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Car Economics.

P

PlatinumGold

Lifer
i've always believed that's what you should do with cars, this time i didn't. i kept both of my cars over 5 yrs now.

so


Ford Windstar, 5 yrs 96k miles.

trade in value: mb $3500
Cost to maintain: $3500.00 (wiper broke, new tires, 2 sets of brake pads)

if i had traded it in after 3 yrs, i would have saved $3000.00 (wiper broke after 4th yr, new tires and 2nd set of brake pads after 4th year). Plus i lost about $5000.00 to $6000.00 in resale value.

if i had traded it in after 3 yrs, i would have made 3 yrs of payments on a 23k minivan. currently i would have a 3 yr old vehicle with resalve value closer to $10k

i think from now on, i trade in my vehicle every 3 yrs.

let's face it, cars/minivans are not an ASSET, they are an EXPENSE.
 
All cars are expenses.


You are getting ripped off! $3500 for a wiper, new tires and brake pads?

You also aren't making any payments now that your vehicles are 5 years old.
 
It cost you $3500 for brake pads, a wiper motor, and tires?

😕

Oh, and if are trading in every three years just save yourself the money and lease. IIRC you also own your own business so you should be doing that anyway.
 
that's why when i amd out of college and need a car i am getting a bike. when that fails i am getting a kia or civic or something.

cars are about the worst "investment" you can get, especially when you get an expensive one you are basically bowling a fragile 50k christmass tree ornament down the road. and paying a ton of insurance on it?

the only reason i will ever get an expensive car is for racing it on a track. in a modern sports car you can't go above 4k rpms without breaking a law
 
Originally posted by: radioouman
All cars are expenses.


You are getting ripped off! $3500 for a wiper, new tires and brake pads?

You also aren't making any payments now that your vehicles are 5 years old.
Click to expand...

ya but i was on 60 month loans, so i would have made payments for 2 of those years.

btw, it's not like i went into the shop one time and had all of those things done, i went into the shop 4 different times. there are diagnostic fees etc.

it's like when someone says, you paid XXXX dollars to get your PC fixed, you got ripped off.

no, it takes time and cost money to have people work on your stuff. i don't begrudge mechanics what i pay them because i get paid for providing other professionals a service.
 
There are no diagnostic fees for tires, wipers, or brakes.

If you feel like you are getting a better deal by having a continous car payment for your entire life, then so be it. For some people, having a fixed payment every month and a vehicle that is under warranty is better than a vehicle that is paid for and the expenses may be $0 one month and fairly high another month (for repairs). Whatever floats your boat.
However, it sounds to me like you are trying to justify buying a new vehicle, and heck, I don't blame you since you own a Windstar.

And by the way, if you finance for 5 years and trade in after 3, you are going to be up-side-down and rack up more debt. Not a smart move. If you finance for 3 years, you will probably end up with a really big payment.
 
There's no way that a broken wiper, new tires, and brakes can cost $3500. Impossible.

You're completely right that cars are an expense and not an asset. All the more reason to keep them longer, unless your vehicle is known to have a lot of problems.

Buy cars that have good reliability ratings and then keep them.

I bought a year-old Olds Cutlass in 1997 and just got rid of it last month. There was nothing wrong with it that HAD to be repaired. I probably spent less than $3000 in repairs over the nine years I owned it. For the last four years it's been paid for, and I put that money in the bank which allowed me to pay cash for the car I bought.

The other car is a ten-year-old Jeep. It's been paid off for six years and I've put that money in the bank also. Repair costs while I've owned it are about $5000 - far, far cheaper than a car payment.

Repairs are expensive, but not compared to a car payment every month.
 
Originally posted by: kranky
There's no way that a broken wiper, new tires, and brakes can cost $3500. Impossible.

You're completely right that cars are an expense and not an asset. All the more reason to keep them longer, unless your vehicle is known to have a lot of problems.

Buy cars that have good reliability ratings and then keep them.

I bought a year-old Olds Cutlass in 1997 and just got rid of it last month. There was nothing wrong with it that HAD to be repaired. I probably spent less than $3000 in repairs over the nine years I owned it. For the last four years it's been paid for, and I put that money in the bank which allowed me to pay cash for the car I bought.

The other car is a ten-year-old Jeep. It's been paid off for six years and I've put that money in the bank also. Repair costs while I've owned it are about $5000 - far, far cheaper than a car payment.

Repairs are expensive, but not compared to a car payment every month.
Click to expand...

wiper motor.
 
I see so many mistakes here it isn't funny.

1) That'll teach you to buy reliable vehicles next time. Ford makes some good vehicles, the Windstar ISN'T one of them. Specifically, Consumer Reports keeps a list of hundreds of vehicles, and the Windstar is one of a handful that made both the "used cars to avoid" and "Bad Bets" list. The Windstar line has some of the worst track records of all vechiles when it comes to: engine, fuel, transmission, electrical, suspension, brakes, body integrity, power equipment, and body hardware. The only reasonably reliable parts are the cooling, ignition, and exhaust.

2) You got ripped off on those repairs. That is, unless there is something you aren't telling us.

3) Don't trade in a vehicle. Sell it on your own, and you'll likely make far more money.

4) Don't buy a vehicle with huge depreciation. The reliable Honda Odyssey or Toyota Sienna have much less depreciation. A 5 year old Odyssey or Sienna with 96k miles have an average trade in of just about $10,000. And they both had the same initial price as your Windstar.

5) You drive far above the average mileage. You'll get royally screwed trying to sell a 3 year old vehicle with almost 60k miles.

6) The stupidest financial thing you can do with a vehcile purchase is to replace vehicles every 1-3 years. The second stupidest thing is to lease vehicles. Keeping them for 10+ years is the best thing you can do. About 5 years is average. Don't go from average to the #1 stupidest thing. Try this math out:

[*]You probably spent ~$30k on the vehicle (you didn't say the exact model so I'm guessing here). Plus you spent $3500 on repairs. Then you got $3500 back. Net cost: $30k. Divide over 5 years and it was $6k a year.

[*]Or instead, you could have spent ~$30k on the same vehicle and sold it after 3 years at your estimated $9000 price (using the average of your $5000 to $6000 numbers). Net cost: $21k. Divide over 3 years and it was $7k a year. Notice how it is $1000 a year more expensive!

[*]The math above doesn't include the extra sales tax, extra interest, extra insurance, extra licensing fees, etc that you will pay by replacing them more frequently. So, in reality, it is more likely $1500 - $1750 more per year to buy new and sell them every 3 years instead of every 5 years.
 
i tend to keep cars for 5 years. you're getting raped buying domestics and putting up with repairs, imo.

 
You are doing you math all wrong. If you do all your math based on your monthly payment, you are a car dealers wet dream.

example:

Buy new car: $25,000 (2006 Ford Freestar Loaded)
Down payment: $5000
Car payment: $385 (~6% * 5 years)

Own car for 3 years.

loan balance: $8700
trade in value: $12,500

Your net cost for this vehicle is :
$5000 - down payment
+$13,860 - loan payments
-$12,500 - trade-in credit
+$8700 - loan payoff
+$0 - all repairs under warranty
$15,060 or $5000 avg cost per year.


If you started with the 3 year old minivan, it would look like this:

Buy used car: $15,000 (2003 Ford Freestar Loaded)
Down payment: $5000
Car payment: $300 (~6% * 3 years)

Own car for 3 years.

loan balance: $0
trade in value: $6,000

Your net cost for this vehicle is :
$5000 - down payment
+$10,950 - loan payments
-$6,000 - trade-in credit
+$0 - loan payoff
+$2,000 in overpriced extended warranty
$11,950 or $~4000 avg cost per year.

The used vehicle saves you $1000 per year before you factor in the reduced insurance cost.
 
Originally posted by: dullard
I see so many mistakes here it isn't funny.

1) That'll teach you to buy reliable vehicles next time. Ford makes some good vehicles, the Windstar ISN'T one of them. Specifically, Consumer Reports keeps a list of hundreds of vehicles, and the Windstar is one of a handful that made both the "used cars to avoid" and "Bad Bets" list. The Windstar line has some of the worst track records of all vechiles when it comes to: engine, fuel, transmission, electrical, suspension, brakes, body integrity, power equipment, and body hardware. The only reasonably reliable parts are the cooling, ignition, and exhaust.

2) You got ripped off on those repairs. That is, unless there is something you aren't telling us.

3) Don't trade in a vehicle. Sell it on your own, and you'll likely make far more money.

4) Don't buy a vehicle with huge depreciation. The reliable Honda Odyssey or Toyota Sienna have much less depreciation. A 5 year old Odyssey or Sienna with 96k miles have an average trade in of just about $10,000. And they both had the same initial price as your Windstar.

5) You drive far above the average mileage. You'll get royally screwed trying to sell a 3 year old vehicle with almost 60k miles.

6) The stupidest financial thing you can do with a vehcile purchase is to replace vehicles every 1-3 years. The second stupidest thing is to lease vehicles. Keeping them for 10+ years is the best thing you can do. About 5 years is average. Don't go from average to the #1 stupidest thing. Try this math out:

[*]You probably spent ~$30k on the vehicle (you didn't say the exact model so I'm guessing here). Plus you spent $3500 on repairs. Then you got $3500 back. Net cost: $30k. Divide over 5 years and it was $6k a year.

[*]Or instead, you could have spent ~$30k on the same vehicle and sold it after 3 years at your estimated $9000 price (using the average of your $5000 to $6000 numbers). Net cost: $21k. Divide over 3 years and it was $7k a year. Notice how it is $1000 a year more expensive!

[*]The math above doesn't include the extra sales tax, extra interest, extra insurance, extra licensing fees, etc that you will pay by replacing them more frequently. So, in reality, it is more likely $1500 - $1750 more per year to buy new and sell them every 3 years instead of every 5 years.
Click to expand...

actually, it had list of like $26k, but i only paid 21k. i got a decent price on it. i paid just over 23k tax tag and title.

there was no way i was going to get a comparably equiped sienna or odessey for anywhere near that amount. i was looking closer to 29 to 30k for a comparably equiped toyota/honda (not including tax tag title).

so i didn't lose that much on resale value (albeit i lost some). also, at the time, it was 1st year for this model windstar and i didn't know reliability of it.

for me, part of this analysis is also based on the fact that, even if it did cost a bit more, i'd rather have my wife and kids in a relatively new car and the piece of mind it affords.

mb i just got burned on the windstar.

also, insurance has been mentioned, NJ is no fault so there isn't a whole lot of difference in insurance rates.

ok, i was off on the repair costs i quoted (the $900 i spent having my window wiper motor replaced, i had that done at the ford dealership, never will go back there again).

the $1100.00 or so i spent on tires i don't feel bad about, i got pretty good Toyo's for it and they've been very good tires.

brake pads, hmmm, mb i only spent like $300.00 each time i had them replaced.

$2600.00 on repair.

i probably spent some money somewhere else but jsut can't remember it at the moment.

 
Originally posted by: m2kewl
i tend to keep cars for 5 years. you're getting raped buying domestics and putting up with repairs, imo.
Click to expand...

if you can guaranteevme that with imports you dont' have to replace brake pads and tires after so many miles, than i'll go out right now and buy japanese. 😉
 
I still can't get over $900 for the wiper motor? :Q

I've had to replace one in a Ford ranger. It was $30 and about 20 minutes of work. And I'm about as mechanically uniclined as they come.

 
Originally posted by: Mwilding
I don't think you are very good at math...
Click to expand...

seriously. Cars dont lose over 50% of their value between the 3rd and 5th year. That car lost most of its value in the first year. If you give me 2000 I will fix those things for you!
 
Older cars are expensive if you can't do your own maintenance, cheap if you can.

Take this car:
http://mspencer.net/Demon-Xanth/Volvo/IM000566.JPG

My cousin got a new car because this one had an intermittant start problem. To get it fixed, he paid a tow truck, had it towed, they took it to the dealer, they found no spark, replaced the coil. This ran some $350. Then it wouldn't start again, he had it towed again, it started up. Then it did it again further away. He left it there. He got a newer car that he's wanted for a while (2001 Subaru 2.5RS), so he gave me that one. My brother in law and I went over with a trailer (150 miles each way), within two minutes we had it started and drove it onto the trailer. Got it home, found the problem is a crappy electrical connection to the coil. Cost to fix: near $0

Other stuff that needs to be taken care of:
Brake pads: parts: $40-80, labor: $40 to have the rotors turned. He'd have to add about $150 for labor.
Transmission pan gasket: parts: $3.29, labor: $0. He'd have to pay about $60 for labor.
Brake light: parts: $1? labor: $0. Not sure a shop would even bother charging.

The stuff is cheap and easy for me, but a PITA and expensive for him. He doesn't have the tools, knowledge, nor facilities to do the work. I'm going to save $3/day on gas by getting it running well 🙂
 
Originally posted by: PlatinumGold
i've always believed that's what you should do with cars, this time i didn't. i kept both of my cars over 5 yrs now.

so


Ford Windstar, 5 yrs 96k miles.

trade in value: mb $3500
Cost to maintain: $3500.00 (wiper broke, new tires, 2 sets of brake pads)

if i had traded it in after 3 yrs, i would have saved $3000.00 (wiper broke after 4th yr, new tires and 2nd set of brake pads after 4th year). Plus i lost about $5000.00 to $6000.00 in resale value.

if i had traded it in after 3 yrs, i would have made 3 yrs of payments on a 23k minivan. currently i would have a 3 yr old vehicle with resalve value closer to $10k

i think from now on, i trade in my vehicle every 3 yrs.

let's face it, cars/minivans are not an ASSET, they are an EXPENSE.
Click to expand...


Buying new and selling after short period of time is the dumbest thing you can do. If you plot the depreciation rate over time, it's gonna be highest in the first couple years and then it levels off.

If you buy a new car, as soon as you drive off the lot it's worth less because its pre-owned/used.

The last car my mom had was a fully loaded Taurus. Her payments were 320 a month for 3 years. Thats about 3600 a year or $11K over the course of 3 years. Now we traded that POS in after the lease was up and bought a used Mercedes C class. The car was $7K and costs about $1000/year (overblown figure btw) to keep up. Residual value is gonna be about 4K after 3 years. So That's total of $6000 over the course of 3 years....
 
Out of all the dumb things you've admitted to doing in this thread, most notably, getting over charged by Huge amounts. Buying the cars BRAND new takes the cake.

BTW, you do understand how easy it is to change your brake pads youself right? Maybe you should try learning something if NOT getting ripped off is actually important to you.
 
Originally posted by: PlatinumGold
Originally posted by: m2kewl
i tend to keep cars for 5 years. you're getting raped buying domestics and putting up with repairs, imo.
Click to expand...

if you can guaranteevme that with imports you dont' have to replace brake pads and tires after so many miles, than i'll go out right now and buy japanese. 😉
Click to expand...

seriously, this is also taking into account normal maintenance and wear and tear.
 
I bought a 54,000km 2001 Honda Civic....super cheap, reliable, good on gas, all I need at the moment.

Buy a few years old, add on the 3-year full warrenty, and you don't have to worry about anything. Getting used with a warrenty will still be way cheaper than new.
 
Originally posted by: AMDZen
Out of all the dumb things you've admitted to doing in this thread, most notably, getting over charged by Huge amounts. Buying the cars BRAND new takes the cake.
u.
Click to expand...


QFT... he is every dealer's dream customer....
 
Originally posted by: PlatinumGold
actually, it had list of like $26k, but i only paid 21k. i got a decent price on it. i paid just over 23k tax tag and title.

so i didn't lose that much on resale value (albeit i lost some). also, at the time, it was 1st year for this model windstar and i didn't know reliability of it.

for me, part of this analysis is also based on the fact that, even if it did cost a bit more, i'd rather have my wife and kids in a relatively new car and the piece of mind it affords.
Click to expand...
Must have been the lower end Windstar. That's ok, I just guessed. Lets do the updated math.
[*]Keeping it for 5 years. At an ~7% interest rate, that cost you $4300 in interest. $23k-$3.5k+$2.9k+$4.3k = $26.8k spent. Divide by 5 years and you get $5365 per year.
[*]Keeping it for 3 years. You'd have spend $3625 in interest at ~7% interest. $23k-$9k+$3.6k = $17.6k spent. Divide by 3 years and you get $5875 per year. Still that is $510 more per year!

You can always estimate reliability from that same vehicle in other years. Yes, it was a redesign, but redesigns tend to be minor. In fact, on the first year of a redesign, the changes tend to make them a bit more unreliable. Thus from the crappy reliability ratings on the 1997+ years, you'd know the Windstar was likely to suck with repairs.

Do you really distrust 4 and 5 year old vehicles? Is it worth $510 a year for the rest of your life to not occasionally drive a 4 year old vehicle?
 
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