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Thread: When is it time to get rid of your old car?

  1. #1
    Vulture of The Western World Eric's Avatar
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    When is it time to get rid of your old car?

    People are keeping their cars much longer than they used to - eight to ten years on average, according to the American Automobile Association.

    That's up from 5-7 years in the '90s.

    It's easy to understand why; modern cars last longer - and new cars are really expensive (especially when you factor in the obnoxious property taxes and high insurance costs that come as part of the deal).

    But when is it the right time to start thinking about a new car?

    It varies from case to case - and car to car - but there are some signposts along the way to the junkyard.

    These include:

    * How important is trade-in/resale value to you?

    Virtually all news cars begin to lose value, or depreciate, the moment they are driven off the dealer's lot. After the initial first-year hit - when a car might lose 25 percent or more of its original sticker price value - the depreciation slide slows down to a slow bleed. While the vehicle will still lose some of its value with each passing year, it doesn't typically free-fall as dramatically after that initial, first-year depreciation cycle. But there comes a point - roughly around 5-6 years and 50,000-60,000 miles - when that value takes another plunge.

    That's what you want to watch out for.

    Even though most modern cars with 5-6 years on them and 50,000-60,000 miles on the clock will still run reliably for another 5-6 years and 75,000 miles or more with proper care, the perception is these are becoming "old" cars - and the market value dips accordingly. If you want to get top dollar, you should be thinking about trading or selling sometime before it hits the 5-6 year/50,000 mile mark.

    * Would you rather have a monthly payment - or face the possibility of occasional (and potentially large) unexpected repair bills?

    Once a new car is out of warranty - especially its powertrain or extended warranty - you face the Russian roulette of dealing with the possibility of large unexpected expenses from that day forward. And the older the car - and the higher the mileage - the more the odds are stacked against you that, eventually, something's going to break or require costly service.

    Some cars are better-built - and so inherently more reliable, for longer periods of time - than others. (Checking sources like Consumer Reports, JD Power customer satisfaction rankings and government recall data will give you a good feel for which cars have the best - and worst - track records.) But just as people get creaky as they age, even the best-engineered, best-cared-for car will eventually wear out.

    If you keep track of how much money you're putting into your car for upkeep, you'll be able to notice trends that can serve as the hint it's time to begin thinking about a new car - hopefully, before the old one suffers a major breakdown, such as a dead transmission. You don't want to find yourself in the catch-22 position of having to put more money into the car than it might be worth - and without increasing its value significantly after having done so. Looked at another way, spending $2,500 to fix an older car is the equivalent of more than six months' worth of $350 per month new car payments. Instead of nursing an old beater that could suffer another breakdown at any moment, you could be driving a new - and fully warranted - vehicle.

    * The Hassle Factor.

    Related to the above is your willingness to deal with more frequent trips to the shop - not just for unexpected repairs, but for ever more frequent preventive upkeep and maintenance. The farther you get from the day you drove off the dealer's lot, the more often you'll find yourself coming back for service. And paying for things like brake jobs, new tires, clutches, CV joints, struts, etc.

    Everything from new batteries and tires to fairly big and involved jobs such as timing belt replacement are hassles and expenses you can avoid entirely if you trade-in once every 3-5 years or so (or lease). For some people, the higher costs associated with buying a new car more frequently or leasing are worth it - if it means dodging the time and expense spent at tire stores, brake shops and the dealer.

    * How important are "peripheral"costs - such as insurance and property taxes - to you?

    One of the real downsides to owning a new/late model car is that peripheral costs of ownership - insurance and property taxes in particular - can be very high. Many people don't take them into account when considering a new car purchase.

    They should.

    Personal property taxes on motor vehicles (where applicable) can easily be $500 or more annually on a new vehicle. Conversely, the same car, when it's eight or nine years old, might cost you next to nothing in personal property taxes - because it's worth next to nothing as far as the tax man is concerned. Property taxes on motor vehicles are based on current market values; and obviously the older a car is, the lower is value (and thus, the applicable taxes) will be.

    It's the same story with insurance; new cars cost more because it costs more to cut a check if there's an accident and the vehicle needs to be repaired or replaced. As the car ages and racks up mileage, it's worth less and less - so premium costs tend to go down.

    * The Newness Factor

    This last criteria is the least objective - but it's no less important in terms of deciding when to ditch your ride. Some people are perfectly content to drive a car that's obviously older - so long as it still runs well (and is paid-for). Most Americans, however, have a lot of their personal image wrapped up in their wheels. And there are people in professions - such as real estate - where it's important to be seen in a car that looks new and sharp.

    So it comes down to what you want as much as what you need. But hopefully this discussion will have helped you strike a balance between the two.

  2. #2
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    My strategy is to buy a 2-3 year old car from a reliable brand (Honda, Toyota, and now Ford), keep it for 6 years until it's 9 years old, which is about when truly expensive things start breaking, and then repeat.

    If I have to take out a loan, get it for the shortest period of time I can afford. Time remaining is used to make payments to myself, preparing for the next purchase.

    Chip H.

  3. #3
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    Quote Originally Posted by chiph View Post
    My strategy is to buy a 2-3 year old car from a reliable brand (Honda, Toyota, and now Ford), keep it for 6 years until it's 9 years old, which is about when truly expensive things start breaking, and then repeat.

    If I have to take out a loan, get it for the shortest period of time I can afford. Time remaining is used to make payments to myself, preparing for the next purchase.

    Chip H.
    That's a great strategy.

    I think that you can even go beyond 9 years before repairs become obnoxious. I have a 2001 Saturn L100 that I bought new. I maintained the crap out of it and it has 185,000 miles on the clock. In that whole time, the check engine light has only come on once due to spark plug boots.

    I have had to take it into the shop only 3 times for unexpected repairs. That's not to say that it doesn't cost money to maintain it, but it is nothing compared with a car payment.

    So far, the AC works well, the alternator is still charging, it has only gone through one starter and one ignition key cylinder.

    I would say, all in all, not bad, not bad at all.

    I think that Honda's are pretty good cars, but slightly overrated. Toyotas are dull, but Fords are pretty damned good these days. I hate to say it, but GM's products have served me well. I would never buy a GM product made after 2003, when ONSTAR became standard equipment, nevermind that GM became part of the government.

  4. #4
    Vulture of The Western World Eric's Avatar
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    A big expense associated with new/newer cars is property tax (and insurance).

    In Va, the pig-fuckers are still hitting me for around $130 annually on my twelve year old pick-up with an assessed value of $3,500.

    Imagine the tax on a 2011 truck with a book value of $35,000!

  5. #5
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    Quote Originally Posted by Eric View Post
    A big expense associated with new/newer cars is property tax (and insurance).

    In Va, the pig-fuckers are still hitting me for more around $130 annually on my twelve tear old pick-up with an assessed value of $3,500.

    Imagine the tax on a 2011 truck with a book value of $35,000!
    Unbelievable. I wonder if it is more or less in North Carolina.

  6. #6
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    My county property tax on the 9-year old CR-V I used to own was about $110.

    Not sure what the tax will be on the 4-year old Ridgeline yet. Texas doesn't have an income tax, but they make up for it in various other ways.

    Chip H.

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