[LibertarianInExile]

Actually, there IS a way to get ahead of the market on used cars, and actually MAKE money on the deal (or, more precisely, avoid having your car lose value every year). Buy classic vehicles and drive them. Don't let them go to hell, but drive them. I drove a '66 Mustang and only lost money selling it because I was forced to get into AC when I moved to Florida, and in Florida cars without AC drop in value about a K.

I wouldn't buy a car that wasn't already at least 20 years old. And I would NEVER buy a used 4x4.

God, this sounds like Cartalk.com or cu.org. :)

[ruppertdog]

I bought a couple of cars I couldn't afford out of college- a 98 f-150 and a 97 mustang GT. $800 per month for both of those. My wife got pregnant in 2000 and the first thing I did was trade them in (just barely covered the loans) and pay cash for a 95 Camry wagon ($9000) and a 93 Jeep Cherokee ($3200). The camry is awesome- 115,000 miles, fully loaded and we will keep it forever! I drive the Jeep- it is like one I had in highschool. 175,000 miles and going strong. I put about 100 miles per day on it. The high output 4.0 inline six is one of the best gasoline engines ever made.

[uglybiker]

My last three vehicle purchases were made utilising the origional 0% financing method.

Pay cash. Finance 0%. Works damn good.

[Cyber Liberty]

Title should be, "Zero Percent Financing Entices Consumers into Unwise Purchases."

The cars depreciate regardless of the level of financing used to make the purchase.

[tm22721]

I only buy two year old cars with cash and keep them for 15 years.

I'm doing my part to tank the economy.

BUMP

[ArrogantBustard]

Who the heck pays "sticker price"? Sticker price is just a bad joke.

[Liberal Classic]

Our cars are at about 90,000 and 125,000 and we we're considering replacing them, but after reading this thread I feel positively wasteful :)

[machman]

I've been looking at used cars the past few months as I have a daughter that will soon be driving. I can't believe the deals you can get on a two year old car. Virtually any new American car drops by more than 50% in value in those two years. Ford and Chrysler the most. They are right on with the Taurus, the same is pretty much true of the Dodge Intrpid too.

I've stayed away from cars from the big three for many years now, Japanese and German cars hold their value so much better. I got a VW Passat last year, not too much over invoice, and it is rated as having the highest residual value of any car in its class.

I tell you, the guys on the used car lots are desperate. They really, really want to deal right now. All the zero percent stuff has been killing them, as a glut of used cars hit the market and new cars are more afordable. I also think it will eventually kill off new car sales as well as they are just pulling foreward future new car sales.

[apochromat]

At the risk of being too obvious and simple, a consumer concerned about immediate resale would almost invariably be looking for a used car and is likely someone who is unsure of their economic future. A vehicle is not considered a liquid asset to the consumer. A car is not an investment unless made into one.

[Revolting cat!]

My great 1983 Toyota, which I had bought new 20 years ago, has just fallen apart requiring a $1400 engine repair. Before a rational decision could be made, the better half decided to junk it and bought a 1983 Benz 240D Diesel, 146,000 miles and a rebuilt engine, from some immigrant mechanic for $3000. I still have the Toyota, hate the MB, but what am I to do, write a country and western song?

(Your response: "Thank you for sharing!")

[Psycho_Bunny]

I don't understand this article. I was in this business, on the banking side, for 6 years.

The Blue Book and depreciation values cited here look correct.

[lds23]

Part of the problem is the automakers have put too many unwanted add-ons and supposedly "nifty" features. Not to mention all the many, many, many mandated safety, control, emmissions, etc.

For example, the headlights on my car stay on "for convenience" for about 30 seconds after I turn it off. I end up standing in the rain waiting for the blasted things to go off, even though I'm SURE I switched them off.

Or the "always on" headlights - try driving through one of those Christmas light displays.

Cupholders, OK. But all the trim and gewgaws and whatnots - I ain't payin' for 'em.

[MrNeutron1962]

I intend to drive my cars until they are ready for the scrap heap.

[monkeyshine]

Cool. I wanted to buy a Suburban. I can get one with low miles for 1/2 the price of a new? Nice. And it won't have the new "crunch in a crash" design... safety being one reason why I wanted one to begin with.

[wardaddy]

This article is very astute. It reminds me of in the mid 80s when Mercedes lowered their new car prices dramatically one year thereby overnight wiping out over 10K's value in some of their models of one to two year's old. I believe they had to settle a class action suit over that.

I've got an MB M class 320 right now, that I have been trying to sell at 500 over wholesale for 6 months. The used car market is a glut.

[Petronski]

New cars are for suckers.

[zx2dragon]

Let's see, I paid 11.5% interest on my first new car, and then received $800 on a trade in seven years later. Bought my second new car at 0.9% interest and will trade it in at the 7 year mark for just a little more.

[SamAdams76]

People who finance new cars are crazy. Why finance a depreciating asset? Pay cash for your cars. For people who say they can't afford to pay cash for their cars, I tell them that I can't afford NOT to pay cash for my cars!

Consider that the average new car these days sells for about $20,000. If you get a $2,000 trade-in on your old wreck and finance the remaining $18,000 at todays interest rates, you are paying about $500 a month for a total payment of $24,000. That's $26,000 if you include the trade-in.

Now here's my system for paying cash for your cars. If you still owe money on your current car, pay it off. Then keep your car and continue making whatever payment you were making to yourself. If your car is already paid off, even better. Start making a car payment to yourself now.

I've been putting $400 a month aside in a separate account for myself. I use that account to pay all car expenses, such as repairs, insurance, etc. Whatever is left over is used to purchase my car. Originally, I had intended to use this money to buy a brand new car. But once you see all that money sitting there, guess what, you don't WANT to buy that new car anymore! Now you want to either hold on to the car you've already got a little longer or you want to shop around for the best used car you can find so that you don't spend as much of your own hard-earned money.

This is how the car dealers get you psychologically. They sell you the car on the installment plan. Forking over $500 a month for a new car doesn't sound so bad. It sounds doable. You can drive a brand new car off the lot today with no money down and E-Z payments! But you are paying through the nose whether you get a zero percent interest rate or not. Handing over a check for $20,000 cash is not as easy as it seems, even if you have it sitting in the bank.

BTW, this is the same tack that the IRS uses with tax withholding. Taxes don't seem so bad when they are already removed from your paycheck. Some of us even think we are "getting something for nothing" if we get a paltry tax refund for having too much taken out. But if we all ever got bills for the whole amount at one time that was due April 15, we will fill the streets and have another revolution.