This is a response to a blog post I read. In it, the writer simply asked the bloggers how they really felt on this topic and then posted their responses.
I was surprised at the responses of some of the bloggers who said they preferred to buy new, considering that I thought they were supposed to know a thing or two about smart money habits.
The Prefer New Responses
Overwhelmingly, the main reason responders said they prefer to buy new is for the lack of problems they will have with the car. They understood that the car loses value the second it is driven off the lot, but justified this by saying that they plan to drive it for a long time.
I tend to disagree with this logic in both cases. Who says that new cars won’t have any problems, and how do you know you’re going to drive it for a long time?
The Prefer Used Responses
Most of the responders said they preferred to buy used cars. The reasons varied slightly, but did not include their desire to drive old scratched and dented beaters all the time.
Of course everybody would like a new car, but these responders chose used for wise and sound financial reasons.
The biggest reason to avoid buying new was to not take the major hit in depreciation the moment the car was driven off the lot.
My Take on New Cars
I would fall into the category of people who have never bought a new car. My take on the issue is slightly different than all of the ones I read on Shawanda’s blog post. I agree with all of the financial reasons for not buying new, such as avoiding depreciation, better deals and lower insurance costs. But I look at the situation from an entirely different perspective.
Why do you suppose new cars lose so much of their value so quickly? Do they really actually lose their value, or did you pay too much in the first place? The only place you can purchase a new car is at a dealership.
You can’t buy directly from the manufacturer, and you obviously can’t buy a new car from a private party. Have you seen the big fancy buildings and showrooms at new car dealerships?
Do you know who is paying for those buildings? That’s right, the people who buy the new cars. So, did the car really depreciate, or did you just send send a huge chunk of money to the manufacturer, dealership and salesperson just for the privilege of owning a new car?
How I Buy Used Cars
When I am looking to buy a car, my number one rule is to avoid dealerships. I am not mad at dealers and I understand that they and their salespeople need to make a living. I simply choose not to contribute to their salaries by paying more for a car than I have to.
A used car dealer is no different from a new car dealer in that they have overhead expenses that need to be covered. In most cases, you will pay more for a used car at a dealership than you would if you bought from a private party.
Even if the dealership doesn’t make a huge margin on the sale of the car itself, they make money in many cases by selling you the financing or the rip-off extended warranty. I also prefer to avoid the whole haggling with a salesperson routine.
Private-party is definitely the way to go if you are looking for the best deal on a car. I have had luck with Craigslist for my last few car purchases.
Combine a Craigslist search with research on car values on a site like Kelley Blue Book, and you can’t go wrong.
In most cases the seller will accept a slightly lower offer than their asking price because that is just what is expected in private party transactions like this.