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Do you consider your car to be an investment?

Discussion in 'Living Room' started by kimba88, 29th Dec, 2015.

?

Do you consider your car to be an investment and upgrade it every few years?

  1. Yes, i upgrade every few years to avoid mechanical hassles and its easier to sell

    4 vote(s)
    8.5%
  2. No, i'm happy to keep my car and pay for whatever mechanical issues that come about

    43 vote(s)
    91.5%
  1. kimba88

    kimba88 Well-Known Member

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    Hi guys,

    I've been thinking lately about whether i should sell my car or not. So it's go me thinking a little more deeper than most probably would. I need a mechanically healthy car to be able to get me to and from work - to be able to save for i/p deposits (public transport is also not good from the area i live, to the area i work). There are currently no issues with my car, but things i am considering are:
    - Warranty was for 5yrs and is now ending in May 2016
    - My timing belt will need to be replaced next year (according to the log book) and i have been quoted $1200 from one mechanic
    - I've done 75,000km's and it's probably better to sell prior to 100,000km's and prior to warranty ending

    I was lucky enough to buy my car used with only 4000km's on it. I guess you could also say i was lucky enough to buy below market value with some heavy bargaining from a dealership.. paid $16,800, when the previous owners who had it for 4months paid $22,500 (i still have their receipts as they were in the log book)

    Now, issues i'm facing are:
    - Obviously i'll need to buy another car - was thinking the same car, just a newer model (i'm also hoping to pick it up as used with VERY low km's) - price point seems to be higher in 2015 compared to 2011
    - I'm unsure on what sort of price i would be able to get for my vehicle, and would be quite a few thousand out of pocket i would assume if i was to buy a newer model for the warranty purposes.

    So, i'm just wanting to hear people's opinions.. Is there anyone out there that deliberately upgrades their car every few years due to issues like:
    - more mechanical issues that could go wrong with the car now that it's older
    - no warranty to cover you
    - easier to sell off and the car is holding more of it's value within warranty period

    Basically, if i didn't have my car, i wouldn't be able to work at my current job - and jobs in my field are highly competitive. I know cars depreciate in value, but it's the value of it being able to get me to and from my job reliably.

    Opinions are appreciated :)
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Sounds like you are trying to justify your impending purchase of another depreciating asset.

    What sort of car you drive and how often you upgrade will depend on how bad you want to invest.
     
  3. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Depending on the type of car it is, I'd keep it. It's only a baby. If it's a Jeep though then get rid of it :p

    Cars are cheaper to run after warranty I reckon. You can learn to do minor services yourself and they are designed to last longer than a warranty :)

    Either go and buy a newer car for the same price as your current trade in value - ie move to a cheaper brand like a Hyundai or keep your car.
     
  4. bob shovel

    bob shovel Well-Known Member

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    If you buy smart you can make money. If your looking for a newisher car, check out pickles auctions (plus others) and you buy where the used dealers buy. They are ex lease vehicles and have log books etc.
    We bought a camry a few years ago from pickles. The stock changes every week so you need to have an idea what your looking for. Walk in pick your chariot and sign. There's no test driving but you can start them, the guy in there did it for us! And told us what to look for and even looked if there was something better priced. They're not there to rip you off, it was good service.
    We paid 16k and for similar on car sales privately was around 20k and 23k from dealers.
     
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  5. Tillie

    Tillie Well-Known Member

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    I could say that all my hubby's hobby cars have so far been good investments. The best one has doubled it's value over 3 years. The worse performer is still in pieces but when restoration is finished it's value will be at least 20% more. But these cars are at least 40 years old collector's items.

    Making money with cars is like any other investments, what you buy and what you pay for it matters the most. If you are handy you can increase the value of investment by yourself.
     
  6. freyja

    freyja Well-Known Member

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    100 000km isn't a lot IMO. We sell our cars (petrol) once we hit the 200 000 km - they haven't ever cost us money apart from regular servicing and timing belts etc.
     
  7. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    My 2006 vehicle (Red Citroen C4) with 100,000 kms still drives well - but cruise control only works some of the time, water gets into the doors when raining, the back windscreen wiper randomly wipes when you open the hatchback back so there is some fault (this odd behaviour started about 2 weeks ago) and the paint on the bonnet is coming off (top coat of clear paint separated) and doesn't look great. It has basically spent its life ungaraged due to our house.

    But spending money on another car is not a priority for me. It has heaps of airbags, ABS, uses little fuel as it has a diesel engine etc. Imo new cars are for more for consumer suckers. I don't think there's been any major vehicle safety breakthroughs in the past 10 years.

    I reckon keep driving it, repairing a $1200 part is still cheaper than buying a replacement car. Older cars are good too in that you can stop buying comprehensive insurance and go third party only.

    Anyway... its up to you. But seeing you are happy with the car I'd keep driving it. Consider the money you spend on a car upgrade as the stamp duty on a IP purchase. The price you get selling yours could be lower than you think too.
    I'd keep driving mine till there's something that needs replacing that is worth more than the car itself, the car hits 20 years or I write it off or damage it badly in a prang, but I think the partner wants to upgrade... I keep saying no (we share the 1 car between the 2 of us)
     
    Last edited: 29th Dec, 2015
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  8. Whitecat

    Whitecat Well-Known Member

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    I'm aiming for 300000km from my Yaris. It's at 120 and going fine.
    Honda Civics from the 80s still cruise along.
    Most people upgrade cars for cosmetic reasons. I wouldn't upgrade personally unless circumstances changed and i needed a completely different purpose of vehicle.
     
  9. Hodor

    Hodor Well-Known Member

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    Cars aren't an investment either way.

    I'm lucky enough to have little need for a car these days so I sold mine.
     
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  10. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Personally - I prefer to not spend too much on cars. They're a waste of money IMO - I wouldn't see them as an investment.

    I've had all types - "cool" little sports cars to a clunky old family 4WD.

    At the end of the day - a car that works and fits the family and dog is all I need. A flash, fancy car isn't going to make me happier (not to say that you're looking at buying something flash and fancy).

    Cheers

    Jamie
     
  11. See Change

    See Change Timing Lord Premium Member

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    We've just invested in a new Mazda 6 station wagon .

    In the last years there have been significant advances in the safety features available in cars and the model we've bought has the majority of the modern safety features currently available .

    Money is important , but something that might keep me alive when older , less safe cars won't is a worthwhile investment from my view point .

    Cliff
     
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  12. Greyghost

    Greyghost Well-Known Member

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    I have has numerous flash new v8's in my late teens and early 20's.

    Sold the last one and bought a 2003 xtrail. Even though my friends teased me asking me "did it come with a baby seat", lol it has been the best 6k ever.

    I have driven it interstate, easy to drive, 4cly, service it myself, minimal repairs, great on fuel, taken it camping, can cart the dogs around.
    Yes it is 12 years old, but we are made to think we need to buy a car every 5 years.. It's rubbish.
    Do your research on which models were lemons and which were good value for money.

    The reason why you are having this delema is as follows;

    1. You bought original car brand new from dealer.
    2. Heavey depreciation from the moment you leave dealership
    3. This is why value wise it's best to buy a 3 yr old car - if you look at the price reduction curve it's the optimum point.
    4. You are comparing the written down value of the current car compared to another new one.

    If it is a solid car that you feel could last another 10 years why trade for?
    You will be in the same position again on another 3-4 years, constantly trading and playing the game the car manufacturers want you to play...


    But off topic and relevant to the thread heading:
    I do consider my car an investment IF it is something classic - e type jag, camaro, hq/hk monaro etc etc.
     
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  13. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    @kimba88... try to resist the urge... wow the poll has 17 votes to 0 in favour of keeping the older car.....
     
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  14. BarneyRubble

    BarneyRubble Well-Known Member

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    Brisbane
    Personally I drive a 2001 model ute that I picked up 4 years ago with 65,000 km on the clock for $5k. Other than an annual oil change I have not spent a dime on it. Cheap motoring.

    Actually, I like that I get underestimated driving this, especially at property inspections.
     
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  15. bob shovel

    bob shovel Well-Known Member

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    Buying a new car may have its benefits but surely out weighed by that first few years of it losing a huge chunk of its value!
    [​IMG]

    That's the best graph I could find with a quick google. And I don't necessarily agree with the drop after 5 years. But it is probably dependant on the vehicle. Some hold their value very well. Plus, it's about buying under value and getting a bargain.
    My Landcruiser I bought 4 years old, had 180k on it. I've had it for 5 years and probably list 4k. A lot better than the 30k it lost in the first 4 years!
     
  16. Barny

    Barny Well-Known Member

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    I've had 3 cars within the family that we held for a ten year period or more. All purchased used at 2 year old mark which has the biggest depreciation loss. I've calculated the costs over the years as I keep all my receipts. Some cars will have less issues over the years and the end result will differ slightly. But there isn't a major difference from the initial purchase of an old car you keep for years to a newer car that you update every few years. If you buy well, I've found its slightly more expensive to do, and happy with paying slightly more to enjoy the car I like. Rough example of the last 3 cars.

    Ford falcon ba, purchased 22k 2 years old. Kept for 10 years.
    Paid 1200 for extended new car warranty for another 2 years.
    So total 23200 drive away. New over 30k at the time.

    Had 2500 of costs fixed over the next 3 year warranty period for free.

    Over the next 7 years had gearbox issues, ecu issues, heater stuffed up, and a few other little things. Total just over 5k.

    Once a car gets over 100,000km you usually have to pay more in major servicing at the 100, 150, 200,000km marks which is about double the costs. So add 600x3 =1800

    Now 10'year mark the ford is worth 1500, and has more issues so I can either spend more to try and fix or of load it.

    Total costs over 10 years so far = 28500 if I sold the car at 1500.

    That is 2850 cost to own per year.
    That's not taking into account the initial price (23200 drive away) that could have been sitting in an offset saving interest.

    The other Holden we owned was similar in costs. Turned out to be 2300 per year over the 10 year period.

    If you buy a Camry, it might be more reliable, who knows, or buy a Kia with 7 year warranty will change the overall price at the end, hopefully.

    I also like fun cars so we have more that one car in the family, last 2 cars I bought 1.5 years old and sold couple years later.

    Purchased at 49.5k, sold off at 47250 2 years later. No costs involved to service as it was free with the car. And no issues and had warranty if there was so all good. Cost of ownership 2250 for 2 years.
    Again not including the initial cost which could be offsetting the mortgage or earning interest.

    Bout to buy again, there are also interest free periods with demo and new cars. I've done all the calculations on purchasing a used demo with free interest period for 3 years, and the total costs for a 35k car is 3800 a years if I keep it for 4 years. This is a Renault which depreciates more than most cars.

    If you do sell, make sure you sell it with the new warranty in place. Otherwise most looking to buy will not look at your car, and you will have to drop the price more to rid of it.

    So in all, may cost a little more per year to own. And I don't consider a general road car an investment. But some other cars yes or in time, but generally you can't clock up km in em as they affect the return when you sell bout 30 plus years.
     
    Last edited: 29th Dec, 2015
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  17. Travelbug

    Travelbug Well-Known Member

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    If it starts costing you money it can be advantageous to sell. If it'd reliable and keeps going I would never sell.

    I had my last car for 12 years. It never missed a beat. Loved that car. I only sold it as it was a big V6 and the kids had left home so didn't need a big car. Regret it though. My little car is so gutless.
     
  18. Barny

    Barny Well-Known Member

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    Hi travelbug. Can we use your car as an example with no issues.
    How much did you buy it for and how many km when sold, and sale price? Cheers
     
    Last edited: 29th Dec, 2015
  19. Kinnon Bell

    Kinnon Bell Finance Broker

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    I often drive a 29 year old car and apart from its little quirks it runs fine. It's had little money spent on it over the years other than the usual maintenence costs.

    I've just realised in writing this post that most of the cars my husband and I have owned in the past have been bought for less than $10k and sent to the wrecker as opposed to being sold as we drive them till they're no longer worth being fixed. My husband is pretty mechanically savvy so has no issues servicing and fixing the older cars.

    In saying all of that though we're currently on the process of purchasing a 2012 4wd ute and sinking a sizable amount of money into that which hurts but I see it as a necessary evil as it will be his work ute.

    But as others have said, it sounds like you're just making excuses to talk yourself into buying a new car.
     
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  20. sash

    sash Well-Known Member

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    Kimba...I think you bought well.

    I am with you...replacing a car once near 100k or 8-10 years is important. At that point there is more maintenance.

    I also bought my car when it was 4 years old with 25k on it for 17k with trade-in it was 10k in cash. It now has 77k on it and plan to replace it some point. Otherwise parts and replacement parts will be expensive.

    My car is now probably worth around 9k...so it has depreciated 8k over 5 years.

    So here is the numbers to me to run it:
    1. Petrol $1400
    2. Rego/CTP/Comprehensive $1580
    3. NRMA cove/Service - $420
    4. Depreciation per year - $1800

    So it is costing me about $5200 per annum to run my car.

    I have a car allowance and using the 5000 klms rule as I use part of it for work...I get a tax deduction of about $3750 per annum after tax it is about a $1900 deduction. So the real cost of running my car is about $3300pa including depreciation.

    I know a lot of people who easily use this in public transport and taxis.

    If you run an old car...the services can run up to $1k or more on Europeans. Most of the Europeans are junk....anyway. Go for the Korean brands like Kia and Hyundai. In Europe they are highly regarded and expensive.