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November 25, 2013


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I have been looking for a resonable priced used car for my kids. I am just not finding it. People are keeping cars longer, higher mileage and higher prices are the norm. The cost differental between new and use is not as great as it use to be.

I always buy new but keep the car for a long time. I get rid of a car if I suspect a major problem is about to occur like a transmission or if the car is a money pit of fixes and cost me more time in getting it repaired than driving.

I have two vehicles with over 100k miles on them one 10 years old and the other 7 and a third with 60k miles that is 4 years old. My wife drives alot of miles and she NEEDS a reliable car.

New versus used is not an issue if you purchase vehicles that retain value over the years, proven reliability and low maintenance/ownership costs. Then keep it clean and looking nice, in good repair and drive it until the wheels are ready to fall off.

I think it would be more interesting to know what millionaires were driving to their first day of work rather than what they now drive. The question most people have is how they got there and not what they do once they hit target. Sure some of them were driving brand new since the age of 16, but these people probably came from more privileged backgrounds so they would be the minority. And I'd bet that very few of the self-made millionaires were paying off large balances at high interest rates with their seed corn.

Earlier this year I bought a car for 0.1% of my net worth. The 10-20K savings for used vs new is irrelevant to me now (I bought used). My previous cars were all used and the savings from those made a lot of difference, especially that first one.

We buy new cars because we don't want to spend time getting them fixed. Our cars are not expensive, and they have reasonable resale value. We generally keep them for 3-5 years, and then buy new again.

When I buy a new car, I tend to negotiate hard. The depreciation on a new car is a lot less onerous if you're paying a couple standard deviations less than the average buyer.

I agree with all the reasons you outlined in your new car post.


That is an excellent point and the seed corn analogy is perfect. When you are trying to build wealth and don't have much to start with a new car is a huge detriment. Once you are much further along on the journey it no longer makes as much difference. A new car every year though that is still a pretty big money drain.

@Lurker Carl,

I agree with most of your list. However retaining value should only matter if you trade your vehicles mid value rather than driving them until the wheels fall off as you suggested since all vehicles go to nearly zero at the "wheels fall off" stage.

This is a part of the interview that didn't make the publish deadline...

Father: It is worth it to buy a new car, because you don’t inherit someone else’s problems. Cars must be reliable, and the value is in provided utility. There is never a good time for a car to break down, especially when your family is using that car.

Son: In 37 years of car ownership, I have owned four cars, two used and two new. Total 665,000 miles driven, and $36,130 paid, and hope to get another 10 years out of my current whip. I don’t care about cars, and my only indulgence is the sound system. Which is awesome. Always. I drive them until they stop, then donate them for the write-off and don’t hassle the towing, fixing, selling, registration transfer, etc. It has worked out that at the end of each car’s useful life, the sound system was worth at least twice what the car would sell for. Not sure that is a useful metric, but maybe someone will find it interesting. My wife drives a nice car, very safe and comfortable, always bought new. She can drive whatever she wants, but chooses to keep her vehicles for 10+ years. I once read the Motley Fool’s philosophy, that “you are not your car.” My brother wondered why I was driving a car with 330,000 miles on it, and the conversation went like this:

Bro: “You know what, Dude? Why do you drive that beater? It looks like hell.”
Me: “You know what, Bro? I am not my car.”
Bro: “You know what, Dude? You are that car.”
Me: -

Point taken. Bro.

Our last car was new... It was the end of the model life and we got a great discount. We plan to drive it for 10+ years so I think it will work out in the long run.
Used car of the same model was only a little cheaper than the new car.


Retaining value is important if your automobile is wrecked, stolen, vandalized or anything requiring insurance to make whole. Vehicles that do not retain value tend to have defects engineered into them; cosmetic, mechanical, electrical shortcuts that make them ugly and/or unreliable as time passes.

When the wheels fall off, the difference may be as much as $1000. Well built vehicles retain considerable value even at the end of their useable life - junkyards pay a premium for a Camry versus than scrap value for a Concorde.

@Lurker Carl,

Good points. Having a totaled vehicle that has lost it's value early would be a big bummer.

I overlooked some of those reasons.


Once you HAVE your retirement, savings, college, LTC, whatnot saved, then splurge on a car! But, until then: a modest priced used, or a new car, perhaps an unpopular model that has lots of discounts (NEVER PAY OVER INVOICE AND you should always pay less - I have), both plan on driving 15~ years and say 250K~ miles) should be the practical answer. And, not many needs for 2 cars either. I just purchased a 15 year old full size American (Read Ford) sedan cheap ($1500), 181K miles, put $600 into it and it's perfect. Looks ok, runs well and cost me almost nothing to run per mile/insure and I don't care it gets rain splattered or a door ding. LoL, cars are NOT investments but an expense and if you must make payments, say more than 48 mos, you need a cheaper car! Go figure, huh..

Cars have changed but the dialogue about what cars to buy hasn't kept up. The classic discussion of new vs. used is wrong. User cars are no longer a huge discount to new cars once all of the dealer incentives are included.

I think the new discussion should be used vs. 100k miles used. We all used to think that after 100k miles a car is unreliable and could die at any minute. That is flat out wrong.

I'd say the best values out there are cars with over 100k miles that are greatly reduced in price. We bought our car used 10 years ago with 20k miles as that was a sweet spot in the market. It now has 185k miles. When this dies, I will look for a luxury vehicle with over 100k miles and probably pay less than half of original price of the car.

I've actually gone against all my previous advice and gone and leased a car.

I discovered I was driving about 600 miles a month for work and with mileage reimbursement I could get back a little over $300. I leased a nice new, reliable Toyota with an awesome $199/month deal. I'll only use about 1/2 of my allocated milage and still "make" an additional $100 a month while having a free car to use as I wish for the next 3 years.

Thank you all for your educative remarks. You know, I have always loved second hand cars for some reasons. They cost less because I have a mortgage to repay. But I most importantly love second hand cars because they have enabled me to understand the mechanical parts of an automotive. And my second hand cars also last longer because I have a trusted mechanic.

Interesting, I read The Millionaire Next Door and I always thought it said that the average millionaire drives an older model sedan, not a sports car or anything special. I don't specifically recall it mentioning used/new (it has been a few years since I read it) but I do think most people assume they meant used.

Buying new doesn't really affect your finances vs buying used. Granted, the car's $ value drops faster in the first few years (say, $4000/year) and less thereafter (say, $2000/year). If you drive the car for 12 years, that 'new' car will cost you $2500/year on average, vs $2000/year used. In return you know what you're buying. Doesn't seem like such a bad idea to me. Buying new can be frugal - if you don't buy a new car every other year.

Whether its a new or used car, its either too much car or not for one's financial situation (wealth and income). By definition, that means some can't buy new cause there's not new options under certain price points...

Everybody keeps talking about that a car depreciates 5K when you drive it off the lot and you should let someone else take that hit....but I've looked and can't find that just driven off lot car for $5K less or I'd buy it...

I drive a car as long as I think I can count on it, it helps to have been the only camry is a 2002 which I know I can count on...

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