New car depreciation question

[CT Yankee]

I often hear people say that they do not purchase new vehicles because they depreciate in value so quickly. That's a fair assessment. My question is, if you plan on holding on to the new vehicle for a long time, does the rapid depreciation of that vehicle actually matter, since you don't plan on selling or trading it in anytime soon? We typically (but not always) purchased new vehicles and kept them for about ten years. We also purchase the gap coverage if we have to finance the vehicle. My husband works for an insurance company that offers a very good employee discount, so we get a good price on the premium for this product.

 

[robinb]

We don't worry about depreciation and all but 2 of our cars have been new. The 2 used cars were 50/50 on reliability. The first, a Saab 9-5 (to replace a previous 9-5 that was totaled while a friend was driving it), ended up to be a real lemon that we traded in as soon as it was out of warranty. The second was a Subaru Outback that was great until it too was totaled (my DD was hit by someone on a mountain pass). It was such a great car, we bought a brand spanking new Outback to replace the totaled one.

Our current driver is a 2018 Honda Clarity with 96,000 miles on it and it's a solid car that we bought new. I'd buy another new one in a couple of years, but Honda discontinued them .

 

[808blessing]

I always buy used. Then sell about 10 years later. Depreciation hits you any way you look at it. Just less with resale. Saab's have a bad repair reputation...so if you pick a used reliable with good history you should be ok. My first car ever was brand new. Won't do that again unless I'm loaded.

 

[tvguy]

Well, to my way of thinking, I MIGHT consider depreciation if I kept my cars for ONLY 10 years. My current car will be 8 years old in June, I traded in a vehicle I had for 31 YEARS. My wife's car will b 6 years old in July, we traded in a car we had 20 YEARS. But we are in California a rust is not an issue. As for upkeep costs, I added up all the receipts on the vehicle I had for 31 years and spent a few dollars over $10,000 on repairs and upkeep. Or about what you lose in depreciation the minute your drive a new car off the lot.
Another thing I do not consider is whether the cost of repairs exceeds the value of the vehicle. The last two sets of tires on the vehicle I had 31 years cost more than it was worth if I was going to sell it. Only exception to that would be collision damager. When my daughter rear ended someone and crunched the front of a car we had owned for 18 years, I did not even get a repair estimate, it went straight to the junkyard.

 

[RivShore]

I often hear people say that they do not purchase new vehicles because they depreciate in value so quickly. That's a fair assessment. My question is, if you plan on holding on to the new vehicle for a long time, does the rapid depreciation of that vehicle actually matter, since you don't plan on selling or trading it in anytime soon? We typically (but not always) purchased new vehicles and kept them for about ten years. We also purchase the gap coverage if we have to finance the vehicle. My husband works for an insurance company that offers a very good employee discount, so we get a good price on the premium for this product.

We do something similar, buy a new reliable car and hold 10 to 15 years, getting rid of it once repair and mantinance costs start climbing. I have always figured everything nets out the same vs buying say a used 3 year old car, which will need to gotten rid of 3 years sooner. Plus with a new purchase, your also getting the latest safety and tech features (for instance, I can't live without wireless CarPlay after getting it on our new 2024 purchase).

 

[barkley]

we buy our vehicles and drive them until there's an issue that's no longer cost effective to repair so we hold on to them a good long time. for us it's never been a consideration of what the value of the vehicle would be down the line but moreso what the cost is now/does it meet our needs. when we were daily commuters we were putting allot of miles on them and needed reliabilty which we infrequently saw with used (generally inheriting someone else's issues unless it was the RARE case with a great deal on a very low mileage-aka 'the little old lady who just drove it to church on sundays' ).

it may make a difference for us in that we tend to pay cash for our new vehicles (except for our most recent which we paid off in a year b/c the interest rate offered was lower than what we were getting on the bank account we would have pulled the funds from).

 

[barkley]

Plus with a new purchase, your also getting the latest safety and tech features (for instance, I can't live without wireless CarPlay after getting it on our new 2024 purchase).

that's an aspect I hadnt thought of-insurance. we had a 2006 that reached the end of it's life at the end of 2024 so that's when we bought our newest. I just assumed that the newer/higher value vehicle would increase our insurance but no, with the newer safety features our insurance decreased so that's a long term cost factor as well.

 

[Anthony1971]

I will say it depends… we don’t buy used but…
If you are talking about Honda or Toyota I see little advantage to buy a newer used one and even older ones are pricey. There are a good many cars that just don’t have great resale value but that is where research matters also finding one with low miles that is in good condition can be chore to find. Truthfully we have “lost” under 1,500 year on Hondas and Toyotas and we keep them 6-7 years. One of the Hondas we gave to our son and is now 10 years old that one we woukd lose closer to 1000 a year if we sold it. These were out the door prices not the price before tax…..

 

[kathy884]

Usually if you are keeping it for 10 years and want a new car, sure no issue. OMG though, DS who always drives his car for 10 years or more got a new one a year ago (cash purchase - had saved up the monies for over 10 years and it was the exact car he wanted and loved), and then this year got hit by a hit and run driver and his car was totaled. Things like that, what he got from his insurance company, etc. are what really show you how much that first year appreciation is.

Probably not a wise choice and probably I'm being much too extravagant/indulgent mom, but DH and I are gifting him some monies so he can replace the car he loved with the exact same car new, color features, etc. Hope this time he will be able to drive the car at least 10 years. I am doing this once, but not again. He'll be on his own next time. Honestly, though, I don't even care about the money. I am just so thankful he was not injured in anyway.

Now me, I just replaced by 12 year old car with a 2024 car - certified pre-owed that came off of a lease and had 16,000 miles on it. It seems like a new car to me and I don't have the first year depreciation if something would happen to this one. In this case, though, I liked the 2024 model year and could get a used with color and features, etc. that were my first choice.

 

[DCL58]

I am on my 4th Honda. I buy new and trade in the older one when the vehicle gets to be about 7 years old. I cannot believe how much they give me for trade in - they made less than $3000 when they sold my last trade in at the dealership. I do buy the top of the line Pilots - they seem to be in demand as a used car. I do not worry about depreciation.

Husband just bought a Toyota Land Cruiser. They seem to sell for more as a used car than new since they are so hard to get your hands on.

 

[reddog21]

We used to never keep cars for more than 5–6 years, but now we just lease. It’s more important to me to have a reliable car than to worry about depreciation. I don’t think I’ve had to pay for a car repair in over 10 years.

 

[ronnie2hotty]

There's no real one-size-fits-all answer to this question. So many variables to consider: not only the type of car it is, but different models of the same brand can vary hugely in the quality of the vehicle; the climate you live in; your daily driving habits; the terrain of the state you live; the preventative maintenance you do on the vehicle. It all adds up.

My personal, general rule of thumb is this: If this is a vehicle I'm going to keep for the long haul (8+ years), or if it will be my family's main vehicle, I am more inclined to buy new if I can. Peace of mind for reliability for longer is more valuable than any amount of depreciation. If the vehicle is something I'm not going to drive every often, like a third vehicle for the family, or something I plan on trading in in less than five years, then used is the better way to go.