Financial graphic comparison of buying a new or used car

[John105]

My best friend to this day, dad was a CPA partner for a big 6. Back then mandatory retirement was 57. In 2016 he recounted to me how he did not have enough saved at age 57, 3 kids in college and 2 more on the way. So he went back to work full time.

I do recall many many Mercedes Benz and BMWs when I was in high school. I got to drive all of them. I thought he was unique swimming through new cars, but I can’t tell you how many successful people I’ve met my age who are similar, who seem to be from my eyes careless with their hard earned money.

All I can surmise is that by saving and being careful, when disaster strikes, we seem to have reasonable choices available. We’re able to pull a plan forward.

Maybe I’m not with the times, but I avoided super cruise because that necessarily changes the first digit of the list price of our car to Gordie Howe’s and Maurice Richard’s number, and I’m not comfortable with that. Same with 24” wheels. It’s just not a monthly payment to me it’s a total cost of ownership. 14 mpg on premium I’m ok with.

 

[CarlB]

Well, if someone decides not to pay for cable TV (assuming a starting point at $100/mo and adjusting for inflation) at age 18, and putting them in the most conservative etfs possible, come retirement they'll be at:

Return Rate	Value at Age 65
3%	$183,408
4%	$318,792
5%	$310,800

My cable was $160 when I cut it almost 10 years ago, as it was about to get more expensive.

Then again, $310800 in 45 years might be buying a small house, or two weeks worth of Aspirin at hospital rates. No way to know.

I describe it as death by 1,000 cuts to the younger people. Monthly subscriptions/services are something to try and limit as much as possible.

 

[CarlB]

Buying new is a "luxury." Meaning it's totally unessential, but makes people feel good.

Don't take this graphic as saying new is, "wrong." Just don't lie to yourself that it isn't throwing money away on luxury.

I'll forgo earnings to facilitate the car and racing obsession. It just seems wild that people are giving up hundreds of thousands in interest to always have the latest Rav4.

 

[edyvw]

A common expression among doctors is "if I need more money I'll just put in a few more hours." or "income is the most easily adjusted variable" or something similar.

And that my friend is how they end up broke after making big money and spending big for their whole career. If you don't think this is true you don't know many doctors.

Depends on expectations. The guy who said this drives a 13-year-old Buick Enclave, has a $900 inflatable boat to go fish every Friday, and was nominated for the Nobel.

 

[Astro14]

Good on you. I've seen young docs who have just completed their residency driving new BMWs. And I've seen old docs (+/- 80 years) who need to work just a little longer because of financial commitments.

Many years ago we were in Ottawa for Canadian Medical Association work and stopped in to see a VP at MD Management (then a branch of the Canadian Medical Association that provided investments and investment advice to physicians and their families). We were a few years into our investment plan and were looking for advice and comments. The VP said we were already in better shape than the "about to retire" surgeon he had just seen who had made big money all his career and not only had no money, he had nothing to sell either (no expensive cars, no farm land, no vacation homes). The money was just gone.

Thanks. She “gets” it.

When her student loan payments were suspended during CV-19, she banked every one of them in her high yield savings, and then after a year of piling up cash, called me up, and said, “Dad, how do I open an IRA?”.

More recently, she asked me to look over her Volvo, stating, “The car is great, and I don’t want a car payment.”

We’ve discussed insurance products (doctor disability among them), car buying, real estate, and the various investment vehicles that will be available to her when she finishes her fellowship.

But, germane to this topic, the Plastic/Hand Surgeon wants to drive a used car, avoid a car payment, and shape her financial trajectory before ever considering a new car, much less an $80,000 one.

 

[scoot]

How much does Sarah spend to keep the clunker running? Also Sarah has to keep spending 10k every 3 years to keep a reliable vehicle . Glad I not Sarah.

 

[supton]

How much does Sarah spend to keep the clunker running? Also Sarah has to keep spending 10k every 3 years to keep a reliable vehicle . Glad I not Sarah.

Unfortunately that isn't described--more of a parable than a real story.

Hard to say, last beater I bought avoided expensive repairs, and I doubled down on that by doing most of the work myself. But how much of a gamble was that? for most, not a good one. Used to be that people sold old cars out of fear--I'm not sure how much that occurs today, or if that fear is well founded. Once you start down the path of having to pay someone else for every repair, then the costs add up.

The $10k used market around me is kinda scary, lots of cars with rust or collision damage. Seems wiser to pass down good cars to the kids and to buy myself something that costs more but might last the family longer that my immediate needs.

 

[blueglide88]

Sam's going to be dating Sarah's hot roommate and riding around in his $80k car.

Sarah's hot roomate has slept with every guy that has a nice new expensive car in the neighborhood.
Along the way, she picked up herpes and now Sam has something other than a nice new car

 

[CKN]

Who buys $80k cars? And $10k used cars are abused money pits unless you are able to DIY.

I have done well buying modestly priced new cars and keeping them forever. My kid drives my 2008 xterra I bought new.

Many SUVs and Trucks exceed $80,000.00 and there are plenty around. I have no issues with those that buy used cars-the issue being is that used cars are getting very used and the prices are going up.

The average age of vehicles in the United States is currently 12.8 years. This marks a new record high, surpassing the previous record of 12.6 years in 2024.

Here's a breakdown of the current situation:

• Overall Trend:
  The average age of vehicles has been steadily increasing since 2019.
  
  
• Factors Contributing to the Increase:
  Higher prices for new vehicles, consumer behavior, and economic conditions are all contributing factors.

 

[CKN]

Buying new is a "luxury." Meaning it's totally unessential, but makes people feel good.

Don't take this graphic as saying new is, "wrong." Just don't lie to yourself that it isn't throwing money away on luxury.

I'll forgo earnings to facilitate the car and racing obsession. It just seems wild that people are giving up hundreds of thousands in interest to always have the latest Rav4.

It has been determined over and over again buying a new vehicle (generally) is a money losing thing with depreciation.

There is no news here.

And yea-I just bought my wife a very lightly used (15,000 miles) 2022 Volvo XC60. Not the cheapest used vehicle. But it is one nice ride. I have the original sticker-$56,000.00 List price.

 

[edyvw]

Unfortunately that isn't described--more of a parable than a real story.

Hard to say, last beater I bought avoided expensive repairs, and I doubled down on that by doing most of the work myself. But how much of a gamble was that? for most, not a good one. Used to be that people sold old cars out of fear--I'm not sure how much that occurs today, or if that fear is well founded. Once you start down the path of having to pay someone else for every repair, then the costs add up.

The $10k used market around me is kinda scary, lots of cars with rust or collision damage. Seems wiser to pass down good cars to the kids and to buy myself something that costs more but might last the family longer that my immediate needs.

$10k, but what car? Yes, $10k can get you a nice, albeit older, Corolla or Civic, or a bit older Accord, especially Camry.
But those cars break too. I always take as an example my neighbor with 2015 Sienna. You could hear her coming 100 yards away because the suspension was clunking. At one point, her car's rear end started to make the second dip; shocks were done. I asked her: How is a car (trying to get her to say something so I can recommend her to address certain issues) and she said: "Never had better vehicle." I was like, Okaaaay.
One day, on Facebook, she is having a temper tantrum because she heard some clunking (finally, I thought), took the car, and they quoted her $4,000 for repairs. I mean, if you ignore issues, all cars are reliable, until they are not.
So, unless one knows what they are buying to prevent huge repair bills mostly related to labor, and does not need a big car bcs. let's assume Sarah does not have kids, a husband etc. On the other hand, is Sam buying a family vehicle or Toyota Supra or BMW 340? Bcs. a lot of family vehicles today are above 50k. Go full-size SUV, and you are well into 80k territory. I mean, we went with a Sequoia used, 64k miles, because. I would never pay 80k for a vehicle where kids are going to throw up, spread salmonella etc. But used options such as 2nd generation Sequoia, which is uber simple and reliable, are getting extinct. The complexity is becoming the norm. And Sarah might be on the hook for some expensive repairs bcs. labor is expensive.

To @Astro14 point about his daughter and Volvo. Those cars are not considered as a first, third, or 10th choice as a good, reliable option when used. Because they are more complex, require a bit more TLC, and once things go south, which is caused 99% of the time because of neglect, things get expensive fast.
BUT, when one is maintained properly (which is NOT expensive) they are super reliable. So that works for me (BMW) or his daughter bcs. Astro can take a look, do some preventive maintenance, and you end up in fun car that works great. I know on BMW you can replace all coolant hoses for some $300 and be good for the next 100k. But, how many people know that? Then things get super expensive bcs. $45 coolant reservoir started to leak.
That is why they go new cars bcs. 6yrs warranty etc.

 

[SC Maintenance]

Many SUVs and Trucks exceed $80,000.00 and there are plenty around. I have no issues with those that buy used cars-the issue being is that used cars are getting very used and the prices are going up.

The average age of vehicles in the United States is currently 12.8 years. This marks a new record high, surpassing the previous record of 12.6 years in 2024.

Here's a breakdown of the current situation:

• Overall Trend:
  The average age of vehicles has been steadily increasing since 2019.
  
  
• Factors Contributing to the Increase:
  Higher prices for new vehicles, consumer behavior, and economic conditions are all contributing factors.

I was responding to the meme, which appeared to present two fairly young people with $10K to their name.

People can buy whatever they want - it makes the world go round. Unlike many here, I seemingly could care less what other think of my spending habits and what I think of theirs. Having said that a Grand Highlander starts at $45, and a Sequoi around $60K, although I am sure top trim is over 80. Again I don't care what anyone spends, but clearly the sale volume in those categories are small comparatively.

Still, if you buy a new $80K vehicle and drive it for 15 years, annualized cost really isn't all that bad.....

 

[CarlB]

$10k, but what car? Yes, $10k can get you a nice, albeit older, Corolla or Civic, or a bit older Accord, especially Camry.
But those cars break too. I always take as an example my neighbor with 2015 Sienna. You could hear her coming 100 yards away because the suspension was clunking. At one point, her car's rear end started to make the second dip; shocks were done. I asked her: How is a car (trying to get her to say something so I can recommend her to address certain issues) and she said: "Never had better vehicle." I was like, Okaaaay.
One day, on Facebook, she is having a temper tantrum because she heard some clunking (finally, I thought), took the car, and they quoted her $4,000 for repairs. I mean, if you ignore issues, all cars are reliable, until they are not.
So, unless one knows what they are buying to prevent huge repair bills mostly related to labor, and does not need a big car bcs. let's assume Sarah does not have kids, a husband etc. On the other hand, is Sam buying a family vehicle or Toyota Supra or BMW 340? Bcs. a lot of family vehicles today are above 50k. Go full-size SUV, and you are well into 80k territory. I mean, we went with a Sequoia used, 64k miles, because. I would never pay 80k for a vehicle where kids are going to throw up, spread salmonella etc. But used options such as 2nd generation Sequoia, which is uber simple and reliable, are getting extinct. The complexity is becoming the norm. And Sarah might be on the hook for some expensive repairs bcs. labor is expensive.

To @Astro14 point about his daughter and Volvo. Those cars are not considered as a first, third, or 10th choice as a good, reliable option when used. Because they are more complex, require a bit more TLC, and once things go south, which is caused 99% of the time because of neglect, things get expensive fast.
BUT, when one is maintained properly (which is NOT expensive) they are super reliable. So that works for me (BMW) or his daughter bcs. Astro can take a look, do some preventive maintenance, and you end up in fun car that works great. I know on BMW you can replace all coolant hoses for some $300 and be good for the next 100k. But, how many people know that? Then things get super expensive bcs. $45 coolant reservoir started to leak.
That is why they go new cars bcs. 6yrs warranty etc.

$4k on some repairs is a lot less than the $80k plus 8% from the infographic.

 

[supton]

$10k, but what car? Yes, $10k can get you a nice, albeit older, Corolla or Civic, or a bit older Accord, especially Camry.

10 years old with 150k, give or take. Corolla might be 100k on the clock while Camry 150k. But yes, simple cars who unfortunately have the Toyota tax. But again, 10 years old with unknown problems that can pop up. And up here, with the rust that comes with that age.

I toy with getting myself a truck or SUV, or even a CUV, something slightly more capable than a sedan, but I know purchase price and repair costs scale with size. So I'm stuck with sedan and hoping for the best. Just haven't found it yet, scratch the surface and every used car has its detractors.

 

[fdcg27]

There is a wide gulf between 80K and 10K.
For 80K, there is a wide range of interesting and quite fancy vehicles from which to choose.
This is also true at 10K, but if 10K is what your budget plan allows for, an old Benz or BMW should not be selected, but rather something modest that may well last six years without any major work needed. Brakes, tires and battery of course, but nothing not typically considered consumable.
A new car for 40% of 80K would make sense. As I and others have pointed out, cost per mile for a well-bought new vehicle is likely no higher than it is for a used one, considering that the new one is at least 100K away from any major or even minor repair expense. Also, a new vehicle is fungible, while each used one is an individual. You know what you're getting in something new while this may or may not be the case with something pre-loved.
Finally, there is an old saying that a fool knows the price of everything and the value of nothing.
To me, this implies that one should maintain a healthy balance between parsimony and extravagance.
The value of something new is that you should get bulletproof transportation for quite a few years to come, even though you have to pay more for that privilege.

 

[edyvw]

$4k on some repairs is a lot less than the $80k plus 8% from the infographic.

Yes, but that car was not $10k. It retains value like crazy. That is until the timing cover starts to leak, and the engine has to go out, and no one will touch it below $3,000. And not to mention downtime, bcs. If you have Sienna, you have a few "critters" that need transportation, so you have to rent it, or you have a second car, etc.
That is, of course, thinking Sarah will invest that money into an index fund and not spend on something else.
My point is that Sam might be just the guy who wants a warranty for a family vehicle because he does not know anything about cars (which most people don't). Yes, buying a Honda Pilot would be much better or new Sienna. However, if he is buying a Toyota Supra, there is a high possibility he has an extra $1227 on the side for an index fund, too. Of course, there is a possibility that he is my wife's cousin. She is 49, single, makes well into six figures, buys these used cars for $15k, and barely could save money for a small apartment bcs. lifestyle. What index fund? There is a party on Friday, Saturday, and maybe on some other days.

 

[BMWTurboDzl]

$4k on some repairs is a lot less than the $80k plus 8% from the infographic.

A lot of people can't swing that type of bill.

My best friend to this day, dad was a CPA partner for a big 6. Back then mandatory retirement was 57. In 2016 he recounted to me how he did not have enough saved at age 57, 3 kids in college and 2 more on the way. So he went back to work full time.

I do recall many many Mercedes Benz and BMWs when I was in high school. I got to drive all of them. I thought he was unique swimming through new cars, but I can’t tell you how many successful people I’ve met my age who are similar, who seem to be from my eyes careless with their hard earned money.

All I can surmise is that by saving and being careful, when disaster strikes, we seem to have reasonable choices available. We’re able to pull a plan forward.

Maybe I’m not with the times, but I avoided super cruise because that necessarily changes the first digit of the list price of our car to Gordie Howe’s and Maurice Richard’s number, and I’m not comfortable with that. Same with 24” wheels. It’s just not a monthly payment to me it’s a total cost of ownership. 14 mpg on premium I’m ok with.

They were probably company cars where the lease payment was getting written off as a business expense.

 

[Pablo]

The average Sarah is not fixing a $10K car herself.

Decent used car $20-25K+ and that still is a used car

Decent new car, let's be reasonable, $50K

Keep and maintain that new car at least 10 years. Not THAT much different, IMHO.

Depends on the model, but yeah new cars depreciate rapidly at first and never are an "investment".

All that said I've not made a car payment in the last 35+ years and we buy new. Doing ok, don't smoke cigars

 

[Astro14]

My point wasn’t about the economic viability of a 23 year old Volvo - that’s a particular use case.

My point was about financial awareness and good decisions.

 

[CarlB]

Yes, but that car was not $10k. It retains value like crazy. That is until the timing cover starts to leak, and the engine has to go out, and no one will touch it below $3,000. And not to mention downtime, bcs. If you have Sienna, you have a few "critters" that need transportation, so you have to rent it, or you have a second car, etc.
That is, of course, thinking Sarah will invest that money into an index fund and not spend on something else.
My point is that Sam might be just the guy who wants a warranty for a family vehicle because he does not know anything about cars (which most people don't). Yes, buying a Honda Pilot would be much better or new Sienna. However, if he is buying a Toyota Supra, there is a high possibility he has an extra $1227 on the side for an index fund, too. Of course, there is a possibility that he is my wife's cousin. She is 49, single, makes well into six figures, buys these used cars for $15k, and barely could save money for a small apartment bcs. lifestyle. What index fund? There is a party on Friday, Saturday, and maybe on some other days.

See my previous post about luxury. Given the same monthly cost, he's throwing away tons of earnings to have a warranty. It's a choice, but one that needs to understand the financial impact.

A lot of people can't swing that type of bill.

They were probably company cars where the lease payment was getting written off as a business expense.

Then they especially cannot afford a new car payment.