I had to laugh when I read that... buying a 1 yr old 40K car for 15K... just a little too much optimism IMHO. 25K maybe, but not 15K unless it has been utterly abused or has very excessive mileage. OK, so even with the $10k from the 2005 car, what about, change over costs, reality of further depreciation on '05 car, the fact that it is not the same as a '10 car.....
I have something else worth consideration... It's called
LCC (life cycle cost). This concept, applied across many industries, is used for large fleets and is very useful for the private consumer. Personally, I have had experience in the management of a ~4000+ fleet, so perhaps I am not totally speaking out of my rear end.
1st point. Comparing a new car to a used car is not comparing apples with apples.
2nd point. The LCC is useful to determine the cost differential from differing options, like new vs used. It includes all purchase, operating and disposal costs for each option which can be reduced to $/km.
3rd point. When using a LCC comparison, you need to be mindful of consistency. Ie. A new car, fully insured, financed & dealer serviced DOES NOT compare to a used car, 3rd party insured, paid cash & otherwise serviced. This is not a COMPARABLE situation. However, all other variables being equal, New vs Used, can be...but it still isn't really apples & apples.
My point? First establish some ground rules. (Criteria) Ie. Upfront expense (purchase cost), annual Kms, type of insurance sought (ie. comprehensive) manner of servicing & maintenance (ie. dealer, local workshop, self)
Once you have that sorted, you can more aptly determine the pros/cons of each purchase by being consistent and confined to YOUR requirements.
Of course, spending 10k on a used vehicle is cheaper than 25K on a new one (by 15K upfront) BUT what is the real difference over say, an estimated 5 yr ownership cycle? What are the running costs, maintenance cost estimates, relative reliability of each, depreciation etc...
Only now, will you be able to make some sense of the numbers and then attribute a VALUE to each of your original criteria to enable a fair comparison. Ie. Reliability may be important if your vehicle helps generate income, so you might be prepared to pay a little more for that. Or, weekly running costs may be more of an issue, so you might rate that higher.
Personally, I have bought New and Used. New is not necessarily a bad choice, if you can
afford it, as it comes with piece of mind. (proper warranty) Certified used is another good alternative. My latest purchase was used, because I
wanted to stay within a certain budget, pay cash, yet have something fairly reliable. 11k can buy something decent (where I live anyway):
Final point. Comparing New / Used is not easy, and not really selecting from the same apple cart. If the final straw is $, then do a LCC comparison & will see $/km. Keep on looking at newer used cars until you hit your $/km threshold. Hint: NRMA has done most of this work for you if you look for it.
Happy car buying
