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Comment by camiller | Hacker News Reader

Sometimes, depending on the season (fall when dealers are liquidating inventories to make room for the next model year), dealer inventories, etc., the 0.0%-0.9% 5yr financing on a new car makes for a lower monthly payment than the 5.9%-7.9% 4yr rate on a decent, low mileage, used car.

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Best way to buy a car is to pay cash for one that sold in high volume 6 or 8 years ago. Look for one that has been taken care of. Mileage is nearly irrelevant in that case. They don't command a price much above the neglected ones, but they have a ton of low-cost life left and insurance is cheap.

Doing some quick math the used car would have to be valued at 70% of the new car's value to make the monthly payments equal. Edit: Also going to point out that you will lose about 10% of the new cars value just by driving it home and it will have a higher depreciation rate then the used car.

But the steep discounts offered, especially during the transition between model years makes it kind of work. Especially if you are looking for a used car with <40,000 miles and less than three years old. The same car, new, in the 2016 model year with a $8,000 incentive off the MSRP plus low interest...

I can see this being the one case where it's likely to make sense.

The low-mileage used car owners purchased at a higher price or buyers will use worse financing options. The dealership has an incentive to get the old models out, and the financial backing to cut interest, resulting in their being able to sell new cars for less than a low-mileage used model.

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