Used Cars Question

[LivingAlmostLarge]

Do you think it's bad to buy and sell used cars? I mean the they still do depreciate but I mean you buy a used car and keep it say 3 years then it goes from 5 to 8 years old or something like that it. Is it as much a waste of money as a new car? Or more "financially" acceptable to do things like that?

I am feeling guilty for wanting to get rid of our perfectly great used car that will probably last another 10 years. But since it's used is it okay?

[bjl584]

The depreciation curve will be less than a new car, so you most likely won't lose as much money if you were trading in new cars every few years. Most of the depreciation happens in the first few years, then is levels off until about year 10. Then it starts dropping rapidly again. So, if you are buying a car say 4 or 5 years old and then selling it when it is 8 or 9 years old, you probably won't lose all that much on the deal depending what type of car it is and what type of shape it's in.

It still probably isn't the best idea if you make a habit of it. But, as a one time thing it probably won't hit your wallet all that bad.

[disneysteve]

I am feeling guilty for wanting to get rid of our perfectly great used car that will probably last another 10 years.

Why are you getting rid of it?

I agree that the depreciation curve is flatter on an older car so it's definitely better than doing the same thing with a new car. Of course, it's not as good as keeping it another 10 years.

[ua_guy]

Do you think it's bad to buy and sell used cars? I mean the they still do depreciate but I mean you buy a used car and keep it say 3 years then it goes from 5 to 8 years old or something like that it. Is it as much a waste of money as a new car? Or more "financially" acceptable to do things like that?

I am feeling guilty for wanting to get rid of our perfectly great used car that will probably last another 10 years. But since it's used is it okay?

I don't think it's any more/less financially "acceptable" but the impact to your overall finances is usually less. Like bjl584 pointed out, you're generally starting on a less-steep slope of the depreciation curve and working with a total transaction price that's cheaper than a new vehicle purchase. It's really going to depend on the vehicle and its age.

I'm in your same shoes right now. We purchased a used vehicle at the end of August last year, and I'm ready to sell it (already!). I've put over 15k on it in that same time period and I just don't really enjoy the car that much, coming from an enthusiast perspective. The transaction cost of getting out of it is enough to make me think twice and consider better financial decisions. I'm trying to set a goal for keeping it, but that's a thorn in my side because I just should have bought what I really wanted.

[JoeP]

If it is perfectly good, then why get rid of it?

Some people are bothered by driving the same old thing year after, putting up with annoyances, paying for maintenance to keep it content, maybe doing minor appearance upgrades, and can't wait for an upgrade. (Odd how much this sounds like a spouse, but I am talking about a vehicle )

[tom edward]

I bought a vw about two years ago for 11k. its value now is about 8. Only put on 15k miles but i think the used car market has been manipulated the last three years to drive up sales of new vehicles(my theory lol). I paid it off last month before I lost any more money on the interest, I'll never finance a vehicle again! I would think this loss would be worse with a new vehicle.

[disneysteve]

i think the used car market has been manipulated the last three years to drive up sales of new vehicles(my theory lol).

I don't think there was necessarily any manipulation. What happened was that during the recession, people just stopped buying new cars. Sales plummeted. People held onto their cars a lot longer. The average age of cars on the road hit a record high if I'm not mistaken. As a result, used car prices actually shot up because that's where the demand was and the supply was lower since people weren't trading in and selling as many.

Now, the normal pattern has started to come back. New car sales are up sharply and used car prices have started to moderate as supply improves.

[snafu]

LAL, we only live once and if you don't like your current car you can sell it privately or trade it for another. Not every single decision needs to be based on thrift. I see a parallel in retirement saving. It's very important to be able to be self supporting as a senior sometime in the future but I also need to enjoy life, my family, friends and relatives now. It was my late brother's birthday a few weeks ago. I picked up the phone to call and offer my best wishes. At that point I remembered he had passed away nearly 4 years ago and I miss him a lot. He died before being eligible to use his retirement savings.

[feh]

Why are you getting rid of it?

I have the same question...

[ua_guy]

I don't think the reason matters. It sounds like it's an arbitray decision and that's ok. There are plenty of frugals on here that do arbitrary things with money even though their overall management of money is generally sound.

As I'm thinking about the used car I want to jettison, if I listed the reasons why I didn't like it, I'd get a lot of sideways looks. The reasons only matter to me. Are they based in need or best financial practice? Probably not, but swapping a vehicle isn't going to destroy me or my finances, so it really comes down to opportunity cost.

[greenskeeper]

I bought a vw about two years ago for 11k. its value now is about 8. Only put on 15k miles but i think the used car market has been manipulated the last three years to drive up sales of new vehicles(my theory lol). I paid it off last month before I lost any more money on the interest, I'll never finance a vehicle again! I would think this loss would be worse with a new vehicle.

The prices have been manipulated as an "unintended consequence" from the "cash for clunkers" fiasco. Taking perfectly working used vehicles and sending them to the crusher to "stimulate" the economy is hogwash. The supply of used cars has been diminished so now the prices have increased. What's next? Cash for broken windows? Give me a break.

[ua_guy]

The prices have been manipulated as an "unintended consequence" from the "cash for clunkers" fiasco. Taking perfectly working used vehicles and sending them to the crusher to "stimulate" the economy is hogwash. The supply of used cars has been diminished so now the prices have increased. What's next? Cash for broken windows? Give me a break.

I think that's true only if you're talking about vehicles valued at less than $5,000, and even then, C4C was what, 4 years ago? We're talking about a completely different age of vehicles now, post C4C. As a benefit, now there is an excess of inventory of used parts for cars that weren't C4C'd. Despite what the government said, a lot of those parts are available second hand.

It saddens me to think that Obama paid someone to crush a 91 GMC Cyclone or an 84 Indy Camaro. C4C was devastating for emerging classic vehicles, but it did increase new car sales and last I read, it did increase the national fleet average fuel economy. I wouldn't blame the government anyway, the decision to C4C a vehicle was ultimately an individual consumer choice. Nobody was forced to do it.

At any rate, it really doesn't apply to that next-tier used car market in the $10-$15k range. Those aren't the kind of vehicles that were being C4C'd almost 4 years ago now. People are hanging on to their cars longer, vehicles are lasting longer.

[LivingAlmostLarge]

I'm willing to do a lateral move. I think I might want a minivan. in 2012 when we bought I couldn't get one I liked for the price I could afford. Now I feel it's a bigger need and I'm willing compromise more. Last time I stuck to price and age, now maybe an older minivan will be the compromise. In case you wondered I am willing to put three kids across our current cars and I have bought carseats to accomodate that but I'd like to have space for a friend or just more space in general.

I'm not loving all the 3rd row SUVs I've tried. I've driven friend's Acura MDX, Mercedes Diesel 7 seater SUV, Highlander and Pilot. Most are pretty new. The only thing I haven't borrowed is a minivan.

[greenskeeper]

I think that's true only if you're talking about vehicles valued at less than $5,000, and even then, C4C was what, 4 years ago? We're talking about a completely different age of vehicles now, post C4C. As a benefit, now there is an excess of inventory of used parts for cars that weren't C4C'd. Despite what the government said, a lot of those parts are available second hand.

It saddens me to think that Obama paid someone to crush a 91 GMC Cyclone or an 84 Indy Camaro. C4C was devastating for emerging classic vehicles, but it did increase new car sales and last I read, it did increase the national fleet average fuel economy. I wouldn't blame the government anyway, the decision to C4C a vehicle was ultimately an individual consumer choice. Nobody was forced to do it.

At any rate, it really doesn't apply to that next-tier used car market in the $10-$15k range. Those aren't the kind of vehicles that were being C4C'd almost 4 years ago now. People are hanging on to their cars longer, vehicles are lasting longer.

C4C required that the vehicle be destroyed - no parts could be taken off of them - FACT

C4C scrapped cars less than 10 years old with plenty of life left in them - FACT

C4C didn't stimulate anything. You don't stimulate by destroying something and replacing it. All it did was put a phony surge of car sales and then a drop off - FACT

C4C took my tax dollars and subsidized a vehicle purchase - FACT

C4C did nothing for raising fleet averages on a measurable scale - FACT