financed through my credit union, paid it off early and drove it for 11 years until I moved to England. c) took public transport for 4 1/2 years. d) bought 2 year old used cars from a local car dealer, paying cash – between £2-4K each. This worked well most of the time but not always. e) When I retired I sold my car (I was sad, but it was the only sensible option) and we now drive Bill’s car which he plans to keep until it ‘wears out’. He figures this will be his last car (he is 68). I expect I may decide to buy a car after this, depending upon when all that happens. I’m not sure what method I will use, most likely buying 2nd hand car for cash. Besides the fact that new cars in Britain are stupidly expensive, credit unions aren’t the same sort of organisation here that they are in the US. Even if I were to finance through my own bank, they would set rules for the loan as a car loan and they would NOT allow me to pay off the car early! One of the main reasons I decided to go used and pay cash. I’m amazed they can do this, but apparently they can. Even if I got a ‘personal’ loan, they would want to know what I was buying and if I said ‘car’ those rules would apply… Crazy, eh? Your method of buying used sounds great, so long as you have a car mechanic you can trust.

    • Revanche says:

      That seems outrageous to prevent you from paying off a car loan early. I suppose it’s one way to push you into buying cash or making it worth their while to lend? I am impressed that you can (could?) get 2 year old used cars so cheaply when they’re so expensive new!

      It does seem a shame to have sold your car and then need to buy another after this but I suppose it can’t be worth the cost of maintenance and insurance between now and needing it.

  4. Shelley says:

    PS Adverts on telly for carwow.co.uk. For new cars, but you specify the car and dealers bid for your business, not the other way around. Anything like that happening in the US?
    Shelley recently posted…Cragside ContinuedMy Profile

    • Revanche says:

      That’s a new one to me! At least I’m not aware of an organized effort to do it that way rather than selling to you direct. Now I’ll have to look around to see if we’ve got any of that going on.

  5. NZ Muse says:

    Never bought new, probably never will be in the budget. Had a lot of bad experiences with used, though!. Always envious of those who buy cars off family members. I think as with most things, if you have the luxury of time and a decent budget used can be great – we’ve always had a squeeze on one or both of those things at car buying time to date.

    • Revanche says:

      I’ve never bought a car from a family member but I’ve seen friends do it. The coldly mercenary part of me always wondered why they get cut such a deal for a newish well maintained car when they’re already getting the benefit of a well maintained used car but maybe that’s the poor mentality speaking.

  6. Karen says:

    I’ve had 4 cars. First one was used and went back to the dealer due to transmission problem. The rest were new. 3rd vehicle was totaled else I’d probably still be driving it and it replaced the preceding vehicle after 10 years. 4th vehicle is 13 years old. I don’t want it to ever die 🙂

    I would probably not buy from a private seller unless it was a beater type ($1-2k) car.

    How do you confirm rule #3? I keep up with basic maintenance but I don’t keep record of it. What about those who do their own maintenance (like I should but…don’t lol)?

    • Revanche says:

      Hoping Ride #4 stays with you for ages more!

      We only buy from sellers who have kept records of their maintenance whether self administered or done by a shop. Usually those who DO do their own maintenance have receipts for things like new oil and old oil disposal and new parts and so on.

  7. Leigh says:

    I had a beater in high school that I bought really cheaply and then re-sold for most of what I paid. After college, I bought a brand-new car and I’ve been pretty happy with it. It’s a subcompact, gets great fuel consumption, etc. My plan is to drive it for 10-15 years. I’m almost 6 years in now and it’s still doing great. I had my first > $100 maintenance year this year, but it was still < $200.

    "Used" absolutely makes me think of a clunker!
    Leigh recently posted…Being financially stable doesn’t make you betterMy Profile

    • Revanche says:

      That’s great! I always preferred to buy or drive beaters because I felt less self conscious or worried about keeping them nice. I’m better about accepting nicer cars now 🙂

  8. PW says:

    We buy used, we have a 2000 lexus 80,000 miles my husband walks to train and takes train to work and a 2003 Toyota Avalon, 120,000 miles. I drive a long distance to work every day and my car usually is used for errands, trips etc. We thought about getting rid of the Avalon but it is has been a gem, no problems other than maintenance. We never buy used, we buy from CarMax, no problems. We won’t buy direct from previous owners, husband an attorney too much liability and problems. I know cars, was probably one of the first women auto mechanics back in the day of timing lights, etc. Now they are too hi tech but we have an excellent trustworthy mechanic that I lucked out finding due to my knowledge. We keep our cars up in repair and take good care of them, they are both high end cars with a lot of bells and whistles which I don’t need. People are always after me because I don’t have Bluetooth, (taken care of with a device I purchased, I do have a navigation system but I stopped updating it, use my cell phone). We are happy with what we have. Most of our friends drive new $60,000 cars and up we do not. Car Max worked for us, we usually get a loan for about 6 months then pay it off, we get loan to get a better price. We will probably drive those cars until they fall apart.

    • Revanche says:

      Makes sense to keep the Avalon, treated right they will run for such a long time and without too much in the way of nasty maintenance surprises.

      I’ve considered selling through CarMax but haven’t bought through them. I didn’t know they gave you a better price if you financed, too. I know new car dealers do that.

  9. Mary says:

    Hmm, the closest we have come to a “new” car, was a dealer model, Dodge Demon 340, it had been modified and I loved it – I also learned to never, ever get white interior in a car [dog, husband who, at that time was a mechanic]. So for over 40 years we have gotten used cars. Some have been great, some not so great. But I listen to friends and family and hear about recalls and think “new” doesn’t seem much better LOL.
    We have bought thru private parties, dealers used, and lots that just sell used cars bought at auctions. Right now we have a 97 Jeep bought from a friend who charged us more than we would have if positions were reversed [not a great deal] and an Avalon from a used car lot that is knock wood going well and comfy.
    Over the years we have had quite a few vehicles and all used.

    • Revanche says:

      Sometimes new doesn’t seem worth it, does it? Like that car glitch in the 2015 Grand Cherokee that’s been responsible for injuring and killing drivers who didn’t know if the car was in park or neutral – an acquaintance said that design was terrifying when he used the car as a loaner for a couple weeks.

  10. Cassie says:

    I’ll never buy a new car again. My first vehicle was used, vetted by my father (a mechanic by trade). My second car was purchased brand new, full price from a dealership, and it was a lemon from the get go. I had so many problems with that car, and the interest rate I got from it was terrible because I had very little down (straight out of school). My third car was a junker purchased for $50 from a close friend who told me about all of its quirks. After negotiating with dealership after dealership, my fourth car was also purchased used. I don’t regret a single of my used purchases, and I completely regret my new purchase. I’ll never buy new again. I hate the nonsense negotiations and run around you get at the dealerships, they’re bloody overpriced, and there’s no guarantee the vehicle is any good. I’m familiar with enough vehicle red flags and know enough people who are mechanically inclined that I have no qualms buying used.
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    • Revanche says:

      What a shame your new car was a lemon. We have a lemon law here in California but I suspect its provisions still aren’t broad enough when your experience was a thoroughly negative as yours was!

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