
Why you should buy 5 year old car and sell it after 10 years. - scotty79
http://infochimps.org/static/gallery/economics/new_car_smell/NewCarSmellPoster-5.pdf
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zealog
While an interesting examination, the problem with articles like this is they
have lots of graphs and math to maximize dollars without any consideration of
value that can't be stored in the bank; like pride of ownership, owner
enjoyment, confidence in reliability, and predictable monthly expenditures (as
a function of warranty).

There is more to value and cost than money.

~~~
agnokapathetic
Buying new cars is financially crippling.

<http://www.daveramsey.com/etc/lms/drive_free/player.cfm>

~~~
xexers
A car costs about $10-12k per year on average (including gas, insurance,
payments, repairs).

If you live in a city with great public transportation, an annual pass will
cost about $1200. Taking taxis and renting cars to fulfil those other trips
won't add up to much. You can save even more money this way and go green at
the same time :)

~~~
randallsquared
If you used taxis and rental cars like you'd use a car you owned, it would be
far more expensive, even in the cases where it would be possible (want to run
out to the store when you discover you don't have any X while Y is cooking?
You're out of luck in most places, unless you have a car).

I just spent a year and a half without a car, and it was a nightmare some
weeks. It basically means no spontaneous trips unless you happen to have an
extra half an hour to get there, on average. Oh, and the choice between
spending several hours a week grocery shopping (mostly in walking to and from
the store) or paying 15% extra to have most stuff delivered isn't fun. I think
if you put an hourly price on all the inconvenience, a car comes off as the
less expensive option.

~~~
igrekel
I wouldn't base that large an expense on something like the cooking problem. I
just try to plan better, improvise, have someone cooking for me or just eat
out (not these days tough). The problem exists even if you have a car but live
out of town.

As always, you need to look at your life and make the appropriate choices. I
spent many years without a car and I look back to it as a good time. The trick
is to look at things globally and then not sweat on the small expenses (like
the grocery delivery charge and taxi fares) if they were budgeted as a way to
afford bigger costs.

~~~
thismat
Grocery delivery charge? You mean to say you can have your groceries delivered
to your door on a regular basis? I want that!

~~~
randallsquared
Around DC, there are several such, including Peapod (operated by Giant) and
Safeway.com. I've used both, and while neither have a great selection or a
perfect web interface for shopping, they do okay if you take the inherent
limitations into account (don't order produce or breakables, and assume
they'll fail to stock sufficient quantities of low-margin things, like 2L
soda, in my experience).

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thaumaturgy
Even after looking at the graphs, I find it disconcerting that our society
considers something as complex and expensive as a car to be disposable after
10 years.

~~~
pohl
Disposable? I don't see anything that suggests that you bury it in a landfill
after 10 years. All I see is a sweet-spot calculation for when to liquidate
the asset. I think the assumption is that someone would buy it and use it.

I'm in the process of selling a condo and buying a house. Does that make my
condo "disposable"?

~~~
thaumaturgy
Sure, someone would probably buy it and use it, but ultimately at a
disadvantage; they would end up paying more in maintenance costs than the
vehicle was worth. They would be doing that out of necessity; if they had the
credit or initial funds, this pretty clearly indicates that they'd be better
off, financially, buying a 5-year-old car instead.

If the car's maintenance costs exceed its value after 15 years, then it should
be considered "disposed" at that point, even if it hasn't been thrown away.
Just because you can sharpen the blades on a disposable razor doesn't make the
razor less disposable.

After looking more closely at the graphs though, I realized that I
misinterpreted the headline here. The headline suggests that the car becomes
disposable at 15 years of age, and the graph actually has it closer to 20 I
think. That's not quite so bad.

~~~
pohl
Still, do not despair. The problem here is not that the car is considered
disposable by that criteria. The problem is the criteria itself, in
particular: 1) the definition of the asset's value, 2) the definition of
maintenance costs, and 3) the notion that the asset should be considered
"disposed" when those ill-defined maintenance costs exceed that ill-defined
value.

The problem with #1 is that an asset's value to its owner is only partially
represented by the amount of money for which it can be liquidated.

The problem with #2, is that they include operational costs (fuel, etc.) that
one would bear regardless of which car they owned.

The problem with #3 is your concept of 'disposable', which may work for you
but is not universal. Someone else might only consider it 'disposable' when
problems begin to appear in a notoriously expensive-to-repair subsystem, like
the transmission. And, even then, the car tends to not actually be disposed
because its parts can be used to keep other similar models alive.

I guess I feel like your lament hinges upon one very narrow possible meaning
of the word 'disposable'. Perhaps "fully depreciated" is more close to the
idea you wanted to capture?

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pmichaud
I pretty much adhere to this -- I buy an older car, somewhere in the 5 to 10
years old range. I pay cash. That way I don't worry about totaling it. I know
that no matter what happens to it, I can just replace it with maybe a week's
notice without making a significant dent in my cash flow.

I made someone's day once when they rear-ended me and I told them the car was
a piece of shit anyway, so have a nice day. It's a load off one's mind.

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pasbesoin
Having a fair and trustworthy mechanic makes a large difference in effectively
managing/achieving the cost savings of a used car.

I've gone through a couple of referrals that have provided me with honest,
helpful service (the first went into full-time commercial work, whereupon she
referred me to another shop she respected). They may not always quote the
cheapest price, but it's a fair price, and I understand or can have explained
exactly how it breaks down. They also understand my position with regard to
keeping the vehicle safe and reliable, but not spending money unnecessarily.

Further, their work is entirely reliable. The owner is someone who has a
personal investment in doing things right. It's not just about the money; he
finds value in a quality job.

As a result, they've had my steady business for years. Win, win. And a few
repair jobs in the average year is a lot less that new car payments.

(I even switched to doing my oil changes there, as well. It takes a bit more
planning and works best if I schedule and show up first thing in the morning,
before they get other work onto the lifts. But it provides them a bit more
income, and I don't struggle with mismounted filters, nor find my tire
pressure varying 50% between the different tires, etc., etc.)

The real treasure is finding a shop like this. It's something I worry about,
if/when I have to move.

If you have a mechanic like this -- someone you know and really trust -- and
are looking to buy a used car, ask them what they like for your circumstances.
It's a pretty good heads up on what is reliable and economical. Plus, you know
they'll work on it. (Do also check Consumer Reports' ratings, though.)

------
DanielStraight
This doesn't take into consideration the uneven aging of cars depending on
driver habits, the cost of lost time spent repairing a car (much less on new
cars) or finding a car (much less on new cars as well), etc.

~~~
rflrob
Actually, I think it might take some of those into account. It mentions a Lost
Wages term, assuming 1/3 day per failure. It also has includes "Transaction
costs" for buying a new(er) car. It's been 5 years since I bought my first,
and so far only car (a '96 Camry, still going strong), but I'd disagree that
the cost of time looking for a new car is _much_ less, if at all.

I would also be inclined to disagree with their assertion that "your car is in
no way a positive-dollar-value asset". While I'm sure there are usage patterns
where this statement is true, in cities with poor public transit, employment
may be effectively directly conditioned on owning a car, thus very quickly
making it a positive-dollar-value. I suppose the counter argument is that no
one is forcing you to live in that city, but that starts getting really hairy.

Either way, I would like to see the paper that this poster is connected to (if
there is one). A lot of the terms and figures

~~~
sokoloff
If you know what car you want, you can buy a new car in about an hour without
getting cleaned out too badly. If you only pretty much know what you want, add
an hour or so to that.

You can easily spend 10-20 times that amount of searching for a used car if
you're at all particular about just color, miles, brand/model, etc. "There are
no used car factories." If you're very particular about options and condition,
it only goes up from there.

All new cars are roughly the same (as other new cars with that config). No two
used cars are the same. So you need pre-purchase inspections, research into
the history of the car, need to consider whether to throw your money away at
used car warranties, etc. I can understand why people who "just want any car"
buy new cars.

All that said, I bought one brand new car 14 years ago (when I was 25) and
think it was a huge mistake; I'm still driving that car today, 158K miles
later, which lessens the failure somewhat.

Even though I could pay cash for any new car the average person has heard of
(no Maybach, McLaren, etc), I probably won't buy another new one until I'm too
old to work on them. They're just too damn expensive, especially when you look
at the huge selection of 3-4 year old off-lease cars selling $0.30-0.40 on the
dollar.

~~~
DanielStraight
This explains better what I was trying to say. Used car shopping is stressful.
You never know (unless you're a mechanic or something) if you're getting a
good car. You never know if you'll have problems a week later. With a new car,
you're protected by warranties at least for a while. Also consider that being
the sole owner of a car might make it easier to sell used.

I think the simple fact is that the issue is not simple. It's not enough to
say new cars have a huge initial depreciation, so you shouldn't buy them.
There are way more things to consider.

~~~
jrwoodruff
I've never owned a new car. In fact, most of the cars I've owned were between
5 and 10 years old when I bought them. That said, I really prefer buying off
private sellers, especially when they're the ones that bought the car new.
They might be pulling one over on you, but it's easier to judge the history of
the car when you meet the owner, see their garage/driveway.

If you just need a car to get you from point A to point B, there's no reason a
5-year-old Honda won't work for you. Especially if you're a two-car family.

Obviously, though, there are other considerations. If you drive 50,000 miles a
year for work, a new car is probably smarter. But for the average commuter, I
don't think it's necessary to drop 25 large to get a reliable vehicle.

