New CR report: Buying new versus buying used

[ctbering]

I am the worse economist in this group and others I'm sure, however I always felt the concept of saving on a used car versus buying new has been skewed in terms of saving money. I have a history of buying new Toyotas and either keeping them over 10 years or selling them 4 + years with very good resale value. I found one of the biggest financial hits was associated with paying taxes, especially the City of Chicago taxes. (I think a used car buyer is required to pay some taxes too).
I also think there is something to be said about having fixed costs, (car payments) or better yet, the cash payout, versus wondering what will go wrong with a used car. I'm sure if a smart buyer gets a great deal on a used car that has been well cared for, the 'immediate' savings is gravy. But...what happens as the car gets older and the buyer has difficulty finding parts and every time a car needs increase servicing doesn't the labor increase these projected costs of purchasing the used car, now significantly?
CR even discussed the costs of purchasing some american beauties that have a very poor track record of reliability. Of course, they focused on the prohibitive cost of a new Prius and how a used car buyer can purchase enough gas during he year to compensate for the Prius gas savings.
There is always dig from these writers when they bring up the Prius.

[qbee42]

If you are trying to save money, you don't buy a new car, Prius or otherwise. As the car guys will tell you, the cheapest way to own a car is to buy a beater and drive it into the ground, then buy another beater and do it all over again. Obviously some cars hold up better than others. You end up sacrificing some reliability for spending less money, and you don't have the satisfaction of having a shiny new car. That is the trade off. The best bet is to buy one that looks bad but is still in decent mechanical shape.

Tom

[dogfriend]

Especially true if you can wrench on your own cars. You can buy a lot of parts for what the average new car payment is.

If you buy a late model used car, you can usually get a lot of miles with a minimum of repairs, yet you will avoid the depreciation hit (the first owner absorbed that).

The Prius may be the exception to the above because the demand is keeping the used car prices very high.

[DeadPhish]

The statement that buying an older vehicle is nearly always the least expensive way to 'buy transportation' is accurate. The only consideration is how far down the price scale one wants to go.

2 y.o. vehicle that saves 20% of a new vehicle
5 y.o. that saves 50% of a new vehicle
4 y.o. vehicle with 100K miles that saves 60% of a new vehicle
9 y.o. creampuff with 50K miles that saves 70%

OR..

Now that they've been out a while why not a ...2 or 3 or 6 y.o. Prius... assuming one can be found. In this way you get a double benefit, lower acquisition price and lower fuel cost.

[Patrick Wong]

Originally Posted by DeadPhish

...Now that they've been out a while why not a ...2 or 3 or 6 y.o. Prius... assuming one can be found. In this way you get a double benefit, lower acquisition price and lower fuel cost.

A two or three-year old Prius still under drivetrain and hybrid system warranty might be OK, assuming a reasonable acquisition price.

A six-year old Prius will not be under drivetrain warranty but may be under hybrid system warranty for a couple of years (depending upon odometer reading.) It is certainly possible for a 2002 to suffer an electric steering gear, catalytic converter, or transaxle failure that will be quite costly - not to mention the DTC P3191 engine start problem associated with a downrev engine ECU.

One problem with purchasing a used car is that a portion of used cars offered for sale have a significant problem which motivates the sale. Hence, a buyer who cannot identify the problem will be at a big disadvantage. This is particularly a concern with Prius, since it behaves differently than a normal vehicle and post-warranty repairs can be extremely expensive (since competent independent repair shops are not available in most parts of the country.)

[galaxee]

we've owned a whole lot of used cars, but only once a new car.

if you get the right kind of used car and have some mechanical ability, you can get away with ownership cost <$1000/year. we used to buy, fix, drive and sell old camrys and had essentially no cost of ownership once all was said and done. it really is great to be free and clear of any kind of car payment.

our 1985 mercedes is on track to pay for itself and all repairs and related costs by the end of the year. because we bought the right one!

but yes, used cars can get expensive if you buy the WRONG one. we're still bitter about the 1994 saturn. we stuck so much into that car, only for it to fail again and again.

the thing is, you can buy a whole bunch of used cars and fix them up for $25000. sure, you can offset by keeping the car for 10 years or so but between the two of us, we still haven't spent that much on used cars in the past 10 years.

oh, and i looked at a civic coupe the other day with an otd price of 21800 (before negotiation, not incl taxes) for a friend. i found myself thinking that's not much less than what my car cost!

[DeadPhish]

Until the Prius I only bought used vehicles unless it was a company purchase. I agree with galaxee that for me the potential savings with used vehicles outweighs the risks of getting an occasional bad one. Sticking with Toyotas and Hondas has proven a safe bet.

Now that the Prius is reaching 8 yrs of ownership I wouldn't hesitate to buy a used one ... if the price was right. A 2003 Gen 1 at $9-10000 and miles in the 60000 to 90000 range I'd feel would be a safe bet.

[sdtundra]

All of our car purchases have been new until this year where we bought a 2007 G35 Coupe.

2007 G Coupe, 10,900 miles-$28,000 out the door

2008 G Coupe- Starting at $34,900

Granted the 2008's now have 330 hp vs. 275. It still feels fast and can corner well enough for everyday driving

[Neohybrid]

I bought used cars for years - 2 reasons; 1)I couldn't afford new, and 2)I could work on them and fix most anything on them. My first new car was purchased in 1985 -- since then almost everything has been new with the exception of a pick-up that used to belong to my father - it had 160,000 miles on it when I got it, but I knew that it had been meticulously cared for.

Cars are certainly more complicated, require more tools, a better knowledge of electronics, and more sophisticated diagnostic equipment. I perform my own routine maintenance, but when it comes to something more I rely on the dealer / independent mechanic. On average I keep a car for seven years -- my oldest is turning 19 (purchased new in 1989 with 3 miles on the odo) and , knock-on-wood, has only needed a major repair once ($900 in 1999 money).

When it comes to the Prius -- everything I've seen tells me that new is cheaper than "barely used". Not many cars hold their value like the Prius.

[kazots]

I think everyone tries to make this same decision, to buy new or used. If you know what car you want and meets your requirements, it is just a matter of price. I would look until I was happy with the car and deal. If it doesn't just pass it by and keep looking. It will be a matter of timing or being at the right place. I hate buyers remorse!