Automobiles > Automobiles

Keep my car or trade it in?

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By the way I think the Aussie made a lot of good points and should be writing here!!  You wrote you need a good reliable car. Well a 2-3 year old car (or a little older as yours are) can be quite reliable.  I know people in Central Pennsyvania who have vehicles over 10 years old with over 200,00 miles on them.  How you take care of a vehicle and the quality of the company also play a roll.  Go to Consumer Reports and find out the reliability of the vehicles you are considering.  Snow plays a minor roll in how long a vehicle lasts (rust and accidents mostly).  In the desert it's heat (kills alternators and batteries early) and rain. (Oil acts like ice any time of the year).   How you drive the car, quality (how the company builds it) and maintenance are most of the real factors.  Age alone plays a very minor role as I bet the Aussie knows. Otherwise they wouldn't have shown the financial logic of buying a less expensive reliable slighly older vehicle.  I appreciated that.  Thanks.    

My 1984 Escort died at 70,000 miles. Escorts used to only last a little longer than that if I remember correctly.  I was told when I bought my 1997 Escort that it would last until about 120,000 miles then it probably would start to die (so to speak).  I would plan on getting a new car at about that mileage whether it's 2003 or 2004.  Make sure that you have enough savings to get one before that mileage hits your vehicle.  You should always be prepared for the car to die.  I think this salesman was referring to the engine mostly but I can't really remember other than him saying the car wouldn't last much past 120,000 miles.

I do agree though that you should get a vehicle with low mileage like your second vehicle rather than buy new. If the market in your area shows proper depreciation. The 1984 Escort was almost new (8,000 miles) but it was cheaper than brand new.  My current car was new.  I would get a 2-3 year old car now if I had to buy another car.  Prices are better where I live now.  I only have 35,000 miles on it and plan to keep it a while.  I got the new one because my other car had died and the car dealers in my area wanted way too much for a used one with a lot of miles.  I went to several new dealers and at the time paid $12,000.00 instead of  about 1/2 less for a used car with a lot of miles.  At that time it was a better deal (no maintenance for 3 years) for me but now it should be better getting a 2-3 year old model.  Compare price, mileage and whatever before making a final decision.          

I'm sure not an expert here, but I would say drive it till the wheels fall off, so to speak.  at 100,000 miles, the trade in value won't really be anymore now then later.  (I think, lol!)  So you might as well get all the use out of it that you can!  That is my plan, anyway, with my 9 year old oldsmobile with 175,000 miles on it, still going strong!  I live where there is NO PUBLIC TRANSPORTATION, not even taxi cabs.  If my car dies suddenly, I can always borrow from a friend, catch a ride, etc. till I get it replaced..which doesn't really take that long.  Just wanted to give my 2 cents!  Good luck!

Rachel Dsida:
thanks for the Down Under reply, mate!

Honestly, if I lived in Aussie, I wouldn't be writing.  You Blokes  :D don't get any snow compared to us in Pittsburgh, and your public transit was excellent.  For the 3 weeks I was in Australia I didn't bother with cars at all.  if I lived in Melbourne or Sydney, I wouldn't own a car - besides, your car prices are about twice what we pay here, and your petrol (gasoline) is about 4 times the cost.  What you pay for a liter, we pay for 4 liters.  And there's no propane-powered vehicles like you have.

So, I paid about $12,000 for my brand-new Escort.  Even with the exchange rate, that's about A$14,000.

But for me, I *must* have a reliable car.  There really isn't any public transit whatsoever (the bus in my neighborhood runs twice a DAY), and I'm too far to walk or bike to my work and school.

However, you bring up a fantastic point:  cars last a heck of a lot longer than 20 years ago.  100,000 miles is just the beginning, and perhaps I should stick that money into some short-term bonds and save it up for a repair bill instead of a new purchase.

I don't have to make my decision for another 10 months, so I'm sure I'll waffle back and forth many many times before then!  :-)


In Australia, the average age of a car is over 10 years old. Your two cars are very young in comparision. I have an above-average 8 year old car, purchased when 3 years old. I plan to replace it in about 4 years. It is a top-of-the-line model by the way, airconditioning, airbag, ABS, CD player, leather interior, electric windows and mirrors, but not a prestige brand name model.

A 2-3 year old car can be bought for 60-70% of the price of a new car. Take an example. Person A and Person B both have $25,000 to buy on a new vehicle.

Person A decides to buy a new vehicle at the price of $25,000 and replace it for a new vehicle in 5 years time and after spending the $25,000 has no money left over. After three years the vehicle is worth $12,500 (50% of new car price). Person A has $12,500 after 5 years.

Person B is like person A but doesn't have a fancy to material things. A car is a car after all. Person B has the same amount of money as person A but instead of buying a new car buys something that is below what he can afford. Person B buys a 2 year old vehicle for the price of  $17,500 (70% of new car price). The $7,500 left over is invested in a 5 year term deposit at the rate of 4%p.a. After 5 years his term deposit is worth  $9,124.896 and his 7 year old car is worth  $8,750 (50% of his pruchase price or 35% of the new car price). Person B has  $17,874 half of which  is in cash and drives a 2-7 year old car (average 4.5 years). Person A has $12,500 and drives a 0-5 year old car (average 2.5 years). After 5 years Person B has 40% more money ($5,374) than person A.

After 5 years Person A requires $12,500 to replace his vehicle with a new vehicle. Whereas person B only requires $7,556 (actually person B doen't reqllly have to cough up anything because $17874 > $17500  and you can see by this fact that Person B is more financially independant than person A but we have to make both have $25,000 so person B has a $7556 shortfall). In fact person B might just as well cough up $8,750 to replace his vehicle with another 2 year old $17,500 vehicle and leave the $9,124.89  that he has in the term deposit and reinvest it for another 5 years.


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