OT: when to trade a car in

[tele]

Maybe I'm stuck in an old school mentality. Just flipped 90k miles on our 2011 Chevy Traverse. Got me thinking if I should start looking at trading it in for something else...is there still the dreaded 100k drop-off in value?

[Mikej]

Maybe I'm stuck in an old school mentality. Just flipped 90k miles on our 2011 Chevy Traverse. Got me thinking if I should start looking at trading it in for something else...is there still the dreaded 100k drop-off in value?

Nah, the dreaded drop off in value happened on day 1....Drive it or get a new one, this ain't bar tape.

[AngryScientist]

there are basically two questions here from tele:

1) the actual question -

answer - making some assumptions about what model you have, the rough trade in value of a 2011 traverse with 90k miles is $9600, and the rough trade in value of a 2011 traverse with 110k miles is $8600. that's based on the NADA blue book calculator. you're driving it about 20k miles a year, so driving it for another year will likely cost you roughly $1k or a bit more as it will also be a year older next year...

2) the implied question -

should i just keep it? - YES! most modern cars should go to 200k miles, unless it's a complete dog without too much trouble. i dont know what that thing cost new, but it's already likely depreciated hugely, make some routine repairs and drive it into the ground. IMO.

[tele]

We did buy it used so I guess I didn't get stuck with all the depreciation. I guess I was curious if the 100k milestone was an antiquated thing or still real.

[soulspinner]

Maybe I'm stuck in an old school mentality. Just flipped 90k miles on our 2011 Chevy Traverse. Got me thinking if I should start looking at trading it in for something else...is there still the dreaded 100k drop-off in value?

At auctions 100k still is a drop off point. At this point if you sell it yourself cause the trade value isnt great. If you like it and its been good keep it as a second/third vehicle.

[fourflys]

for me there is a point where you start spending too much to repair to make it practical to keep... I have a Highlander with 120k that I don't plan on getting rid of any time soon...

OR, you just want and a new car... ;)

[tumbler]

Another factor is taxes. Some states allow you to trade-in a vehicle towards the purchase of a new one and only pay tax on the net price (after trade-in) of the new vehicle. Other states (f--- you California!) ignore your trade-in value and charge tax on the full value of the new car. Just something else to consider...

[dgauthier]

We did buy it used so I guess I didn't get stuck with all the depreciation. I guess I was curious if the 100k milestone was an antiquated thing or still real.

Why not plug your car specs into Kelly Blue Book with different mileages and see how the value varies?

[kitsnob]

Why not plug your car specs into Kelly Blue Book with different mileages and see how the value varies?

I'm in the business ... That said. Kelly does not buy cars they simply offer a GUIDE. Most of the time I tell my clients to use the GOOD condition and automatically take 3K OFF of their price right off the top to get a somewhat accurate guage of what the dealer would give on a trade in.
ALWAY ALWAYS ALWAYS negotiate the price of the new car 1st before even entertaining getting your possible trade in appraised. Otherwise, you WILL get fleeced!
I usually advise my clients once the repair costs approach 30% to 40% of the trade in value or what the car is worth, put a Band-Aid on the car and get out/dump it!

[cmg]

;) never sell a car you bought new. drive it into the ground. when the motor fails replace the motor from something that's been wrecked. it will take a lot of repair to equal the value of a new car, keeping it is always cheaper. you already bought the car, why do you want to do it again? if you replace a newly bought car like the traverse every 6-7 years, in 21 years you would have spent $100k just own a car, no sense in that. don't trade it in, buy another with zero down and keep the traverse as a back up with cheap insurance for when the new car needs to go to the shop.

http://usedcars.about.com/od/avoidingproblems/a/Five-Reasons-Not-To-Sell-Your-sed-Car.htm

[carpediemracing]

I'm in the business ... That said. Kelly does not buy cars they simply offer a GUIDE.

+1

A dealer prices your trade in to the auction market locally because they'll probably sell the car at that auction. Some cars may come close to matching KBB, but generally speaking KBB is super optimistic.

Those dream cars? They get close to KBB. Like a 2010 Civic with 7,000 miles. Or other ridiculous cars like that.

The more cynical will respond to "but KBB says my car is worth x amount!" with "then sell your car to KBB!" "They don't buy cars." "Exactly."

[benb]

Heh.. I swear KBB is just there so the car dealers have a carrot to get you into the dealership... as soon as you negotiate they'll say they don't use KBB and give you a trade value vastly lower.

It seems amazing to me that a Traverse with 90k miles could ever be worth $9600. They MSRP'ed between $30-40k (seems like a lot) but I would have imagined they sat on lots and sold new at huge discounts like a lot of the other GM vehicles.

GM products for all the bashing in the auto press seem pretty low cost to keep for the long run. Reliable and not that expensive to repair. Kind of a no brainer to keep.

My parents had a bunch of GM vehicles that they drove 250k+ miles before moving on. Not exciting IMO but they sure got the job done and were seemingly smart moves financially.

[kitsnob]

+1

The more cynical will respond to "but KBB says my car is worth x amount!" with "then sell your car to KBB!" "They don't buy cars." "Exactly."

^^ +1
If I had a nickel for every time I either heard or said that, I wouldn't be working!

[buddybikes]

Many ways depends upon how much you need the new technology like being able to go on the internet while driving and crap like that rather than actually driving.

Friend of mine who has 2 lease cars says technology changes so fast, need to only lease. Even convinced her kid, 25 year old living outside Boston (car livng on a street).

Another friend has 88 chevy pick up and he said they will pry it away from his dead body - he wants a car he can fix.

Personally I wouldn't go in, car dealerships are worse than having tooth extractions without nivocaine.... (having one tomorrow)

[carpediemracing]

On leases - keep in mind that you do NOT own the car. You're leasing it.

Therefore if anything catastrophic happens - it ended up under 5 feet of water due to Hurricane Matthew, you got t-boned by a drunk, whatever - then you get ZERO dollars of insurance for the car. The collision coverage goes to the car's owner, the leasing company (we'll call it that for simplicity sake).

So with a lease you really want to put as little down as possible. Roll everything into the lease, the sales tax, the acquisition fee, everything. Payments will be higher overall but that's okay, you're out as little as possible if something bad happens. Plus if you have a good lease rate the interest won't be killer. Significant, yes, not free, yes, but not absurd.

If you're trading in a car that you already own, don't put the car equity as downpayment. Get a check from the dealer. "You can trade your car in and your payments will be only $99/mo because your car is worth $10k". "Write me a check for $10k and tell me what the lease payments would be."

Remember also that lease rates can be adjusted legally by the dealer. They can add a point or whatever without telling you and that's okay. If you agree to the terms it's all good. Get a lease calculator, understand how a lease works, and see if the dealer is adding 1% or more like I've seen done across the board.

If you're writing it off on a business, you want to put as little down as possible because generally only the payments are deductible, not the down payment. I'm not an accountant but that's what I heard, but not sure if it's specific to CT or if it's Federal. I'm not going to wake up my wife to ask her but she's the CPA.

[Ralph]

I can't think of anything you can't fix on a vehicle of that age and mileage for less than a years depreciation on a new model. Shucks......the sales tax cost of a new or almost new vehicle will fix about anything except maybe a new transmission.

It's almost always cheaper to fix (if anything goes wrong) a vehicle with around your mileage than trade it.

And......lots of folks now look for good condition hi mileage vehicles....fix them up as necessary....and drive them another 100,000 miles.

It costs more to do body work than engine work. So if the body is good....drive it. Unless.....you just want a new or different vehicle. Most people trade because they just want to trade.

[cmg]

the way to think of it is, say your Traverse has 110K miles and engine failure is at 240K miles, so if this is your main and only the motor will fail in 6 years. now if you get a second car and half the mileage the traverse will self destruct in 12 years and the new car will get fewer miles on it, won't hit the 100K miles of free maintenance early. don't buy new, buy used and insure at the lowest cost. i have 3 cars. they get about 6K miles each. at that rate if failure is 100Kmiles away, 2 of them have 8 years of life each. the used car value is at keeping you from spending $30k in one pop. now if the goal in gathering new tech or experiencing something different then happy shopping.

[Zoodles]

the way to think of it is, say your Traverse has 110K miles and engine failure is at 240K miles, so if this is your main and only the motor will fail in 6 years. now if you get a second car and half the mileage the traverse will self destruct in 12 years and the new car will get fewer miles on it, won't hit the 100K miles of free maintenance early. don't buy new, buy used and insure at the lowest cost. i have 3 cars. they get about 6K miles each. at that rate if failure is 100Kmiles away, 2 of them have 8 years of life each. the used car value is at keeping you from spending $30k in one pop. now if the goal in gathering new tech or experiencing something different then happy shopping.


How does this make sense vs driving the one car into the ground and then buying another used. Over several years forgoing a second (or third) car leads to savings in insurance costs, repairs etc... that represent a substantial chunk of the traverse's replacement.

If being left stranded is a concern set up a short term rental option just in case.

To me the quoted text neatly sums the insanity of our current car culture.

[tele]

Thanks for all the discussion, lots of food for thought. I hadn't thought about trading the Traverse in until a couple of weeks ago when I knew I would need tires before the winter and getting close to the 100k milestone.

I have looked at KBB and a couple of other trade in value sites and prices are all over the board. Seem to be a dealer scam to me.:fight:

The only real vehicle I would look at getting would be a crew cab pickup, but I'll think on it. Thanks again!

[cmg]

How does this make sense vs driving the one car into the ground and then buying another used. Over several years forgoing a second (or third) car leads to savings in insurance costs, repairs etc... that represent a substantial chunk of the traverse's replacement.

If being left stranded is a concern set up a short term rental option just in case.

To me the quoted text neatly sums the insanity of our current car culture.

What will you use for traverse's replacement? you only get that value if you buy 60 payments with full coverage. the goal of the car culture is to always be making a payment, to never own anything. life's too short.

replacing an engine or transmission will be much cheaper than buying a new car, even if you do it several times. the goal is no car payment and insurance at the cheapest level. it will take a lot of repair to equal the cost of new. buying 60 payments every 7 years is wasteful, that's the insanity of the car culture. the compromise comes at what your using for the used cars, won't work if your using a German/European car but it will if it is something boring, something not to technically advanced (known reliability, durable) like a honda/toyota/nissan or american truck. when a motor fails it's not like it explodes and you die a fiery death. it's a different mind set.

[carpediemracing]

I didn't think of using someone else's work to price out repair costs of cars but we're looking at replacing two TDIs. The wide variation of extended warranty costs really shows what an insurance company expects to pay, on average, to keep a car on the road. Having seen the absolute clusters at the dealership (so many blown engines in cars 2010-2012, plus certain cars with differential replacements every 18k miles) I'm wary of getting an "unsupported" newer car.

So for comparison sake I've used Carmax. Cars in our price range typically have 35-50k miles on them, warranty out to 100-150k odometer reading, 3-5 years depending on age.

Mazda, 2013, 33k, 5 year out to 125k is $1800. To 150k is $2200. Turbo 4, manual.

Golf, 2013, I think it was 45k miles. 5 year out to 125k, $5100+. No warranty to 150k offered. Turbo 4, manual.

So an insurance company has decided that it will probably take, say, $800 to keep the Mazda on the road for 90k miles, if you figure a $1000 profit. The VW will take $4100, with the same net profit.

I haven't seen a warranty go out past 150k so I think there's not enough data or the repair costs go up significantly.

Carmax is less than AAA. Carmax has a pretty high minimum standard for cars they sell, at least on paper. AAA offers warranties on any car so the assumption is that the car may be in poorer shape. The Mazda example would be $2900 from AAA for 6 years but only up to 100k miles odometer reading, with a $400 discount for me because I've been a member longer than 10 years but less than 20 years. So just over 10k miles a year on that Mazda, which for us is very reasonable now but may be unrealistic if our lives change.

In our price range I think that Carmax is maybe $1000-2000 higher for a given car but for the really nice condition ones (on paper, based on miles and year) I think they're not far off at all, $500 or so.

[d_douglas]

ha ha - we have two SUVs - 12 + 14 yrs old and they have have low 200k KM on them. We plan to drive them until they no longer drive, then pour money into another used car :).

They're safe and reliable now, so what more can I ask? Cars are a terrible investment.

[batman1425]

Food for thought:

I've bought my last 2 cars new. First one made it 4 years and 48k miles before I dumped it. It was a problem child and I would have lost my shirt on it after the warranty ran out. I got about 60% of what I paid for it as a trade - basically cost me $260/month to drive that car for 4 years - it was an Audi, I knew I would take a hit on resale value but I always wanted one, and I loved the car. Worth the extra cash. However, the trade in value covered 80% of the new car I replaced it with and got a 0% loan for the remainder to boot. Drove that car for 5 years, 77k miles. Not a single problem with it - zero out of pocket aside from oil, gas, and tires. Sold it outright for 50% of what I paid for it - so it cost me around $83/month to drive. In that 9 year time span - I paid about 17.5K to drive those 2 cars which honestly isn't too shabby. Lets stick to vehicle cost and ignore opportunity costs as well for simplicity.

Lets flip the script - to do better I would have to had purchased and maintained a vehicle for 9 years for less than 17,500. Considering what 12-15K buys you (leaving some space for projected repair costs for a used car), even 10 years ago, that's a fairly tall order. I would have been looking at a 4-6 year old car with maybe 50-60k miles. By the end, I'd be driving a 13-15 year old car with 175-185k miles. A car in that age/mileage range is at some point probably going to need some electrical work, maybe a timing belt, suspension wear components, struts perhaps, brakes. Is all that, over 9 years, going to cost less than 2,500-5,000? Perhaps, if you end up with a good car, but the margin is thin and towards the end reliability will become a question mark. I'm not sure I would jump in a car with 160K on the clock and drive it across the country with out making sure my AAA membership was up to date first...

I don't think I lost much by doing it this way. The point being - it isn't completely financially devastating to buy new, if you shop smart.

[Pierre]

;) never sell a car you bought new. drive it into the ground. when the motor fails replace the motor from something that's been wrecked. it will take a lot of repair to equal the value of a new car, keeping it is always cheaper. you already bought the car, why do you want to do it again? if you replace a newly bought car like the traverse every 6-7 years, in 21 years you would have spent $100k just own a car, no sense in that. don't trade it in, buy another with zero down and keep the traverse as a back up with cheap insurance for when the new car needs to go to the shop.

http://usedcars.about.com/od/avoidingproblems/a/Five-Reasons-Not-To-Sell-Your-sed-Car.htm

What he said! Totally agree - drive it into the ground. Always helpful to pick up some car repair skills though that and find a forum for your vehicle so that you can learn more about upcoming problems. What I've discovered from regularly contributing to a Volvo forum for my V40 is that you are NEVER the only one who has had a particular problem...

[Ralph]

I agree with above. When you buy new you get new. New car warranty. New tires, and everything else. The new car "hit' is offset by what you get new. When you buy new, you buy 100% of the car. When you buy a car with 50,000 miles on it, you are only buying about 2/3 of a new car, with that 2/3 being well worn. If payment size is a problem with new, then finance a new car a year or so more than a used car. After all, you have all the car to use up, not just the remainder you bought with that used car. The trick is to pick a model with better than average depreciation rate, and one with a good reliability record. Unfortunately....many of those vehicles are not overly exciting to drive and don't give the upwardly mobile image many seek.