Cars and depreciation

[Audi_Driver]

Folks,

Just discussing the above topic with a work colleague the other day.

There is no doubt cars are a serious money eater in my opinion.

My colleague was of that opinion that to best avoid depreciation, he buys a brand new car (circa €25,000) and keeps it for 10 years before replacing it again with another new car.

I was of the opinion that buying a second hand maybe 8 years old car for circa €6000 and keeping it for 6 years before replacing again with another car for ~ €6000.

Just wondering what are some of you money savvy experts opinions on cars and how to best try and avoid depreciation .

 

[Branz]

Its like death and taxes, cant be avoided.
In addition to depreciation there is also the opportunity cost of using your capital to purchase a depreciating asset. {I know with low interest rates and DIRT/USC/PRSI it is less of an issue now but still there}
Increased maintenance and NCT costs on older cars, as well as a move towards higher insurance costs for cars above 10 years ( but below the classic car cut-in of 30 years) mean that looking at depreciation on its own may give the wrong answer

 

[Joe_90]

But surely OP you and your friend have different cars his will younger that your for 8 years!

So he pays out €25k and keeps it 10 years and say trades it in for €2k so costs him €2,300 per annum.

On the basis that a car depreciates most in the earlier years, perhaps he would be better of buying a second hand car after a year and then keeping it for a long time.

If you keep your 8 year old car for 4 years then the depreciation is lower but you are not comparing like with like.

 

[mathepac]

... looking at depreciation on its own may give the wrong answer

I agree totally. Focussing on any single element instead
of a TCOO model may skew decision making.

 

[monagt]

Years..............Survey 1..............Survey 2...............Survey 3

New................10-20% down.......20% down..................
2-3Yr...............50% of New ................................3Y+80Km = 40% of New
4Yr..................40% " "
5Yr............................................... 1/3 New..................
5-7Yr..............<40% New

Nothing much goes wrong in first 4 years and life of a car is 9 Years
Buy > 2 Years @50% or less (was do most millionaires)

 

[roker]

Slightly off subject, but would it also save by purchasing 2nd hand from the UK, and selling it in Ireland after a few year?

 

[Leo]

Slightly off subject, but would it also save by purchasing 2nd hand from the UK, and selling it in Ireland after a few year?

Assuming you do your homework on the particular model you're buying in the UK, then yes.

 

[Buddyboy]

I purchased in Belfast late last year. The train from Dublin to Belfast was €15 and I drove the car back to Cork that day.

I have definitely saved money on the deal, as well as getting a higher specced car (base spec in The North/UK is higher than The Republic, e.g. Air Con, ABS etc.)

VRT was a painless process, and with the VRT calculator I knew how much it would be before purchasing the car.

The car was on a website, from Charles Hurst, so took train to Boucher Road. I'd already negotiated the price over the phone, quick test drive and then paid by Visa Debit card. Drove home. Organised the VRT the following day.

By the way, car was a Hyundai I10, 2009, 17,000 miles, immaculate. ABS, Aircon etc. Price was £5k, plus VRT so came to around €7000 all up. Nothing available in the Republic came close.

So it is definitely possible to save money, if you do your homework.

 

[dub_nerd]

The NI import thing might be a good idea. But for Irish dealers, I don't know where people get the "50% off @2 years" idea. I've never seen anything remotely like that level of discount from a dealer. For example, just checked 2 year old Toyota Auris on carzone.ie and it looks more like 10-25% off new prices. I can believe you might lose 50% depreciation if you were selling the car to a dealer, but it doesn't work the other way round. Two cars ago I bought my first ever second hand car and it didn't work out any cheaper than buying new and keeping for 10+ years, which I've just done for the third time.

 

[monagt]

I don't know where people get the "50% off @2 years" idea.

My data came from 3 different sources which is why they don't exactly agree and if others can get even more and consolidate them, it would be good.

 

[Black Sheep]

Over the years I have bought a couple of cars in NI and it has worked out well. I have a couple of friends up there who know about cars and do most of the leg work for me so I'm lucky.

Just to remind others they salt the roads in winter so watch out for rust