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Discussion Starter #1
Oh great financial gurus :). If one tends to keep cars a while, what's better:
- buying a 2 year old car
- buying brand new and financing some portion
- leasing then perhaps a buyout at the end.
 

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taking the bus... :)

I don't think there's any right answer. There are way too many variables, and both new and used car prices fluctuate based on economics and trends.

I'm not a "new car" guy myself.

For me, a dollar spent on a rapidly depreciating asset is a double whammy because there is lost opportunity for the saved money.

personally, I would never borrow money for a car or anything else that depreciates unless it is absolutely necessary. e.g. I had to get to work and I had no money for any car

Borrow to buy appreciating assets. or ones with at least a chance of appreciating.

But that's what is right for me. Your mileage may vary.
 

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I did a post about a similar topic on new car every 10 years or used car every 5. From my assumptions, buying a used car every 5 years won out. For us though, buying a new car and driving it over the long term works best for us.

If you are shopping for a used car, I noticed that in year 3-4, the sticker price is approximately 50% of the current year version.
 

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As stated above, there are too many variables in everyone's personal situation.
These days, IMO, new cars are offering a great bang for the buck.
They are loaded with the latest safety features, latest technology (Blue Tooth, OnStar, etc.), latest fuel efficiency.
They give the old adage of buying used cars a run for its money.
If you can shop around, bargain hard, and get a good deal on a new car, I say go for it.
Take one of those 0% financing for 60 months options.
Then pay off all the remaining balance at the end of the term.
You get the best of both worlds.

The auto market is flooded with too many car makers, too many brands and too much investory (new and used).
 

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Depends on your needs/wants. I like older cars better because I can chose my own tires, brakes, suspension etc whereas a lot of stock parts are not as good. I like having all the options but I wouldn't want to pay for them new.

Those 0% for 60 month deals just means they won't lower the price nearly as much. If you pay cash, you can negotiate the price a lot more.
 

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As others have said, it depends on a great many things. One place to start is to look up a few comparable used cars and the new car you're thinking of, and see how much the used cars have depreciated. I found a few months ago that used cars were keeping their value way too well -- I do place some value in having a new car, so it made no sense to me that, if I assumed a 12-year life for a car, that a 2-3 year old used one would have barely depreciated by a straight line (though maybe that was to build in more room for negotiation for the used cars).

Then you've got to consider your financing situation, etc.
 

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Here's my opinion. I will never buy a new car but that's just me. The dealers are definitly giving the used car market a run for its money with the 0% stuff but like someone said they won't move on price much. I guess I keep asking myself why would I pay 29k$ for a 2011 Civic (for example) when I can go buy a 2008 with 30kms for 15k$...still has most of the bells and whistles and fuel mileage.

there's 2 cents worth.
 

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If you pay cash, you can negotiate the price a lot more.
My experience has been the opposite of this. They WANT you to finance, so they can get interest money from you. By the time you finish making mult-year pmts on a $30K car, you've shelled out $40-50K for that same car. Used car buyers won't give you this money back.

Anyway, I agree with the person who said that an '08 for half the price is the way to go. That's exactly what I just did, 31000 KMs and half the price of new. Beautiful car and in NO way inferior to a new one. Cars depreciate quickly.
 

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I guess I keep asking myself why would I pay 29k$ for a 2011 Civic (for example) when I can go buy a 2008 with 30kms for 15k$...still has most of the bells and whistles and fuel mileage.
You can get an 08 Civic with 30 kms on it?
There must be something wrong with it.
If not, why would it be so cheap?
Used Honda cars are hard to buy at such a bargain, unless it's a private sale.
It seems a lot easier to say buy a cheap used car, but practically it's not that easy to get cheap Civics and Accords.
 

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A new car might be worth it for the long factory warranty, especially if you travel to the USA or long distances from home in any direction, and plan to for the next few years.

One thing I see a lot with leasing, is people loving their efficient new car and therefore driving it twice as far as they ever expected they would......ending up with expensive mileage penalties

Late model used cars at dealers are off-daily rent about 50% of the time.
Even though OMVIC requires disclosure, the dealers almost never reveal that. If you go to sell privately down the road, that rental car info is glaring in the face of every perspective buyer as the first line on the UVIP.
 

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Discussion Starter #11
FT, thanks for the links, read them with interest.

We've been buying 2-3 years old and buying cars that don't require me to have a car payment. This one is going to cost more than my normal outlay so we'll be financing some of it. Are we better to go with a 0%? or are we better to go with bank financing (I thought bank financing rates on this stuff was crazy).

Also is it a good idea to start calling every dealer around and doing that faxing thing? I don't want to po all the dealerships just to be cheap if I don't gain anything :).
 

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Here's my opinion. I will never buy a new car but that's just me. The dealers are definitly giving the used car market a run for its money with the 0% stuff but like someone said they won't move on price much. I guess I keep asking myself why would I pay 29k$ for a 2011 Civic (for example) when I can go buy a 2008 with 30kms for 15k$...still has most of the bells and whistles and fuel mileage.

there's 2 cents worth.
I am helping my younger brother look at cars right now. He's interested on a 2010 Mazda 3. Mazda is offering 0% for 0 months and we have managed to get the dealer down to invoice + $500. I helped my stepmother buy a new civic 1 1/2 years ago for invoice + $250. A person I work with just bought a 2010 Nissan Altima for invoice + $250 and I think that car was just over $30,000 out the door.
Go to carcostcanada.com and buy some reports, figure out what car you want and start emailing/calling/visiting dealers. The auto market is not doing well regardless of what the dealers are trying to tell you. On thing I noticed is that each dealership we visited was the 'exception' in that the were having a terrific year. Kind of like the mutual fund salesperson. The one you are currently talking to is the only one who got his/her clients money out before the crash. All bullsh*t.
One dealer my brother and I visited had dozens of 2011 Mazda 3's already and he admitted to having 55 2010 models still left (he has 3 dealerships). Whether you finance or buy cash you'll be able to negotiate a very good deal for yourself. Remember the dealers are not the ones subsidizing the 0% it is the manufactures. They could care less how you pay right now, so long as you buy the car from them.
Good luck in whatever you decide. Let us know how it works out for you!
 

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You can get an 08 Civic with 30 kms on it?
There must be something wrong with it.
If not, why would it be so cheap?
Used Honda cars are hard to buy at such a bargain, unless it's a private sale.
It seems a lot easier to say buy a cheap used car, but practically it's not that easy to get cheap Civics and Accords.
You're right it's a little harder for that low of kms. I just did a quick kijiji to make sure I wasn't wayyy off! In my area I found 4 decent used civics. 2006 with 96kms for 11k$, two 2007 with 50km-60km for 12k$ and 13K$ and the 2008s were mostly leases but one was there for 19k$ with 50kms and one for 17k$ with 57kms.
So yes for 2008 you're looking at about 20K$ by the time you put taxes in there. but hey, what's wrong with a 2007? :)
 

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One thing I see a lot with leasing, is people loving their efficient new car and therefore driving it twice as far as they ever expected they would......ending up with expensive mileage penalties

Late model used cars at dealers are off-daily rent about 50% of the time.
Even though OMVIC requires disclosure, the dealers almost never reveal that. If you go to sell privately down the road, that rental car info is glaring in the face of every perspective buyer as the first line on the UVIP.
Any cars that have been previously leased or used as daily rentals are almost guaranteed to have been mishandled.
ex-rental cars are the worst.
Folks forget good driving habits and good fuel efficiency habits the moment they are in a rental or leased car.
Excessive acceleration and breaking, not servicing on schedule, using cheaper gas, leaving it out in the snow/rain, etc.
Rental cars are also driven for long distances at a time (that's usually the main purpose).
That's partly a good thing since efficiency is better on long stretches of highway.
I'm driving a rental these days and when I took it out, the economy reading was 10.8L/100km. I've gotten it down to 9.9L/100km.
I'll do the best I can for the next few weeks until I return it.
Target is 9.5.
 

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FT, thanks for the links, read them with interest.

We've been buying 2-3 years old and buying cars that don't require me to have a car payment. This one is going to cost more than my normal outlay so we'll be financing some of it. Are we better to go with a 0%? or are we better to go with bank financing (I thought bank financing rates on this stuff was crazy).

Also is it a good idea to start calling every dealer around and doing that faxing thing? I don't want to po all the dealerships just to be cheap if I don't gain anything :).
I have OCD with researching things before I buy, and as mentioned, it seems that cars that are about 3-4 years old is the sweet spot. 50% discount with fairly low km's (if you look), and a little bit of warranty remaining for some manufacturers. Discount may be less for vehicles that retain their values like Honda/Toyota/Subaru.

If I was buying new right now, I would have no problem taking the 0% financing for 60 months. It's free money!
 

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To me Xander is the closest here on how you should buy a car if you are looking new. People let way too much emotion into such a large purchase. I don't care that the sales guy was nice. Use car cost Canada to get the invoice price, start calling dealers and basically give them a price. Every dealer sells the EXACT same thing. A new car from dealer 1 is EXACTLY the same as the new car from dealer 2. The only difference is price.

Depending on the manufacturer there may be some promotion where the dealer gets the car below invoice also.


From my experience used cars don't have near the room to move price wise, figure out your financing with a bank before hand if possible as at least another option. There are probably going to be several other of the same car in the same condition or close for sale by someone else. This isn't the only one, you can walk away.
 

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From my experience used cars don't have near the room to move price wise, figure out your financing with a bank before hand if possible as at least another option.
I'm guessing you don't mean private sales? They always have room to move (everyone wants a new car these days) especially if they don't live in a big city (nobody wants to drive 2 hrs to look at a used car)

Believe it or not in high school I sold my first bike and car for about 20% more than I paid. They were of course Japanese and I never spent a dime on them besides basics. From looking at ads, I'm about to sell another Japanese bike I spent nothing extra on for 20% more than I paid. Certain vehicles are just in demand, and deals are easy to find

I'm pretty sure that 0% financing is baked into the price, so if you have good credit or cash I would negotiate it. Time value of money anyone?
 

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I'm guessing you don't mean private sales? They always have room to move (everyone wants a new car these days) especially if they don't live in a big city (nobody wants to drive 2 hrs to look at a used car)

Believe it or not in high school I sold my first bike and car for about 20% more than I paid. They were of course Japanese and I never spent a dime on them besides basics. From looking at ads, I'm about to sell another Japanese bike I spent nothing extra on for 20% more than I paid. Certain vehicles are just in demand, and deals are easy to find

I'm pretty sure that 0% financing is baked into the price, so if you have good credit or cash I would negotiate it. Time value of money anyone?
A buddy of mine uses that strategy as well. Buy finds deals on cars that are about 6-7 years old, drives them for about a year, and sells them again for the price that he purchased. He's been doing this for the past 2-3 years.
 

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I'm pretty sure that 0% financing is baked into the price, so if you have good credit or cash I would negotiate it. Time value of money anyone?
Look out for dealers who advertise a 'cash price' and a 'finance price' which is about $5k more. IMO this is false advertising as the cost of borrowing isn't really 0% if you paid a bloated price for the privilege. Perhaps the increased competitive market of the past two years has curtailed this practice?

I recommend negotiating a cash price and not revealing your intention to take advantage of 0% financing or a trade-in (if either apply to you) until after you have agreed to terms you are happy with.

Also, dealerships have a lot of leeway to negotiate non-price related concessions like free oil changes and maintenance, upgrades, undercoating, warranties, and other options.
 

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A buddy of mine uses that strategy as well. Buy finds deals on cars that are about 6-7 years old, drives them for about a year, and sells them again for the price that he purchased. He's been doing this for the past 2-3 years.
I've been able to do this once, but only because the price was under market value. To answer the OP, buy 2 years old, save your self 10-25%.
 
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