Used car pricing

[Steve Carlton]

You really have to go on a case by case basis and somewhat apples to apples. The value of a new car is greater than the value of a $7k used car- not apples to apples. If you want to drive as cheaply as possible, that's a different equation with different cars to consider.

Leases can be great if you don't want to have a particular car more than 2-4 years. You'll usually be under warranty the whole time and probably not replace any tires or brakes. Many cars have maintenance included, often to cover the whole lease term. Sometimes maintenance in a lease is subsidized. You have a guaranteed way out of the car by turning it in, historically not worth the payoff a lot of times. What's being taken away is to access the equity at the end of a lease, as most lenders are blocking that now.

Sometimes leases have incentives that purchases don't, but not often. A lot of times they have lower finance rates, if you compare the lease factor (times 2,400) to an APR. APRs are down to the low 2%s now in the open market. Sometimes lease rates are close to a 0% equivalent (not lately, though).

A useful rule of thumb for a good lease payment is if it's around 1% per month of the MSRP of the car, with maybe $1,000-1,500 out of pocket for a 10-12k mile/year lease. If you find a lease that's, for example, $400/mo on a $50,000 car, that's in the thumbs up territory. $700/mo for the same car, that's getting into the crazy side of the matrix. Plug-in hybrids (PHEVs) and pure electrics (BEVs) tend to wind up in the hot end of the matrix. If you take $10,000 worth of electric incentives and enjoy them over 2-3 years in a lease, the payment is going way down.

Although the mechanicals in a new car will usually last a long time, the electronics don't do so well. I'm not a fan of being out of warranty, but labor rates are $200-250/hr in CA, lower in other states I'm sure.

[red-beard]

Originally Posted by asphaltgambler

For us, we had delayed trading / selling our Jeep, continuing to put money and maintenance into it because of the $$ surge in the used market. To the tune of over @1-1/2 years delayed. This Fall it became clear we needed to do something soon as the clock was about go over 200K and the rear main seal started to weep. There were also other issues that needed addressed.

This is what we're doing with my Wife's BMW X5. I just put $6K into it because I'm not paying MSRP for a new vehicle for her.

With the miles she puts on her car, I'm thinking of a lease for the next one.

OTOH, I'm about to start a project in Idaho. I'm looking for a used Pickup instead of using a rental car 10 to 15 days per month. That is going to be brutal.

I am considering buying one here in Houston and shipping it up to Idaho.

[red-beard]

My other option is to buy a "What I want" and then sell my truck to the company for the market price.

[asphaltgambler]

The wife's DD vehicle pretty much runs 7 days a week. Her daily commute is a fair bit each way plus errands, church, etc. She also travels multiple times a year to visit her parents @4hrs South of us. So whatever we get .....it gets used.

We briefly considered buying a old Toyota or Honda cheap clown car, keep the SRT8, fix / maintain it, use it for special occasions. But the math didn't work out.

[Steve Carlton]

Originally Posted by red-beard

My other option is to buy a "What I want" and then sell my truck to the company for the market price.

Sounds like your company is paying for your wheels in Idaho. Do you own the company?

Random thought- assume a lease on swapalease.

[Jay Auskin]

Originally Posted by Alan A

This surely can’t go on being this crazy.

I mostly lease. We have multiple vehicles and I rarely keep a car the full 3 years.
We can argue the economics till the cows come home, but it is what it is.

So I leased a VW 2 years and 10 months ago. Paid 33.5k including taxes - 31 and change before tax on a car that was 34k MSRP.

Traded it yesterday for 26.5k on a new SUV off the lot.

So I drove (or more accurately the wife drove) a new car for almost 3 years for 7k. Didn’t pay a cent for consumables other than washer fluid and all the servicing was included.

I’m still in shock. Why would anyone buy a used car in the current market?

At least by me, there is nothing new available. I took our vehicle that is on lease, and expiring April to the dealer for an oil change. While I was in there, chatted with a sales guy, and was asking him about options come April. He said check back in March, and maybe they'll have cars. Now...nothing.

I'll likely just purchase the vehicle at lease end. What is typically a bad deal, is now a fantastic deal. I'm way low on mileage, and he said they'd give me a few thousand to return it. But, they have nothing for me to lease in return.

Let's see what happens in four months.

[Steve Carlton]

Originally Posted by Alan A

So I leased a VW 2 years and 10 months ago. Paid 33.5k including taxes - 31 and before tax on a car that was 34k MSRP.

Traded it yesterday for 26.5k on a new SUV off the lot.

So I drove (or more accurately the wife drove) a new car for almost 3 years for 7k. Didn’t pay a cent for consumables other than washer fluid and all the servicing was included.

I’m still in shock. Why would anyone buy a used car in the current market?

What amount do you get if you take everything you paid (minus the registration) and subtract the difference between your trade in allowance and your payoff?

[Alan A]

8k. Used it as a cap cost reduction on the new one. Old lease was 450 a month with everything rolled in and all servicing included, so I paid a total of 16.2k for the car for the time I owned it and got 8k back.

Had a choice of 3 new ones on the lot. One of the others sold as I was signing the papers for mine, and I was in and out in under an hour. New cars are there - at MSRP - but you can’t hang round, because they sure don’t. Again I leased a VW because the Audi I really wanted had a 6 month wait, so I’m for sure not saying everything can be bought.

Mfr offered a 0% lease on the 19 when I got it, so pretty much every cent I paid outside of the depreciation was recaptured.

New car is nicer by every metric. Come with 3 years of servicing so unless it needs tires it won’t cost anything but the monthly nut.

This wasn’t to start a lease vs buy or new vs old war. Your circumstances are all different. Mine is I don’t want to drive a daily without a warranty and unless I choose to drive exotics I can do so. I’ve bought two used cars in 20 years. Both CPO. Both left me stranded. None of the new ones have, so I’ll keep doing this until I can’t.

My whole point was that the differential between a new and a late model used car is small enough that if you can find something acceptable I can’t understand why you’d buy used right now.

[Steve Carlton]

Is the 8k net of the amount of the cap reduction or before?

[Alan A]

Originally Posted by asphaltgambler

The wife's DD vehicle pretty much runs 7 days a week. Her daily commute is a fair bit each way plus errands, church, etc. She also travels multiple times a year to visit her parents @4hrs South of us. So whatever we get .....it gets used.

We briefly considered buying a old Toyota or Honda cheap clown car, keep the SRT8, fix / maintain it, use it for special occasions. But the math didn't work out.

My wife used to do 40k a year commuting to and from work. Back to the new and under warranty thing, we used to buy a new Jetta diesel for her every year. The cost savings in fuel - they got ridiculous good gas mileage on the highway - vs gas covered the up charge and saved a couple of hundred on top on the monthly nut.

My point - look at one of the dieselgate cars if you can find one. They’ll have a power train warranty through 24 and be pretty much fully depreciated by now.

[Alan A]

Originally Posted by Steve Carlton

Is the 8k net of the amount of the cap reduction or before?

I could have pocketed 8k from the car I traded and had a more expensive lease.

I took that 8k and used it as a cap cost reduction on a vehicle that sold at msrp - saving an additional few hundred in tax. Residual was 57% so I probably saved $400 in sales tax.

The VW money factor isn’t great - .00128 for tier 1 - but no worse than anywhere else without a deal. Which they don’t need to offer.

Not the best deal I ever got, but I can live with it.

[pksystems]

Used cars that need work have never been cheaper around here.

[flatbutt]

My Taco is 1 year old with only 10K on the clock. Kelly BB says I can sell it for 1K more than I paid. Not worth it given the prices for another one.

[pmax]

Originally Posted by Bob Kontak

What?

Depreciation's front loaded so makes no sense to buy a 6 year or newer give or take used car and keep only for 3 years, might as well lease as the OP has figured out is the best route and that's true even without taking warranty and covered maintenance advantages into consideration. Hence the OP's surmise but it really only applies courtesy of the circumstance and lifestyle choices

Not sure about anyone else, for myself when it comes to buying a car, mundane considerations such as ease of maintenance, engine design, common failure modes are serious matters to be pondered over.

[Steve Carlton]

Originally Posted by flatbutt

My Taco is 1 year old with only 10K on the clock. Kelly BB says I can sell it for 1K more than I paid. Not worth it given the prices for another one.

Kelly BB is unreliable- usually too high. Run it by Carvana, Shift, Vroom, Driveway, and Carmax dot com to see what you can sell them for. Your relative lack of equity is probably because you paid all the sales tax when you bought it, vs monthly on a lease. But I'm not sure how they work lease tax in NJ.

[dmcummins]

I traded my 2017 Jeep Wrangler 6 months ago, it had 30k miles. The dealer gave me what I paid and I could chose what he had on the lot or order something. Yes I paid very close to sticker, but with the trade I was happy.

My old Jeep was already gone when I stopped by a week later.

[red-beard]

Originally Posted by Steve Carlton

Sounds like your company is paying for your wheels in Idaho. Do you own the company?

Random thought- assume a lease on swapalease.

Yes, or really about 1/3rd owner.

Buying a truck for the year to 18 months makes more sense than renting. And we might keep it at the site for a company truck.

Lease might be a good idea. I'll check it out.

I'm still debating the hotel vs. Apartment.

[Steve Carlton]

I'm not sure what's going on here, but shipping from Elk Grove, CA to Idaho wouldn't be too bad, maybe about $1k.

A lot of dealers advertise like this, throwing every possible incentive and rebate on their listings, but $4,000 from the dealer alone is very strong. Dodge incentives are regional- they need your zip code to see what you qualify for.

https://www.elkgrovedodge.net/new-inventory/index.htm?make=Ram

[Nostril Cheese]

Theres a Subaru BRAT in my neighborhood offered at $8K. its not restored.