'Value' for the Enthusiast: Buying New & Holding vs. Buying Cheap & Used vs. Leasing

[veedoubleme]

Middle of the road is not buying new. middle of the road is buying a car 2-4yrs old, not getting hit with major depreciation, getting it certified as well, then keeping that car 5-7 years, imho.

Pretty much this right here, or at least the idea of buying slightly used low mileage cars. I always buy slightly used. I got my 2011 GTI with the Autobahn package for $5k less than brand new, and it only had 11k miles and was CPO.

Annual mileage can have a big impact on purchasing decisions and frequency. I put on at least 25k per year, so I kill cars with mileage quickly. In fact, if I did the 6 year loans they like to give out on cars now days, I'd have 150k miles on my car before it was paid off. Thus, I pay off relatively quickly — this baby will be paid off 4 years from when I bought it.

When you think about it, most people spend 12k miles per year in their car. After 4 years of ownership, I've spent as much time in my car as most people would over 8 years.

I used to flip cars every 1.5-2 years, but it was getting expensive — I've had 11 cars as daily drivers in 17 years, and that's not including ANY of my wife's cars. My last car was the FIRST car I had over 2 years, and that was an 06 Jetta 2.0T that I had for 3.5 years. I'm really shooting for a full 4 years out of my GTI this time.

 

[RicoA]

I have seen the error of my ways. I admit I was wrong.
Bender, you're right I do pay under 1% interest right now.
Doug, in the event I traded my car in right now, what is owed on my car is $13,xxx. kbb trade in value is at $19,xxx. I could trade it in for 19k and get around 6k to put down on another car. I was looking at purchasing a WRX and was given a write up from the dealer with exactly that. After all is said and done, when I buy my lease out and make my last payment I will pay exactly $26,327. With 0% interest I would have paid $23,414. So you are correct sir, I will pay more, I just have lower payments for another year. Now, I would buy. Then, I didn't want to pay an extra $ a month.

EDIT: I guess I could have just bought the car and gotten a longer loan term. Don't know if the 0% apr would have been available though. Well.... $3,000 for a nice learning experience I guess.

 

[Gunkata]

Pretty much this right here, or at least the idea of buying slightly used low mileage cars. I always buy slightly used. I got my 2011 GTI with the Autobahn package for $5k less than brand new, and it only had 11k miles and was CPO.

indeed, you saved $5,000 and got an extended warranty out of it. It's a win-win situation.

 

[Bender1]

Doug, in the event I traded my car in right now, what is owed on my car is $13,xxx. kbb trade in value is at $19,xxx. I could trade it in for 19k and get around 6k to put down on another car.

Unfortunately, this is best case. Your residual is based on the term of the lease. So you would need to pay the loan to term, THEN buy at the residual value. Once you are in a lease, the best bet (typically) is to pay until the end and move on.

 

[Baldeagle]

What is the better value, new or used? I think the answer ultimately lies in uncertainty. The total cost of buying a new car will be high - depreciation, loan payments, lease payments, down payment, etc. But in exchange, the driver receives a high quality experience (new car) and exposes himself to very little financial uncertainty (warranty).

While a used car generally has a lower total cost of ownership, they can sting you and potentially cost much more. Depreciation will be lower but maintenance is often much higher - tires, brakes, major services, etc. And all it takes is one major car repair and you’re screwed. Used cars generally do not drive as well as new cars – lower quality experience.

More often than not, buying a good used car is a better value, but you don’t have the guarantees. And guarantees have value; it’s just hard to assign a monetary value to it.

 

[veedoubleme]

What is the better value, new or used? I think the answer ultimately lies in uncertainty. The total cost of buying a new car will be high - depreciation, loan payments, lease payments, down payment, etc. But in exchange, the driver receives a high quality experience (new car) and exposes himself to very little financial uncertainty (warranty).

While a used car generally has a lower total cost of ownership, they can sting you and potentially cost much more. Depreciation will be lower but maintenance is often much higher - tires, brakes, major services, etc. And all it takes is one major car repair and you’re screwed. Used cars generally do not drive as well as new cars – lower quality experience.

More often than not, buying a good used car is a better value, but you don’t have the guarantees. And guarantees have value; it’s just hard to assign a monetary value to it.

Depends on how used and how many mileage. None of this is true for the used GTI that I bought, which also came with substantially more warranty than a new one.

 

[Baldeagle]

Some leases make sense, other are poor values. The “owner” still pays all that early depreciation, which often makes them expensive.

Recently I helped a neighbor buy a new car. To make long story short, she leased a brand new Honda Civic EX for $149/month with ZERO money down. If you work the numbers, you can’t buy the car for that little (future trade in value minus down payment minus loan payments minus payoff). This particular lease was amazing.

 

[Baldeagle]

Depends on how used and how many mileage. None of this is true for the used GTI that I bought, which also came with substantially more warranty than a new one.

I agree. But each case is different. Heck I bought my 2010 GTI used with 4,500 miles for $19,200. I LOVE used cars.

 

[Chris@Revo USA]

I have seen the error of my ways. I admit I was wrong.
Bender, you're right I do pay under 1% interest right now.
Doug, in the event I traded my car in right now, what is owed on my car is $13,xxx. kbb trade in value is at $19,xxx. I could trade it in for 19k and get around 6k to put down on another car.

Read your lease, you don't own the car. If you traded that car in for 19grand your leasing company would get the 6grand not you. You would need to buy it out first for the current pay off amount, heap on the sales tax on that since you didn't pay it yet and then you could trade it in and get 19K (possibly) for it but now you aren't making 6k anymore.

 

[grambles423]

Buying used vs. Buying New....

Is this what the thread is utlimately about? Value?

I bought a 2008.5 GTI with 28K on the mark for $14K Had it paid off in less than a year (~36Kmiles) and now the rest is money in my pocket. It had plenty of modifcations on it from the get go as well. I had to fly to Baltimore to get it and drive it back down for 14 hours....but stil.

Value? Nailed it......

I will definitely buy used again from a user on the forums (Or local....depending on whats available). Someone who ultimately cares about the vehicle and keeps it in better condition than the dealer can has my money any day.

EDIT: Here's the OP
http://www.golfmk6.com/forums/showthread.php?t=21367

 

[OmgitsSexyChase]

I bought a new car in December, Of the three choices I chose to buy a brand new 2012 Gti.

I didn't lease because I personally see it as burning money, I want something I will own in five years and have no car payment.

I didn't buy used because...I generally like newer styles but the main reason is I don't trust other people, my family has treated every car they have ever owned like garbage, and my sisters are you average non car savvy consumer, My friend just traded in a car with a hole in the gas tank he plugged himself and the oil hasn't been changed in about 12k miles on conventional. Imagine buying that car.

That's why I prefer new

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[Gunkata]

I bought a new car in December, Of the three choices I chose to buy a brand new 2012 Gti.

I didn't lease because I personally see it as burning money, I want something I will own in five years and have no car payment.

I didn't buy used because...I generally like newer styles but the main reason is I don't trust other people, my family has treated every car they have ever owned like garbage, and my sisters are you average non car savvy consumer, My friend just traded in a car with a hole in the gas tank he plugged himself and the oil hasn't been changed in about 12k miles on conventional. Imagine buying that car.

That's why I prefer new

I hear those reasons all the time, and that’s why you can do the following:

1. Certified used has a warranty, handles any issues.
2. Get a used vehicle inspection done at OEM dealer, costs $80-$120 typically


First one typically extends the factory coverage to a longer time period than the original warranty. This does not apply to all brands though. While a used car inspection is a also great idea – you tell the selling dealer, lets say its a Mazda dealer, that you want to bring the Honda or VW to the Honda or VW dealer down the street for an inspection. Call said dealer, confirm price for inspection, and that they will hoist it up on the lift and check it out, pay them for that inspection, get the results and decide from there. They know what common issues to look for on that model.

My dad didn’t buy a 3000GT SL based on an inspection (oil leak, suspension going) , and I was able to buy my Supra for less because of the inspection I had done ( previous fender damage found )

Those two things are pretty easy to do and still saves you thousands. As someone who has bought a few new ones compared to most used, I can understand your rationale, but its easily worked around and avoided Your way is easier, no doubt, but by doing the above you can definitely get more for less money.

 

[McQueen77]

Bender, way to bust some knowledge on the leasing tip. It amazes me how little people understand about basic finance and that leasing is almost always a bad move. You are renting a car. If you buy it at lease end you are really a sucker because buyback will always be higher than if you had just bought the car in the first place. But leasers rarely do, they just lease again and pay and pay and pay and pay. That being said, there is a convenience and freedom in it and if money were no object to me (I cant imagine that), Id lease all the time and not give a shit. People w/money who lease do it because they can afford the convenience and tie their money up in the meantime in much more lucrative endeavors. Common people who lease are suckers.

Gun Kata: you read through all those epic responses and wrote cumulatively more than my OP. And...

I agree with most of what you said.

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I understand why some people do not like the CPO thing, but people saying its 'worthless' is just an opinion with no real merit. I've explained this many times: I bought my GTI with 9k miles on it, car was about 9 months old. It was about $3500 below invoice vs. a 'new' 2010 on the dealer lot with the same features AND I get a 2 year extended warranty that comes with the purchase. I instantly had equity in the car, wasn't upside down like many new car buyers AND I locked in 1.9% financing. If someone wants to explain to me why that is 'worthless' go right ahead. Cars are not made of glass and even though someone drove it for 6 months (car wasn't put into service until 3 months after delivery date) it was no worse for wear.

I just have a hard time swallowing an instant massive depreciation hit like that and trying to rationalize it long term. Doesn't add up for me. I looked at the new one. Smelled a little newer. Drove them both. Drove the same. Just cost $3500 more.. Guess what, if I drove it home that night, it would be worth much less a day later. And I've already used my extended bumper to bumper warranty. Got almost 2 years left on it too. So I essentially have a bumper to bumper warranty for 5 years. Not to mention, Ive lost count of how many threads I've read started by owners of brand spanking new '11 or '12 GTIs with bad water pumps, failed mechatronics units, on and on whereas, after a year and a half on my 'used' GTI, I've had zero mechanical issues.

 

[Gunkata]

I am a cumulative dude, no doubt agreed^

 

[Chris@Revo USA]

I understand why some people do not like the CPO thing, but people saying its 'worthless' is just an opinion with no real merit.

Actually it is an opinion with a lot of merit.

Depending on the manufacture the CPO is between 1200 and 2000 bucks. You paid for it not the dealer or manufacture.

The cars that are CPO'd have to meet certain requirements that means they generally have between 500 and 2000 bucks in repairs to them before the cpo is approved. On a car with 9K miles no repairs may have been done but the sales department still pays the service department to go over the car so there is some cost.. you pay that. In theory having a used car inspected is a good idea so maybe you consider that a wash but its still a 100% valid point and most people don't realize this went into the price.

That means at minimum there is about 2grand worth of nothing tacked onto the car. You can get an "aftermarket" extended warranty for much less in many cases.

The CPO.. if we are focusing on VW. Is not in anyway shape or form bumper to bumper. Read the fine print and get a copy of the actual items covered and you will find that it is EXTREMELY limited. This isn't my opinion based on no merit as you claim this is my actual experience having worked for dealers and watching CPO claims be denied left and right because the items are not included.


If you paid 3500 bucks less then the new car and they tacked on another 2grand for the cpo you really could have saved 5500 bucks over buying new. 5500 bucks goes a long way to fixing anything that could possibly go wrong with your car. Chances are you will never see even 500 bucks worth of repairs paid out with your cpo. If you do sure you lucked out and won. But its like insurance you are just gambling and the house usually wins.

You can't tell people that gambling another couple hundred bucks over 3-5 years leasing vs buying isn't worth it but then outright say getting a cpo is absolutely worth it, they are both gambles. Generally you as the consumer lose in both instances, if you always one companies would be losing money and stop doing it.