Should You Buy a New or Used Car

hi I'm Greg your car angel which is the better choice a new or used car in this video I'll be showing you why a used car is really the best choice so in this graph that I'm drawing for you this line represents your money and this line represents the age of the car beginning when new and when it's two four six eight and ten years old so now of these years I'm assuming twelve thousand miles per year all right okay so that is how many miles are being driven per year if you were to buy the car new here you'll find that most of the depreciation in the car happens pretty much in the first couple of years and it evens out as the car ages in other words you will lose most of your money on a car's value in the first few years and as the years progress you're going to have less and less depreciation between individual years money that you lose and depreciation is here in the first few years you will also on the other side by buying a new car have very little repair cost if any in the first few years so that's why I begin it down here okay so here the green being your repair cost are low at the beginning and they start going up over time exponentially okay so now you have your depreciation and you have your repair costs so the question is should you buy new and have the heavy depreciation in the beginning but have very little repair cost or buy a car that has had a lot of depreciation that's occurred and risk the repair cost and the answer to that is what I call the sweet spot and the sweet spot occurs at about the second year and goes to the eighth year and that would if you're putting on twelve thousand miles a year that would be between twenty four thousand and ninety six thousand miles and this sweet spot is what I consider the best financial choice to own a car cars are built so well these days that the sweet spot is at twenty four thousand two ninety six thousand miles so this scenario you're going to get the best possibility of getting the car for the best price with the least amount of maintenance during your ownership most people buy a new car because there's very little risk involved in other words there's no repair cost but the best financial move is really to get into this sweet spot right here and what I have done at my website car buying support calm is to show you how to successfully buy a high quality used car in the sweet spot for the best money whether you're buying from a private party or a dealer so I encourage you to go to that site and I will teach you exactly how to get the best car at the best price with the best experience I'm Greg your car angel thanks for watching I'll see you in the next video

Channel: undefined

Views: 2,068,481

Rating: 4.6471863 out of 5

Keywords: car, auto, depreciation, repair cost, expensive, new or used, used car, new car, buy, purchase, sweet spot, finances, used

Id: TmpICSpni1A

Length: 4min 19sec (259 seconds)

Published: Fri Mar 11 2016

Reddit Comments

[u/feurie]

It's a general idea. It's the same thing.

[u/run-the-joules]

There's not enough data to create a reliable graph, IMO.

[u/Blind_at_Sea]

Depreciates a little less than competitors. Here’s a few auction averages curtsey of Manheim.

Model S MSRP $74,500 - ‘14 Tesla Model S 60 $40,100 - ‘15 Tesla Model S 60 $45,500 - ‘16 Tesla Model S 75 $58,300 - ‘17 Tesla Model S 75 $63,000

Mercedes S550 bass MSRP $96,600 (To be fair, they now have a cheaper model S 450 starting at $89,900 but that wasn’t available prior) - ‘14 Mercedes S550 $42,500 - ‘15 Mercedes S550 $49,100 - ‘16 Mercedes S550 $63,600 - ‘17 Mercedes S550 $71,100

Audi A8 MSRP $83,800 - ‘14 Audi A8 $26,300 - ‘15 Audi A8 $32,200 - ‘16 Audi A8 $34,600 - ‘17 Audi A8 $40,700

If you have any other car suggestions I might do 1 or 2 but I’m not gonna sit here pulling MMR numbers all day.

Keep in mind this is wholesale pricing, not retail.

[u/Teslaorvette]

The repair cost curve is flatter for longer. The depreciation curve is a more gradual slope.

[u/Brutaka1]

Well what's odd is that Model X's tend to hold their value more than a Model S for some reason. I'll see a 2016 Model X with 30k miles worth 78k while a brand new one is just as much.

[u/Vic18t]

It’s tough to say how repair costs will be for a Tesla in the future. But as it stands today, an out of warranty Tesla that needs repairs is far more expensive than an ICE car.

[u/jrherita]

The Depreciation curve of EVs is definitely different than Gas cars -- part of the curve is the ever decreasing useful life of the battery; once the battery is replaced though the value of the vehicle probably actually goes up a little bit (albiet not as much as the battery replacement cost).

For Nissan Leaf - At 12K miles/year the 5-7 range is where the battery really 'needs' replacement (24-30kwh example). The Model 3 is probably more of a 8-13 year (standard-long range).

After the battery, the federal and state credit incentives have some influence on used pricing. For EVs where demand is being met (Leaf, other brand PHEVs) the depreciation curve is initially a cliff based on the EV credits. By the time Model 3 is produced enough to meet demand, there will likely be $0 federal incentive, so expect a slower-than-normal for EV curve for Years 1-3. i.e. Your hit shouldn't be terrible if you buy now for the first few years..

Expect some additional steps in depreciation when:

1. The OS No longer gets updates (at least 6 years out, based on Model S)

2. Battery tech gets significanly more advanced/cheaper reducing cost of newer Model 3's (IIRC Musk indicated a 30% improvement coming in ~ 2-3 years), though he may not reduce price especially as other makers are behind Tesla.

3. A newer smaller, cheaper EV from Tesla comes out, (5+ years) as that might reduce the 'expected premium' for EVs, putting downward pressure on Model 3.

All up, the natural depreciation curve is probably similar to the video.. If the federal tax credit is extended for Tesla then expect a steeper initial depreciation curve in 2019-2020, based on other EVs.

[u/dnizzle]

r/theydidthemath