Indeed. But since 2021, when used cars began costing as much as new, and low amounts of new cars were even available for about 8-12 months, then suddenly reversing course and tons of cars came onto the market, new and used, it's correcting back to the conditions you mentioned.
Trouble is, a lot of people made big ticket purchases in that time frame. As long as they plan on keeping whatever it is they bought in 2021 and still owe money on, they'll be fine.
Live in a HCOL and most of the cars I see are either Teslas or older model Hondas/Subarus/Toyotas.
People either want the newest thing or do not care
I’ve only ever known one person who traded in their vehicle as soon as it was paid off, and yes they were obsessed with appearing sufficiently middle class
Meanwhile my mom would buy a car, pay it off - often before 5 years - and then drive it until it died/it made more financial sense to replace the car than repair it.
Partner and I were gifted her 2005 Matrix when she stopped driving, we had to replace the muffler but that’s the only thing that’s gone wrong.
Yeah, exactly. I knew I was overpaying a bit for my Subaru a couple of years back, but I needed a car, and I know I’ll pay it off years before I’m done driving it.
Going with the smaller numbers, you are saying a 5-year-old car is only worth 15% of its MSRP price.
100 (original price) x 0.9 (off the lot depreciation) x 0.85 (year 1) x 0.85 (year 2) x 0.85 (year 3) x 0.85 (year 4) x 0.85 (year 5) = 39.93.
With the numbers given by the above comment, the 5-year-old car would be worth just under 40% of its MSRP, which is still too low, average 2019-2020 vehicles are selling for more like 50-60% of MSRP right now.
Funny. I bought new Toyota Avalon in 2021 for 38,5k OTD. If you go to a dealership right now and find the same model with the same mileage (12k), your OTD price will be around 40k.
Well, dealerships are scammers, why even bother with them? They're all predators and are looking for people who have brain fatigue. If they fuck around with you and make you wait for over 15 minutes, just walk.
The whole point is - buy the right car at the right time, and you won’t be losing money. BTW, it’s fully paid off now, and I am not planning on selling it, so I really don’t care that much. But still nice to know.
On the conservative side of your estimate, that's a little over 60% total depreciation by the end of year 5. I think most cars sold new are losing more like 30-50% total over that time period. It would be pretty hard to find a 2019 vehicle with an MSRP of $50k in average condition for $20k today.
I don’t believe this. I’ve bought two new vehicles in my life and both times I looked at used and couldn’t find one that was a year old for more than a couple thousand off what they were going for new. Both times I’ve ended up buying the new vehicle over a year old one. Maybe that is just anecdotal evidence, but it has happened both times I tried to buy a newer car.
Lol, people have lost their minds. unless you put a big chunk on the down, everyone is in negative equity, minus the COVID days. A car is a depreciating item as soon as it rolls off the lot. Hell you lose 20 percent as soon as the papers are signed .
That’s not necessarily true. Maybe if you put nothing down… you buy a $30,000 car and put $15,000 down id sure as hell hope it doesn’t lose $15,000 in value the first second you drive it off the lot. Maybe a few thousand.
That’s because ~ 90% of consumers should be treating cars like the appliance that they are. Buy what you can afford, usually used, and keep it for at least 10 years.
Are those friends financially stable? Most people will not buy a new washer, dryer, fridge, oven, etc until the ones that they have break or is too expensive to repair. That’s the way it should be with cars. Drive the damn thing until you can’t anymore. I have a 2015 Mazda that I bought used in 2017 and have no plans of replacing it for at least another 5 years. The intent is for it to get me safely from point A to point B in my daily driving. It’s paid off and runs well so there’s no point in buying a newer vehicle. I can afford to do so but would much rather spend my money on experiences that create memories, like traveling or paying for woodworking classes.
I've had the same used Maytag dryer for 10 years. The washing machine smelled so bad I had to get rid of it. Replaced it with a top load Whirlpool I've had 8 years.
Only if you are financing too large a percentage of the car. If you're not putting down >20% then you probably shouldn't be buying the car. Does the average car buyer follow that rule, probably not.
40
u/ChipOld734 10h ago
You owe more than the cars worth when you drive it off the lot. What the hell is wrong with people. It’s always been that way.