Car depreciation: a possible solution??

wyrleyite

I read an article recently by a financial advisor (quite a good one in fact as he now receives clients from Max Clifford!) and he commented on how his biggest extravagance was his cars and how he never lost money on cars. He did this by buying a nearly new car every six months, that way he never lost money or a least very little money on the one he sold. Therefore he didn't have to save as much for the next one.

What do the masses think? I reckon a new car every year could be quite fun as well as moneysaving.

savemoney

As soon as you buy a new car it looses a lot of money

Elaine_Wilson

I would like to know more details. How can he lose only a little? I thought the price dropped quite significantly from the initial purchase.

A few years ago I came across someone who seemed to be addicted to new cars. He replaced his every three months and lost a fortune on each one.

soolin

It sounds the wrong way round as the car depreciates most in the first few months. In fact it is often said that you lose 20% of the value the moment you drive it off the forecourt .

Unless of course he was buying cars that were a few months old already and therefore had already suffered a big hit depreciation wise?

wyrleyite

Sorry I didn't make myself clear. I'm pretty sure he was buying nearly new (1-3 years old). The price difference between an 06 and a 56 plate car isn't very much.

Also he was buying high end cars like Porsches so they may not depreciate as much...dunno.

flea72

its because he never actually finishes paying for a car, or ignores the capital he first used to buy the car.

so he buys a car for £10k, it looses £2K over the next yr, so he then buys another £10k car, but only has to find £2k due to his p/x being £8k, and continues like this infinitely

all he sees is, he is paying a few £k and getting a brand new car and doesnt factor in the £10k outlay at the start

As soon as you drive off the forecourt, you have lost the value of the VAT you have paid, plus a bit for depreciation

Flea

wyrleyite

The way I see it is this. You buy a car (cash) for say 10k. 12 months later you buy another car worth 10k and px your old one making up the difference from depreciation from savings, ad infinitum.

For me I save something each month for my next car and usually buy a (nearly) new one every 3-4 years for about the same value each time. I've realised over the years that depreciation is a big factor as it dictates how much you need to save, therefore reducing in any way must be advantageous.

Ozmilton

If you buy new then you lose a fair percentage of the value. But the post said he was buying "nearly" new cars. Maybe at the high end of the market there is an optimum point where the depreciation is slowest, maybe between the 2nd and 3rd year for example, and he replaced his car every 6 months with a car that was 6 months to 1 year newer. Perhaps he also manages to sell his car for around the same as he buys the one which is a few months newer. If he does it every 6 months I'm sure he must get good at buying and selling at his target prices.

Crabman

I've moved this thread to the Motoring Board

Hi, Martin’s asked me to post this in these circumstances: I’ve asked Board Guides to move threads if they’ll receive a better response elsewhere(please see this rule) so this post/thread has been moved to another board, where it should get more replies. If you have any questions about this policy please email !!!!!!.

anewman

Buy a banger and you won't have any depreciation to worry about. Plus in the current economic climate you won't shift a nearly new car for anywhere near what you paid for it and it will be on your driveway for months until you lower the price.

david69_2

Agree I bought a sri140 vectra 1999 model off ebay about 16 months ago paid £1000 for it sailed through its last mot had it serviced drives really well if it fails its mot badly next year i will scrap it .
It means that in 2 years i will of lost £1000 less any money i can get for it by selling any parts if it passes the mot i will keep it