Is it financially stupid to trade-up a newish car?
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  1. #1
    Fellow Frogger!
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    Is it financially stupid to trade-up a newish car?

    Hi all,

    Working late on an assignment..just stopping by the forum as usual...

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    My Clio is almost coming up to 2 years old, and recently I was thinking about trading up to a Clio Sport of similar age... I think my Clio would be worth around 12-13K trade in, and a 2nd hand Sport would retail for 25K up.

    My car is currently under finance, so in terms of repayment it would be the same, only difference should be the residual value.

    But would it be stupid to do so?? For reasons such as depreciation issues, and if it's worth doing..etc.

    Thanks for your comments.

  2. #2
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    If you want the fun-factor, do it

    It's only financially stupid if you can't afford it.

    Derek

  3. #3
    Moderator Alan S's Avatar
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    Here's the dilemma you face.
    If the car you have is what is considered in the trade as "better property" than the one you want to buy, then you'll get a pretty fair deal. In a case like that, the downside is that when you try to sell the car you're buying, that's when the birds will come home to roost as regards depreciation.
    If it's the opposite, and they consider the car you want is better property than the one you have, they'll slaughter the trade in price now...heads you lose; tails they win deal
    The "good property" caper I could never really come to grips with as my theory was that all used cars that are on a yard, from a dealers point of view only became "good property" when someone else was driving them and the money was in the bank. whistle
    The defining of "good property/bad property" is usually based on a few things. Prices at Auction coupled with the amount of interest show at Auction, the dealer or his mate getting stuck with one & losing money, rumours, Insurance costs, dealer prejudices.
    It has also happened that a car considered 'bad property' at one time has gone on to be looked upon as the opposite and this applies both ways.
    The reality about owning French cars in the past has been to change over cars at low mileage and within 2 years due to horrific depreciation that comes into play beyond that 2 year mark and even then there is always the risk that a run out of a similar model being discounted will catch you out so really, unless you are in a tax benefit situation, I couldn't imagine that aspect being really practical for an average motorist.
    The route a lot of us have taken over the years, often based on bitter experience is to select a model that really rocks your boat, is a pleasure to drive & own and something you know you can live with. Buy it at a reasonable mileage and at a reasonable price & be prepared to keep it rolling for a few years. I've owned CXs since 1984 and the most I've paid for one was $10,500 and I still have them all and wouldn't swap one for a new car for anything. My "latest" aquasition was the BX in 2000 so I've got a long way to go with that before it's ever thought about replacement, so I'd suggest that if you intend going for one used car to upgrade another used car and both of similar age and on the assumption the other car is the good property & yours not quite so, then you'd better get used to owning the one you're about to buy as I can see it being an expensive exercise if you have a change of heart in a year or so...picking these things are a bit like choosing a wife... "'till death do us part" cry dance mallet head_ban

    Alan S whistle
    If it ain't broke, use a 12" shifter.....that usually does the trick!!

  4. #4
    XTC
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    Regardless what people tell you - a car is an expense and not an asset - it then comes down to how much enjoyment do you want to get out of that expense. Trading up is fine if your bank balance can take it and the expense is worth it.

    - XTC206 -
    You're not fooling everyone, or did you forget? .......




    '02 Peugeot 206 GTi / '07 VW Golf GTI
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  5. #5
    Sense Pug307's Avatar
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    Here is an interesting thread I read. One of the basic premises mentioned in there is you lease what depreciates and purchase what appreciates. There are some interesting analogies in there too.

    <a href="http://www.airliners.net/discussions/non_aviation/read.main/442315/" target="_blank">Lease or buy?</a>

    I'd be interested in some Aussie opinions, as it's still fairly US centric.

    When owning a car, we often push depreciation aside as an expense. We moan when petrol goes up a few cents a litre, the service man charges $200 for an oil change, bloody insurer puts their prices up then uses crap parts, but for those of us with newer cars, we forget to moan about depreciation Big, big expense!

    What value do you place on the newer car? Depreciation is the price you pay you'll pay for that enjoyment - if you really enjoy it and you have the means, go for it.

    Peugeot 307 XS 1.6
    Aussiefrogged in MEL, PER, SYD, BNE & ADL.
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  6. #6
    Budding Architect ???? pugrambo's Avatar
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    i think if people are worried about depreciation then don't buy a car that is new enough to do so
    buy something older and don't be worried
    all cars do it and we know it yet people still complain about it
    the answer is simple
    3 x '78 604 SL

    1 x '98 306 GTi6

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    1 x '98 406 STDT troop carrier and i don't care if it stinks, i don't sniff it's arse Death by wank tank

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  7. #7
    Too many posts! JohnW's Avatar
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    rc968:
    Hi all,

    Working late on an assignment..just stopping by the forum as usual...

    My Clio is almost coming up to 2 years old, and recently I was thinking about trading up to a Clio Sport of similar age... I think my Clio would be worth around 12-13K trade in, and a 2nd hand Sport would retail for 25K up.

    My car is currently under finance, so in terms of repayment it would be the same, only difference should be the residual value.

    But would it be stupid to do so?? For reasons such as depreciation issues, and if it's worth doing..etc.

    Thanks for your comments.
    I'm with Alan on the logic here. If it turns you on, the most affordable way of ownership is long term. We bought our 306 new (the only car we've ever done this with in 30 years+) and it is now 8 years old and has plenty of enjoyable life in it.

    I bought a 1996 Xantia two years ago for $19,000 with only 18,000 km. I'll keep it for years. Our R8 has been very good value - $1,100 in 1973 and going well. Depreciation costs? Bugger all long term. Change regularly, and you'll pay, dearly.

    So do that if you can afford it but avoid it like the plague if you can't. That's been our approach anyway.

    Cheers

    JohnW
    JohnW

    Renault 4CV 1951
    Renault R8 1965
    Renault Scenic 2005 (wife's)
    Renault Scenic 2007 (mine)
    Renault Scenic 2006 (daughter's)
    CitroŽn CX Pallas 1980

    National Co-ordinator, Renault 4CV Register of Australia

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