This question has led to as many internet flame wars as whether you should use conventional or synthetic oil. You pay more for a brand new car, but you get the peace of mind of knowing that no one else has ever owned the car, as well as a full factory warranty. This is worth a great deal, and it’s reflected by the fact that any new car depreciates significantly the moment it rolls off the dealer’s lot under new ownership. On the other hand, there’s a strong argument that it’s better to let someone else take this initial depreciation hit and buy a better used car than you can afford new. So which is better?
Many people buy used because they simply don’t have a choice. The Great Recession shot many people’s credit ratings in the foot, and financing a new car at a reasonable rate was simply no longer an option. Even if your credit is good, the monthly payments may still be too much to handle if you’re living on a shoestring budget. For less than a decent down payment on a new car, you can buy an entire used car outright, with no loan and the title in your hot little hand. It may be an older, high mileage grocery getter with a few rattles, broken air conditioning, and maybe one speaker that works, but if you do your research and choose wisely you can stretch your money pretty far. You won’t have a warranty on something this old, but if you choose a good car the cost to repair it from time to time will be less than regular car payments. If you have the time and expertise to make such repairs yourself, you can save even more money.
Even if you do have the means to buy new, you may prefer to buy used anyway, particularly if you’re an enthusiast. If you already have a newer, reliable daily driver, you can go a little crazy on an older project car. You probably wouldn’t want a 1980 Alfa Romeo Spider as your only car, but for tinkering on, taking top-down cruises, and the occasional autocross, why not? It may not be the most reliable car on the road, and parts may not be easy to find, but when you have another car to fall back on, it’s not an emergency when the Alfa breaks.
A while back, a close friend and I were getting more involved in track days, and were both concerned about the prospect of balling up our daily drivers at the track. We decided to buy an older Miata together. We saved money by splitting the costs in half, and shared custody of the car when not at the track. If something broke, our daily drivers would still get us around. Though we never had any “incidents” at the track besides the occasional spin, we did run the engine out of oil once, which put the Miata out of commission for a couple of months while it was replaced. Obviously you’d only want to enter a partnership on a car like this with someone you REALLY trust, but even going solo on a “play” car will keep your daily driver out of harm’s way on the track.
You can also get some rather interesting cars for not much money if you do it right. During some of the leanest income years of my life, at various points I owned an AW11 MR2, a RT4WD Civic wagon, a B13 Sentra SE-R, a Saturn SW2 with a manual transmission (unheard of for the original soccer mom owners), and another Miata. All of them had some issues – usually rust, being in New England – but it was nothing I couldn’t work with. As a result, I got to play with some cool cars for cheap change. These older cars obviously had no warranty. But that meant I could modify them to my heart’s content without worrying about voiding the warranty they didn’t have.
My Subaru BRZ is the first car I’ve ever bought new. I figure it’s one of those things I had to do at least once in my life, and I had the means when my ex-cop Crown Victoria wouldn’t pass state inspection without four figures worth of work, so it was time to invest in something new instead. I also needed to NOT be required to work on my car regularly. Currently I have no garage and no work space. I even had a nosy neighbor complain to condo management about me bleeding my brakes and swapping brake pads earlier this year, despite being properly parked in my assigned space. Clearly the real answer is to move out of there, but until I can do that, I need a car that requires nothing more than oil changes, scheduled maintenance, and the occasional swap from summer to winter tires and back.
This strategy has paid off for me. The only issue I’ve had with my BRZ is a horn wire that came loose. The dealer fixed it under warranty, and then I replaced the stock horns with Hella Supertones anyway. It’s easy. Everything just works.
And it comes at a price. A new BRZ currently starts at $25,395. I got a deal on my 2014 model for $24,442, but still, I actually went and got a car loan for the first time in years. I’m making car payments for the first time in years. I spent about the same amount of money on my BRZ as I did on my previous ten cars. None were nearly as modern, reliable, or refined (and no, the BRZ is not exactly refined by modern standards). But still, when I think about it that way, it sometimes makes me wonder if I did the right thing.
Buying Certified Pre-Owned
Why am I being redundant? “Certified Pre-Owned” is a fancy way of saying “Used,” right? Well, yes and no. Yes, it’s a used car, as opposed to one with no miles and no previous owners. But it’s also not some $400 Saturn with blown struts and a front subframe so rusted that you get torque steer from flexing. Far from it.
My fiancee just bought a Certified Pre-Owned 2012 Ford Flex. (Yes, there will be a review.) New car dealers always sell used cars as well, but not all used cars are Certified Pre-Owned. Ford, for example, makes an extensive 172 point inspection which a car must pass before it is considered Certified Pre-Owned. Ford also provides a free Carfax report on the vehicle, and a warranty regardless of how many miles are actually on the car (12 month / 12,000 mile comprehensive, 7 year / 100,000 mile powertrain). Though their standards and warranties may vary, most manufacturers have a similar CPO program. I’m citing Ford’s in particular because I’ve just learned about it and how it applies to the Flex.
This may seem like just a lot of hype, but in the case of this particular Flex it’s all true. The car is in excellent condition, inside and out. If it wasn’t for the appearance changes since 2012, I’d have a difficult time knowing this wasn’t a current model. It doesn’t have a new fangled MyFordTouch infotainment system like the new Mustang has, but the controls are still quite good and aren’t dated. It’s only three years old, and the previous generation’s LED displays are perfectly readable. Some may even prefer this method to MyFordTouch. This particular Flex has the EcoBoost option – a 355hp twin turbo V6 with standard AWD. That’s a lot more drivetrain than the regular V6 with FWD offered in the base models, and a lot more complexity that could go wrong down the road. But Ford’s CPO drivetrain warranty makes me feel a lot better about that, and potentially expensive repairs like turbo replacements.
But the part that really makes my head spin is the price – $28,500. I went on Ford’s web site and tried to build my own new Flex with the same options as hers, and I couldn’t get a comparable one for less than $42,000. By waiting three years and 34k miles, she saved $13,500. That’s almost enough to buy a new Fiesta. That’s enough to buy a used rally car and a trailer to tow it. I could go on eBay and spend that on a 1967 Mustang, a 2002 Corvette, or even a 2005 Cadillac CTS-V.
I’m not going to, but that’s not the point. My point is, Certified Pre-Owned isn’t lame marketing speak – it’s actually a good way to go. It’s the best of both worlds. You let someone else take the first several thousand miles and the initial depreciation hit. But you still get most of the advantages of buying new, like a warranty and a car that is in “good as new” condition. I’m not planning to get rid of my BRZ anytime soon, but at some point that day will come, and when it does I’ll be seriously considering a CPO car for myself.
(Top photo credit: autobild.de)