09-15-2006, 10:54 AM
I went through a similar thought process when I was truck shopping, and now that I am looking for a nice daily driver I am coming to the same conclusions, so thought I would share and see what everyone else thinks. I had always assumed that used cars were the financially smarter move, but when I see cars with at or over half of their lifespan used up, but for half or more of their original cost, I started doing the math.
The comparison will be between a 5 year old BMW 3 series that books for 16k, and a new BMW 3 series that sells for about 2x that, 32k.
Assumptions are that with the new car you will sell it in 5 years for about 16k too. (which may actually be a low estimate depending on mileage)
You will drive on each car for about 90k miles (high estimate, but its what the 5 year old 3 series for 16k has on it)
then sell them at the end of that.
So the new car costs you 16k, and the old car costs you 16k- whatever a 10 year old BMW with 180k miles is worth, which probably approaches 0. Lets call it 3k generously.
These are relatively rough assumptions, and you are free to contest them if you wish.
So the difference between a new and used bmw 3 series in cost is only 3k.
Now is that cost worth it? lets break down the advantages and disadvantages of each
New car:
+Free scheduled maintence for 5 years (?)
+Warranty for the majority of the time you own it
+Newer styling, options, features, technology
-need more money up front
-higher monthly payment (that you get back more of when you sell)
-more accrued interest since the principal is larger
-3k more expensive (not factoring maintenence and repair) in the end
Used car
+lower accrued interest due to lower principal (but higher APR on a used car)
+lower monthly payment and down payment
-the 2nd 90k is NOT going to be as reliable as the first 90k
-you dont know how it was treated, accident history etc the first 90k
-repair costs
-old technology, styling, features, etc
Personally I think that 3k is going to be used up in the repair and maintenence cost delta between the new and used, making final costs pretty much a wash.
So the primary reason for buying used over new would really only be lack of upfront funds, and lack of ability to pay a larger monthly payment. Of course that monthly payment is a significant factor, especially when you already have bills, mortgage, etc. Personally since I already have a truck payment, I unfortunately cannot afford another large monthly payment.
But everything else (to me) seems to favor a new car.
And of course, the situation changes drastically when you decide to sell that new car sooner than 5 years or so.
this is dissapointing to me because I want a E46 as a DD, but now my logical brain wont let me get one, and I sure as shit cant afford an E90. Dammit.
The comparison will be between a 5 year old BMW 3 series that books for 16k, and a new BMW 3 series that sells for about 2x that, 32k.
Assumptions are that with the new car you will sell it in 5 years for about 16k too. (which may actually be a low estimate depending on mileage)
You will drive on each car for about 90k miles (high estimate, but its what the 5 year old 3 series for 16k has on it)
then sell them at the end of that.
So the new car costs you 16k, and the old car costs you 16k- whatever a 10 year old BMW with 180k miles is worth, which probably approaches 0. Lets call it 3k generously.
These are relatively rough assumptions, and you are free to contest them if you wish.
So the difference between a new and used bmw 3 series in cost is only 3k.
Now is that cost worth it? lets break down the advantages and disadvantages of each
New car:
+Free scheduled maintence for 5 years (?)
+Warranty for the majority of the time you own it
+Newer styling, options, features, technology
-need more money up front
-higher monthly payment (that you get back more of when you sell)
-more accrued interest since the principal is larger
-3k more expensive (not factoring maintenence and repair) in the end
Used car
+lower accrued interest due to lower principal (but higher APR on a used car)
+lower monthly payment and down payment
-the 2nd 90k is NOT going to be as reliable as the first 90k
-you dont know how it was treated, accident history etc the first 90k
-repair costs
-old technology, styling, features, etc
Personally I think that 3k is going to be used up in the repair and maintenence cost delta between the new and used, making final costs pretty much a wash.
So the primary reason for buying used over new would really only be lack of upfront funds, and lack of ability to pay a larger monthly payment. Of course that monthly payment is a significant factor, especially when you already have bills, mortgage, etc. Personally since I already have a truck payment, I unfortunately cannot afford another large monthly payment.
But everything else (to me) seems to favor a new car.
And of course, the situation changes drastically when you decide to sell that new car sooner than 5 years or so.
this is dissapointing to me because I want a E46 as a DD, but now my logical brain wont let me get one, and I sure as shit cant afford an E90. Dammit.