Car Depreciation
OhioGuy
considered a form of savings. During the discussion, someone brought up
making a car payment, and asked if I would consider that savings.
A number of folks chipped in with their various views. Many of them
considered depreciation.
Well, we have a 1969 Ford Econoline van that I got for $500. We also have
a Dodge Caravan (van) that we also paid $500 for. Then we have a 1996 Buick
Century that we've had since 2002, when it was given to us as a wedding
present.
So we have a grand total of $1,000 in 3 vehicles. From my point of view,
there really isn't a whole lot of depreciation to be had. I do most of the
maintenance myself. If we had do, I think we could probably sell these 3
vehicles for $3,500 or so. The true value is that each is dependable, well
cared for, and is insurance against ever having to make a car payment, or
have to take out a car loan.
Plus, each serves a specific purpose. The older van we bought to go
camping. We don't have to set up and take down a tent, and it works out
great in colder or wet weather. The newer van is good for medium trips
where we want a bit more room. The Buick is best for city driving and long
distance driving when it is just 1 or 2 people, and the best mileage is
desired.
For some folks, automobile depreciation isn't much of a financial issue.
We only have 2.5% of our annual income invested in our 3 autos. Of course,
we will probably put in more money into fixing some things up than might be
true with newer vehicles. Plus, it will take more time for maintenance on
my part. However, that is essentially a hobby that I enjoy, and something I
can do with my son to teach him about tools & such, so I don't consider that
a negatived aspect at all.
Seerialmom
Generally when one is considering automotive depreciation they aren't
talking about an almost free car to begin with. Instead they're
talking about the car that continues to lose value even though you
don't own it yet, like the $24K Dodge Charger that will probably be
worth about $6K by the time it's paid off. Keeping your $500 car
running can be considered an investment if it allows you to keep your
$50K a year job.
James
All cars take a huge hit once they are driven off the lot, and most
continue to depreciate over time (except some classic cars, which
start out depreciating, level off then appreciate). Its definately a
front end loaded process - thats why its good to buy a 2 or 3 year
old vehcile, because they have already been depreciated a significant
amoutn, but may still have warranty left.
Once you reach a certain rock bottom, book values become somewhat
meaningless -unless its a car that you can no longer get easy access
to parts for.
If you have a good eye you can buy old cars and increase the value,
but many people try and fail at that game. Many classics are sold for
less than recent restoration efforts.
North American cars definately have a rock bottom - the price at which
they are worth more as parts cars/scrap than they are as a running
vehicle.
James
clams_casino
> Keeping your $500 car
>running can be considered an investment if it allows you to keep your
>$50K a year job.
>
>
OP admits to doing most of the maintenance himself. I'm not sure
paying oneself cab be considered an investment.
Valuing one's time at naught makes for a hobby.
Seerialmom
>
> - Show quoted text -
I know I've never considered my cars to be investments, always an
expense. However, if you play your cards right that expense can be
minimal. And if it helps you acquire more income, then it's a tool :)
Lou
"Seerialmom" <seeri...@yahoo.com> wrote in message
news:6ee3a913-c797-4a64...@l8g2000prm.googlegroups.com...
Where are you drawing the line? ANY car that makes it possible to keep your
job could be considered an investment.
Seerialmom
> "Seerialmom" <seerial...@yahoo.com> wrote in message
Is it an investment if you buy a $35K car when you have a $19K a year
job? But if you look at the traditional term "investment" the item
itself appreciates in value, a car does not. In the case mentioned
where the cost outweighs the return, it's not a good investment.
Seerialmom
>
> - Show quoted text -
Try telling that to the folks on Craigslist trying to get $3500+ for
the non-running 62 Dodge Dart sitting in grandpa's barn that hasn't
been on the road since 72. :)
Rod Speed
>>> Generally when one is considering automotive depreciation they
>>> aren't talking about an almost free car to begin with. Instead
>>> they're talking about the car that continues to lose value even
>>> though you don't own it yet, like the $24K Dodge Charger that will
>>> probably be worth about $6K by the time it's paid off. Keeping your
>>> $500 car running can be considered an investment if it allows you
>>> to keep your $50K a year job.
>> Where are you drawing the line? ANY car that makes it
>> possible to keep your job could be considered an investment.
> Is it an investment if you buy a $35K car when you have a $19K a year job?
Yes, a bad one.
> But if you look at the traditional term "investment"
> the item itself appreciates in value, a car does not.
Its the total value thats intended to increase over time, not just the value of the car.
> In the case mentioned where the cost outweighs the return, it's not a good investment.
Yes, but its still an investment, albeit a bad one.
timeOday
I never said it was a *good* form of savings :)
NPR recently ran a story about collapsing SUV values. A guy who paid
$72,000(!) for a Cadillac Escalade last year was offered $32,000 for it
at carmax. I think the guy would be a fool to sell at that price, since
I think gas prices are in a speculation bubble right now. Problem is,
the payment is so high he cannot keep up. Check and mate. Repossession
must be tempting for him because the bank would get royally screwed.
Good practical cars (unfortunately for us bargain hunters) don't
depreciate nearly so fast.
nicks...@ece.villanova.edu
>All cars take a huge hit once they are driven off the lot...
I just stopped at a Smart Car dealer and noticed the $13-15K new car stickers
and asked if they had any used Smart Cars for sale. The salesperson pointed
to one on the lot and said it just sold for $21K, after 2 months of use.
("The owner had too many cars.") It was no fancier than the new cars.
I asked why the price was higher, and she said Smart Cars APpreciate
as they leave the lot.
Nick
James
I did mention that some people buy old cars and make them appreciate
in value. But many people loose their shirts when they discover that
parts are scarce and repairs more extensive than they thought.
Very common is the "$5,000 invested" car selling for $4,995.
That old Dodge Dart could be highly collectable, or totally unwanted
and thats a big difference in whether "investing" is worth it. Problem
is that what is interesting to collectors or collectable is highly
variable. You could watch the Barrett Jackson auctions and pick what
popular, and by the time you rstore, the market has changed.
Best to think of it this way, if its interesting to you, then do what
you like and enjoy, and if you can turn around and sell it at a
profit, then consider yourself lucky, if not, its a hobby not an
investment.
James
James
I live in Canada, where Smart Cars have been on the market for years.
There is no shortage of them, and they do depreciate like any other
car.
She is an idiot or a clever salesperson or both. Who would pay more
for used when new was available.
The only time I've seen used cars appreciate is when a new car is
introduced and demand takes off shortly after launch and there isn't
enough supply to meet demand. But what generally happens is the new
car dealers ask for a premium for the new cars until the supply
catches up. So the market evens out. It takes companies months to ramp
up production sometimes, so thats how long the condition lasts.
Personally, I wouldn't buy one. I think a Toyota Yaris or Honda Fit is
cheaper, more practical, and pretty fuel efficient.
James
George
his about two months ago after a 1 year wait. He placed the order at a
traveling show Smart had in Philly. The dealer said they were also
getting a big premium on new "orphans". They said some people had
ordered the car a year ago and bought something else in the meantime so
the dealer can then sell it for whatever they can get.
Like all things this is simply market timing. When we were in Philly
looking at the Smartcars before they were imported to the US the one
Daimler guy was a little chatty and he said they were somewhat concerned
about even bringing them here. The US was the last country to get them
because back then everyone in the US needed to drive a huge fluffed up
truck even though they were only transporting themselves and a large
beverage. In another year other manufacturers will have similar vehicles
and things will adjust.
James
You could come up to Canada and take your pick.
I know that bringing cars in from the US can take a week for the
paperwork to process and cost you a thousand or more. But dealers in
Canada have lots, and they are exactly the same models as in the US
(slightly higher MSRP though). I expect the US paperwork would be
similar to Canada's.
When they came to Canada in 2003, they outsold Mercedes expectations.
They do work fine in the snow (with snow tires from dealer) . They are
not desigjned to cruise at 75 MPH all day, but they can drive the
limit everywhere.
They have a well designed safety cage - go to you tube and search for
the footage of a Mercdes E class and a Smart car colliding.
Most of the critics didn't like the transmission.
James
Silfax
The dealer was yanking your chain...
If they were worth more after 2 months use, you could go into business
buying a new one then selling it 2 months later. Then buy anther new one,
use it for 2 months and resell it again. Looking at the numbers posted
above (buy for 15k, sell for 21k) you would be looking at an income of 6k
every 2 months -- 12k a year for doing pretty much nothing.
and what moron would pay an additional 6k for a slightly used car when a
an identical new model is sitting right next to it for 6000 less?
--
Silfax
Seerialmom
Wouldn't that qualify as "instant gratification" though? If they have
a used one to drive off the lot vs having to wait 3-6 months on a
waiting list, some (not saying it really makes sense) would opt for
the premium to have it now.
George
car and because they can't do what you described. If you placed your
order today it would take 14 months to get your new Smartcar. You simply
can't walk in and buy one. There is *no* dealer stock. All cars are
already sold.
George
I think the guy should thank whomever was willing to buy his fluffed up
truck at 3x market value.
I have a number of friends who are involved in car dealerships etc and
they all say you can barely give fluffed up trucks away. My one friend
said that he recently went to a repo auction of vehicles repossessed by
a mega bank. He said most everything offered was 1-2 year old fluffed up
trucks such as the escalade. He said the minimums were around $9,000 and
there were no bidders. He said they were normal vehicles and none were
trashed.
George
>
> You could come up to Canada and take your pick.
>
> I know that bringing cars in from the US can take a week for the
> paperwork to process and cost you a thousand or more. But dealers in
> Canada have lots, and they are exactly the same models as in the US
> (slightly higher MSRP though). I expect the US paperwork would be
> similar to Canada's.
>
> When they came to Canada in 2003, they outsold Mercedes expectations.
> They do work fine in the snow (with snow tires from dealer) . They are
> not desigjned to cruise at 75 MPH all day, but they can drive the
> limit everywhere.
>
> They have a well designed safety cage - go to you tube and search for
> the footage of a Mercdes E class and a Smart car colliding.
>
> Most of the critics didn't like the transmission.
>
> James
The US model is different than what was imported into Canada. My one
friend did check about bringing one in and it was spendier than a grand.
I did see all of the various crash test footage and it is definitely a
safe car. I drove my buddies a couple hundred miles and it is not
uncomfortable. The car is solidly built. The transmission is an
electronic manual as used on other Daimler designs. There is nothing
wrong just a different feel when it shifts. Anyone who is used to a
normal "automatic" could draw interesting conclusions if they didn't
understand the arrangement in the Smartcar.
My buddy already picked up snow tires for his. Everyone says they
perform really well in snow just like the old VW bugs because the engine
weight is over the rear wheels.
James
>
The car being imported into the US is exactly the same model as being
imported into Canada today. But you are correct that the initial one
that Canada got, which was a turbo diesel will not be imported into
the US. In their infinite wisdom MB decided to make it one model for
both Canada and the US and actually stoppped importing the diesel into
Canada until the US was ready for the gas. So Smart cars became scarce
for a while in Canada, though most stores didn't run out completely.
The critics I was referring to are automobile journalists. Their
comments on the tranny were that there was a significant lag between
shifts. I'm sure you can get used to it. But these guys are plenty
uised to driuving everythingf SVTs to sequential shift boxes. Everyone
has commented. Perhaps they are comparing to the excellent manuals and
automatics in the Yaris and Fit.
James
Bob F
"OhioGuy" <no...@none.net> wrote in message news:g62n68$qq4$1...@aioe.org...
And what are you paying for insurance and licensing for each of those vehicles?
clams_casino
>>
>>
>>
>
>And what are you paying for insurance and licensing for each of those vehicles?
>
>
>
>
Please.
Don't confuse the savings issue by bringing up costs.
James
But, it does have an impact.
I could buy an old cheap car that used far less gas than my 6 year old
minivan. And if all I looked at was the purchase cost, it might make
sense. And my van would depreciate more slowly because I would be
using it less
But when I look at the additional cost to insure a second vehicle
(about $180 a month for my first vehicle, 100 for my second), there is
no way to justify the second vehicle because there is no way I will
save $100 a month in gas, unless the price of gas continues to climb.
Plus add $80 a year for licensing, and $45 every other year for
emissions testing.
The concept in business is called TCO or total cost of ownership. You
should even include the price of the equipement you use to maintain
the cars. Until you know the total costs, your ideas about savings are
speculation.
James
clams_casino
There you go again - confusing the issue with facts.
Bob F
"James" <jl...@idirect.com> wrote in message
news:287b68ac-a8c0-4f7c...@s50g2000hsb.googlegroups.com...
The concept in business is called TCO or total cost of ownership. You
should even include the price of the equipement you use to maintain
the cars.
****************************************************************
But I HAVE to have that!
Vic Smith
wrote:
Right. Like the IRS 58 cent cost per mile, generalizations are
generally worthless.
Not sure what OhioGuy exactly does with his 3 vehicles.
Maybe 2 are being used at one time.
The 3rd may be worth having for it's camping convenience.
My insurance cost for that would less than $300 a year and $110
licensing. Sort of a personal call whether it's worth it.
This isn't rocket science and most people who can balance a checkbook
can know exactly what their vehicle is costing them, or make a close
estimate without putting a pencil to paper.
--Vic
Coffee's For Closers
aca4e3...@v26g2000prm.googlegroups.com>, seeri...@yahoo.com
says...
> On Jul 21, 5:14=A0pm, "Lou" <lpog...@verizon.net> wrote:
> > "Seerialmom" <seerial...@yahoo.com> wrote in message
> > news:6ee3a913-c797-4a64...@l8g2000prm.googlegroups.com...
> > On Jul 21, 12:14 pm, "OhioGuy" <n...@none.net> wrote:
> >Generally when one is considering automotive depreciation they aren't
> > >talking about an almost free car to begin with. =A0Instead they're
> > >talking about the car that continues to lose value even though you
> > >don't own it yet, like the $24K Dodge Charger that will probably be
> > >worth about $6K by the time it's paid off. =A0Keeping your $500 car
> > >running can be considered an investment if it allows you to keep your
> > >$50K a year job.
> > Where are you drawing the line? =A0ANY car that makes it possible to keep=
> > your job could be considered an investment.
> Is it an investment if you buy a $35K car when you have a $19K a year
> job?
Well, hopefully, the car would last long enough to eventually be
paid off with the earnings from the job. Although I would never
personally set myself up with that severe a discrepancy between
income and car cost.
> But if you look at the traditional term "investment" the item
> itself appreciates in value, a car does not. In the case mentioned
> where the cost outweighs the return, it's not a good investment.
Perhaps a better term would be, "overhead."
Although the concept of "investment" could apply at the start of
the situation. If you say, "In order to get this new job, I must
first buy a car to get there," then the purchase could be viewed
as an investment that pays a return in the form of your earnings.
Much like making an investment in setting up a new business.
--
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