I've heard my whole life how the least-stressful route is buying new. The mentality of this country is one of 'Keeping up with the Jones'. People gotta have the latest and greatest things. People ignore the bad, and embrace the good reasons to get something new. Besides, new comes with a warranty, right? And nobody likes underhanded used car salesman. But does it benefit you to buy an older vehicle?
For whatever reasons, most manufacturers re-design their vehicles every few years. The newest technology goes into them, sometimes the newest kind of problems come out. They are also the quickest to inflate over the years. Obviously used cars do not inflate at the same rate.
From an inflation perspective, lets look at prices... As an example, we'll use the vehicle with the most all-time sales, the Ford F-150.
In 2000 you could get a base model new F-150 for $15,520 MSRP. Assuming 8% interest, it amounts to 60 payments of $314.xx dollars a month.
Today, a base model 2012 Ford F-150 has an MSRP of $22,900. The payment? $464.xx dollars a month. Inflation sucks.
Keep in mind, the above prices are for a completely base model. They are called "strippers" in the business. Everyone knows dealers don't stand to make as much selling base model vehicles, and most people do not even consider the base model. Very few are ordered by dealers.
Most F-150 buyers will buy the 'XLT' model or higher. The current MSRP of the XLT model is $27,690. That's still with a regular cab V6 and limited options. The payment is now north of $560.00 a month, and that's with good credit!
From a depreciation stand-point, it's what kills you on a new vehicle (besides the price). Lets say an upper middle-class family buys a new Escalade every 4 years. New, they cost $63,170. In four years you're looking at probably $40ish grand if you're lucky. Trading it in probably $35,000 at most. That means operating the Escalade for 4 years will cost you $28,000 dollars or more in just payments and depreciation. That means in 12 years, the family is burning through $84,000 dollars. Is driving the latest and greatest really worth that much to you? Even if they kept the first one, and drove it into the ground, they're still out over $60,000. That's a modest house, or a full ride at a darn fine university. As much as this example family are screwing themselves, they're screwing and teaching their kids worse.
Lets clear up another myth, not all vehicle owners are created equal. Some drive their vehicles hard, with a majority of city mileage over the life of the vehicle. Others, will pamper their vehicle, driving it only on the highway or farm-to-market roads once or twice a week. With a trained eye, you can tell the difference. You can also notice a garage-kept vehicle vs. a slightly sun-damaged one that has been outside its whole life. If the paint looks too good for its age, check underneath for overspray. There's almost always some if the vehicle has been re-painted. Whether it's on the spare, frame, or suspension there will almost always be some. Also, the condition of fluids and any maintenance records can help you estimate Vitality.
Vitality is based on on-time maintenance, and how far and hard it was driven. You better believe age does not remove half the vitality that mileage does. So it might be a few years old... big deal. If it's been sitting in a garage and has low mileage, who cares? I'll give you a perfect example.
Example #1:
A 2005 F-150 with 28k miles or a 2010 F-150 with 60k miles...
Assuming the 05 was taken care of and maintained, not only will it cost less, but parts will cost less and there is more vitality left in the vehicle. In this example, the condition of the 2010 isn't even relevant. Let some sucker buy it for way too much because he's told it's "almost new" and believes it.
Example #2:
What you see there is a 1997 Dodge 1500 Extended Cab V8. Power everything. It sat in a garage when not being driven by its senior-citizen owner. Mileage? 54,000. That's about 2,000 miles a year. The asking price was $6,987 dollars. Payment comes out to $141.xx. In perspective, for roughly 1 year of payments on a new XLT F-150, you could own this truck free and clear.
Driving the example Ram another 100,000 miles will cost roughly 50% in depreciation. Not considering inflation, you're only going to be out $3,000 dollars. With inflation, probably less. As long as repairs total less than $21,000, You're in the black.
Anyone who tells you that you can't get a decent used car or truck for $10,000 is blatantly lying to you. The truth is most families will not be buying a new Escalade every 4 years, but many will buy new vehicles every 6 or 7. The key to retaining wealth and vehicle value is buying one that has taken the depreciation hit, but not the mileage or the vitality hit.
I'm not an ego-maniac or a used car salesman... I just think one of the biggest favors you can do for yourself is being honest with yourself. Ditch what doesn't truly serve you.
Living within our means not only helps us, but other people and future generations as well. Hard-earned cash can be invested in feasible and positive things, and not guaranteed financial failures every time.
Our economy does not re-new itself through 'the government'. It renews itself through private citizens. When private citizens stop throwing money in a hole and burning it, good things have a chance to happen.
Oh, and don't buy a vehicle from somewhere that won't negotiate... That's just un-American.
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