In yesterday’s post, I wrote about buying a new car. Well, actually, I wrote more about my car buying experiences over the last 13 years. In that post I mentioned that buying a used car isn’t always the most prudent thing to do. I promise, I’m not crazy! But, on my way to my new car decision, I found there sometimes isn’t a huge savings to be made in buying used.
The vehicle I ended up purchasing was a 2014 Ford Escape, S model (which is the most basic model). Gone are the days though where most low-end models are stripped bare: This vehicle has A/C, Cruise Control, automatic locks and windows, an awesome media system called Sync, that enables you to sync your phone, iPod, etc. to your vehicle, plus added extras like a rear view camera, so you can see behind you as you’re backing up. The starting MSRP is $23,535, which I got to just over $20,000 with rebates and the fleet discount (these amounts don’t include taxes, etc).
Most of what dealerships carry aren’t the basic models, but rather the upgraded models, with lots of extras. I read somewhere that very few people in the US tend to order a vehicle, but rather buy what is available at the dealership. And dealerships make the most money off the vehicles with all the extras. Which means they order very few of the most basic models.
Common knowledge says that you lose a ton of money on depreciation of a vehicle, especially in the first couple of years. Which leads to so many people saying that you should buy a used vehicle that’s at least a few years old. Let someone else take the depreciation! But, as I got to looking, most used Ford Escapes that were only a few years old were running above $23,000. Ouch! And you don’t usually get rebates and discounts off of those!
Okay, you have to take into consideration that the vehicles being offered for over $23,000 used weren’t the S models, but something a little higher up. If it’s hard to find the most basic model new, it’s even harder to find it used. That being said, aside from real luxuries, like leather seats (which I hate anyways), my new vehicle has a lot of extras that a higher end model even a few years older won’t have. After all, things like rear view cameras are just starting to become standard features on SUV’s.
Much like I didn’t see the value in buying anything above the base, I didn’t see the value in paying more for a vehicle that already had some wear and tear, and however many miles on it. But, I didn’t stop there. I looked at the Honda, and averaged out how many miles I’d driven per year since I bought it (originally, in 2000). I came up with somewhere in the neighborhood of 14,000 miles. In this day and age, a well cared for vehicle can easily drive for 200,000 miles, which in my case would be about 14 years. Had it not been for my move, and the several months of abuse that the Honda got, I could have easily seen myself driving it for that long. I really wasn’t that far off!
So, with that in mind, what if I looked at a used, “mid-life” vehicle? Something that already had about 100,000 miles on it? Again, it’s not really apples to apples; Most of what I found were not the most basic of models. But, there were a variety of Ford Escapes available for sale throughout the city, all with ~100,000 miles, and in the range of 5-7 years old. And all in the price range of about $10,000.
So, half the life, and about half the price. Again, it’s not really apples to apples; I didn’t find any vehicles that weren’t upgraded, higher class models. But, again, higher end models from 7 years ago didn’t have the safety and luxury features that my base model had. Looking at the big picture, I could buy the 2014 model for $20,000, finance it, pay it off as quickly as possible, and drive it for ~200,000 miles. Or, I could buy an older one that had 100,000 miles on it, finance it (at .5-1% higher interest rate, because it’s used), pay it off as quickly as possible, drive it to 200,000 miles, sell it, buy another used one that has 100,000 miles on it (~2014 model year, by that point) hopefully with cash, and drive it to 200,000 miles.
In the end, I might save a couple thousand dollars with the two used purchases, versus the one new, if you figure in some savings in interest, and whatever trade in value the first used vehicle had left. But then, vehicles tend to cost more in maintenance towards the end of their lives, and I’d be doing two “end of lives”, instead of one, which would probably eat up that savings. I’d save some on insurance. Although, the new Ford is only costing me $400 per year over the Honda, and I wouldn’t save all of that difference on a used Ford, since with the financing on the used car would also require an upgrade from collision. It can also be assumed that I’ll get better gas mileage for the first 100,000 miles on a new vehicle, so there would be some savings there.
So, from that angle, there isn’t what I would consider a huge savings between the two options. But then, there are some variables there. Cars don’t tend to hold their value as well as SUV’s. If I were looking at used cars, I could have possibly scored a better deal. Did I need an SUV? Well, need is an interesting question. Some would say if you don’t need the space everyday, then no, you don’t. Do I need an SUV every day? No. On a daily basis, it’s just me, sometimes the dog. But at least 10 times a year (usually more), I’m carrying 3-5 people, with either a lot of luggage, or camping gear, or food and packages, or tables and chairs. Parties, camping, road trips or Holidays seem to happen almost monthly! And I’d like that to be as comfortable a ride as possible. And then, several times a month, I’m lugging boards, or mulch, or God only knows what else from the hardware store. So I don’t need it every day. But I need it often enough that renting for all these occasions would just be ridiculous (and not really cost-effective). I wanted something that would be big enough, comfortable enough, and reliable enough. And yet not too big.
As I was looking, I looked at the easily accessible “advertised sales”, which includes dealerships and some personal listings. Getting a little deeper, there are better deals to be had by digging into things like Craigslist. In theory, Craigslist is wonderful. I’ve used it several times in the past. The last time I used it was several years ago when I listed a variety of items for sale. Among them was a bedroom set. When a buyer had expressed interest, I invited her out to my house. She got there (with multiple people in tow) and proceeded to argue with me about everything from the price (even though we had supposedly already agreed on that) to the fact that the box springs and mattress were not included (which was clearly stated in the ad). They left, saying they’d have to think about it, and a few hours later I sold the set to a very nice gentleman, for my full asking price, which he said was a steal. For a week the first woman continued to call and leave me voicemails, yelling and screaming and telling me what a terrible person I was, and how I’d ruined her child’s life (apparently she wanted the set for her child). It was scary knowing that this person knew where I lived.
I’d chalk it up to just a bad experience, and maybe try again. But then there have been several murders in my town related to ads on Craigslist, and I’ve met very few people who can’t tell you of at least one crazy experience they’ve had with someone off Craigslist. Craigslist is a fabulous idea, and can lead to really great buys. The problem is, there are just way too many crazies out there, and people who ruin something good for everyone else. And maybe I’m paranoid, but I don’t think saving even thousands of dollars is worth the potential hassle and risk for me. One man got killed for an iPhone! Actually two men, since it was two robbers who killed the seller, and then one of them killed the other. If people are willing to kill for a used electronic worth a couple hundred bucks, I can only imagine an exchange involving $5,000-10,000!
All things considered, I think I made the best decision for me. The one that will fit my lifestyle the best, while hopefully still being a somewhat financially wise one. There were other options available, many of which could have saved me more money. But, like most things involving money, it’s about balancing the risks, the benefits, your wants and needs, and your own emotional biases.
– Cindy W.