DIYbanter - View Single Post

Scott Lurndal

(Doug Miller) writes:
In article , Chris Friesen wrote:
On 01/25/2010 10:53 AM, Doug Miller wrote:

Do the math. Buying a new car is *never* financially sound. Buy used, and let

someone else eat the depreciation.

I'm not arguing that it *can* make sense to buy used, but it depends on
what's available in your area. I'm just saying that at the time I was
looking to buy a car, the type of car I wanted to buy was selling used
for significant fractions of the new price.

Even now, a new Matrix XR is about $20500 with 0% financing and some
incentives added on top. Checking the local auto trader listings, a
2008 with 45000km is currently $18000. A 2006 with 79000km is $15000, a
2004 with 157000km is $11000.

Assuming the expected life of the vehicle to be 250,000 miles (400,000 km),
and amortizing the purchase cost over the remaining life:

new: $0.0513/km
2008: $0.0507/km
2006: $0.0467/km
2004: $0.0453/km

Like I keep saying: do the math. It does *not* make financial sense to buy
new. You pay a very large premium for the privilege of driving a new car. If
you like driving a new car enough that you're willing to pay that premium,
fine. But if you think you're saving money, you're fooling yourself.

And the older the car is, the better the deal is (up to a point, of course --
I doubt I'd be interested in buying a 25-year-old used car...).

My most recent used car purchase: 1999 Saturn SL2, two years ago, with 90,000
miles. Assuming expected life of 200,000 miles, my purchase cost of $3300
amortized over the remaining life is $0.03/mile = $0.0186/km. That's U.S.
dollars, of course, but it's still not much over CDN$0.02/km.

Have you factored in maintenance? The maintenance costs for a used
car can go up exponentially; particularly if it has a timing belt
instead of a chain. With most new cars requiring _no_ significant
maintenance (aside from oil changes, rubber & radiator fluid at 50k),
until about 120k; the maint charges after 120k add up quickly.

scott