car depreciation

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nearly40

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I have a 2004 car worth 18,000, no loan, cost 28,000 3 years ago. At what point does it make financial sense to change to a newer car, take out a small loan now or a bigger loan in 2 -3 years.......for the same cost in the long run ,could i be driving a newer car now?
 
That is one of the great debates. The most realistic answer is to keep your 2004 car until it is no longer viable to keep it on the road. i.e. the cost of repairs and maintenance cost more than the car is worth. Personally I change the car every 3 years. Not because I think its more cost effective or the car needs changing. I am interested in cars and lets face it we all like to drive a new car from time to time even if we know it makes no economic sense. Sorry I can't answer your question but I was in a comparable position to you this year and bought a new one for the reasons I outlined.
 
The longer you keep it the less the effect of depreciation per annum. The depreciation curve is steepest in the first 3 years then starts to ease a bit. Buying a new car and financial sense don't really go together, buy a 3 year old one to get best value and keep it a long long time. However, as SOM42 says, we all like a new car now and then and if you're happy to spend more money for the reassurance of a newer car then go for it.

If you really want to minimise depreciation costs then buy a good 2/3 year old car in the UK, keep it a year and sell it for at least what you paid for it (usually more), works for me! More effort naturally, and very make/model dependant but if you're careful its the most economical way to own a nice car at minimal cost.
 
DaveD said:
If you really want to minimise depreciation costs then buy a good 2/3 year old car in the UK, keep it a year and sell it for at least what you paid for it (usually more), works for me! More effort naturally, and very make/model dependant but if you're careful its the most economical way to own a nice car at minimal cost.
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This sounds wonderful - is there...erm...a bit of 'manoevering' involved here?
 
Financial sense, car loan and newer car don't go in the same sentence.
Most buy new cars because they want a new car, want the newest model or change of need or image. If you want to keep depreciation to a minimum then as DaveD says, buy second hand (thereby already saving at least 20-30% of the initial depreciation of driving a new car off the forecourts), import from mainland UK (where cars are even cheaper than the north because of the pure scale of the second hand market), look for low miles, conservative colouring of car and a prestigeous brand (the Germans and Honda) and sought after engine/ engine size for the model.

Yes importing may require a touch of manoevering however that's the beauty of the internet- target a area of UK/ N. ireland, do your car searches online going specifically for the car/model and spec you are after (you'd be doing this anyway in Ireland, plus you'll find UK cars are better spec than Irish), and check the VRT for that car online or ringing the VRT office. Once you've seen a selection for the car you want then arrange a couple fo days to visit, look and test drive the car, Barter hard for the car you pick pricing dealers against each other (much easier to do in UK than in Ireland where dealers for some reason are arrogant) arrange temporary insurance over the phone with the dealer and drive it back to Ireland via the ferry. If you are married, you can look at the cars while the wife/partner goes on a shopping trip...everyone happy. get home, make appointment with VRT office, get your plates and fully insured in a couple of weeks. Obviously if you're gonna be saving a few grand then this is very worthwhile doing. Don't be put off by resale value (no effect in my experience). I've mentioned before that when i moved from the UK, I brought my mini with me. I sold it easily last year actually getting more money for it than I paid originally 4 years ago....obviously I didn't pay VRT in the UK, but just saying it doesnt affect the value of the car.
Also, importing cars from the UK is what most second hand car dealers do...I've been to a good few in my time and you'd be amazed how many UK reg cars they have now sitting waiting to get their VRT/ irish plates....car dealers know this is the best way to make a profit.
Nothing more frustrating I'm sure than spending a number of weekends driving around Ireland looking at one car at a time.
 
nearly40 said:
I have a 2004 car worth 18,000, no loan, cost 28,000 3 years ago. At what point does it make financial sense to change to a newer car, take out a small loan now or a bigger loan in 2 -3 years.......for the same cost in the long run ,could i be driving a newer car now?
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Just out of interest, what kind of car is it?

When you say it's worth 18k, is that what you'd expect to get for it if you were selling it?

The reason I ask is that any car worth more than 50% of its original (new) cost after three years is doing very well.
 
2004 honda HRV Auto 28,000ish can't rem exactly as trade in was involved.Was an ex demo about 6 months old 1000 miles .
 
OK - that makes more sense: I'd assumed you'd bought new and the original price was list or close to it, which would make depreciation on your car very low (as a very rough guide, most cars loose about half their value in the first three years).

It's pretty hard to judge which is better of the two options you quote, as it comes down to what the two cars are worth at two different points in time.

Strictly speaking the only time it makes financial sense to switch to a newer car is when the cost of repairing the old one exceeds its value (assuming replacing like for like: replacing a five litre Merc with a Yaris or the like rebalances the equation a bit).

But when did financial sense (honestly) play much of a part in any car purchase??

Intersting question, though....
 
What may also be worth considering is that new(er) cars will have a warranty which should prevent any nasty bills should anything go wrong with the car. Given the prices of parts and labour it does give considerable peace of mind to know that the car will be repaired should something go seriously wrong.
 
SOM42 said:
What may also be worth considering is that new(er) cars will have a warranty which should prevent any nasty bills should anything go wrong with the car. Given the prices of parts and labour it does give considerable peace of mind to know that the car will be repaired should something go seriously wrong.
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But you still would pay labour which is the most expensive part??
 
mmclo said:
But you still would pay labour which is the most expensive part??
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Why? If the car is under a manufacturer's warranty then any repairs will be carried out at the manufacturer's expense. Surely thats the whole point of a warranty.
 
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