Driving forces: When buying a new car is smarter than buying used
Shattuck says people need to look at the history of a used car, perhaps by purchasing a vehicle history report from CarFax.com. They also need to bring the car into an independent mechanic who can look for problems and determine how well it has been maintained. A car that has been driven only 10,000 miles is a much lower risk, she says, than a car that has been driven 80,000. The more mileage, the more critical it is that the car was well maintained.
"Did they bother to change the oil?" she says. "Fluids are the most important thing. Cosmetic problems (such as dings and dents) can be fixed."
Mason recommends looking at the April issue of Consumer Reports, which lists the long-term reliability of various car models.
"Some people simply trust a new car more," says Rob Drury, the executive director of the Association of Christian Financial Advisors. "As in an investment portfolio, it is important to make financial decisions that will allow one to sleep soundly at night."
Depreciation is a big factor to consider when buying a new car. Shattuck says cars in the $50,000 range lose value quickly. This means that buying a slightly used Lexus or Mercedes could save a lot of money over buying a new one.
Other cars, however, may not depreciate as quickly — lowering the difference between new and slightly used.
Mason had his class look at 2009 Honda Accords. They found that for cars with about 50,000 miles, the average price was $15,600. Compared with the price of a new car, the difference of about $7,000 might make someone think it was close enough to buy new instead, with its fuller warranties.
"The used price could be relatively pricier than you think," Mason says.
Shattuck says oftentimes the difference between a new car and a slightly used car can be as low as $2,000.
"If you can buy new for $2,000 or $3,000 more, you may wish to consider it," she says. "Then you have a brand-new car with exactly the features you want, plus a full warranty."
The tipping point that would make Shattuck advise someone to buy a used car is if the difference is around $6,000 more. But other people may feel the cost savings would have to be higher before they would buy a used car.
Shattuck warns people to not get too far into the monthly payment mindset. She said there is a big difference between making a monthly payment for 36 months and making one for 72 months. "Don't go any longer than 60 months if you can," she says.
But if people have a low budget, their choices narrow, and that low budget may decide for them whether they buy new or used, she says.
Negotiation is easier with new cars, Shattuck says, because there is so much information available on the Internet. Used cars are trickier because it is hard to know the ultimate condition of the car and how much money the dealer put into it.
If someone can only afford a $3,500 clunker, Shattuck says finding a decent car takes a lot more work. She is helping a client buy just such a car, and she has eliminated about 90 percent of the cars she has investigated.
Kissell ultimately decided to buy a new car because its warranty would allow him to better manage repair costs. He has been happy with his metallic black Chevy Sonic, and should he encounter another puddle the size of a lake, he won't be too worried.
"If it fries, it will be covered under warranty," he says. "And I can sleep at night."
- 10 years after housing bubble, damage lingers...
- World stocks leap as fears ease over British...
- Nearly 1 in 3 on Medicare got commonly abused...
- Yellen faces GOP criticism over weak economic...
- Financial Tips & Tricks: When is bankruptcy...
- Michelle Singletary: Should you replace your...
- Dave Ramsey says: You might not need life...
- Sturt & Nordstrom: The 5 fundamental...
- 10 years after housing bubble, damage... 6
- Costco begins new credit card agreement 4
- Yellen faces GOP criticism over weak... 3
- Michelle Singletary: Should you replace... 2
- Nearly 1 in 3 on Medicare got commonly... 1
- World stocks leap as fears ease over... 0
- Financial Tips & Tricks: When is... 0
- Dave Ramsey says: You might not need... 0