Financial Comparison New vs Used

Not sure if this is the appropriate area to put this worksheet but my analytical mind thought I'd share anyways.

Financially it typically makes more sense to buy a used vehicle vs new, however, I wanted to run then analysis and put some figures together to see what the "theoretical" data shows (I'm a Finance Director/Financial Analyst/Spreadsheet jockey by trade, so forgive me...).

Overall, it's not as much of a spread as I thought it would be, particularly once we get 80k-95k miles ( I think there's another dip in value >100k miles).

Appears that if you're buying new, you'll want to keep to 80k miles minimum or drive it into the ground to get maximum value (there's probably a flat line value at 150k/200k miles).

I thought about creating my own internal leasing program of buying a 2/3 YO vehicle, just after lease/warranty and keeping for 2/3 years, but again unless said vehicle is kept to 80-95k miles, it doesn't really maximize the financial benefit (as in if you buy at 36k and flip at 60k miles).

To keep apples to apples, I assigned a warranty cost of $1500 since there has to be an implied value to a new vehicle vs used of having 36k trouble free miles (yes, these are Toyotas so there's not as much risk to hedge).

If I ran the same analysis for Domestics, I'm assuming the analysis would scream buy used or lease as you'll never catch up...but on a Toyota buying used isn't as bad as I thought it would be if you keep to 80-95k miles...

Hope you enjoy!

https://docs.google.com/spreadsheets/d/1_AE8VAjiAEzKriGmGkl3bzDLsRcd5eqca-FsU6k4jjM/edit?usp=sharing

(Let me know if anyone has a problem seeing the spreadsheet...).

 

I bought a new 16 Limited. 9 months and 13,000 miles in, got rear ended and was totaled.

The at faults insurance cut me a check for $2000 MORE than I paid in total out the door.

 

Not sure if that would happen in Michigan with no fault but either way...Toyota’s residual value is in deniable.

 

Maybe I'm looking at the spreadsheet wrong, but it appears that this calc is more about overall depreciation of the vehicle vs cost of ownership. From what I can see, the comparison is showing the purchase price of the vehicle in relation to the # of miles on the odometer. So it makes sense that the more miles on the odometer, the less the $/mile (higher numerator). So I think this proves more that Yotas hold their value more over the years vs which one makes more financial sense to buy.

I don't believe your model takes into account loan term nor interest which is the true cost of ownership (assuming maintenance is zero over the life of the vehicle by the purchase of the warranty as you noted). In the short term, it makes sense that a used vehicle would make more financial sense to buy due to the lower cost of purchase, but over the life of the vehicle, all things being equal, it should be the same as both are depreciating assets.

 

I would imagine that this also does not take into account that the Toyota Super White is the fastest and greatest looking Toyota color ever produced...is there a separate doc for the all elusive Super White?

 

That's a good point and I thought about publishing that, particularly when used car interest rates are at a higher rate than new. Also 0% interest on new really isn't 0% if you can get an additional 3k off your purchase price.

I interpret depreciation as the most major part of Total Cost to Own as really the true cost of the vehicle is what you buy OTD vs what you sell it at, with the variable being cash flow in and out.

I didn't include loan interest into the calc since that is very dependent a person's credit, but as a general rule of thumb, a used car loan is greater than a new interest wise, hence narrowing the gap.

However, I have been fortunate enough to pay cash for my vehicles hence eliminating that interest rate disparity.