New car vs. used car - revisited

Posted by Data Babble | 4:15 PM | , | 2 comments »

So I've caught a little flack from people saying how buying a new car is never a better financial decision over buying a used car. Once again, I will explain my view a little more in-depth on this topic.

In many cases, buying a used car is a much better financial decision versus buying a new car. There, I said it. But my point here is that you may buy a complete lemon of a used car (even with a warranty, it will be in the shop causing you problems) that may affect your job. It may be worth buying a cheap, reliable new car with a low payment and warranty. Now, obviously new cars can have problems as well, although it is less likely.

When buying a used car, you never really know how well it was treated by its previous owner. Mechanics, car salesmen, and car washers can work wonders on used cars and polish them up to look great. But looks may be deceiving.

If you have a new job or a tough boss, having an unreliable car may cost you considerably in the long run. Follow my logic: You get a new, decent paying job right out of college. You buy a lemon and it causes you to lose several days of work here and there and several more days of coming in late. You get fired because you haven't worked there very long and they see you as an irresponsible employee. You're out of work for say 6-8 weeks or you have to settle for a lower paying job in the mean time. Say your starting salary was $2000 (take-home pay) and now you've been out of work for 8 weeks, you've just lost $4000. This is probably more than any depreciation you would have incurred with the purchase of a cheap and reliable new car.

I know this is a stretch, but my point here is that there's much more to buying a used car versus a new car when considering the financial consequences.

Buying a used car may make sense in many cases financially, but it may not always pay off in the long run.

2 comments

  1. Life with the Quinns // February 6, 2008 at 3:08 PM  

    I bought a used Honda Odyssey 4 years ago with 60,000 miles on it. It was about $10,000 cheaper than a brand new one. I have spent just about $10,000 on repairs for this vehicle. I got this car from a certified Honda dealer and thought it was going to be in good shape. The first owners didn't take good care of this car. I really wish I got a brand new one instead.

  2. E.C. // February 7, 2008 at 12:15 AM  

    I agree that sometimes it can make sense to buy a new car. A few years ago, my dad got the first brand new car he'd ever owned to replace the twenty year old Volkswagen he was driving at the time. Since he works for a company that manufactures parts for Mazda, among other car companies, he got a nice discount on his Protege. My parents could have easily paid cash, but they got 0% financing and decided it made more sense to pay over time and earn interest in the meanwhile.

    My dad is a mechanical engineer, former aircraft mechanic, and car nut. He's a bit obsessive about maintenance and proper driving technique, and there have been no problems with his car so far. It has over 100,000 miles, and he plans to keep it for another 100,000. For someone who is going to drive a car until it dies, taking the depreciation hit to ensure you get a car that has always been taken care of instead of buying late model used might be worth it.