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Compare Costs Buy New Car vs. Used

Buying used can save you thousands upfront and over cycles of ownership, but buying new has other advantages.

While buying new cars is enticing, you should take a cold, hard look at how much you could save over time by buying used cars instead.

The average person owns 13 cars in a lifetime, each costing an average of $30,000, according to a report by the National Automobile Dealers Association. If each of those cars was 3 years old, instead of new, you could save nearly $130,000 during your lifetime.

The real money-saver in buying a used car is wrapped up in a sinister-sounding financial word: depreciation.

Car buying’s dirty little secret

Once you fully understand how car depreciation sucks money out of your wallet, you’ll learn how to save boatloads of cash over your lifetime. You often hear that a car loses 20% of its value as soon as you buy it. Yes, in just one minute, a $30,000 car will lose $6,000 as you gleefully drive off. By the end of the first year, mileage and wear and tear could bring that to 30%, or $9,000. Why don’t you feel this big hit? Because it takes effect much later, when you sell or trade in your car.

Take a look at two similar cars, one new and one used.

New-car depreciation: You buy the car for $30,000 and sell it three years later for $15,000. The car has cost you $15,000 in depreciation.

used-car depreciation: Now let’s say you buy the same car, but it's 3 years old when you buy it. You could buy the car for $15,000. Three years later you could sell it for $10,000. So the used car depreciation cost you only $5,000.

Now, if you’re paying attention, you would quickly say, “But driving a brand new car is much better!” You’re absolutely right. So, if driving a new car is worth an extra $10,000 to you, go for it. But don’t say we didn’t warn you.

Forget the old used-car stigmas

It used to be common for people to put down used cars by saying that it was just a way to buy someone else’s problems. That’s not true anymore. Here are two updates on old knocks against used cars of recent vintage.

Reliability: Cars have never been more dependable than they are today. It’s not uncommon for some cars to deliver more than 100,000 miles before needing major repairs.

Maintenance: All cars require regular maintenance such as oil changes, tire rotation, brake jobs. But you can drive today’s cars much farther in between these scheduled maintenance visits. Even tires and brake pads last much longer than before.

More used-car advantages

So it’s pretty clear that buying a used car is much cheaper and that cars in general are more dependable. But take a look at these other advantages:

Lower car insurance rates: When a vehicle is worth less, it costs less to insure it when you're buying collision and comprehensive coverage. You can also drop collision and comprehensive coverage, which pay for repairs to your car, and save even more.

Registry renewals are cheaper: The cost of registering a used car goes down every year.

Move up to a luxury car: Because you can save 30% or more, you can shop in a higher class of cars.

Less stress: Got a ding in the door? Who cares? But when it’s the first dent in your new car, it’s a huge bummer.

New-car advantages

While nearly everything about used cars costs less, buying a new car has its advantages.

New-car shopping is easier: All new cars are assumed to be perfect, so evaluating the condition isn’t a factor. No need to take it to a mechanic. Also, it’s easier to figure out what you should pay for a new car, even if the negotiation process is still a pain.

More used-car options: Automakers offer plenty of incentives to lure buyers, such as cash rebates. New car loans have better interest rates. This means you'll likely pay thousands of dollars less than the frightening sticker price once you negotiate a final price and apply the incentives.

Advanced technology: New features for comfort, performance and safety are introduced in new cars every year. You’ll need to wait several years to get them in used cars.

Peace of mind: A new car will likely be more reliable than a used one, even though pre-owned cars are much more dependable than in the past. If a new car breaks down, you can have it fixed for free under the included factory warranty, at least for the first 36,000 miles or three years that most carmakers offer.

Prestige: Let’s put it this way: You don’t hear many people bragging about the used car they just bought.

An exception to the rule

Not all cars depreciate at the same rate. Some brands are known for holding their value exceptionally well. When you add in possible new-car incentives and low-interest used-car, there are times when buying a new car doesn’t cost much more than buying a 1- or 2-year-old car.

You can find how much cars depreciate on several automotive websites, such as Kelley Blue Book’s 5-Year Cost to Own or Consumer Reports’ Cost of Vehicle Ownership.

What it means for you

Depreciation is a silent killer to your automotive budget. But by buying cars that hold their value, you can minimize the effects. If you’re still on the fence, use a car loan calculator to see how much less your monthly payment would be if you bought used instead of new.

Article Originally published on Nerdwallet.comBy Philip Reed

Sedan Buying Guide - Scottsdale, AZ

Please Read Scottsdale Auto Group's "Sedan Buying Guide"
Content provided by ConsumerReports.org


Though it may surprise some 21st-century car buyers, there was a time when sedans were among the best-selling vehicles of any type. However, over the past 20 years or so, sales of SUVs and pickup trucks have far surpassed those of the lowly sedan. And that’s a shame because there are many standout sedans in CR's ratings that excel in comfort, performance, fuel economy, and safety. On the flip side, it’s the same rise in SUV popularity that has driven automakers to make their sedans stand out and excite buyers who are otherwise on the fence.

The classic sedan body style offers a diversity of size and price. Determining the sedan type that you need will help narrow the field. Each type (midsized, large, and luxury) has a spectrum of models to choose from, so this is a useful step toward creating your shopping list.

Sedan Types

Midsized
Midsized sedans still command a certain popularity, led by market stalwarts such as the Toyota Camry, Honda Accord, Hyundai Sonata, Nissan Altima, and Subaru Legacy. Domestic manufacturers have largely abandoned this segment, turning their attention and development dollars to crossover SUVs.

The makes and models still competing for business offer a wide variety of options to appeal to buyers. Generally, a front-wheel-drive configuration is the most common. Snow Belt dwellers now have more choices with all-wheel drive, as Nissan and Toyota have options to compete with Subaru.

Most manufacturers in this segment even offer hybrid powertrains to improve fuel economy. Four-cylinder engines are most common as the days of smooth, powerful V6s wind down.

What you’ll spend: Common midsized sedans are priced from about $24,000 to $37,000 and offer a good balance of cost, function, and safety, addressing the needs of many drivers.

Large
This is another dwindling market segment for Detroit, with only Chrysler sticking it out with its large 300 sedan and Dodge with the Charger—both still offering rear-wheel drive and V8 powertrains. Buyers who don’t want to pay luxury car prices and want lots of interior room and a smooth, quiet ride will find good value here. In particular, the Chrysler 300 and Toyota Avalon offer levels of luxury and comfort almost unmatched for the price. Hybrid powertrain options are somewhat limited here, but performance-oriented versions are available.

What you’ll spend: Look to spend between $35,000 and $50,000 for cars in this category.

Luxury
Companies such as Acura, Audi, BMW, Cadillac, Infiniti, Mercedes-Benz, Volvo, and others sell smaller luxury sedans for those looking to own a prestige-branded car. Prices range from the mid-$30,000s to over $50,000. While these models may offer more refinement and performance, more space and comparable luxury can often be found from a top-trimmed midsized sedan for the same money.

Moving up a size or two, there are a number of choices for luxury car buyers. Long-standing nameplates such as the BMW 5 Series, Lexus ES, and Mercedes-Benz E-Class continue to be steady performers. Relative newcomers like Genesis (Hyundai’s upscale brand) and Tesla have made great strides in this segment.

Most of these luxury coaches can be extravagantly outfitted with plush interiors, powerful engines, all-wheel drive, and almost every creature comfort the automotive world can imagine. Turbocharged four-cylinder engines have become common on base trims, and some hybrid options are available.

The ultimate in luxury continues to be dominated by the Audi A8, BMW 7 Series, Lexus LS, and Mercedes-Benz S-Class. The premium flagship sedans pamper drivers and passengers alike, and they can be the launch point for many high-tech innovations.

What you’ll spend: Prices for these well-to-do models vary widely, from the mid-$40,000s to well into six figures. Truly, the sky’s the limit here.

What Sedan Buyers Should Consider

Seating
Almost all sedans can accommodate at least four people in relative comfort. Keep in mind that the person stuck in the center rear position usually gets the least comfortable perch, which is why four-person comfort is usually the norm, no matter what the specifications state.

Naturally, larger models include lots more head- and legroom, especially for rear-seat passengers.

Engines and Fuel Economy
Four-cylinder engines are generally more fuel-efficient than V6s, and some of the latest four-cylinder sedans balance fuel efficiency and power quite well. In the past few years, many manufacturers have turned to combining turbocharging with four-cylinder engines to aid efficiency and acceleration. Keep in mind that some of these turbocharged cars and many upscale sedans require premium fuel.

Hybrid systems are now prevalent in nearly every segment—even on luxury models. The fuel economy champion here is the Toyota Avalon hybrid, which returned 42 mpg overall in CR’s test.

Currently, there are very few all-electric models. Tesla is the dominant manufacturer here, but more EVs (either partial or full electric) are on the way from Audi, BMW, Lucid, Mercedes-Benz, and Volvo, among others.

Cargo
Trunk sizes vary widely by model. Some can accommodate a week’s worth of groceries with room left over. Others have awkward shapes, high liftovers, and intrusive goose-neck hinges that limit their usefulness. Over the past several years, some manufacturers have come out with four-door hatchback designs, such as the Kia Stinger and Volkswagen Arteon. This body style comes with a split rear seat design, so one part can be folded for cargo while still allowing someone to sit in the other part. Hatchbacks like these, though, can have a more restricted rear view, made worse by the heavily sloped slit of a rear window, thick back pillars and tapering rear side windows.

Safety and Advanced Driver Assistance Systems Technologies
Consumer Reports’ safety ratings include assessments of crash-avoidance capabilities and crash-test results, based on tests performed by the federal government and insurance industry. Further, our road tests detail issues regarding child seat installation and headlight performance.

Forward collision warning (FCW), automatic emergency braking (AEB) with pedestrian detection, and blind spot warning (BSW) are crash avoidance technologies that CR believes should be standard on all vehicles. These should be on the next new or used model you buy.

FCW technology provides a visual, audible, and/or tactile alert to warn the driver of an impending collision with a car or an object directly in its path. AEB responds to an imminent collision, braking if the driver doesn’t react in time. BSW monitors a vehicle’s flanks, warning the driver that another vehicle is alongside, where it may be difficult to see.

Other modern safety advances include telematics systems that can alert emergency personnel if an airbag deploys, such as GM’s OnStar service; lane departure warning systems that sound an alert if the driver changes lanes without signaling; lane keeping assist to maintain the vehicle’s position in the lane if the driver starts to drift; and rear cross traffic alert, which monitors the sides of the vehicle when the driver is backing out of a parking spot, and can even apply the brakes if needed. (Learn more about car safety.)

Drive Wheels
The vast majority of sedans today use front-wheel drive. The space efficiency from a front-drive design allows a car to have a smaller engine compartment and a flatter floor, leaving more room inside for passengers and cargo. It’s also effective at getting going in slippery conditions because there’s more weight on the front wheels for extra traction. Rear-wheel drive is traditionally reserved for high-performance and luxury sedans for its handling benefits. AWD is almost universally offered in every sedan segment. Designed for improved foul-weather traction and extreme, track-ready grip on enthusiast-targeted models, some buyers who live where it snows won’t settle for less.

Towing
Most sedans offer very modest towing capacities—if any at all. Most max out around 1,000 pounds. Clearly, if towing is in your future, an SUV or a pickup truck is the way to go.

New vs. Used
Like with any type of car, the first decision to make in choosing the right car: Will you buy new or used?

Buying a brand-new car certainly has its benefits. New cars have the very latest safety gear and engineering improvements, not to mention a bumper-to-bumper factory warranty. With a new vehicle, you know what you’re getting; you don’t have to worry about potential service problems or concealed collision damage. Further, you can have your choice of color, trim line, and option level. And financing rates are typically lower than for a used vehicle.

The key drawback to buying a new car is how quickly it depreciates. New cars have been known to shed around a third of their value in the first two to three years. Financing a new vehicle with a small down payment can easily make buyers “upside down” on the loan, where they owe more than their car is worth.

Buying a used car can save money up front and over the long haul. Plus, the U.S. used-car market is about three times the size of the new-car market, so there are plenty of choices. A 2- to 3-year-old vehicle, possibly one that has been returned from a lease, has already taken its biggest depreciation hit and should have the majority of its useful life ahead of it. Modern sedans, if soundly maintained, can run for 200,000 miles or longer. Checking with CR’s reliability data can help you zero in on a model that might give you fewer headaches down the road.

Again, focus on reliability when selecting a good new or used car, even if the vehicle is still covered by its original factory warranty. Check with Consumer Reports to find those that have top-notch reliability scores.

Whether buying new or used, it is important to do a little homework to choose a good model and to follow that up with effective negotiation.