New Cars or Used Car?


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PostPosted: Fri Sep 27, 2013 5:42 pm
I'll make this quick. I have a used car that I use to deliver food. I maintain it regularly and have repairs done as needed. The car was cheaper to buy than a new car and the insurance payments are also cheaper but the repairs seem to come more often and nothing is under warranty so it comes out of pocket.

My friend bought a new car, its under warranty, he gets free oil changes from the dealership and he trades the car in after a year or two for a new car with all the same benefits.

What are you guy's thoughts. Used car or new car, which do you use? Which do you say is the better way to go?
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PostPosted: Sat Sep 28, 2013 3:43 am
Welcome to the Board!

I agree that old used cars are expensive to maintain, and that new cars are expensive to acquire and absorb the depreciation on.

Each person needs to chose the scenario that best suits their finances and mechanical abilities to make the job 'pay'.

Both models have their pluses and minuses, but most employers pay far below the actual expenses in either case IMHO.

If we were paid like the 'professional' drivers like we are, this would be a 'non-issue'. But in light of all of the lawsuits, and many drivers ascribing to many different vehicle scenarios, it will be many years yet until we know which course is the most advantageous.

What does everyone else think on the matter of 'new' versus 'used'?
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PostPosted: Sat Sep 28, 2013 9:46 am
They each have benefits and drawbacks. Aside from things already stated above,

A "used" car is more likely to be a vehicle you've had for a while, which should mean you know its quirks, how it operates and are more comfortable in it, etc.

A "New" car should be more reliable in most cases, yet can have problems no one knows about yet that can blindside you.

One thing both share, it sucks just as badly in either case when you come out for a run to find a new F**king door ding from an asshole customer that parked next to you.
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PostPosted: Thu Oct 10, 2013 5:28 am
quite frankly all vehicles break down at some point, what you have to consider is the amount your driving for work. while a used car requires more repairs it has the same maintenance as a new car. To get the answer of which is better for you, you have to understand how the costs compare. The biggest difference in the two choices are deprecation and payments vs repairs. Typical scenario using a 1 year time frame, used car valued at $3000 with 150k miles and brand new car valued at $15,000 with 0 miles. The used car will probably cost you and extra $3000 in repairs that year and will finish off with a value of $2000 as its now a 200k mile vehicle for a total cost of $6000 with $2000 in equity so you're out $4k for the year. A new car will cost you nothing in repairs due to warranty but you will pay roughly $300 a month in payments ($3600) which will finish out with a 50k mile used car now valued at $10k so you payed $3600 and have an equity of -$2000 so you're out $5600 for the year.

now if your job doesn't log 25 to 30K work miles a year like mine the scenario changes some but still favors the used car on actual costs

Never by new for delivering pizza the depreciation kills it. and constantly trading in after a one year period just grows the negative equity from one car to the next till you can no longer get approved for a loan and get stuck with an enormous payment and have to ride it out till you a reasonable negative equity number to get approved for another loan.

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PostPosted: Mon Jan 06, 2014 7:02 pm
I agree with Brian, and that's not even factoring in the difference in insurance premiums. You will pay dearly for a new vehicle just from additional depreciation and insurance costs. Always keep in mind that depreciation is (almost) an exponential curve that accelerates the newer the vehicle is:

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Source: http://www.freeby50.com/2013/02/car-dep ... -time.html

Because of depreciation and insurance, I prefer older vehicles (at least 10 years old), and that's with or without a delivery job. As long as I can maintain my vehicle well enough to keep it functioning properly, I have no use for newer vehicles. I prefer to have more money in my pocket rather than someone else's.
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PostPosted: Thu Jan 09, 2014 10:00 am
Is there a similar set of curves that show the rising cost of repairs over the life of a vehicle? I too despise buying a new vehicle for the reasons stated above, but I also do not want a money pit that without warning requires expensive and work stopping repairs whose costs exceeds the benefit of avoided depreciation. Or more simply, what years are the 'sweet spot' where depreciation AND repair costs/down time are lowest? For me that is from 2-10 years old subjectively.
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PostPosted: Thu Jan 09, 2014 12:29 pm
IMHO the absolute best place to get a used car is going to be from a rental company.

Yes, rentals are sometimes abused. However, they are also meticulously maintained. You have a far better chance of getting a very good vehicle that has had spotless maintenance history through a rental company. Enterprise, Hertz, Alamo, etc. are always selling cars after a few years of use.
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PostPosted: Thu Jan 09, 2014 12:33 pm
gregster wrote:Is there a similar set of curves that show the rising cost of repairs over the life of a vehicle? I too despise buying a new vehicle for the reasons stated above, but I also do not want a money pit that without warning requires expensive and work stopping repairs whose costs exceeds the benefit of avoided depreciation. Or more simply, what years are the 'sweet spot' where depreciation AND repair costs/down time are lowest? For me that is from 2-10 years old subjectively.


I don't think the costs of maintenance and repairs per year for older vehicles ever becomes more expensive than the total costs of a newer vehicle (under 5 years). Of course, you will eventually have to rebuild the engine or transmission, but the cost isn't that high when averaged out over the mileage life span of those items.

However, you did hit on something important. Even though maintenance and repair costs may not be that bad, having your vehicle in the vehicle hospital often is an important consideration. We need our vehicles nearly every day, and any day that our vehicle is sitting in a repair shop, it's costing us more money than the repair.

I do think there is a "sweet spot", and the end of that sweet spot is when your vehicle is spending too much time each year in a repair shop. Now the question is where is the beginning of the sweet spot?

To answer, I recommend some statistics from consumer reports:

What that car really costs to own

In that article, there is a good amount of information on total costs from year 0 - year 8 and how they change over time. I will quote a few things to help us determine where the beginning of that sweet spot is.

Keeping a car for eight years, rather than five, can reduce median ownership costs significantly to just $7,800 a year on average. This is partially due to lower depreciation costs, and partly a result of keeping the car for a few years after the loan has been paid off.


Depreciation is the largest cost factor by far. On average, it accounts for about 48 percent of total ownership costs over five years.


Carrying costs diminish significantly over time, while operating costs rise slightly, primarily due to increasing maintenance and repair costs. Still, on average, operating costs are less than carrying costs until a vehicle is about five years old. (my emphasis)


Depreciation makes up almost 60 percent of the cost in the first year, and it is still the largest annual ownership cost for vehicles up to six years old. Cars cost less to own every year after that.


In the end, it is almost always less expensive to hang on to your current car than to buy a new one. Even the most-expensive repair bills for an old car can't outweigh the cost of depreciation on a new one.


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Based on this information, I'd say the "sweet spot" is about 5 years old until your vehicle is in the repair shop too often each year regardless of maintenance costs. If you purchase a vehicle that is newer than 5 years old, you'll be spending more money on carrying costs (on average).

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PostPosted: Thu Jan 09, 2014 2:19 pm
Another important consideration is to pay for your vehicle in full at the time of purchase. Fortunately, older vehicles are easier to pay in full without getting a loan. This saves you the cost of interest on the loan, which can be significant in some cases. If you can't afford to purchase a used vehicle in full, it's best to save enough money until it's possible.
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PostPosted: Thu Jan 09, 2014 5:12 pm
Excellent post!

In the end, it is almost always less expensive to hang on to your current car than to buy a new one. Even the most-expensive repair bills for an old car can't outweigh the cost of depreciation on a new one.


I agree. But when buying a used car, the operating costs are always rising, so buying a newer used car seems comparably better then buying a older used car. The trick is to buy one new enough that no major repairs are likely for several years. A six year old car is much more likely to need a major repair than a two year old car. That is what I am trying to avoid. I like Clark Howard's advice that when any repair costs more then the value of the car at the time, it's time to get rid of the vehicle. Or, looked at another way, when the vehicles worth gets down to about two grand, it's time to trade it in. That's my view anyway.
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