TEN YEARS OF SELLING NEW AND USED TRUCKS
This is my favorite debate. I have been on both sides: bought dozens of used trucks and now I buy new, at least for this year.
Invoice, holdback, 3-4 percent back of invoice, rebates, 0 percent interest all mean a new truck could be $5,000 to $10,000 below MSRP (manufacturer’s suggested retail price). Consider the opposite: a used truck that you have no clue whether the dealer took it in as trade or bought at auction thousands below blue book value. On a new truck you can calculate a good deal, but on used trucks you’re shooting in the dark if you’re buying from a dealer. If you can find a one-owner used truck that didn’t tow, has all the maintenance records, and is at least two years old, you have a case for a used truck. We’re all familiar with invoices on new trucks. Not all are real, but generally it gives you a starting place. Invoice minus holdback is what the dealer pays, which is 3 percent to 4 percent off the invoice. A new truck dealer may get other incentives if they sell their monthly quota. After subtracting whatever the current rebate is, all you have to try to negotiate is the D&H (dealer handling). Fleet departments don’t charge D&H, but it’s hard to get the retail side of a dealership to let it go. I’m not against used trucks; most of mine have started out used when I bought them. If your budget points you to an older truck, then you’ll want to read Chapter 6 on “Used Truck Judging 101.”
We have all heard how much you lose when you drive a new car off the lot. The people you hear saying this the most are the USED CAR SALESMEN. Trucks and cars drop like a rock after you buy them whether they were used or new; that is the wholesale spread. Car dealers make more money on used trucks than new. You don’t have an invoice on used vehicles, and you have no way of knowing exactly how much the dealer paid for it. Very few people pay full retail for new vehicles, and then there are those rebates. It would surprise you how close the actual sales price of a new vehicle and a one year old one are. And you know the new one wasn’t raced to the airport by one hundred different people. I actually know people who trade-in every year and never change their oil.
Since trucks have better resale value and generally last longer than cars, they can be priced even higher at one year old than new. I have seen that happen often. To see a significant difference, you need to go back three years in trucks. Crew cab 4x4s are the kings on resale value. In 4x4s, used can be a whole new experience. Since you won’t know how much off-road use it had, a 4x4 can create its own payment! It seems that every part on the bottom of a 4x4 truck costs over $2,000. If you are the first owner of a truck—especially a 4x4 or diesel—and you take care of it, it can last you decades for less cost per mile.
Did the used truck tow big loads often? What do you know about the truck history? Or should you buy new and know what the truck did in its past life?
Top Five Reasons to Buy
a New Truck
1. It’s all new: A new truck has new everything. All you have to worry about is making the payment. The interior is spotless, exterior has no dents and is all the same color. New tires, new brakes, an engine that doesn’t use oil, and it’s quiet inside the cab. A used truck, especially older than three years, could have a dozen owners. It’s kind of like marrying someone that was married six times before; makes you think about all the previous users. Not all owners handle maintenance the same, or use the same oil brand or chase coyotes through the same river. Then there are the states that use salt on their roads in the winter, or worse, use magnesium chloride, which eats metal and plastic on your truck. Eastern state owners may drive in the rain every day, Southwestern drivers might let the truck sit in the sun (120 degrees Fahrenheit) for months and crack the paint, curl the plastic grill, or dry rot the tires.
2. Lower payments: At 0 percent interest or even 3 percent, new trucks are easier to finance. Truck manufacturers offer the lowest interest on loans or give you bigger rebates if you finance yourself, with sometimes a combination of the two. My new truck financed at 1.9 percent with big rebates; my car financed at 0 percent interest with nothing down for six years. It’s like free money. Now look at financing a used truck: the term will be shorter and the interest will be higher depending on your credit. Now, an average interest on a used truck can be 5 percent or higher, with no rebates and maybe no factory warranty left. If payments are important to you like they are to me, that is the big difference between new and used. If the prices are close, then rebates and lower interest are important. A new truck payment can be more than a $100 a month lower.
3. Known history: You know how your new truck is used. You know when you changed the oil. You know how big your trailer is. On a used truck, you don’t know how many people raced it, or how fast or slow they drove (both can hurt it). On a used truck, you don’t know if it came from the last hurricane with rust on the starter, mold under the carpet, new paint, and water in the tail lights. If the truck you’re looking at has a drop-in bedliner, look under it. That’s an old trick: to put in a bedliner so you don’t see the gooseneck ball or bed rust. I know many used dealers who take the receiver hitches off so you don’t think it was used for trailering.
4. Warranty and roadside assistance: Imagine not having to work on your used truck on weekends. I used to do that; every weekend I was working on the vehicles or the house. With the forty-plus computers on your truck, just plugging a mechanic’s computer into your truck will cost at least $80. And, if you don’t have the right computer you may not even be able to work on the newer trucks yourself.
5. Long cross-country vacations: To take the family on the road, you need a dependable truck towing your RV. Anything can happen to a used truck. When I was young, alternators, starters, and spark plugs needed frequent changing. Breakdowns on the road cost twice what they do when you’re close to home, but trucks are more dependable now. That’s why I started buying new, so I wouldn’t worry about my family breaking down on the road when I was several states away.
Top Five Reasons to Buy
a Used Truck
1. Total price: If the truck is at least three years old, the cash price should be dramatically lower than a new truck. On a used truck, you can look up its history with the VIN number at that brand’s service center. Recalls will be there, dealer repairs will be there, and on Carfax you can look up accident reports. You can read reviews done on the truck years ago, and truck forums will give you insight into other owners’ experience with trucks you’re considering buying.
2. Lower sales tax: The lower the cost of the used truck, the lower the sales tax. Generally, license plates cost less on a used truck. Generally, insurance is lower on a used truck. Same with parts for your used truck: after a few years, the parts are all available at the parts stores, like NAPA, O’Reilly Autozone, etc., which generally are cheaper than a truck brand parts counter.
3. Your neighbors won’t think you’re rich: If you’re driving a new $90,000 truck, you’ll be surprised at all the friends and relatives who will want to borrow money from you. Warren Buffet and Sam Walton drove used trucks for a reason. If people think you have money, it bothers them.
4. You can crank up the power: Once the factory warranty is expired, you can add all the power modules, headers, and nitro, not having to worry about voiding any factory warranties. This is important to those of you who hop into your used diesel for the weekend drag race at the track, or pull sleds at the county fair. If you like to modify your truck’s suspension for radical off-road use, then an older used truck is up your alley.
5. Trucks last: Just like the Energizer Bunny, if you don’t drive long distances or are a volunteer fireman, you can keep a truck for decades. I have a forty-six-year-old