URGENT! New or used car - which is better?

[scottischicken]

My current car is nearing its end of life and I need to buy another car. Is carmax.com reliable? And is buying a used car (from carmax.com) better than buying/leasing a brand new car from the dealer? Any advice? This will be my first time buying a car as an adult.

 

[Lady of McCamley]

As Dave Ramsey (a financial advisor) says: If you buy a new car, take a wad of bills, roll down the window, and toss them out of the window as you drive off the lot and keep doing that as you drive down the road. A new car loses 20 to 25% of its value the first year of driving with 15% each following year, so by year 3, you've lost about 50% of value.

I have bought a new car only once in my life. It was NOT worth the price. I've regretted that ever since especially if you are taking out a loan. I've always bought a 2 to 3 year old lightly used vehicle from a reliable dealer who has reconditioned it, and I often (but not always) take it to a reliable mechanic to review before my 3 day rescission time is up, or before committing to buying, if I can.

I have had wonderful luck that way and have paid half the price of a new car...which are astronomically priced now.

My mother in law sold her van through Car Max. They seemed legit, but I doubt they do anything to inspect and condition the cars. It's not a lot different than buying from owner used on Craigslist...which I don't recommend.

I typically find a lot that sells a lot of different cars, new and used. Go at the end of the month when they are trying to make sales quotas. If you can go around a major holiday, or best yet, at the end of the year, you often get special deals.

Avoid the nonsense of leaving you in an office while the salesperson "checks with the manager" if he can give you a discount or what the final sales price is. They are playing the pressure game. Be careful of the trade in shuffle...where they overprice your trade in because they have greatly overpriced the sales car. Find out before you go what your blue book value is for your car. Trade in is generally wholesale.

When my old Mercury Mountaineer finally dies, I plan to look at a Kia Soul. My son has had wonderful luck with Kias, and they are more reasonably priced. I can find a nice low mileage one for about $15,000 in my area while many new car prices are $30 to $40,000 (insane...many cars are now priced at what I bought my house for in 1987).

Good luck car shopping.

LofMc

 

[Lady of McCamley]

...oh, and if at all possible, save up to pay for the car outright. I know that can be really, really hard, but the interest pay back adds another third to what the car is worth. Your car will literally devalue more in 3 to now 6 years of loan payback while you still have loan to pay making it totally ridiculous. You can owe more than the car is worth. Never trade in a car with outstanding loan as you will tack that amount onto the new loan and will go "underwater" in value for the newer car.

There...I told you what I told all (my now adult) children as they navigated first car purchases.

 

[Evadig]

My current car is nearing its end of life and I need to buy another car. Is carmax.com reliable? And is buying a used car (from carmax.com) better than buying/leasing a brand new car from the dealer? Any advice? This will be my first time buying a car as an adult.

I also just bought my first car as an adult, so I can relate.

Get a used car. Brand new cars usually have problems that haven’t been uncovered yet. They will be in a a few years.

I used carmax to get the history of the car. You can buy a car off there, but in the end, I just ended up going to my local dealership and picking a used car off the lot (after researching it).

Hope this helps a bit!

 

[azurbanclucker]

I don't have major heartburn about new vs used and the pro/cons of either, personally. It's really up to you to decide what's the right fit for you. Ask 100 people, get 100 answers to this one. In the end you're choosing (generally speaking) between:

New car:
Warranty if things break.
Higher cost / payments
Depreciation of value
More advanced safety features and tech (pro)
tech (con)

Used car:
Lower cost/payments
Someone else ate the depreciation so you won't have to
No warranty. If it breaks, you're eating the cost of whatever you cannot fix yourself.
Older cars have less modern safety features depending on age and laws.
Less life left in them, especially if you live some place that sees a lot of rust and road salt.

Things to consider:
1. What is your budget?
This includes things like money for a down payment, what you can afford to pay for financing, as well as care and feeding (gas, oil changes, tires, other routine maintenance) It also includes things like your insurance and registration/taxes. Newer cars will have higher insurance costs and registration than older cars, and insurance is ageist and sexist. Males under 25 and old people pay the most, and by a LOT. You need to have a hard look at your cash flow and decide what you can afford BEFORE you shop. If you decide to finance, check your bank / credit union / loan shark and try to get pre-approved before you buy so you can make a purchase confidently and know your spend. Financing through a dealership is risky and generally costs you a lot more in the long term, but sometimes, it's what you have to do. Especially as a first time buyer with little or no credit history. So back to the "what can you afford?" question. Do not overextend yourself. Have a number. Stick to it. Walk if they won't work with what you can afford.

2. How much do you drive?
The more miles you put on a car, the more often it needs to be serviced. On used cars with higher mileage, this may also mean much higher chances of failure sooner. If you're just running to town a couple times a week and the like, a higher mileage used car isn't as much of a risk as if you were putting 50 or more a day on the clock. On the flip side, if you're putting 12k or more miles on it a year, the comfort of a new car warranty is something you should consider. Cars break down. New, used, even right off the dealer lot. Who pays for that repair matters, and you need to consider that.

3. How handy are you with auto repairs?
If you can fix most minor and some major things on your own, you have a lot more flexibility buying a car that may or may not need some work done soon. That can translate to a cheaper buy up front on something used or that needs repairs. If you can turn a wrench confidently, it's sometimes easy to pick up a "broken" car that needs a couple hours of work for dirt cheap.

4. local purchases (marketplace, craigslist, "I have a buddy", etc...)
If you are not mechanically inclined and a good bargain hunter, just don't. Assume every seller is hiding major damage in a car they're dumping unless they can prove otherwise. Take a mechanic with you or do not agree to a private sale without taking it TO a mechanic of YOUR choosing inspect it. Trust no one. I'm not saying there aren't good sellers out there, but the percentage of cons/flippers is way higher than the good folks looking to pass along a car that they no longer need.

As a first-time buyer, I would look at certified preowned cars from reputable dealers (and that can include carmax and carvana). Make sure they have a full service history (carfax, etc) and check to see what comparable cars are selling for to make sure they're consistent with the market. Find something that will suit your use case, has as low miles as possible, and fits your budget.

Another option may be to look into a lease on something new. Essentially you're renting the car for 2-3 years for lower payments, but at the end you can walk away. This can help establish and build credit as well, but leases have mileage limits and depending on the dealer and lender, other potential pitfalls. You also have no equity built up in the car at the end of the lease, so like renting an apartment, you're walking out with nothing to show for it at the end.

My 2 cents.

 

[HenriettaPizzaNolan]

There are a lot of factors to consider, but for me, buying a used car in cash has always been the best option. I go with a reliable make and model, such as a Honda Civic, and get one that is 8-10 years old, is in good shape (have a trusted mechanic put it on a lift and inspect it), and has under 120k miles on it. I like owning a car and not having debt hanging over my head. Getting a reliable model that is relatively affordable to repair makes it worth it. I know I have paid less over the course of time than my friends who have leased or did monthly payments on a new car for purchase.

Do what's right for you, but I don't mind driving a little older car if I can save some money and have a reliable ride.

 

[BigBlueHen53]

I agree, a used car makes sense for us. We have bought several Honda CR-Vs over the years and love them. Let me tell you about our latest. My 18 yo GS, who has lived with us since he was 6, was now in need of a vehicle. Like I said, we like CR-V's. I decided to get him a nice used one, that I would not mind if he scratched or banged up a little. I found a 2009 with about 150,000 miles on it in a nearby neighboring state for $7,000. We could pay cash for it, as he had about half that in his savings. We went to look at it and this thing was in better shape than my 2014. Seriously. Not only that, but his is the LXE model. Moon roof, heated seats. There is one tiny dimple in the body that looks like maybe a ladybug hit it going 60 mph. That's it. So now I'm a little mad. The kid is driving the best car on our lot, lol. But not really, bc he's headed to college in the fall and will need a good, solid ride. We always buy from a dealership and have always been happy.

 

[gtaus]

Any advice? This will be my first time buying a car as an adult.

I hate buying cars, new or used. It's just not a pleasant experience for me, although I know some people who enjoy it. I would suggest you find out as much information as you can on the type of cars you might want to buy. I think if you have more than one model on your list, you won't feel as pressured to get that "perfect" car. There are many resources that give cars, new and used, ratings that might help you buy a car with a better reputation for service and repairs.

There are many, many, YouTube videos on how to negotiate the price of a car - what to say, what not to say, etc... Watching them might give you more confidence in any negotiation and getting a fair price.

I had to buy a couple of cars a few years ago when used car prices due to COVID were sky high. It took me a long time to find a couple of used cars that I was happy with the price. I paid cash for my cars because I had saved money for replacements. I don't mind driving used cars that are in good condition.

As others have already mentioned, when you drive a new car off the lot you already lost 10% of the value and by the end of the year, about 25% of that value on the car is gone. Plus, you might have to pay loan fees and interest, along with higher insurance bills on that new car.

It's great that you are in a position that you still have a working car while you look for a replacement. Don't rush yourself and you might find a great deal. I have found that it's almost always less expensive to repair my used cars than replacing them. However, all cars reach a point where they need to be retired.

I hope you find a good replacement and things work out for you. Good luck.

 

[BigBlueHen53]

And ask around about dealers. When I first moved into this area I went to trade my little Focus in on a truck. I had cash for the difference. Those yahoos kept me in the showroom for about four hours, the salesman kept running out to talk to his nanager to try to get me a better deal, and would be gone half an hour or longer. I could not get him to give me a price on the bloomin' truck! He didn't want to sell me a truck, he wanted to sell me a LOAN. I didn't want a loan! I can't believe I sat there that long. I should have walked out! Still makes me mad.

 

[azurbanclucker]

Also. If you decide to try for new and have a Costco Membership, USE COSTCO AUTOMOTIVE. They have preferred dealers, you deal with the fleet sales team, not some rando sales droid watching the door, and they try to get you in and out as fast as possible. Pricing is also discounted. Member perks do pay off here. It makes having to go to the dealer a far more sane and bearable experience.