Personal Finance Advice

Even though a used Honda/Toyota is expensive, (high resale value) the depreciation is less when compared to a new car. Generally a new car looses 20% of its value when you drive it off the lot. Not with a used. A good detailed comparison site – http://autos.yahoo.com/research/index.html

Buy a car that is 1-3 years old.

I ended up buying a Ford Focus 2006 for a good price.
However, I spent 6 months of saving every dime and nickel to get it.

I put such a large down payment on the car that the payments are really low.

The car was new. It’s still running great!

So save a lot, and buy new…

While a new car does depreciate at a very high rate, there are inherent advantages to buying a new car. First is the long warranty you get with a new car. This helps offset the high purchase price since most of your repairs would be covered under the warranty. Second, you will know everything that happened to that car (driven hard, driven into a pole, oil changes skipped, etc). Finally, you can get what you want. You don’t have to compromise on features or color just to get a car.

I was a devout follower of the “buy used” philosophy (3 used cars owned) until I started looking to replace my Honda Civic (bought used of course). I found that buying used was still an exercise in compromise and I was tired of getting some features and having to get the rest of them as aftermarket parts. While I don’t mind compromise in general, if I’m going to own something for 10-15 years I want exactly what I want. So I ordered a 07 VW Rabbit from the factory. I got the car with 18 miles on it and I know every time that car has been driven hard and more importantly for me it is exactly what I wanted.

Overall I think if you plan on keeping the car for a long period of time, buy new. Take advantage of the long new car warranties and get the car you want with the features you want.

i’m in the same boat and i currently plan on trying to buy used.

make sure you do your research. many places have an extended warranty on their used cars, which i think are pretty valuable.

most used cars are pretty comparatively expensive because they’re post-lease cars. people who tend to lease cars will try and get them fully loaded, so you’re buying a used car with all the perks, not typically just a used base model, which will inflate the price.

Whether you buy new or used remember that a car is an expense, not an investment. It drops in value each year, and new cars drop dramatically the first year.

Along with the other great comments, I suggest you consider how you will finance your car. Ideally you would pay cash and be finished with it. If that is not the case, a more expensive vehicle means longer, bigger financing, and in the end higher costs.

By going used, you can probably lower those financing charges. I would never finance for more than three years – if the car in question requires longer financing, then in my book you cannot afford it.

Good luck.

Earlier this year, we were pondering the same question. We bought a used car. For us a car is merely transportation. I can understand that for others it is a status symbol, a sport, or something else. They might consider buying a new car. I feel we got a lot of the perks of a new car, including warranty, yet at a discounted price.

Here are a couple of notes on our buying process
http://breydel.blogspot.com/2007/02/home-is-where-tank-is-parked.html

If you are buying a car that is not built to last, you should buy it new. However, if you are buying a reliable car like Hondas and Toyotas, I’d recommend used.

I buy such cars ten years old and keep them ten more years. I use an inspection service like Lemon Busters. If they tell you that something will need to be repaired soon, you can use that information to negotiate the price down. If they tell you that a lot of things need to be repaired soon or that the vehicle was poorly maintained, don’t buy it at all. Sure, you’ve just blown over $100, but that’s really small potatoes!

Using this method, and saving $50 per month for my next car, I have been able to pay cash for all my cars. They are of such low resale value that it’s not worth paying for collision insurance, so I save that monthly payment, too. (If I did crash the car and it was my fault, I would just buy another one.)

Now I have so much saved that I spend only half my savings on a car so that in case something happens I can pay cash for the next car right away!

[...] New or Used Car? (Your Advice) @ Personal Finance Advice When it comes time to get a new car there are always a lot of questions that arise since it is a purchase that isn’t done very often. This reader wants to know whether or not she should get a new or used car plus some questions about how to get the best deal: [...]

It depends on how long you plan to keep it and how you will pay.

If you plan on buying and keeping it forever and can pay cash or get 0% financing then new isn’t always bad.

Generally though, I prefer used, particularly if you like to trade them in every couple years or can’t pay cash.

If you plan on financing, I suggest you live for several months with making a “fake” car payment (including increased insurance, etc.) so you can see how it’s going to impact your life financially. You can make your payments to a savings account and use that money for your down payment.

I suggest people do this with every financed purchase because many times people finance thinking it won’t be a big impact and it becomes a struggle.

Whatever you decide, look for quality over flash.

Good luck!

new cars always will be better. but a new car

I bought a car a month ago, via a company loan a relative got for me. Was it hard to find a car! In January, prices of cars really appreciated and that’s when I thought I should buy a used car. I didn’t want too high a debt.

I have bought a used car and I keep noticing things that aren’t right with it. But I’m glad my loan is cheaper to pay off.

My advice is, if it’s your first car (mine is), go for a used one. Not only is it cheaper (and first-time owners are usually hard presed for cash) but it’s the car you’re more likely to hit. You don’t want to spend heaps on a car you are likely to make mistakes with.

Secondly, after a few years — I intend to dispose of mine in three — you can sell that car (which will have depreciated at a lower rate than a new one) and get a new car you can better afford and better care for. That’s great for two things: you’ll have got the feel of driving different cars (if you buy a different model) and in a few years, when everyone else’s ride is beat up, you’ll be the flashy one!