Over 400,000 Monthly Readers
IN FOCUS FOR PEOPLE Over 50
  • Home
  • Health
  • Money
  • Travel
  • Arts
  • Tech
  • Cover Stories
  • Housing
  • From the Publisher
  • Silver Pages Directory
  1. Home
  2. Money

Money

SEARCH Money

Should your next car be new or used?

Photo by Helgi Halldórsson
  • Share
PRINT
By: David Muhlbaum
Posted on: April 10, 2020

At Kiplinger, we’ve hewed pretty closely to the same car-buying advice over the years: Used cars offer the best value. Not overspending on a depreciating asset fits well with our get-rich-slowly philosophy.

As designated car guy, I’ve repeated that mantra plenty of times. But recently a friend challenged me on it. 

He was looking for something safe for his kids, with a stick shift and a hint of sportiness. Maybe a new Honda Civic or Toyota Corolla iM? No problem with your choices, I said, but why not buy used? 

His counter: Carmaker subsidies made the interest rate he would pay for a loan on a new car much lower than the rates he was finding for used-car loans. Also, he argued, a three-year-old car would be that much closer to needing new tires, brakes and possibly major service.

“But…but…depreciation!” I sputtered. At the same time, I remembered that the models he was considering have super-high residual values. Maybe he was right? 

When new makes more sense

I resolved to run some numbers and check with experts to see if it ever makes more financial sense to buy a car new rather than used.

Note that I said financial sense. Some people, for any number of reasons, will never buy a used car. Others won’t ever buy new (price is often the reason). My friend was in neither of these camps, and I imagine there are others like him.

What’s the answer? According to Ivan Drury, senior insights manager for Edmunds.com, there are cases when it’s better to buy new than used. 

“It isn’t even rare,” he said. “You need vehicles that are low-priced to start with and have high resale value.”

Some examples he provided: the Toyota Tacoma pickup, Toyota 4Runner (a popular old-school SUV), the Jeep Wrangler and the Subaru Crosstrek (a small crossover). 

“With these,” he said, “the price differential is not enough to say, ‘Hey, go out and buy a used car.’” 

Buy used luxury cars

It’s the opposite case for luxury vehicles. For these, favorable financing and free maintenance can’t make up for the huge depreciation hit, Drury said. Buy used.

What about the cars on your short list, which might be somewhere in between these two groups? 

I recommend starting with an online cal­culator, such as the Edmunds True Cost to Own tool, to consider all the costs (insurance, depreciation, maintenance and more) that go into car ownership. 

If you want to get deeper into the financing costs, also check out State Farm’s New Car vs. Used Car calculator, which (for better and worse) lets you input your own values for almost all of the parameters.

And, of course, it’s important to make an apples-to-apples comparison. Eric Ibara, director of KBB’s 5-Year Cost to Own tool, notes that cars get better and safer all the time. 

“There are a lot of features coming out on new cars that are not available on a three- or five-year-old car,” he said. “The safety technology, for example — some of the older cars had it, but not all of them did.”

Fortunately for my buddy’s situation, there’s not much difference between a 2020 Honda Civic and one from three model years earlier. So, for a Civic LX with a six-speed, over five years, it will cost $228 less to buy a 2020 model than a 2017 one. 

As expected, the new car costs more up front and depreciates more dramatically, but maintenance and repairs are higher for the used model. Not a huge difference, but don’t forget, you get that new-car smell along with your savings.

© 2020 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.

Money 2021

  • January

#advice #IRA #money #Taxes #Eliot Raphaelson #health

2020
Money Archive

Virtual 50+Expo

NOW THRU JAN. 31 2021

Our Virtual 50+Expo offers more than 50 classes, speakers and entertainers, plus dozens of exhibitors. Click here now to see!

Celebrationof the Arts

CONGRATULATIONS TO THE WINNERS

The 2020 Winners & Honorable Mentions have been announced. Thank you to all that entered.

Silver PagesDirectory

FIND WHAT YOU NEED, FAST.

This comprehensive, searchable directory covers
housing, homecare, elder law and financial planning

CommunityEvents

A CALENDAR JUST FOR YOU

Find fun, interesting, informative things to do Or post your upcoming event on our website!

Silver PagesDirectory

FIND WHAT YOU NEED, FAST.

This comprehensive, searchable directory covers housing, homecare, elder law and financial planning

Submit PrintClassifieds

ALL PRINT CLASSIFIEDS ARE SUBMITTED ONLINE

Click here to submit your classifieds for one of our upcoming print editions.

CommunityEvents

A CALENDAR JUST FOR YOU

Find fun, interesting, informative things to do Or post your upcoming event on our website!

About the Beacon

Over 50 or love someone who is? Then consider the Beacon your resource for trustworthy information on health, money, technology and travel topics, as well as entertaining features, arts and events.

The Beacon’s award-winning content covers health, financial, technology, housing, travel and arts topics, as well as local events and feature stories. Readers of our four print editions pick up more than 200,000 copies each month at more than 2,400 distribution sites. We also mail copies to subscribers throughout the United States.

Contact Us

THE BEACON NEWSPAPERS

PO Box 2227  •  Silver Spring, MD 20915

WASHINGTON, DC

TEL: 301-949-9766  •  FAX: 301-949-8966

HOWARD COUNTY

TEL: 410-248-9101  •  FAX: 410-248-9102

BALTIMORE, MD

TEL: 410-248-9101  •  FAX: 410-248-9102

RICHMOND, VA

TEL: 804-673-5203  •  FAX: 804-673-5308

More on our Website

  • About
  • Resource Guide
  • Celebration of the Arts
  • Awards
  • Staff
  • Privacy Policy
  • Virtual 50+Expo
  • Recipes
  • Puzzles
  • Cover Stories
  • Community Events
Contact us Classified Form Subscription Form