My view is that the used car market prices in the expected problems of an older car - but works on the weighted average for that model.
Thus, if you know you have a better than average example, it will be worth more to you than to a buyer because they don't know that (& won't believe you if you tell them!). So, hypothetically, if it were an auction you'd buy it back because your knowledge would encourage you to a higher price.
Likewise, if you know it's been thrashed or is sometimes making a funny noise, in the auction you'd let it go.
So, as Geffers says, if you like it and its running well, keep it. The cost to change is always that - a cost.
|
I'd have thought that everyone on this forum was pretty much familiar with the typical depreciation curve; i.e. a car loses anything from 35-55% of its new value during the first couple of years. Thereafter the curve flattens out and the yearly loss becomes less and less.
Anytime you buy a new car you take a hit for those first couple of years. In the case of some models (e.g. petrol Mondeos) it seems like you lose 50% in the first six months!. But then I guess no one pays list price for a Mondeo......
If a car is reliable at 5 years (and has been well looked after) I see no reason for major problems to occur. 40k is a very modest mileage for a modern car - it should give many years of good service yet.
|
I have asked myself a similar question about our Xantia 1.9 TD for many years now and have taken quite a few test drives in various new cars along the way. I have always asked myself the question:- is the new car £x000 better than the Xantia? The answer has always been no.
The Xantia is 10 years old now, and worth very little, except as a second car for myself and my wife. It remains a nice car to drive - decent handling, good ride, reasonably quiet and refined. I have never come across a car with a better gear change and the clutch is one of the best I have ever experienced. It is also totally reliable.
As for allowing £40 per month for repairs, well if I was paying that amount, it would definitely be gone. I assume this amount is exclusive of standard service costs.
|
DavidHM wrote 'Don't forget that the Golf is the exception, rather than the rule... [when it comes to depreciation]', yet HJ said that the Mk IV Golf was a good one to trade in owing to reliability issues with increasing age.
Therefore, given:
a) the annual cost over the next 5 years of a new Golf compared to an old Golf,
b) the particular unreliability of the Mk IV, and
c) the increased residual value at 5 years, trading off the back of historic reliability of the Golf,
it looks like time to change. If I could drive a brand new car for only £800 - anticipated repair costs on the old one, I'd change immediately.
|
|
I read in today's Indie that the Mk.5 Golf is selling like the proverbial lead balloon?
|
I read in today's Indie that the Mk.5 Golf is selling like the proverbial lead balloon?
www.sniffpetrol.com/adgolf.jpg offers an explanation. The Golf has lost its "premium" image, sadly (for VW).
|
|
|
|
If a car is reliable at 5 years (and has been well looked after) I see no reason for major problems to occur. 40k is a very modest mileage for a modern car - it should give many years of good service yet.
Spot on i think Aprilia. Five years old is the age i normally buy at! At 40K the car has been nowhere, so if the history is known there is plenty of life left in it.
|
So, effectively, folk are saying that if bought new, this ?bastion of quality? Golf costing £15k is at the end of its *economic* life after it?s done just 40k miles or is 5 years old?
And this one-owner, regularly serviced VW is now set to start costing £480 a year in unscheduled repairs? (DavidHM?s figures)
What kind of shoddy carp product is this?!
No wonder I settled on making my ?new? cars be 5 year old 50k miler Japanese models!
But then except for moments of rashness, I?m a tightwad. A relative of mine used to buy a new car every 3 years, after having done only about 18k miles? Must have cost her a fortune!
On a more constructive note, an alternative ?not as fast a treadmill to be having to keep up with? approach could be: Keep the Golf another 2 years, then trade it in for a 2-year old Golf mkV, shifting the ownership stint to the 2-7 years, 20-70k miles phase.
|
|
you don't sound like a tightwad to me tunacat! i think you just have a bit more financial sense than some others...
|
|
|
As for the £40 a month estimate... it's more of a guesstimate and has very little to do with the particular care. It doesn't simply include unscheduled repairs but also scheduled or at least expected things like cam belts, brake discs and exhausts, which you can mainly ignore for the first 40k miles nad five years. After that, however...
(Incidentally my father bought a 4 year old Rover with 18k miles on the clock. Over the four years that he had it, excluding scheduled servicing, it cost him £80 a month in repairs, albeit on a slightly higher mileage than this. Three exhausts, a cam belt, a clutch and a gearbox didn't help).
|
3 exhausts in 4 years.....
Oh and the interest calculation is 2.4% (after 40% tax, assuming 4% interest), on 9k (as it is the difference between the old & the new car, so £216 per annum. Unless you're on finance, in which case it is three times that! AT which point you should put a cold towel over your head & look for an old banger on eBay.
|
|
|
Oh, I don't claim to have any financial sense!
How can you ignore things which are expected or scheduled?
The last brand new car I had needed new discs and pads all round before 30k miles, the car after that was 2 yrs and 17k miles old, needed a scheduled cambelt change at 36k, unscheduled discs and pads all round, and a new exhaust, before 50k. Another car bought at 49k went to 86k without consuming anything other than 2 front tyres, IIRC.
Cambelts and consumables can need paying for during any period of ownership, unless you're very canny (or lucky) with the times you buy and sell.
Perhaps, when buying new, one should always remember to have a look at Hyundai's 5 year warranty before making the final decision?
|
My point is that you should get 5 years/40k out of a cambelt on most cars, if not much more. An exhaust is probably 50:50 as to whether it will last that long, unless it's attached to my father's old Rover. Pads will probably need one replacement in the first 40k but the discs should still be going strong.
Over the next 40k though, new discs, an exhaust, a cambelt, and quite possibly shock absorbers and/or a clutch will be necessary. None of those being replaced on a six year old, 50k car, would be considered a sign of unreliability, but they are unlikely to fail much before that either. That's why, in most cases, you can more or less ignore them.
As for interest - on savings, it's compounded, don't forget - so should be £245 p.a. average on £9k after tax (Intelligent Finance 4.3%, non-ISA). Interest on a loan at 5.9% APR would be £1,385.40 - or £277 pa average. The reason this is not so much higher is that the loan balance reduces over time and thus so does the interest charged.
|
|
And by switching to diesel you can ignore exhaust replacement as well. I don't think I have done anything to an exhaust for over ten years now. However wife's 2000W Clio is a petrol ..
|
|
|
£216 v £245 - materially correct. the figures were made up anyway!
As for being on finance, it depends on how you do your finance! Chances are that you'll end up needing a bigger mortgage or other loan for something else as a result of having the car, so I disagree strongly that you should reduce that (on grounds of repayment) if looking for a direct comparison. (If you do reduce it, then perhaps you should reduce the interest on savings similarly on the grounds that you'd end up saving the money anyway.)
|
The reducing balance works this way, as in:
Month 1 - Paid £175; Repayment £130; Interest £45; Balance £8870
Month 2 - Paid £175; Repayment £131.40 Interest £43.40 Balance £8738.60
And so on...
That is why the total interest repaid is rather less than 30% of the principal. Of course, as the bank receives the repayment on the loan, it is then free to lend it elsewhere.
|
|
Yes indeed. Distinctly uncertain that you're comparing like with like though. People hwo live their life on credit invariably end up borrowing new money as quickly as their old loan is repaid. Whilst it may not be a direct cost of having a new car, it is likely to be a cost that results from having a new car.
|
|
|
|
|
|
|
|
|
