QOTD: Base, or Used?

Jack made several good observations in his post the other day, not the least of which was “The world of automotive pricing, like the world of wristwatch pricing, works on some bizarre rules which exist nowhere else.” This is true to the nth degree.

Moving metal fifteen years ago, I firmly recall an instance when the dealer bought several low-mile examples of a certain compact car that were a single model year old and of which we still had plenty new copies neatly lined up on the front row. Priced within pennies of the new units, us lads on the floor naturally steered customers towards the used cars because there was significantly more markup on them … meaning a higher commission.

This was all fine and dandy until the manager told us to cease and desist because he was catching heat from the Dealer Principal for not moving enough new cars. I will leave observations about putting the customer’s best interests first in the B&B’s capable hands.

Here’s today’s QOTD: given a budget, would you buy new or slightly-used?

Our weekly Ace of Base series (thank you to the tens of fans who read it) proves the worth of some entry-level cars, particularly ones that include air conditioning as part of their bargain-basement sticker.

Let’s imagine you’re tasked with finding a new driver their first car. They’re going to finance the thing over five years and have a 700 credit score. Being a typical consumer, they want something SUV-ish.

Your choices? Let’s employ last week’s Ace of Base, the 2019 Kia Soul, since it is decently equipped at $16,490 with air and a few other toys. Excluding tax and other state variables, this represents a payment of $290/mo or about $135 biweekly.

Behind door number two is a 2018 Ford Escape SE, a much larger car with only 5,000 miles on its odometer and offered by a dealer. Its price tag is within a few Simoleons of the Kia, however it has a bit more kit. The loan paper will be written at 4.25%, working out to $308/mo or about $142 biweekly.

Maybe you have a suggestion of your own for our fictional friend. And yes, every situation and car is different. Put aside the impossible variables and the question remains: will you recommend new or slightly-used?