Apr 15, 2008

The new car vs. used car debate revisited

There are so many personal finance bloggers who write about buying a new car as one of the worst financial decisions a person can make that I decided to revisit the issue.

As I've mentioned previously, Marc and I considered buying a used car before we ultimately bought our new Nissan Altima. After all, the numbers don't lie. A wisely chosen used car would almost always cost less money than a new car. (See Million Dollar Journey's analysis on this subject.)

But that's the rub.

We don't have any confidence in our ability to choose a used car wisely. Of course, we would choose a car that's reliable, is only a year or two old, and has low mileage. We'd order a Carfax report and have the vehicle inspected before we bought it.

But we don't have a good mechanic anymore. We haven't found a mechanic we trust since our last one went loony after his divorce. Oh no, wait. That was the dentist. He's the one who lost it after his divorce. I guess the mechanic was always loony to start with.

Aaaaanyway . . . last year, golbguy wrote a great series on buying a used car. He addressed our major concern and described how to properly inspect a used car before buying it. It was gibberish to me, and I knew neither Marc nor I would be able to inspect the car in the way golbguy described. That was when we decided that the right decision for us was to buy a new car.

It's not just that peace of mind is worth something (a lot, in my book). It's also that, unless you get a used car in great shape, you can end up with major car repair bills. I speak from experience - my first car was used and turned into a huge headache. Admittedly, my first car was a five-year-old Honda Accord, not a one-year-old car, but still, it should have had far fewer problems than it did.

We now have two cars that we plan to drive until they're each over 10 years old. (The Honda Accord that we traded in for the new Altima was 11 years old. The car we traded in for our old Atima was 12 years old.) In the long run, we might be losing a few thousand dollars by buying new cars. But I think we more than make it up in peace of mind and fewer car repair bills.

Now it's your turn: Do you prefer to buy cars that are new or used?


Kacie said...

My husband and I drive a new (well...now it's 2 years old) car for the same reason. We know how to change a tire, and that's about it. We just aren't confident in our ability to make repairs ourselves, and we don't want to be taken advantage of at a repair shop.

So far, our car has treated us well.

My husband's family drives used cars that look nice, but are mechanically not the best. As a result of wear and tear, poor maintenance, and two accidents within a few months, all FIVE cars his parents insures/has are either undriveable or almost so, all at the same time. Um.

My F-I-L is convinced he got good deals on his cars, but after the time, money and hassle to repair them, I'm not so sure.

Anonymous said...

I've been very pleased with the used minivan (except for the gas mileage - which we knew going into the "deal" and has nothing to do with the actual purchase) we purchased from CarMax.

I really do trust them with their inspections. At least the one we used locally.

I had refused to buy a used car after Katrina until I learned about the guarantee CarMax has regarding water damage. Can't remember the specifics - but I do know that they will guarantee the car for its lifetime that it has not had water/flood damage. If at any time we find evidence that it did, I believe we get all of our money back. But that may be my faulty memory.

We used CM here after my in-laws had several great experiences with them in another state.

Kind of like Used Car Buying For Dummies.

Probably slightly more expensive than a used car purchased from an ad in the paper - but much cheaper than new. We bought a two-year-old van with around 20K miles on it. Could never have afforded one new.

Of course, with gas prices, now we can't afford to drive anywhere! But that's another problem entirely!

Just found your blog recently and I am really enjoying it!

Anonymous said...

That's EXCACTLY what we do and why -- buy new, take great care of it, and keep it forever. We are on our second Honda CRV. We bought a new one about 6 years ago, handed it off to our college senior last year (early grad gift), then turned around and bought another brand-new one. We plan to keep this one until it dies...and based on Honda's track record and our usage, I'm planning on at least 10 years.

paidtwice said...

We were too broke to buy a new car! lol

My first car was new for reasons you cite. this one was used and well, we had the whole engine death, so there's that. But I'd already had it for 3 years by then. lol.

Maybe someday we could afford a new car but until then, we take our chances :)

Anonymous said...

My first car was used and was great. I knew nothing about cars, I went to the lot and chose the not quite cheapest car there with the lowest mileage. I didn't even go by appearance, I just knew I needed something to help me make an hour plus commute every day. In the end it was a great little car and I traded it when it reached over 100K miles because I thought that would make it unreliable. Shows what I know. I bought a used 3 year old VW Beetle that I thought was cute and has been nothing but problems since I've had it. Probably the old car I traded is still driving around out there.

DH however bought his first new car 3 years ago, a Honda CRV...it's been wonderful. He decided to go new when he asked around at work about the service department at our local dealership and everyone said they really didn't know, that other than oil changes they hadn't had to use it. We took that as a good sign and have been nothing but pleased ever since. Since the dealership offers families incentives each time we buy another Honda we imagine our next car will be from there as well. However, we too are the drive them into the ground sort of people before we trade up so we'll have to see how long this one lasts.

My parents, who are retired purchased their first new car about 5 years ago after a lifetime of used cars, some great and some lemons. They were so taken with the fact that everything was covered under warranty and that on their fixed income they could afford a new car (they chose a Ford Focus, a very inexpensive model) and not have to shell out lot of money for repairs. When they paid off their car they immediately traded it for another new car so as not to deal with car repairs.

I'm currently just about right side up again after putting myself 'upside down' when I purchased the used Beetle. I paid too much...which is a real risk when buying a used car....it would be a great post for you to do...What a pain it's been of me dumping all sorts of extra money on the loan to try to pay it down enough to finally trade this lemon.


Chief Family Officer said...

@Kacie - I'm impressed that you can change a tire! Marc and I ... well, let's just say that we'll be keeping our AAA membership forever.

@inthestorm - Wow, I'll have to keep CarMax in mind. I love your analogy: used car buying for dummies! Thank you for your kind words!

@anon - I think you'll be able to drive your CRV for at least 10 years!

@Paid Twice - I'm still so impressed at how well you handled the engine death!

@Jen-Fur - Your parents sound so cute! Thanks for the post idea - I'll have to look into that!

Anonymous said...

I wouldn't say that my husband and I are very versed in cars, nor do we have a great mechanic that we trust close by.
we buy only used cars. We check the Kelly Blue Book price online and I think my husband also reads whatever consumer reports are free. We have better success buying from the newspaper ads than from a dealer.
As an example: our last car was a 1990 Acura Legend that we bought from the original owner in 1999. We put no money into it beyond wear and tear repairs (tires, oil, brakes, etc.) until it needed a big repair to pass yearly inspection in 2006. So we sold it for $700 and bought a used 1999Nissan Altima. So far, so good.

I see the reasons why you all buy new cars, but so far buying used cars has worked great for us (and there were other great used cars in our past!).

Chief Family Officer said...

@Margo - You are either extremely lucky or more savvy that you are giving yourself credit for. I'm betting it's the latter!

Clean ClutterFree Simple said...

I've always had used cars, and my next car will probably be used too. I'm a careful used car shopper (I turned down two used cars when the mechanic pre-purchase check came back with some issues) and have had good luck for the most part.

My next car? I want a Honda Civic and frankly, they hold their value so well that used ones a couple of years old sell for almost as much as new ones! Shocking! So, I may go new and get the colour and features exactly to my taste. When the money isn't an issue, well, why not go new?

Living Almost Large said...

New, but we've only bought 2 cars in our life and they are currently 8 and 9 years old. At the rate we're going they are going to be 15 years before we think about trading them in.

Chief Family Officer said...

@CCS - In your situation, I would definitely go new. The difference between new and used would be especially small as to make the peace of mind and getting exactly what you want worth it!

@LAL - Wow, 15 years! I don't think we can squeeze quite that many years out of our cars so I am very impressed!