12 Personal Finance Bloggers Answer – New or Used Car?

by Shawanda Greene

Post image for 12 Personal Finance Bloggers Answer – New or Used Car?

When it comes to saving money, big or small, I sweat it all. But today, I’d like to pay my respect to one of the largest and most cumbersome expenses in many U.S. households: cars.

We love ‘em here, don’t we?

I certainly have some pretty strong opinions about whether it makes more financial sense to buy a new or a used car. After participating in a BudgetPulse (#bp) Twitter chat surrounding the topic of cars, I realized I wasn’t the only one with dogmatic beliefs on the matter.

Given how passionate many of the chat’s participants were, I wanted to delve deeper into the minds of the personal finance bloggers on the new versus used car debate – in more than 140 characters.

So, I e-mailed them and asked them how they really felt.

Image Source: Accounting Degrees Online

Peter Anderson at Bible Money Matters

Preference: Used

At our house we have two paid for cars that we saved up and paid cash for, used.  My car is a 2006 Chevrolet Impala that we bought with less than 30,000 miles for less than $10,000.  My wife’s car was a bit more expensive, a 2002 Honda, and it had less than 20,000 miles when we paid cash for it in 2004.   It’s still running and has less than 65,000 miles on it!

Because we have no car payments, and because we didn’t have to absorb the large initial depreciation of our cars, we’ve gotten a much better deal on them, and we’re saving and investing our car payments for the future!

Craig Kessler at BudgetPulse

Preference: New (if you’re out of debt)

I had no debt at all, and my car died on me. I decided it would be best to just buy a brand new car. The reason for this is because I plan on keeping the car as long as possible, which could run 10 years. Certified pre-owned cars are not cheap. Those cars could run $17K when my brand new car cost $20K. For the extra few thousand, I would rather have a brand new car with no issues than by a car that is 3 years old. I bought a used car in the past and put a lot of money into it because it had issues. I recommend buying a new car that you can afford if you are in a situation where you have no debt.

J. Money at Budgets are Sexy

Preference: Used

Owning a 17 year old car myself (93 Cadillac De’Ville baby!), I’m a huge believer in only picking up used cars.  That’s not to say I wouldn’t get a current year’s model – but just that it will never EVER be fresh off the lot.

People say it all the time, and it’s totally true – the second you drive a brand new car off the lot you lose money. And a LOT at that.  Why not just look around for one of a dozen 3 month old cars instead?  It won’t technically be brand new, but if it saves you $5,000+ wouldn’t it be worth it? Just because it’s “used” doesn’t mean it’s 5 or 10 years old. People return cars for crazy reasons sometimes, not always for defects.

Kelly Whalen at The Centsible Life

Preference: New (especially when you know how to haggle)

We actually just purchased a new car. I wrote a post about it here.

The car we wanted was redesigned in 2009, and the 2009 models even with thousands of miles were the same price as new. We got an awesome rate on our loan, which made the new car a better deal. We have a 12 year old who will be driving in 4-5 years, so getting a good car we are driving for a few years first makes financial sense. We know how to negotiate, and got a great deal on the car paying about $1,000 less than people in our area typically spend on the same car.

Debt Hater at Debt Hater

Preference: Used (now that she knows better)

I’ve never purchased a used car, but that was because I didn’t know squat about buying cars when I bought my first one…or the second one. I bought the first car before I was in debt. I bought the second one while I was deep in debt. I searched for a used car when I got my second one, but couldn’t find one that I wanted. And the ones I test drove were ugly, smelly and I could just feel the other owners in the car.

I didn’t go on my personal finance journey until well after the purchase of the second car. That’s when I learned how much a car depreciates as soon as you drive it off the lot! And given how quickly people trade in gently used cars, there’s always a good used model available.

Brad Chaffee at Enemy of Debt

Preference: Beat down (until he’s rich)

Would I ever conceive of buying a brand new car? Probably when I am loaded, but only then, and by loaded I mean when I am a millionaire. I buy beaters and even though I replace them more often than I would have to replace a new car, I promise you that I still spend less when the dust settles. In 2 years I have spent $2,500 on 3 different cars. The first, (I re-sold for $300) I drove for more than a year before I upgraded. The upgrade cost me $500 and if you add that to any maintenance I paid during that time, I would say I am still ahead of the game. My wife’s car was bought for $2,000, in 2008 and is still running strong.

Cars depreciate, so why would anyone willingly “overspend” just to satisfy the kid within them who says a new car smell is worth the money lost? Not me Jack!

Mrs. Micah at Finance for a Freelance Life

Preference: Gently Used

Between the extra money it’d add to our overall debt, and the immediate depreciation, we decided not to get a new car. In the end, we got one that was 2-years-old, low-mileage, and priced just above Kelly Blue Book value for its year (we might’ve been able to get a better deal, but we’re not fond of bargaining). It wasn’t underwater for very long and has been easy to keep maintained.

Qi at FrugalNYC

Preference: It Depends

If you cannot purchase with cash, I vote buy used. Cars depreciate the most right after you drive them off the dealership lot. If I were to keep the car for its life, which makes the most financial sense, I think it’s wise to buy new – if you can afford it.  If I planned to have a car for only a number of years, I believe it makes sense to buy used.

Red at Girl with the Red Balloon

Preference: Used

All three cars I’ve owned were bought used. To me, it doesn’t make any sense to spend $20,000 on a vehicle that depreciates so quickly after it’s driven off the lot. I would much rather put that money into a retirement account than into a vehicle. That being said, used cars come with their own set of problems. The 1988 Chrysler Le Baron I was given for my 16th birthday had major problems with oil leakage until I finally sold it four years later.

Torrey McGraw at Men’s Playbook

Preference: Very Used

Some will argue that new cars give them a better peace of mind because they shouldn’t have any problems. But my experience with used cars has been great.  My current car has 160K miles (bought with 101K miles). My last car had 220K miles (bought with 70K miles) when I sold it.

There’s some work I advise you to do before buying used.

  • Check reliability ratings (e.g. MSN Autos)
  • Buy private party – I hate the hassle of salespeople, and I can often times haggle when talking private party.
  • Have a mechanic look at the car – You can save tons of headaches and uncover mechanical problems.

Clare at MoneyEnergy

Preference: Used (when the day comes)

As someone who does not own (and has never owned) a car but plans to purchase one within the next year to two years, I’d suggest other first-time buyers choose a used car as their first purchase. Similar to a “starter home,” your “starter car” can be a learning vehicle and will allow you to get to know what you want in a car.  There is a wide range of options within the “used car” category too.  You can always go with a one-year-old favorite – it doesn’t mean you need to buy a 10-yr-old car.

Well Heeled at Well-Heeled Blog

Preference: New (for certain models)

I have an old Honda sedan that I inherited from my dad, so it worked out perfectly. Even though the car has a lot of miles on it (almost 250K at last count), it’s still in very good condition for how old it is. I am trying to delay buying a new car for as long as I can, because the costs associated with a new car are so high – down payment, monthly payments, insurance, etc.

Many personal finance experts advocate buying a 2-3 year car to avoid the initial hit of depreciation. If I’m buying a luxury car such as a BMW, I’d certainly go this way. But there’s not much difference in price between a new Honda and a 2-year-old Honda, so I’d rather just buy a new car, know for certain there are no problems, and then drive it for 10+ years.

I’ll try to refrain from weighing in on the debate here and, instead, refer you to a blog post I wrote lamenting my decision to buy a new car.

This article was featured as an Editor’s Choice in the Carnival of Personal Finance #246: March is the month for … what?!? at CreditCards.com.

What factors did you consider before deciding whether to purchase a new or a used car?

Do you strongly agree/disagree with a position taken by any of the personal finance bloggers?

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{ 39 comments… read them below or add one }

FrugalNYC February 18, 2010 at 2:49 AM

Thanks for including me on this Shawanda, you did a great job of getting all the different perspectives.


@centsiblelife February 18, 2010 at 3:18 AM

Thank for including my thoughts! I really enjoyed reading this, and think it offers a lot of different perspectives, which leads me to think if 12 personal finance bloggers can't agree there is no right answer. :) Though I think we all agree no one should buy more car than they need.


Brad Chaffee February 18, 2010 at 3:43 AM

This is a fantastic post Shawanda, and a great idea to bring so many perspectives to the discussion. Buying a car is the single biggest expense that we have in our life that depreciates in value. You have to get a pretty LARGE deal in order to justify the money lost from driving it off the lot, and I know of hardly any dealerships willing to go low enough to meet that level of savings.

I've bought MANY junk cars only to get screwed in the end, and surprisingly enough I still would rather buy used. Why? Because I know that you can get a 1-3 year old car that is practically new if you look around and wait for the right deal. Craig – You used "certified pre-owned" in your example but you also didn't take into consideration that the dealerships are usually way higher than private sales. You can also have any car you are trying to buy looked over by a trusted mechanic.

I missed the Twitter chat so I am still quite lively on this topic. The thing about personal finance is that it is indeed personal so whatever decision someone comes to is the decision they decided was right for them. I have to admit though that hearing pf bloggers justify buying a depreciating asset makes me slightly queasy. LOL No offense to those this refers to though, I still love ya, we just disagree. :)


Lakita (PFJourney) February 18, 2010 at 8:26 AM

Used from now on! In fact, I dedicated a story how my new car purchase was the dumbest financial move I’ve made. I can’t wait to be free from that debt continue to drive the car for another 5-10 years and buy my next vehicle and everyone afterwards outright.


Jolyn@Budgets February 18, 2010 at 2:27 PM

Since I didn't get you emailed in time!! I'll just add my two-bits here:

We will never buy new again. And I say that as someone whose husband knows about cars, so I feel confident we can buy used cars in good shape as the need arises.

Ideally, we buy cars about 2-3 years old, but usually they're older. The last vehicle we purchased was our first family van. It was five years old at the time. It's a VW, so it will go strong for miles and miles more. (It's the last item in our snowball and will be paid off this month! YAY!!!)(No, we didn't pay cash. Boo. We had just moved from overseas and also were buying a home: We became very cash-poor very quickly.)

My husband drives a '99 Toyota 4Runner (that we bought used) which we will run to the ground. It may someday be our 14yo son's first car he drives? (I think my husband is just looking for an excuse to buy a car he "really" wants.) (I say, "As long as we pay cash for it!")

Main thing: buy what you can afford. If cash is not possible, then find a friend who can help you choose a reliable used vehicle if you are not engine savvy yourself. Yes, there are great deals on financing new vehicles, but look at the debt load you will be taking on. Is it really necessary? Research consumer reports. Talk to friends (or strangers!) who are driving older, reliable vehicles. Even new cars break down. (Hello, Toyota?)

Early, early on in our marriage, we were so poor we had to borrow cars to drive from family members. We finally financed a very used vehicle: My husband found one from the original owner; it looked rough on the outside, but ran great on the inside. It cost ~$3000, but we were lucky to scrape together $300 cash at one time… Luckily, my small hometown bank gave us a loan based on character, as our credit history was so short. My only regret is that we did not keep that vehicle longer! We "upgraded" as soon as our income improved, even though the car was running fine…

Oh, if only I knew then what I know now!


Moneymonk February 18, 2010 at 3:27 PM

I always buy slightly used at least 2 years old, but not over 5 years


J. Money February 18, 2010 at 3:40 PM

Wow, I thought a lot more PF bloggers would choose Used over New – interesting to see everyone's perspectives :) It def. comes down to personal preference, so as long as you're sticking to what works for YOU it'll always be good.


corrin February 18, 2010 at 4:17 PM

Interesting post! We typically buy new cars, but they get passed around and driven for 10+ years. In the past two years, I've driven a 11 year old Grand Am and a 10 year old Grand Prix. I now drive a 2010 Prius and I guarantee someone in my family will still be driving it in 2020.


Peter February 18, 2010 at 4:31 PM

Used all the way baby! Even if you want a newer car, you can buy a 1-2 year old car with little to no problems, but for thousands of dollars less. Used every day!


Torrey February 18, 2010 at 4:52 PM

This is really an eclectic collections of opinions. Just for additional background, I drove the car that had 220K miles from 1999-2007 (bought for $8K). I'm not a huge car person, so I focus on cost 1st, reliability 2nd and looks last. Thanks for including me on this!


Torance February 18, 2010 at 12:20 PM

Great job on this post. I love everyones opinion but I prefer buying used. That’s after buying new and several used.


@DebtHater February 18, 2010 at 8:54 PM

Thanks for including me! I would also see a gently used vehicle. Certified Pre-Owned isn't much cheaper than brand new, but it's still $1k – $2k off, so I think I'd take it!


craig February 18, 2010 at 11:43 PM

Thanks for including me in the post. So many great answers and very diverse ones from everyone who have different thoughts.


FinEngr February 19, 2010 at 6:13 AM

HA – These are great. It sounds like some of these cars may have trouble passing inspections! :)

I'm used all the way, but a tidbit of advice to consider. It seems like the toss up originates from the previous owner and how well they cared for it. The age of the car is important, but you can do a lot of damage in a short amount of time by neglecting regular maintenance.

See if you're able to obtain a maintenance log, or some sort of repair record. At a minimum, grille the seller with questions to get an idea of how committed they were to maintaining the car.


Shawanda February 23, 2010 at 4:16 AM

When I finally got rid of Betsy, there's no way she could've passed a safety inspection up here. But then again, I brought her from Florida. I remember the friend of the lady I ended up giving Betsy to remarking that people in Florida can have a garbage bag for a window and it be okay. Ah, sweet freedom.


Mocha Dad February 20, 2010 at 12:01 AM

I have bought new and used cars throughout my life. The decision was based on my needs at the moment. I think you can get good deals either way.


Financial Samurai February 20, 2010 at 7:46 AM

Hi Shawanda,

Generally, I go used, but new or used, so long as one can fit the 1/10th rule into their car buying equation, that's good enough! Basically, spend no more than 1/10th your gross annual income on a car!

Hope to see you around.

Best, Sam


Shawanda February 23, 2010 at 4:18 AM

I've never heard the 1/5th, oops I meant 1/10th rule. I like it. It's nice and conservative. Wish I'd followed it. Thanks for sharing that.


Frugal Babe February 23, 2010 at 5:28 AM

I have a 91 Civic and a bicycle. Between the two, they get me everywhere I need to go. We bought the Civic in 2003, for $2300. It is still going strong, with 218,000 miles on it. I hope to still be driving it five years from now (I only put about 3000 miles/year on it, since everywhere I go within five miles of our house is by bike). I doubt I'll ever buy a car that isn't at least 7 – 10 years old.


Ted February 26, 2010 at 7:50 PM

Awesome post! If I had more money, I would be tempted to buy new. There is usually a decent warranty. I would drive it for a while, then pass it on to the kids, and I would not have to worry about depreciating value too much. With limited income and a need for an update sooner than later, I am going to buy used next with no qualms. What I would never do is buy a new model car in the first year of its run. Usually major kinks are worked out in the 3-4th run of the same model.
Great post.


Lawgirl February 27, 2010 at 7:02 AM

My husband and I bought our 2007 Corolla new three years ago on the theory that it was worth it because we would drive it forever and run it into the ground. Last year, however, when we wanted to buy a second car — a larger crossover vehicle for our growing family — and we wanted to pay in cash, buying new wasn't an option. With a bit of research, we purchased a 2006 CRV with 20,000 miles on it for $14,750 — about $9000 less than the blue book value of a new CRV! (We had a mechanic check it out first, and he thought it was a mint.) I couldn't be happier. We have had to pay for nothing but oil changes, and it has fewer miles than our 2007 car. I joke that I expect it to run as long as there is gasoline to buy. After this experience, I'm not sure I could go back to buying a brand new car again!


Barb February 27, 2010 at 10:24 PM

I was always a "used car" buyer, but when I got married, I converted to my husband's religion…"buy new." Since we almost always pay cash and keep the car at least 10 years. It's probably a good decision. I would rather have more cash in the bank than try to "keep up with the Jones'" so we buy a modest car and proudly drive it into the ground!!!!!


Adam@Magical Penny March 1, 2010 at 8:28 PM

I recently wrote about this on my blog too. I've yet to buy a car but it's going to be a used one because I won't know any better (avoiding lifestyle inflation where I can) and its a big easy win.
Great question though and I'm surprised there's so many people on the 'new' side of the debate.


David May 23, 2010 at 6:18 PM

Many people these days only look at the bad in something. They seems forget how good something is…..!


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I was looking around for Modern Entertainment Center or Modern Wall Unit (I’m not really sure what the difference is LoL) and was wondering if you know any resources to explain what I need to know to make an informed buying decision. Any feedback is much appreciated.

Thanks in-advance for all your help


Check out the link to this article I found about Entertainment Centers



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@Matt76Allen October 6, 2011 at 9:48 AM

Some of the comments here are so long, they could be an entire blog post in and of themselves. That is exactly what I did, posted my response in a blog post. To see why I always buy used, and never from a dealer, please see my post @ http://t.co/TZyx8C4d


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