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Old 09-03-2010, 08:10 AM
 
Location: Texas
42,203 posts, read 49,753,916 times
Reputation: 66975

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Repairs aren't just a matter of money. It's a matter of time and inconvenience. And there is safety to think of.

It all depends on how you want to structure your finances and what is important to you. I have an 8 year old SUV I use for hauling and chores and snow and the dogs - it has 60,000 miles...the body has a little rust on top, but overall, it works just fine and looks ok. That car will be around for a long time with us, I hope.

However, for day to day driving and especially my long commute, I have a new car. Run-flat tires, free auto assist, all the latest gadgets and doodads to listen to and navigate - that is worth it to me, because I can't be stuck out in the middle of nowhere in the middle of the night on my way back from work...I also can't be bothered when it needs maintenance and repairs, and the dealership picks it up, drops it off, washes it, and always gives me a free loaner - even for oil changes, inspection, etc. This is the convenience and reliability I need in my day-to-day life.

Also, I love cars and budget extra money for cars. That is my hobby/love. If you are strict transportation guy, crunch the numbers hard and see if you can't squeeze more time out of your old truck.

It just boils down to what you want, what you can afford, and what's important to you and your lifestyle.
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Old 09-03-2010, 08:13 AM
 
Location: Scottsdale, AZ
4,486 posts, read 14,920,188 times
Reputation: 3919
Quote:
Originally Posted by NJGOAT View Post
I think a lot of people here try to preach the intelligent and prudent financial side of car ownership, which is to hold on to the car as long as you can and get the most you can out of it. Still there are plenty of people here with toys and ones who trade there cars in every year or two.

I do both. There was a point in my life where I owned 3-4 cars between my wife and I and routinely bought and sold a car every 6 - 12 months. As the family grew I became more inclined to the frugal side and hold on to my daily driving cars for as long as I can. My wife's Avalanche is paid off and we could trade it in and get something new, but it's a great truck and is in great shape even at 4 years old. I'm planning on keeping my Malibu until it dies as my work car. It'll be paid off in another 8 months and then I'm adding to the savings to get another toy in cash. The toy is the one I'll be swapping out every year or two (current thought is getting an older Audi TT with the upgraded 1.8T and going big turbo, consider it a budget 911, lol).

When it comes to a lot of people around here, it doesn't seem that there are many "enthusiasts" as much as there are people who like cars. If someone was posting that they are getting tired of their Vette and are thinking about getting an Audi S4, no one would argue payments. When someone says my Ford Focus just turned 115k and I'm thinking of trading it in for another pedestrian cookie cutter car, than the frugality argument kicks in. If the old car can still do what you need it to do, there is no reason to get a new "appliance" and waste the money unless you just like having a new car or there is something really wrong with the old one.
I'd agree, I've noticed that there are many here who preach being frugal and keeping a vehicle for many years and many miles...while there are others who view a car as a toy and trade up whenever they feel like it. Neither group is wrong...just a personal preference.

I feel 3 years is a comfortable span of time to keep a vehicle...after that it's nice to get something newer...more features etc. I put roughly 15K-20K miles/ year on my daily driver, when I traded off my Yukon I had 50 some odd thousand miles. After 3 years, I take a pretty big depreciation hit but I keep my vehicles in meticulous condition so when I do decide to trade, I get top-dollar. I may have an arcane way of thinking but I feel it's almost a wash for me to trade up every 3 years versus keeping a vehicle for 6 years and getting almost nothing for my trade. My thinking:

I paid $51K for my Denali in 2007
Received a $26K trade-in for it this year
Got a price of $42K on my F-150
Out of pocket I wrote a check for $18K

If I trade it off in 3 years for something new and receive a hypothetical value of $24K and buy a new truck/suv for $44K (hypothetical). I write a check for $20K.

Versus I buy a new vehicle for $40K and keep it for 6 years, trade in value is about $5000 and I buy another new vehicle and pay $42K and keep it for 6 years with a low trade-in value.

It seems to me that it's a wash between getting a decent trade-in value and trading up every 3 years versus getting a terrible trade-in value and trading up every 6 years.
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Old 09-03-2010, 08:23 AM
 
Location: Texas
42,203 posts, read 49,753,916 times
Reputation: 66975
Not to mention being out the cost of repairs and new tires. ^^^
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Old 09-03-2010, 08:29 AM
 
48,519 posts, read 81,013,914 times
Reputation: 17978
I try to keep my vehicle about ten years;doig all the recommend maintenance.
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Old 09-03-2010, 09:06 AM
 
805 posts, read 1,558,213 times
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Quote:
Originally Posted by SpeedyAZ View Post
It seems to me that it's a wash between getting a decent trade-in value and trading up every 3 years versus getting a terrible trade-in value and trading up every 6 years.
Do you buy brand new and trade up?

Or do you buy relatively new (up to 4 years old) and then trade up for something relatively new every couple of years?

If one's upside down on a used @100K miles should it be rolled into a new or paid off (25K miles later, and a year or two older) and then sold for cash?
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Old 09-03-2010, 09:09 AM
 
14,777 posts, read 34,498,385 times
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Car costs in terms of maintenance are cyclic and generally it just comes down to finding the sweet spot. Assuming 15k miles a year, years 1 and 2 are generally nothing more than oil. Year 3 sees most needing brakes and tires. Year 4 is usually oil and other fluids. Year 5 is also generally low cost while year 6 sees major services and another round of brakes and tires. When you get beyond that you can almost guarantee at least one major system repair over the next 3-4 years as well as another set of brakes and tires. This is simplistic, but it is the trend.

On the otherside you have resale value consideration. Usually you lose about 50% in the first 2 years and then see a sliding scale that bottoms out around year 6 and gradually drops from there.

If you are going to trade up the ideal time to do it is usually in year 4. You generally maximize your resale value vs. ownership cost at that point and avoid the next round of tires and brakes while still having them in acceptable condition for sale. If you go beyond year 4, IMO, you are generally better off holding on to the vehicle as you will be investing money back into it and the value will have bottomed out.
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Old 09-03-2010, 09:17 AM
 
14,777 posts, read 34,498,385 times
Reputation: 14278
Quote:
Originally Posted by superseiyan View Post
Do you buy brand new and trade up?

Or do you buy relatively new (up to 4 years old) and then trade up for something relatively new every couple of years?

If one's upside down on a used @100K miles should it be rolled into a new or paid off (25K miles later, and a year or two older) and then sold for cash?
Reference what I just posted regarding cyclic costs. By buying a used car at 3 or 4 years old, you are picking it up at another sweet spot. However, within 2 years you are generally going to see costs of major services creep in, while at the same time the car has just about bottomed out on resale value. Buying a 4 year old used car is best done as a value proposition to someone who plans on keeping it for the long haul. Buying 4 year old used cars and trading them up every 2-3 years and paying the difference in cash or rolling in the costs to another loan is simply a bad idea financially.

If you are someone who wants a new car every 2-3 years, that's what they make leases for. In general I recommend people who want to buy new that they plan on keeping the car for about 4 years to minimize their ownership costs. If you keep it past 4 years you are better off holding on to it. People who plan to keep a car for the long haul are best advised to buy a car that is around 4 years old that has taken the major depreciation hit and then prepare to invest in maintenance. If you don't fit into either of those molds, the best bet is to lease new.
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Old 09-03-2010, 09:49 AM
 
239 posts, read 761,025 times
Reputation: 194
Actually spending the money on service and repair of an older car is not as bad as the uncertainity. My older cars have always had trouble or broken down completely in the most difficult places far from a quick tow truck. There is something really nice about driving a car that has a 99.99 % chance of starting and being safe and reliable on a certain day. As a domestic car makes it over the 100,000 mile mark that faith one likes in safety and reliablity is gone. Anxiety is the result. Makes driving less pleasant. (But a $250 a month car payment is not pleasant either in today's economy!)
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Old 09-03-2010, 10:13 AM
 
Location: Victoria TX
42,668 posts, read 71,538,289 times
Reputation: 35864
Quote:
Originally Posted by waitingtundra View Post
It's amazing how you can negotiate with cash in hand, your basicaly holding all the cards.
I was under the impression that dealers get such beautiful kickbacks from finance companies, that they hate it when you walk in with cash, and jack up the price to compensate for the loss of their lender's kickback. If you finance the car, the dealer gets the same cash tomorrow instead of today, plus the kickback.
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Old 09-03-2010, 10:50 AM
 
14,777 posts, read 34,498,385 times
Reputation: 14278
Quote:
Originally Posted by jtur88 View Post
I was under the impression that dealers get such beautiful kickbacks from finance companies, that they hate it when you walk in with cash, and jack up the price to compensate for the loss of their lender's kickback. If you finance the car, the dealer gets the same cash tomorrow instead of today, plus the kickback.
Very true. Dealers almost universally prefer customers who finance through their in house affiliates. The dealer makes money off the interest charged on the loan and many get additional incentives based on volume with their lending institutions. If you ever sit in a dealership and watch the finance guys, virtually all deals for people with good credit go to the same bank. Once you get out of Tier I on the credit scale they start calling multiple sources to shop the package to get the rate that will make the deal work, which isn't always the "best" rate for you.

If you ever want to have fun ask a dealer finance guy what he's "buying money for today". The difference between the rate you are charged and the rate the dealer pays is profit for them. This is why interest rates are in fact negotiable. It's not uncommon to see them say something like, sorry Mr. Jones the best rate we could get was 10% and that will make you payment $450. Mr. Jones says I really can't spend more than $430. They then come back and say they talked to the bank and pulled some strings and the rate is lower and it will make the payment $435, but that's the best they could do. In Mr. Jones' case the dealer may only be "buying" his money at 6% and they are just trying to squeeze out the extra. This is also where the credit score falsifying comes in as they make more money on people with bad credit.

When you go in with cash or your own financing you remove a significant incentive for them to make a deal. Many high volume dealers are content to make very little on the car sale and would rather make money on the financing side. I've actually had a local Chevy dealer refuse to accept my Capital One financing check when we bought my wife's Avalanche after they couldn't match the interest rate they were giving me with their banks.
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