Would certainly never buy a new car. It's an awful investment. If I lived in a decent city or even a walkable village, I might consider not having one at all. To my eye, Uber and it's ilk seem exploitative. Mostly residing in one boondock or another, we prefer to buy gently totalled autos at auction and have them patched up.
This is more nuanced, IMO. If you can get financing at or below the rate of inflation (2.1% today) get the financing. What makes a car a poor investment is buying a new car every 3-4 years. That is a terrible thing to do. Cars nowadays are designed to hit 150-200K miles, which puts most cars at 5-18 years of life. Buying a new car and keeping it at the minimum twice as long as you make payments is the way to go. That said, buying a used car or a lease return with 50K miles on it is a better choice for most people. If you are young and your life trajectory is still fluid don't invest heavily in a car when your life may do a 180 in a year or two and you need to upsize or downsize to take a new job, hold a new family etc. Sadly there is next to zero will for public transit out here or else I would not own one either, only a van for the hobby gear on the weekends and that is it.I might consider not having one at all.
And here is where a ton of weasel words come out to play. I looked at used cars first, and the cars I saw that fit my profile (4 door hatchbacks that get as close to 30MPG or above) hold their value well. I found three cars with 40-55K miles on them for sale that were 3 to 4 thousand less than a new vehicle of the same make and model. The Ford Focus seems like it drops 30% in value every six months you own it, the Subarus that you do manage to find used are still worth more than 2/3 their new values. The Mazdas were holding 75-80% at 4 years and 50K according to KBB, but that looks more like it depends on where you are selling the car more than an indication of value. The Chevy cars were the worst; they were not good for what you pay for them new,and then get dumped into the used chain and depreciate quickly. My hope is that with more people holding their cars longer, the decent cars that end up in the used retail chain will benefit. The odd thing is that used car financing, at least here in the Ohio Valley, is double the rate of a new car; this was one of the factors in my decision to go new. The point I was trying to noodle out is that this used to be a rule written in stone, but now with decent new cars in the 20K price range that may not be true anymore. If you are going to go for all the options and the bells and whistles, used is probably the way to go still. To really work it out I may play with some spreadsheets when I am "working" tomorrow and see what I can come up with.I don't think the math here works out. ... And since cars don't appreciate or hold their value, the leverage is negligible.
Used cars with 50,000 miles tend to cost much less than 60-75% of new cars, especially when you account for financing.
Here's the thing, though. This gets into a rolling discussion on poverty and economics and does not have a simple answer. Student loan debt, housing rising at 5x wages, health care costs etc all conspire to squeeze budgets, and if you are under 30 you have an even tougher time making ends meet due to social and economic realignments. These arguments have been worked out a bit elsewhere and only derail this conversation. Millennials are being squeezed and the smart ones are working to minimize debt. And people in their 20's are making less, comparatively, than their parents did at the same age. When you are making just enough to keep the lights on and food on the table, savings takes a backseat. If these people have less than $1000 in cash on hand, how will they save for a car? They don't, so they finance. Saving 10K puts you in the top 14% of US savings. Link to data and study 10K is a LOT of money; for most Americans it is six months take home pay after taxes. As much as it would be awesome if we all had that sort of cushion, it it not realistic to expect it. Having that much saved puts you in a very special class of economic advantage. I work with people who had to finance 6500 for a used car, ended up paying close to 13% interest and in general are screwed. Fortunately this loan is helping them get a credit score into the 700's which will make credit cards, insurance etc cheaper. TL:DR Shit's expensive, yo.Perhaps if you have no money to put down, it is better to buy a new car. But I think a large proportion of Americans ought to question why they have no savings to put down on a new car, and where all of their money is going.
This might reek of privilege, but maybe it's best not to finance used cars? I know that not everyone is capable of saving 10K to buy a new used car, but many people are capable of doing so who do not.
Food. Power bills. Delaying the inevitable eviction notice. You know, silly stuff. I kid of course. Only somewhat. Shoot, now I've gone and made myself sad. :(I think a large proportion of Americans ought to question why they have no savings to put down on a new car, and where all of their money is going.
I'm glad that was a very short chapter of my life. So I have to ask. When you did your car shopping, you seemed to be very methodical in looking at not only getting a good car, but also a good financial deal. Did emotion every play a role for you? I know for myself, my priority was fun first, reliable second, financing third. Though, there was a bit of a financial factor involved. I honestly feel like if I was spending x dollars a month on a car I didn't enjoy driving and owning, I was wasting my money.
I'm not a car guy, at all. I see a car as transportation. I looked at pure form first. Does the vehicle hold my stuff? does it get the MPG I need? Do I fit in the car and is it comfortable? As I have said previously, I'm a big stocky guy with very wide shoulders and long legs. I did not fit AT ALL in the Hondas. The seats were way to narrow. The most comfortable car was the VW, but my telescope would not fit in the vehicle. Once I got the choice down to two or three cars, I went and binged on reviews and reports on reliability, resale value etc. I'm able to push emotions aside when it comes to a big purchase like this, which works in my favor. During the search for the car I now own, I was ready to walk across the street at two separate times. If the sales people were not as good as they ended up being, they would have lost the sale.
They probably knew you had their number when it came to financing. Similarly, when I was car shopping people knew almost right off the bat I was a car guy, so they didn't BS me on what a car could or couldn't do. Except for the guy that tried to convince me that the T-Tops of a 94 Camaro didn't leak. Come on guy. Really?If the sales people were not as good as they ended up being, they would have lost the sale.
So, I found out that www.kbb.com here has a price to own calculator. I'm using their calc for all of this to keep the methodology the same. My car has a five year cost of ownership of 35,000. This includes 15K in depreciation, which from what I am seeing in the current used market is high for the Crosstrek. The Chevy Sonic Hatchback, a much worse car IMO, that is 8K less than mine has roughly the same cost of ownership over five years assuming the same down payment and interest rate. I got the fancy option package on the Sonic to help with the depreciation, but that still comes in at 17K! So now I have an interesting question, but no answer. Assuming that I am stuck for various reasons with a car that retails new for roughly 25K, the cost of ownership comes out to about the same. Are you better off getting a "new" used car every 5-6 years, or a new one that you can baby for 10? Interesting question I need to think on a bit more.