If a new Ford truck has a 3yr 36,000 mile warranty and costs $27,000, why would anyone buy one instead of a used Certified Pre-Owned truck that costs $20,000 and has a CPO Warranty of 6yr 75,000 miles?

Just curious

 

I think there are numerous reasons. .. to list a few.

1) The Certified truck may not have the options that a buyer wants
2) Wrong Color
3) Higher miles, even with a 75K warranty. . .the warranty may not work out to be as long as a new truck with 0 miles. Just depends on the truck, car, suv, etc
4) Some people want a truck that they have owned since day 1
5) Some people like the smell of new vehicles
6) Some people want to order their truck
7) Ther certified truck will probably need replacement parts in the nearer future than the new truck. . ie. tires, brakes, etc. .

These are to name a few. . .

I see your point though.

 

The new 36/36 warranty is bumper-to-bumper, the 6/75 warranty is only powertrain. And it's 6 years from the day the truck was sold BRAND-NEW, and a total of 75,000 miles on the odometer. Buy a 50,000-mile CPO truck that was sold new on January 17th, 2002, and you've got 2 years and 25,000 miles of actual coverage on the engine and transmission. Big deal. I think the other good point Tell3131 brings up is the maintenance you may be facing in the near future: tires, brakes, belts and hoses, tune-up, exhaust, battery, etc... Unless you do your own work, those could add up to a sizable amount of money.

 

Lets reign this in a bit. In the specific case scenario you bring up, a new truck definately has a better warranty. Lets look at a less-extreme case such as the one my MIL found. She found a 2005 Eddie Bauer Expedition for $22,000.00. The truck has 15,000 miles on the odometer. By purchasing a 1 yr old truck v/s new she gets the balance of the new warranty plus an additional 40,000 miles on the warranty. She also paid $18,000 less for the truck than it originally cost. Seems to me like this one would be a no brainer. If you had two identical trucks sitting next to each other, one a new 2006 and one a used 2005 with 15k miles and a 75kmile warranty for 40% less. Which one would you choose? I would much rather get the longer warranty and much lower price.

 

Your initial post asked a very general question, to which I responded with a specific scenario. Of course, if we assume that the 2005 Expedition is in excellent condition, it is certainly a better buy than the new one. But that's not what you asked us about, as you were looking for reasons why someone WOULD purchase a new truck over a CPO. If you had just asked us about the specific Expedition in the first place, I may have responded differently. It would have at least saved me a lot of typing.

 

The extended warranty thing is somewhat overrated. Others have explained why but I wanted to point out one other thing when buying a new car.

My car insurance company offers coverage similar to an extended warranty. The car must be bought brand new or acquired through a policy holder that has the coverage on the unit. The vehicle is covered up through 100,000 miles and the deductible is $250. It covers more than simply the powertrain as well. The cost is something like $30 per year initially and is capped after year 3.

Prior to new 2004 models, there was no limit on mileage. So, my 1995 Ram 1500 with over 101k is covered under their program. If the tranny goes at 185k, it is covered in this case. The catch is that you have to keep collison coverage on the vehicle.

 

I thought you made very sound points with your reply. I just wanted to give an alternative view. I hope you don't feel like you wasted typing since the points you made were very valid. Your reply was very specific and under the circumstances you used, I would agree with you. The question was general and was meant to be so. Thanks for replying, it was informative.

Anyone else have any input on the question? I am taking an economics class in grad school and this topic caused some interesting discussion among many in the group.

Thanks ALL

 

One could ask the same question about many products. I've often wondered why someone would pay a builder the big bucks for a BRAND-NEW house, when you could pick up an identical 1-year old home for probably a lot less (bread-winner transferred and we have to sell NOW, etc...). And why you'd buy a new boat is beyond me, as they have far fewer wear-and-tear items than a car, and there's always someone forced into selling a nice boat, for a hundred different reasons.