The Smartest Way to Buy New Cars

[ZINCYELLOW01]

Play devil's advocate here, SVTP.

A pretty successful guy once told me that the best way to save money buying cars was to do the following:

1. Pick a vehicle that is likely to hold its value better than others
2. Buy said vehicle for the best deal possible
3. Pay off said vehicle within a year or two
4. Trade in before depreciation gets out of control (2-3 years, before 60k miles, etc.)
5. Trade in at a point in the year when new models have been on the lots for awhile and incentives are aggressive

That strategy, assuming you have the means to do it, means that you pay the spread between the old and new cars once you pay off your initial purchase. By minimizing the cost of the spread, you could potentially be driving new(ish) cars for the rest of your life for a relatively low cost.

The problem is that I have never seen a new car hold its value well enough for this to make financial sense. If the strategy is BS, what's the most financially responsible way to buy a new car? Any tricks beyond obtaining the lowest interest rates and shortest loan terms possible?

 

[nonliberal]

Unfortunately the way the market is set up you are going to lose your ass the minute you drive off the lot in a new car normally to the tune of about $10,000 on an averaged priced new car these days. Much more on a higher end luxury model.

It's not as fun, but the best way to buy is get one that someone just lost their ass on. So they are upside down on their current vehicle because they are still paying for the vehicle in your garage that they traded in. ;-)

 

[KingJacobo]

I know a guy who flips sweet cars cars for a profit/breakeven every time. He buys rare cars like the boss 302 right when th3y come out, sell 6 months later when demand is still through the roof, and buy another car/trade for slightly used car, under 12k mi. Repeat.

 

[spitin venom]

New cars are good if you plan on keeping them for a long time. They always drop like a rock the first couple years. They also drop really hard when the market gets flooded with lease returns.

 

[ZINCYELLOW01]

I'm looking at new Grand Cherokees. My dad works for Chrysler and I can get employee pricing because of that connection. I always told myself that I would buy used but a new Jeep is so close in price to a three year old Jeep that it may make sense to buy new. Thoughts? I also think the high-end luxury trim levels like the Summit will depreciate more rapidly than the middle-of-the-road Limited trims.

 

[rotor_powerd]

Smartest way to buy new cars? Don't. Buy used cars that are a model year or two old. You'll be on or ahead if the depreciation curve and won't have to worry about picking "the right car."

 

[gt347mustang]

The smartest thing to do is NOT buy a new car. The minute you drive off the lot the value drops like a rock. A jeep is one of the worst cars when it comes to holding its value.

The only car that comes to mind that would have been a good "new" buy is a Ford GT. Those have only gone up in value.

 

[jbs$]

Rotor has it right, I don't always do it that way, but, it is good advise.

 

[o2gt]

I know a guy who flips sweet cars cars for a profit/breakeven every time. He buys rare cars like the boss 302 right when th3y come out, sell 6 months later when demand is still through the roof, and buy another car/trade for slightly used car, under 12k mi. Repeat.

I can see this working maybe with a car like a boss and a few exotics but other than that what cars he he doing this with? i would think you would eat your profit margin up with taxes and fees.

As to the question if your going to buy a new car, i would try and get the best deal you can, then be prepared to lose money. don't take out a long term loan as you will end up paying lots in interest payments this only adds to the overall cost of your new purchase. dont buy a car for an investment just buy something you like and enjoy it. except the fact that this will likely be an event that you will lose money on and agin have fun with what you buy.

 

[jbs$]

It may work if you are paying cash. Lot of risk involved.

 

[CaDDy]

It may work if you are paying cash. Lot of risk involved.

+2
It seems that the only way to get hit with minimal losses is to pay cash and sell within 1.5 or 1 year to retain as much as your money as possible.

I can't help but think about the mustang I could buy today if I had held onto the 25k I dropped on my GT back in 05. I financed more than half of my car though and with my most recent mod (TVS) lol at getting even 15k for my car.:cuss:

 

[Kiohtee]

I wouldn't even consider buying a new car if all you have in mind is making money off it. If driving newer cars is your thing, I'd look into leasing. The only reason we bought a new car is because it's my wife's, and she keeps her cars for 5-6 years and puts a solid 100k on them.

 

[03SonicBlueGT]

The smartest thing to do is NOT buy a new car. The minute you drive off the lot the value drops like a rock. A jeep is one of the worst cars when it comes to holding its value.
The only car that comes to mind that would have been a good "new" buy is a Ford GT. Those have only gone up in value.

I was lurking, and saw this.. That is absolutely not true. Jeep Wranglers have one of the best resale values. I sold someone a '12 Wrangler Unlimited on Black Friday of '11 and they put 21k on it in one year. They traded it in Dec 31st of '12 and broke even. Got rid of it for a '13 and their payment was within 10 bucks of what it was the year before.

Check local car lots. Look at '12-'13 wranglers. I guarantee their prices are VERY close to a brand new one.

 

[WireEater]

That's one of the reasons I got my car aside from liking the WRX is they hold their value VERY well. Better than most cars I've seen. You can barely find low mileage used one for the price of a brand new one. Mostly do to supply VS demand. Dealers will hardly have them on the lot and you have to special order and wait.

I paid 26k before taxes for a used '12 with 14900 miles. I could have ordered a new one and got it for around the same price but you have about a 3-4 month shipment time.

 

[GM Nitemare]

I never thought buying a new vehicle made sense ever. But if you do. Try to get it at 0% financing. At least that won't hurt as much. Buying in the fall season used to be a good idea. As the newer year models would arrive. But they are coming out before that now. I bought a new 2012 Ram 3500 diesel in may 2012 for dealer cost. I can sell this truck for close to what I paid for it. Which is mind blowing. As this has never happened before. Buying a used low miler is not always the best idea. If you compare interest rates. Sometimes the new ones are cheaper over time.

 

[jbs$]

As with almost anything else, focus on the "out the door cost". It makes little difference to you, and, the dealer can make very confusing, if you get concerned with the individual line items. Also, buy nothing else, you can always go back or on the net for any add-ons you may want.

 

[thomas91169]

lol @ $10k depreciation driving off the lot.

Where are all these sub $20k 2014 GT's at? Maybe 2-3yrs after they are in the low to mid $20's for a '11 with 40-50k miles on it, autofagic with a crappy color nobody wants.

The best advice is to put down as much as possible so you are always at or ahead of the depreciation curve, not behind it.

Smartest way to buy new cars? Don't. Buy used cars that are a model year or two old. You'll be on or ahead if the depreciation curve and won't have to worry about picking "the right car."

Thats nice if you dont want warranty and dont want to know that you were the first person to drive the car hard/agressive or whatnot. IIRC most warranties, if transferrable, are only for half the term/mileage for the second owner. So that 3yr/36k warranty on that 2012 GT you just got used is going to run out quick (just an example, I forget what the warranty is on a GT but just saying).

 

[thomas91169]

I bought a new 2012 Ram 3500 diesel in may 2012 for dealer cost. I can sell this truck for close to what I paid for it. Which is mind blowing. As this has never happened before.

Thats because its a Ram. Try doing that with a F150 and see what happens. Rams always have the short end of the stick with resale and dealer incentives because the dealerships have a hard time moving them.

 

[Coiled03]

I wouldn't even consider buying a new car if all you have in mind is making money off it. If driving newer cars is your thing, I'd look into leasing. The only reason we bought a new car is because it's my wife's, and she keeps her cars for 5-6 years and puts a solid 100k on them.

This.

If you absolutely have to be in a new car every couple years, lease, don't buy.

 

[thomas91169]

This.

If you absolutely have to be in a new car every couple years, lease, don't buy.

Agreed.

Usually a menial down payment ($3-4k) and after the term you can walk away and lease something else.

Cant mod them though, unless you are never_enough...