Gekko

interesting article. thoughts?

Want to make sure your car won’t wreck your budget? Here’s a chart that might help. In a corner of Reddit devoted to visual representations of data, users are buzzing about a graphic that looks at different approaches to car ownership. The graphic, shown below, indicates that the cheapest thing to do is to buy a 10-year-old used car, keep it for five years, and then repeat. The most expensive approach is buy a brand new car, keep it for five years, and then do that again. Is it ever cheaper to go with a brand new car rather than a used car? Yes. The graphic indicates that if you buy new and keep that ride for 20 years, that will cost you less than buying a three-year-old used vehicle that you drive for 15 years. The reactions from Reddit users to the graphic run the gamut. It doesn’t cover leasing, so some tout that approach. “I always lease cars with no money due at signing at $150-$250 a month,” a user wrote. “Buying 3 years old seems to be a good sweet spot,” said another user. “Just suggested that to my girlfriend one week ago, and I’m glad that I sort of nailed it.”

http://www.marketwatch.com/story/the...art-2017-06-26

PAcommuter

Quick and interesting article. It really depends on the individual buyer and their circumstances. Some people like new and often, others vary. Whatever your choice is, be thankful for those that buy new and often as that allows those who don't to have more choices on the age of the used models available.
I fall in the category of 3 years used and hold on for 10+ years for cars. As long as you or your mechanic maintain the vehicle and it's a reliable vehicle, I don't see why it can't run until the odometer stops counting. I finally bought my ES because of a change of residence and commute, otherwise I'd still be in my ML. In fact I gave it to a young family member because of it's reliability and safety. I miss it at times too, but I do love my ride comfort now.

Gekko

Mercedes ML? Is reliable???

Freds430

Dave Ramsey states the only time you should buy a new car is if your net worth is over one million and you pay cash. I even disagree with this. Was very fortunate to have saved and invested wisely and retired early. Could go buy a new LC paying cash but would not even think about it for a second. Early, we were buying new cars because that is what all our friends were doing. Now all our friends are close to retirement could buy a new car and none of us do. We buy two to three year old cars. Funny how it takes awhile to wise up. The average car loan is now $503 a month for 68 months. Let's look at a scenario of a 25 year old couple trying to keep up with the Smith's. If they decide to delay gratification on their new purchase and keep their beater for just the 68 months and invest that $503 in a S&P index fund. At the end of the 68 months they would have $66,174. They than go get a new car maybe!! The $66,174, they keep invested in the same index fund. At age 65, their balance would be $2.259,918. Not a typo. The price of buying one new car while young. It is called the power of compounding.

Gekko

Fred - I agree with most of what you say. I've been investing with Vanguard index funds since 1995 and always lived under my means despite high income, high net worth, and always zero debt. Financial independence is so much more important than what you drive. However I did buy a brand new fully loaded ES 330 way back in 2004 at age 33 and paid cash. I'm still driving it today but hope to upgrade next year. I justified buying brand new at the time because there was not much of a discount to buy a used ES at the time. Also I knew I would drive it "forever" so the extra dollars for new was significantly offset by the extra life expectancy of the newer car. Plus amortized over 14+ years of ownership it was minimal. This time around I think a new loaded 2019 ES will be pushing $50K and I think I will be able to get a 2016 with a few miles for $24K or so when the time comes. Big discount that I can't say no to.

PAcommuter

Mine was pretty easy to maintain. Did our own oil changes, MAF and O2 sensors. Some things we couldn't do ourselves and had to pay for like brakes. Had a big crack in the washer reservoir, but never replaced it as wasn't a big deal and it was always kept in a garage. Still running well and good for the new owner and her needs.
As a side note. I don't like that Lexus puts the oil filter under the engine. Much harder for me to change it now than with my Mercedes.

Freds430

You are very wise. What a difference it will make when you decide to retire. You are an exception. Stats tell us over 50% of Americans over 50 have less than $50,000 saved toward retirement.

Gekko

i'm already there. i posted that from the beach.

Gekko

“The tale is recalled by the chief executive of a dealership that sold Mercedes-Benz in London. His salesmen were lounging around the showroom when a small group of menacing-looking undesirables ambled in. They would like to take the AMG M-Class for an extended road test, they said. As the visitors were packing heat, a nervous salesman handed over the keys. The M-Class was never seen again. The chief executive later admitted, “I console myself with the certainty that, sooner or later, the car broke down.” This true anecdote epitomises a major challenge for the car maker with probably the best reputation in the world. Mercedes-Benz’s rock-solid image is no longer matched by reality.”

PAcommuter

Never understood why there was a need for an AMG version of the ML. Darn thing was great off road and through snow and ice. Had a couple of instances where I had it in low gear driving through spots of black ice. Slow and steady was my ML.
Yes, Mercedes is not as good as it was in the past. Now it's more about how many are sold versus longevity. We have an 86 300Turbo Diesel. Thing is a beast. We expect it to make 500k and more.

PhillyPhan

Since joining the work force I've always been one to buy brand new. I pay off the car and enjoy it for about 7 years and then buy something new again. I don't know if it's because the thought of buying used makes me feel like I'm at risk from the previous owner and how they took care of the vehicle or just because new is so much nicer. Your thought about buying a used 2016 for almost half the price of a brand new 2019 when it comes out is intriguing. Are you buying used from private sellers and getting those kind of prices? I don't ever see dealers offering deals like that on used vehicles. I'm also a firm believer in purchasing the extended warranty, I know several people think it's a waste of money, but it's proven beneficial for me for the last 3 new cars I've purchased. Anyway that's another reason why used doesn't seem to be an option, because I don't think you have the option to get an extended warranty on many used vehicles.

Gekko

PhillyPhan - I'm looking at buying from a Lexus dealer or another reputable big name non-Lexus dealership that maybe took it in as a trade-in. No private seller sales or mom and pop dealers - too many hassles and risks - plus I have my old trade in I want to get rid of easily. Right now I can get an 2014 ES with NAV etc. at ~30K miles for about $22K or less with some strong negotiation. My belief is that after the new redesigned ES is available for sale in September 2018 I should be able to get a comparable 2016 for a couple grand more (or close to it) - an appropriate price drop because of the new redesign and also about 1 1/4 years from now. Getting a "CPO" "Certified" ES from the Lexus dealer would be my first choice and preference and I'm willing to pay a small premium for that but not much given my confidence in and experience with Lexus quality/reliability/durability. I am not buying an extended warranty on a Lexus though. I want to get the 2016 or newer because of the refreshed front full spindle grille which is so much better and modern and aggressive looking than previous years IMO. I pay cash for my cars so when I have to write that big fat check I really think about the amount and the opportunity cost of that money. I like quality and am willing to pay for it but I don't need brand new if I can get a 50% discount and still have a really great car.

PhillyPhan

Thanks Gekko. Great information. I've been trolling the forum trying to learn as much as I can from all of you to use for the purchase I'm currently trying to make. Any bit of advice helps. I guess I should be opening up my scope to include CPO as well going forward. Benefit here in Arizona for buying from a private seller is you don't have to pay sales tax like you do for a new or used one purchased at a dealer.

Gekko

The CPO is nice because you get the 2 Year/Unlimited Miles Bumper to Bumper Warranty after the standard Factory Warranty ends. Also I believe most Lexus dealerships give you other CPO perks such as free maintenance services included as well as free loaner cars. What's that worth? For me, no more than a $1K premium. In short, I'd probably pay $1K more for a CPO. ($25K vs. $24K). Check out Cars.com and create a Saved Search. This way you can periodically check inventory from all sources - including Lexus CPOs and Private Sellers. Knowledge is Power.

p.s. I highly recommend getting a car with NAV. I will never buy a car without it!

Maikerusan

To get more money out of gullible consumers would be the answer.