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In this country, a new car can seem like a status symbol. Lot's of people can judge you based on the type of car that you drive. I work at a school and my students can be very vain. When they find out that I have a 2005 Pontiac Grand Prix, then some of them will give me a hard time. This doesn't last long, because they realize that it doesn't bother me and that I am proud to have a ten year old car. Plus, I respond with the fact that I have that car to save money and they really don't have a comeback for that. Most of my students believe that I am cheap. I would agree with that statement, but I prefer to call it frugal. Buying a used car instead of a new car can be very beneficial.
Reason 1: Safety
The other day I was talking to one of my friends and I mentioned that I didn't want to buy any new cars. He stated, "You might change your mind after having kids." This statement is meant to make you think that the only safe cars are brand new cars.
This type of thinking pressures us into believing that a new car is the only thing safe enough for the brand new addition to the family. I responded to my friend, "there are plenty of 2-3 year old cars that are reasonably priced. Heck, there are even $10,000 vehicles that are good cars." I want my next vehicle to cost $10,000 or less and this is because I refuse to buy a brand new car. There are so many financial reasons to avoid purchasing a new car, but is there any research to the idea that used cars are just as safe as new ones?
I was not able to find any articles on this topic, but I did research the highest rated vehicles on safety. I looked at the Top 10 top rated SUVs for 2017. The National Highway Traffic Safety Administration gave the 2017 Ford Expedition a 5-star rating on crash safety. Below I will list the crash safety ratings for the Ford Expedition.
- 2017 Ford Expedition: 5-star Crash Safety Rating
- 2016 Ford Expedition: 5-star Crash Safety Rating
- 2015 Ford Expedition: 5-star Crash Safety Rating
- 2014 Ford Expedition: 4-star Crash Safety Rating
- 2013 Ford Expedition: 4-star Crash Safety Rating
- 2012 Ford Expedition: 4-star Crash Safety Rating
- 2011 Ford Expedition: 4-star Crash Safety Rating
- 2010 Ford Expedition: 5-star Crash Safety Rating
The Ford Expedition has received an overall 4-star or higher crash safety rating from the National Highway Traffic Safety Administration for seven straight years. So, if you are interested in buying a Ford Expedition, then buy one used, because they are just as safe or a little less safe than a brand new Ford Expedition. Let's look at one more example and this time we will look at a minivan.
- 2016 Toyota Sienna: 5-star Crash Safety Rating.
- 2015 Toyota Sienna: 5-star Crash Safety Rating.
- 2014 Toyota Sienna: 5-star Crash Safety Rating.
- 2013 Toyota Sienna: 4-star Crash Safety Rating.
- 2012 Toyota Sienna: 4-star Crash Safety Rating.
- 2011 Toyota Sienna: 4-star Crash Safety Rating.
- 2010 Toyota Sienna: 4-star Crash Safety Rating.
Once again, this vehicle received a 4-star or higher rating every year from 2010 to 2016. Is the newer vehicle in both instances safer. Yes. Technology is always improving, so newer cars will be mildly safer. The question that needs to be answered is: Is the difference in safety worth the extra cost in buying the newest model. I personally don't believe so. A used version of this car 2 years or older is going to save you up to $20,000 and it is mildly less safe.
Reason 2: Price
Now, we will take a look at the cost of these two vehicles and compare it to buying a brand new car. The costs of each will be listed below:
- 2017 Ford Explorer (5 star): $46,225
- 2016 Ford Explorer (5 star): $40,787-$45,834
- 2015 Ford Explorer (5 star): $26,200-$32,317
- 2014 Ford Explorer (4 star): $24,276-$30,141
- 2013 Ford Explorer (4 star): $22,331-$27,846
- 2012 Ford Explorer (4 star): $18,968-$23,785
- 2011 Ford Explorer (4 star): $18,436-$22,889
- 2010 Ford Explorer (5 star): $17,069-$21,338
All of the numbers above were found from Kelley Blue Book (KBB) and I looked at the price of just a used car. This did not include certified pre-owned vehicles. KBB has listed the fair market values. This means that buying this specific vehicle in this specific price range would be a fair price. The 2017 vehicle does not have a fair market value and only has the suggested retail price. As you will notice, the 2016 and 2017 Ford Expeditions are pretty expensive at close to $50,000. I wouldn't spend that much on a vehicle that drops nearly $20,000 in value in 2 years. Just look at the numbers for the 2015 Ford Expedition. You could possibly get it for $20,000 less than the suggested retail of the new 2017 Ford Expedition. Both the 2015 and 2017 have a 5-star crash safety rating, so if safety is what you are worried about, then the 2015 is a great option and it is cheaper only because it has been used. As the car gets older, then its price drops even more.
Next, we will look at the Toyota Sienna prices.
- 2016 Toyota Sienna (5-star): $26,342-$28,645
- 2015 Toyota Sienna (5-star): $20,503-$23,056
- 2014 Toyota Sienna (5-star): $19,667-$22,050
- 2013 Toyota Sienna (4-star): $18,365-$20,558
- 2012 Toyota Sienna (4-star): $16,992-$19,057
- 2011 Toyota Sienna (4-star): $16,194-$18,181
- 2010 Toyota Sienna (4-star): $14,941-$16,796
The price drop on the Toyota Sienna was not as drastic as the Ford Expedition, but you could still save over $7,000 dollars by purchasing a used 2014 Toyota Sienna instead of purchasing a new 2016 Toyota Sienna. You could save over $10,000 by purchasing a 2010 Toyota Sienna instead of purchasing a new 2016 Toyota Sienna.
There is also a good article on Money.com, that talked about how the cost in cars is decreasing while the cost of trucks and SUVs is increasing. People are buying larger vehicles and thus smaller compact vehicles prices are dropping. This article states that a used 2010-2014 subcompact car has dropped 26% to an average purchase price of $6,684. Oppositely, used SUVs and Trucks have increased 11.2% and 9.3% from this time last year. So, if you don't need the big truck or SUV, the economic decision would be to pick a used subcompact car.
Reason 3: Peace
A lot people use peace as the reason why they purchase a new car. The peace comes from knowing that you won't have to deal with repairs for a couple of years. I have written about this multiple time and you can read a more in-depth explanation in the articles linked here and here. In both articles, I basically explain that there is a false sense of security in purchasing a newer car. Especially, if you buy the car on debt. According to Edmunds, the average car payment in America is $483. Over 12 months, that would cost you $5,796 dollars a year. As a used car owner, I have not spent any more that $2,500 in a year on car repairs. Therefore, I have always believed that there is no real sense of peace in having a new car. The monthly payments alone will kill your bank account. Avoid the debt and pay cash for used cars and then save some money to make sure you can handle any expenses that pop up. They are going to pop up. My car has needed a major repair every year since 2012, but I feel fine repairing it, because it costs me less to repair it than paying monthly payments, and it costs me less than buying a new used car.
The other thing would be that some people would be worried about a used car just breaking down on the side of the road. This would cause some extra stress and could lead to missing an important meeting or event. This can happen, and luckily it has never happened to me. I think with routine maintenance and some knowledge in understanding when you car is about to have an issue, then you can avoid this. All of my issues with my car were caught prior to them becoming anything major. Therefore, I took it in to get looked at and the auto repair shop was able to fix it and everything was fine.
The people who buy new cars believe that there will be less stress and more peace. I actually remember feeling a little stressed after buying my 2005 Pontiac Grand Prix. I had buyers remorse, because I had just taken out an $11,000 dollar loan. I was more worried about being able to make the payments than anything else. I did not have a sense of peace, while I had that car loan. Now, I have a car that is 100% mine and sure I have to get it repaired sometimes, but dealing with repairs is not as stressful as having to worry about making that car payment monthly. So, I take peace in the other form of no car payment.
Putting It All Together
In this article, I wanted to show three things. Safety of used cars is less than a new car, but not nearly enough to justify an extra $7,000 to $25,000 difference in cost. The safety and price reasons are connected, because you have to look at the safety ratings in conjunction with the prices so you can make a decision based on safety and price. Don't let a false sense of security push you into buying a brand new car. Most used cars are just as safe as their new models. On top of that, you can't let yourself be sucked into the idea that a newer car will have less maintenance issues. All cars can have maintenance issues, so don't let that be a reason to push you into buying a new car.
Note: The data used in this article was pulled on Sunday, July 10, 2016. The data and numbers are subject to change by the time that this article is read.