Opportunity cost of newer cars

System

colesy wrote: »

I do 30,000 miles per annum and generally run my cars for 4 years. I appreciate that the loss in value given that sort of mileage will be very high, but it's essential for my business. For the last 30 years I've usually bought low mileage ex-demonstrators. The dealership takes the immediate new car depreciation hit.

You'd be better looking at 2 year old cars. I bought my Mondeo at 2 years old for 40% of its new price, a saving of almost £16,000. In the 5 years I've had it I've done almost 90,000 miles

bowlhead99

parking_question_chap wrote: »

My car is well over ten year old, quiet, tidy and safe.

Though I guess some people like to pay over the odds for image.

No doubt yours is very nice. The one I sold that was 19 years old that I'd had since 5, was also nice IMHO, which is why I didn't sell it for absolute banger money.

If yours is indeed quiet, tidy and safe (all relative to modern build standards as a benchmark) I'll buy it off you for £500 as a spare. However, if it really is, you probably won't let it go for banger money.

The problem with buying a banger for £500 is that the person selling it knows they would rather have £500 in their hand than the vehicle. So, they probably don't think if is going to offer them tens of thousands of miles of hassle-free quiet driving in modern standards of comfort and safety. Because if they did, they would usually want to keep it, or certainly ask more than £500.

So, you might get lucky and pick up Glen Clark's cossetted 18-year old car he had from new. He couldn't shift it for any more than £500 in today's money because it had become an extinct and unloved brand, having already been a decade-old design at the end of its production life when he had bought it almost two decades' prior. When he sold it he knew it was a 'good runner' but didn't command much value. And the reason it didn't command much value, is that many more times out of a hundred, what you'd get wouldn't be that diamond in the rough. It would just be the rough.

Paying 'over the odds for image' is relative. Certainly when buying my last car, the opportunity to spend £65k plus 'extras' to buy a brand new car when the three-year old one of the same design was available with main dealer warranty for a little over £30k sounded a lot to pay for three years extra lifespan and the cachet of a current-year numberplate. It would have been a lot to pay for 'image' and a bit more dealer warranty. So, I didn't go for that trade-off.

However, the option of getting basically the same design and quality for £0.5k did not exist. So I did go for the trade-off of better car for more money, but I wouldn't characterize it as paying 'over the odds for image'. The extra money versus a banger bought a lot more than just 'image'. And in any case, if it was just for image... who is to say it's "over the odds" for image? Second hand cars are a market, so it's market rate for the image...

atush

I buy a 2 year old car for 13K which would cost me 25K new. Then I keep it for 8 years lol.

The money I pay for the car has been built up in reg savers.

parking_question_chap

bowlhead99 wrote: »

If yours is indeed quiet, tidy and safe (all relative to modern build standards as a benchmark) I'll buy it off you for £500 as a spare. However, if it really is, you probably won't let it go for banger money.

Not a chance, you could another zero on that and the answer would still be no, I am the second owner and have had it for the vast majority of its life.

Once it ceases to become reliable I shall retire it into the garage where it shall remain as a 1:1 scale model.

G_M

What's the opportunity cost of a breakdown? Reliability has a value too.

jimjames

missile wrote: »

Good luck on achieving a reliable £500 car and a risk free 9% return. :rotfl:

Had many £500 cars and all have been reliable - you have to look carefully though. Current one is 16 years old with 160,000 miles on clock, owned nearly 2 years and added over 20k miles in that time.

b80_2

Another point is how long are you intending to.keep the car bowlhead? After the higher initial outlay (and drop in price after driving it off the fore court brand new)of a premium car the depreciation can be much lower than other brands, if it's a certain marque.

maintenance and the cost of fixing cars is usually relative to it's price tag when new so this also needs to be considered. You end up with people paying 5k for 10 year old + x5's as its in their price range, then almost spending that again on repairs, tyres etc over next few years and complaiming about it!

Zippeh

Ive spent a fair few £s on cars in the last few years so I decided to sign up to a two year lease deal. That frees up a lot of cash in exchange for a monthly payment. Car will cost 7500 over two years, which is t cheap but its a brand new car and i dont have a lot of cash tied up in it. It also forces me to stick with the same car for longer than 9 months!!

jamei305

G_M wrote: »

What's the opportunity cost of a breakdown? Reliability has a value too.

Or a fatal accident, or one causing serious disablement. :j

Malthusian

jamei305 wrote: »

Or a fatal accident, or one causing serious disablement.

If you're driving an old banger you are less likely to be involved in one of these as you will be less tempted to speed, overtake etc, which is how people get in fatal accidents.

It is pretty rare for bangers to explode, usually they just grind to a halt, which is annoying but very unlikely to result in a fatal accident.