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Keep my car or trade it in?

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  • #19795
    imported_irises
    Participant

      Hello everyone!

      My family has 2 cars:  a 5-year old car with 100,000 miles on it, and a 4-year old car with 30,000 miles on it.
      Both cars are paid off – no payments, and both are efficient little cars (Escort and Tracer), and both are running like tops – nothing but preventative maintenance!

      At 100,000 miles, the Escort loses its extended warranty.  Our plan is to trade in the Escort for a new car.  The question is:  WHEN?  We were thinking at the end of 2003, before the car racks up too many miles, but we’re also considering the end of 2004, when the Tracer is 5 years old, so we’ll have a “new” car and an “old” car (to avoid getting socked with 2 cars needing costly repairs at the same time).

      We’d like to buy a car at the end of a year so we can get a last-year’s model off the lot at a deep deep discount.  What do you think?  This year?  Next year?  Scrap the plan and go with something else?

      Thanks!
      Rach

      #20602
      imported_michael
      Participant

        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.

        #20603
        Anonymous

          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!  :-)

          Rach

          #20613
          imported_KathyDebby
          Participant

            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!

            #20621
            imported_CSinbad
            Participant

              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.          

              #20622
              imported_CSinbad
              Participant

                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.    

                #21045
                imported_emily1067
                Participant

                  I would say keep the car as long as it will run.  You’ll never get as much money for it as it is worth by trading it in.  I have a 1995 Lumina with 200,000 miles on it.  I running it til it dies!

                  #21052
                  imported_cfkingfish
                  Participant

                    Being a car hobbyist to say the least, I would say ditch whichever one has the 100,000 miles and go for a new car this August or September. Most car companines (depending on the label) want to get rid of their new old stock around the fall season as a steady line of the new ones come rolling in. Cars also tend to break down in cycles, where 100,000 is a major cycle of work that usually needs to be done. This is why extended warraties only last till around 100,000 miles, because they know that is when the serious work needs to be done. You also may want to find a model that is getting a makeover for the 2005 year, so the 2004 models will be at their cheapest, as dealers want what they consider to be an outdated look off the lot. Our family bought a 2001 Camry in late August just as the newly redesigned 2002s were coming out. Its a great way to get a good deal.  ;D

                    #21132
                    imported_felix
                    Participant

                      Depending on how well the car has been taken care of, it probably has several tens of thousands of miles in it if it has only reached 100,000 miles.  But whatever you do (purchase another car or not), don’t trade it your existing car–sell it yourself as the dealer will always offer you WAY below fair market value!  Every car I have sold (let’s see, there’s been three) I have been able to sell with only a tad more hassle than if I traded the car in.  Since you live in Pittsburgh, I would highly suggest listing your car on Craigslist, which is completely free and highly effective (have purchased and sold several things on there in the SF Bay Area.)  Post as much info as you can in your ad about the car (to minimize the amount of email you receive asking basic questions) and definitely take the time to take (and post) pics, and voila… car will sold in little time.  Good luck!

                      #21460
                      imported_Lesley
                      Participant

                        I know these are old posts but the subject is still timely and pertinent. I, too, like several others have posted, believe that my relationship with a vehicle is literally for the long haul. Mine is paid for which is a definite plus over a monthly payment, has been regularly serviced , cleaned and maintained and looks as good as the newest models (even the same body style)though it is almost 5 years old and I bought it over a year ago with almost 100,000 miles on it, the bank had all of the service records. It cost less than one third of the cost of the identical vehicle except a little later model than mine. It gets 34-40 MPG, same as the newer and newest models. I do keep my vehicles until they can no longer go any further usually several hundred thousand miles and they have always provided me with very reliable transportation as I live in a rural area with no public transit and biking is not an option. Too bad they are no longer hitching posts for my horse once we get to town to pick up some necessities at WalMart–hahaha. I do love my Paint. He’s very economical, too. Blessings to all.

                        #21604
                        imported_Not2wordy
                        Participant

                          My 1998 Tracer (same as an Escort, just a different name) has gone well over the 100,000 mile mark with no problems at all. (Well, I did get stranded once with a flat tire, but that’s not a mechanical problem…) I plan to keep my little Tracer until the wheels fall off. Which won’t be for a long, long time at the rate we’re going. The older Tracers-Escorts were not as reliable (I had an oldstyle Escort back in the 80s), but the 90s versions are really good cars. Good gas mileage, too.

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