Post # 1
I over heard a convo at work today about new cars. My co-worker feels the need to keep a newer car just because. She pays a car off and trade it right in for a new one OR trades it in right before paying it off. I will be paying my car off in Dec and I cannot imagine jumping into another loan right away. I financed for 3 years this will be my first car I’ve paid off (only 24). I can’t wait to start putting that extra money into my savings. How do you feel? How often do you or SO get a new car? I have no plans on getting a new car until this one falls apart, its a Honda so I am praying never lol. I have an accord coupe so maybe once we start a family I will think about it but hopefully I can make it work as long as possible.
Post # 3
It’s not financially advantageous to buy new, period. And certainly not to dump a brand new car every few years. The biggest depreciation happens in the first year, so it’s actually best to buy a 1-2 year old car, and sell when it is 5-6 years old (based on an average usage of 12-15000 miles/yr). That way, you get the benefit of not taking the initial depreceation hit, but also don’t have to start doing major repairs.It’ll also let you roll the car’s value over into your new(er) car before it’s not worth much.
We just bought a car after 4 years of not owning one (we lived in Boston on 2 subway lines with tons of Zipcars around). We bought a 1 year old Hyundai Elantra, and are planning on following our own advice.
Post # 4
@crayfish: I think people do it for “status”.
Post # 5
Personally, I don’t find that to be a wise financial move.
DH’s dealer tried to convince him to trade in his car that he’ll have paid off in 2 years for a brand new model with another 6 yr loan with payments being $50 less than they are currently. We thought about it for a hot second then did the math. Let’s just say his car payment is $450 a month right now. If we picked up the new model we’d be handing them $28,800. If we simply paid off the car and decided to drive it into the ground before we bought new again, after 6 years we would have paid OURSELVES $21,600.
We’ll never be those people rocking new vehicles year after year. We’ll definitely buy new. But we’ll make sure those suckers have 6 figures in mileage on the gauge before we buy again. Some people love always having new cars and that is fine, but for us we have other plans for all that money. DH’s car is the only one we’re still paying on. Mine was paid off years ago and it feels great not owing anyone money for my car.
Post # 6
@claireos: We feel the exact same way.Some people don’t think about everything else you can do with that cash!
Post # 7
Are you sure she’s buying them? My brother in law does this, but he’s turning in leases. He always turns them in early and trades for something better.
ETA: He does this because they have small children, and always like to be in a newer car.
Post # 9
I think it just depends on the person. I certainly wouldn’t pass judgement on those who always have a new car–first off, she might actually be LEASING a car–leasing keeps you in a newer vehicle for a shorter period of time, so it looks like you’re always “buying” a new car.
And if she is actually buying a new car all the time, good for her to be able to afford that! She must be successful! Some people equate having a new car with status, and driving around in a new ride is important to them. I’m actually one of those people–I don’t have the NEWEST vehicle, but I do think what I drive is important. My husband definitely disagrees though–there’s a 0% chance I’ll be getting something new right after we pay off my SUV next year–and I don’t think I’d want something right away–it’s a great car!
Post # 10
Six of one… half dozen of another.
Most cars nowadays are financed over 4 years or more. And statistically, cars begin to break down and have more issues somewhere around year 4 or 5… so the money you are saving, some of it goes into more maintenance.
Plus the fact that every year you drive the car, the less retained value (equity) it has… while the cost of new cars continues to increase.
So the secret is at what point does it make more sense to trade in the car you own (equity) against whatever loan you`d have to take out to buy a new car (with no problems / under warranty)
I am an oldtimer (in my 50s)… at least for me that decision has typically been made somewhere between end of year 4 and around end of year 6 (most often in year 5)
Hope this helps,
Lol… the other school of thought is buy a car… NEW or USED and drive it into the ground. Then go out and buy another… and so on.
EDIT TO ADD – Leasing is a whole other ball of wax. You pay less monthly… but you don
t own the car outright either. The money you therefore pay into it is like rent... at the end of period of time you dont have anything to show for it. Leasing is popular with folks who have a need for a NEW car all the time, either because they put on a lot of miles or for show… which is WHY they are popular with people who own their own businesses / on the road salesmen etc… they can also write off some of their car expenses on the lease.
Post # 11
Personally, when I was 23 and ready to buy my first NEW car I chose a Toyota Matrix because my mom had a 20 year old Toyota when I was young and only sold it because she needed a bigger car. The Toyota was running fine! My 2004 Matrix is still running smooth as can be, gets great gas milage and I love her. She’s a little banged up here & there, but nothing a paint job won’t fix in a couple years. I plan to drive her until she’s on her last dying breath. I am LOOOOOVING not having a car payment!
Post # 12
I wouldn’t buy a new one right away. I would put money in a bank account to the tune of similar “payments” so that the next time you need to buy a car you can afford to buy one outright. I also would never buy a brand new car, as a PP mentioned you have a better value buying one a couple years old.
Post # 13
We said we were going to buy a used 2-3 year old used car and save money on that initial depreciation, but we ended up buying new. I figure if I’m going to drive this to the ground, I might as well get that extra 2-3 years on it, rather than have to get a “new” car a few years sooner. I can’t imagine trading in a car just when I finish paying it off or before though just to pick up another car payment. We didn’t even want a car payment, so we paid in full for it.
Post # 14
@amazingbee: I’m of the “get one and drive it into the ground” camp. It’s nice to have some freedom (a.k.a. no car payments of any kind), and it’s also nice to know you actually got your money’s worth.
I had my first car for almost 11 years. It was purchased new as a gift from my grandparents and I took great care of it. By the end, it had over 100,000 miles on it and still ran pretty well. Unfortunately, because of its age, I started sinking money into it here and there … And that adds up. I saved up to put a substantial downpayment on my next vehicle, and traded my old car in as well. I ended up getting a used car this time around, but it was a one owner, low mileage, certified/preowned vehicle. I wasn’t so sure about getting a used car at first, but I’ve been really happy with it and the service I received at the dealership was (and continues to be) amazing. I’ve had it for a little over a year now.
I plan to keep this car for at least 6-7 years, provided it still works well and doesn’t require a lot of expensive repairs/maintenance in that time frame. It will be paid off in 2 years (I took out a 3 year loan). I definitely want to enjoy some time without a car payment!
Post # 15
I used to be that girl… buy brand new and trade in every few years. Then I got smart. I now buy a car that’s about 2-3 years old with low miles and then drive it and maintain it ’til it needs to be towed away/or if I know it’s on it’s last few thousand miles.
It’s even smarter to pay in cash if you can. You should never finance a depreciating asset.
Post # 16
Meh. Buying new isn’t a great idea. I bought a 2006 Subaru last year and I’ll drive it until we have a second kid and trade it in for another used Subaru.