whats wrong with my "buy a new car logic"
 

I tend to keep cars for the duration.

I'm looking at buying a new Mini - here in Canada, all in with taxes its going to cost me $30K CDN

If I keep it for 9 years (120,000 miles) it works out to $3300/year...the longer the lower my average cost.

When I compare that to a 3-4 year old Mini (35-40,000 miles), which costs $21K all in with taxes and I only keep it for 6 years because of its higher mileage and age, that works out to $3500/year

For someone like me who keeps his cars for the long haul....why would I buy a used car?

Also I get 3 years of no charge maintenance and the piece of mind of warranty.

Of course there is always the opportunity costs of the extra $10,000 up front, but I think that is offset by the fact I'm not buying someone else's problems

If you pay cash for either, then your logic is probably sound. If financing you have to take into account interest rates and the total cost of the loan. Insurance will be slightly higher on the new one, maintenance will be slightly higher on the used one.

Frankly a similar equation pushed us to buy a new F150 in 2012 and a new Mazda5 in 2013. In each case I started out looking used to minimize the depreciation pain, but found that a 1-2 year old model with 20k-ish miles was only a few thousand less than the new ones. Comparing a brand new 2013 for $22k with a used 2011 with 20k for $19k, paying a few thousand for lower miles, newer, and not neglected starts looking pretty good.

Matt, that same logic is why my folks bought a new ST. The used ones were up to 23 or 24k and with the discounts and a good dealer dad was able to buy new for 26. Hard to make a case for used when the spread is so minimal.

with used cars being so highly valued, this equation is true for lots of cars. esp when financing at below 2% is pretty common on the new cars.

Why not buy a one year old car with 10-20k miles?

Because those are still with a few thousand of the new ones. Go look at Toyota Tacomas for example.

Lease a new Mini. You don't want one when the warranty expires.

I was 100% against new cars, then I got my new 2013 Tundra for less than buying a lightly used one. I don't believe the used depreciation is what it used to be, especially if you can take advantage of timing and rebates. I got about 20% off MSRP, but I'd guess that's not normal.

I can understand where you are coming from but is the new Mini a reliable car?
Check the various Mini forums and see if there are problems with it.

Perhaps a 3-4 year lease might be better and if it is problematic at the end of the lease then return it.

I can think of nothing worse than putting out big $$$ for a new car and it ends up being a POS. Perhaps a CPO mini might be better if it has some warranty left on it.

As you can probably see I am not a great fan of the new mini having owned an old Mini back in the 1970's. Reliability is key here. If a car is not reliable I don't want it.
G.

I have only bought a 2 year old car once. That was a fire sale on on my Mazda MS3. And I bought my TDI new for the same reasons stated above. Other than that I do not think I ever bought a car with under 100k miles? Once they go over the 100k miles hump, they are just a lot cheaper and now I can afford $60k cars. Especially true when it comes to SUVs and to Porsches.

Kaisen would argue that leasing often is the way to go. I think especially if you turn the car after 3 years. May not work so well if you drive it for 10.

And yes, I would also worry about the Mini track record. It may be costing a lot to keep going once it is 5+ years old and higher miles.

G

You guys raise a good point around reliability. Mini claim that this new redesign was in part to address reliability concerns. Hard to substantiate. This would be my first "luxury brand" vehicle. Prior cars are nissans and subarus. Pretty basic vehicles. Will look carefully at leasing in case she turms into a Lemon....the extra interest cost might easily be crushed by expensive reairs. If the cars turns out to be pretty solid and we want to keep it, we can just buy it out at the end of the lease.

The new model is REALLY nice and a major improvement over the old model in terms of dynamics and fit and finish

a few years ago I would say that your math was flawed, however these days used car prices seam to be too high. On something like a mini which I think will have moderate maintenance costs, and decent resale, I think new is a better bet.

I am most puzzled by things like civics, they are worth like 3k less than new with 40k miles. Given that they are due for maintenance and a new set of tires likely, a slightly used civic is about the same as a new one

We went through this last year when we leased our family DD (my wife's daily) M-B C300. I have owned 2 Euro DDs. Both were used when I bought them. One (BMW E46) was a dog & was a service cost nightmare at 4+ years. The A4 was good for 6 years (8 car years) & then went downhill fast. The conclusion I came to is that I don't want to own an 5-6 year old out-of-warranty Euro car. The wallet vacuum machine is just too well oiled.

Ian

For the family cars, the non-fun stuff, I keep them an average of ten plus years. I do a mix of new and used. If I finance I shop deals and pay everything off early, unless the interest rate (zero in two cases) is great.

Cars are so good these days that oil changes and following the maintenance guidelines gets to 100k plus with ease.

In the fleet now:

1999 Tacoma was bought new, 120k on the dial, is now my son's and he loves the thing. Everything works. When he gets commissioned it will go with him. It has been just about the best purchase I have ever made.

2003 4Runner bought used from OWP in 2005/06. 200k. My wife missed driving it so much we switched DD's recently. She got the better deal.

2005 F-150 bought new. We needed a tow vehicle and I prefer to buy trucks new...117K.

2006 FJ. Bought used in 2008. Daughters car. 130K very well cared for miles. She helped buy it so it is still is about perfect.

2013 Highlander. Bought new, now my DD. 17K. It is as boring as a dinner salad but it fits the bill.

Buying new pencils out at times.

I've only bought a new car once in my life. That was a Mercedes in 2000, paid cash. I still have it. It's required nothing but routine maintenance and a couple of repairs that I did myself and cost less than $50 each. It has 85,000 miles on it now, and I'll probably keep it another 10 years.

So, yeah, I think I'll get my money's worth out of that one!

But I wouldn't do it again. My wife's car is a 2007 BMW that we bought used in 2009 with 15,000 miles on it for a very reasonable price, I was able to get it for around $23,000, paid cash. A new one in 2009 would have been what, $15,000 more? At least 10-12K more. It has around 40,000 miles on it now, no problems.

These later model cars are a lot more DIY friendly than most people realize. Buying a 3 or 4 year old model can save a ton of money.

Well, to really save money, you'd buy the 3-4 year old one for $21K and drive it 9 years, like you would the new one (or, even better, drive it for 12+ years!). There's no reason you *have* to drive it only 6 years. If you keep it well maintained and well kept, it'll run and serve you fine for a long time. The financial gravy is in pushing through those later years.

I think the flaw in your logic is the pricing of that used car. The used car price on that Mini is far too high. Our VW GTI Autobahn Edition was $32k new. We bought it 1 year old with 5k miles for $22k. Much more fun than the mini, lots more reliable...

Or the financial disaster. Won't know for sure until it's too late. Fortunately your MB seems to be working out because it's been fairly trouble-free. In our case, we had an Acura that was great for the first 7 years. But little things started cropping up after that: Bluetooth module, starter, door lock actuator, trunk release. Heck, even replacing one of the headlights wasn't cheap ($160 for the bulb) or easy (couple hour job). But before that, all it cost us was gas, oil, and tires. The difficulty is knowing which car will be reliable and which won't. Which is always a slight gamble, no matter the make/model. We try to stack the odds in our favor by picking something "reliable," but it's always a gamble.

Then there's this:

http://www.autonews.com/article/20140125/RETAIL06/140129873/used-car-prices-will-fall-in-2014-nada-economists-say

People feel better about their financial situation and the economy. They're buying more new cars. So, more used cars on the market AND fewer buyers for used cars. Prices should drop.

The last Pickup I sold: Paid $6,200 for a Toyota 4x4 with 89,000 miles (new factory long block at 75,000).......Sold it 9 years later with 192,000 for $3,800.....