Does it really make financial sense to buy used over new?

[ATex7239]

My wife and I prefer newer vehicles. We are higher mileage drivers so they tend to hold up pretty well. New or certified used has worked out for us. We spend a lot of time behind the wheel so we enjoy the creature comforts and new tech. Live well within our means and can afford it. Daughter’s first car beater Hyundai is a different story though. She can work her way up to something nicer like my wife and I had to. Even though we can afford to give her something nicer we aren’t going to.

 

[lovcom]

Trying to think here if it makes that much financial sense to buy cars used over new? Or beaters over slightly used?

• Say you bought a 2017 Honda Accord Sport for $24.5k new. Today after 100k miles it's got a trade in value of $12k, about $1800 annual depreciation.
• Say you bought a 2021 Honda Accord Sport for $25.5k new. Today after 50k miles it's got a trade in value of $20.5k, about $1500 annual depreciation (we're at the end of 2024, 3.5 years I calculated).
• Today a used 2017 Honda Accord Sport with 100k miles is going for around $16k retail. I'm not sure what the value would be after 7 more years and another 100k miles, but currently a 2010 200k mile Accord sells private party for about $5,300, and was $24k new, so $1,350 yearly depreciation from new, losing 78% of it's original value. If we assume the same depreciation for a 2017 to go 7 more years, that would mean it would cost about $1,500 a year in depreciation for it's life from 7 until 14 if we bought it used at 7 years old.

Let's look at another example:

• 2017 Toyota RAV4 XLE, which was $25.5k new. Today after 100k miles it's got a trade in value of $13k, about $1800 annual depreciation.
• 2021 Toyota RAV4 XLE, which was $27.5k new. Today after 50k miles it's got a trade in value of $22.8k, about $1350 annual depreciation, using 3.5 years.
• Today a used 2017 Toyota RAV4 XLE with 100k miles is going for around $17k retail. If we look at a 2010 RAV4 Sport, it's worth $6600 private party, was $23.5k new so $1200 annual depreciation from new, losing 72% of it's original value. If we assume the same for a 2017 RAV4 XLE, it'll be worth $7,140. That would mean it would cost about $1,400 a year in depreciation for it's life from 7 until 14 if we bought it used at 7 years old.

All of this is excluding dealer doc fees and taxes, but taxes should be relative to it's value and would apply either way whether you're buying new or used (outside of private party, depending on the state). Another thing to consider is that although my examples are of very average cars, they tend to hold their value better than some models. Also, I pulled the values above from KBB for my area (very good condition) and got the retail used price looking at AutoTrader for my area (Phoenix) and kinda averaged them together.

Another thing to consider, is that maintenance and repairs for a new/newer car should be less/minimal compared to an older car, so if we look at the depreciation being pretty linear, I'm not seeing much of a savings for buying a used car over a new one. For example, buying a 2017 Accord or RAV4 means it might need a repair/maintenance coming up soon like struts, tires, etc. which would increase the annual cost outside of depreciation.

What does this all wrap up to mean? I'm not sure it is that big of a difference in the end to make it a clear choice. Though if you need to finance the car without a large trade-in or down payment, you might need a used car to make your monthly budget work. But at the bottom dollar, I'm not sure it matters.

One more thought is to buy an old used 14yo 200k mile example of the above cars private party, say for $6k with the intention to drive the wheels off of it, until 300k miles. If that takes 7 more years and the car is worth maybe $3k at 21 years old, that's $450 a year in depreciation. But how much in annual repairs and maintenance for it's life from 200k-300k miles?

What are your guys' thoughts?

I only buy new. Being new means you know the maintenance history, how it was driven, and what accidents the car was in. That is worth more to me than the savings of buying used. Of course, buying new works best if one keeps the vehicle for it's life, and not flipping it every few years.

I think resale value is not important if one buys for the life of that vehicle. There is too much concern for resale value when the most important thing is the value in usage and reliability.

What really wastes money is buying used, flipping the cars every few years, and not really knowing their true history, and being a victim of short car longevity because the prior owners did not maintain properly.

 

[svtrit]

We are shopping for a new minivan now. Due to the major issues with Chrysler products, my current van is my last one.

She wants a green van with Car Play, Heated seats, and AWD. That puts us in a Toyota

A used Toyota with 30-60k miles is going to be $40-$44k and may or may not have what we want, or it was a rental vehicle and is priced more like $30k. If I want to buy a used Honda or Toyota in the $25k range, it will have 100-120k miles.

A new minivan will be $48-$50k and will have what we want for stuff. We almost caved and decided to buy a Pacifica since you can find one with low miles for around $25k, but we are going to drive our current van another year after I did another band-aid fix this last major issue. We still have to deal with power doors that may or may not work at anytime, sway bar links that are an annual problem, etc.

The other issue when shopping for used minivans is that they are GROSS, and you can tell even after a detailing how good or not they were cared for. If I could find an elderly owned van for a decent price, I might pounce, but new is the direction we are thinking of going.

 

[ATex7239]

We are shopping for a new minivan now. Due to the major issues with Chrysler products, my current van is my last one.

She wants a green van with Car Play, Heated seats, and AWD. That puts us in a Toyota

A used Toyota with 30-60k miles is going to be $40-$44k and may or may not have what we want, or it was a rental vehicle and is priced more like $30k. If I want to buy a used Honda or Toyota in the $25k range, it will have 100-120k miles.

A new minivan will be $48-$50k and will have what we want for stuff. We almost caved and decided to buy a Pacifica since you can find one with low miles for around $25k, but we are going to drive our current van another year after I did another band-aid fix this last major issue. We still have to deal with power doors that may or may not work at anytime, sway bar links that are an annual problem, etc.

The other issue when shopping for used minivans is that they are GROSS, and you can tell even after a detailing how good or not they were cared for. If I could find an elderly owned van for a decent price, I might pounce, but new is the direction we are thinking of going.

Yeah, prices keep increasing. We got our 23 Sienna XLE cert used w/15K miles for $45K which was significantly higher than our previous van brand new. That said in my area a Tahoe LT is $65-70K so I’ll take the van even at an inflated cost.

 

[OVERKILL]

We used to buy used, but then with being able to get dealer cost, it made new more attractive, so the last used vehicle we bought was the Durango (Chrysler fleet vehicle), everything since has been new. I'd still have my '16 SRT Grand Cherokee if it hadn't been hit. Holding resale value is nice (the SRT GC's do) if you are flipping vehicles a lot, but we are pretty comfortable with what we have. If you are looking at a used vehicle, that of course helps. Wife still yearns for an X5 PHEV, whose value drops off considerably, which makes used attractive there.

My parents are in the "drive into the ground" camp, which they did with their 2000 Expedition (and we did with our 2002 Expedition). So when I was helping them vehicle shop we avoided GDI/TGDI and start/stop (which my wife and I also avoided with our current fleet). Conventional port-injected V8 backed by the ZF8HP.