Consumer Reports Analysis: Buying a Late Model Used Car Can Save Thousands Over the...

Consumer Reports Analysis: Buying a Late Model Used Car Can Save Thousands
Over the First Five Years

Buying a three-year-old Toyota Camry can save $13,000 over a five year period

YONKERS, N.Y., Sept. 2 /PRNewswire-USNewswire/ --- A new Consumer Reports
study of owner costs shows that choosing a reliable three-year-old car instead
of a new one can save drivers thousands of dollars over the first five years.
In many cases, that's enough to pay for all the gas used during that time.

With relatively low mileage, modern safety and convenience features, and
usually a much lower price than similar new vehicles, late-model used cars are
in the sweet spot of auto deals.

On average, CR's findings show that consumers can save 32 percent in the first
five years by buying a three-year-old car. Similarly, with a one or
two-year-old car, they can save 19 and 27 percent, respectively.

According to the analysis, buying a 2005 Toyota Camry with a V6 engine, for
example could save consumers about $13,000 over five years compared with
buying a new 2008 version. At $4 per gallon, the driver could pay for all of
his or her gas during that period (based on driving 12,000 miles per year) and
still be almost $2,500 ahead.

Similarly, driving a 2005 Ford Focus can save more than $8,000 over the first
five years, compared with buying the new Focus. And with demand for big SUVs
plummeting and their used-car values dropping, drivers could save $25,500 over
five years by buying a three-year-old Chevrolet Tahoe instead of a new one.

CR's five year owner costs are based on: Depreciation --- Calculated by using
CR's Auto Price Service. Fuel costs --- $4 a gallon for regular gas and $4.20
for premium, based on driving 12,000 miles annually and CR's overall fuel
economy for the vehicle. Insurance --- The cost of insuring an average driver
based on data from the Insurance Institute for Highway Safety. Interest --- CR
assumed buyers purchased cars with a 15 percent down on a five-year loan;
http://www.Bankrate.com was the source for the average interest rate.
Maintenance and repairs --- Data was taken from CR's 2007 Annual Auto
Reliability Survey. Sales tax --- Calculated using the national average at the
time of purchase.

"A reliable late-model used car can be one of the best values out there when
buying a car," said Rik Paul, automotive editor, Consumer Reports. "Savvy
shoppers can also get a more upscale model with more features for the same
owner cost as a less expensive new car."

The full report is available in the redesigned October issue of Consumer
Reports, on sale September 2 on newsstands and online at
http://www.ConsumerReports.org.

Why used cars are good values
The real key to used-car savings is depreciation, or how much value a car
loses over time. On average, depreciation accounts for a whopping 45 percent
of a new vehicle's owner costs over the first five years, with the steepest
drop in value coming in the first year.

By contrast, a three-year-old vehicle has already taken its biggest hit in
resale value. Its depreciation accounts for only about 25 percent of its
five-year owner costs. Big depreciation for new cars means lower prices for
used cars, which in turn mean lower finance charges and sales tax. When
combined, that can cut owner cost dramatically.

However, CR found that some popular models such as the Mini Cooper and Toyota
Prius don't depreciate much. So buying a used version of those models results
in modest savings.

Many people shy away from buying a used car because they're afraid of buying
someone else's problems. Yet CR's reliability data show that cars, overall,
are much more reliable than they used to be. Rust and exhaust-system problems,
once common in older cars, are no longer of major concern. And reliable
late-model vehicles usually have few problems overall. That said, if a car
hasn't been well-maintained, reliability and value are wild cards.

To check reliability predictions, visit www.ConsumerReports.org/cars.

Bottom Line
While most used cars on the market are five years or older, it's worth looking
for late-model used vehicles that are three years old or less. Drivers can
often find a late-model used car with many of the latest safety features, such
as electronic stability control and side and curtain air bags. It's even
possible to find one with a transferable factory warranty.

OCTOBER 2008
(C) Consumers Union 2008. The material above is intended for legitimate news
entities only; it may not be used for commercial or promotional purposes.
Consumer Reports(R) is published by Consumers Union, an expert, independent
nonprofit organization whose mission is to work for a fair, just, and safe
marketplace for all consumers and to empower consumers to protect themselves.
To achieve this mission, we test, inform, and protect. To maintain our
independence and impartiality, CU accepts no outside advertising, no free test
samples, and has no agenda other than the interests of consumers. CU supports
itself through the sale of our information products and services, individual
contributions, and a few noncommercial grants.

SOURCE Consumer Reports

Rachel Zuckerman, +1-914-378-2417, rzuckerman@consumer.org or C. Matt Fields,
+1-914-378-2454, cfields@consumer.org both of Consumer Reports