Depressing Depreciation

Most trucks and cars are bought to be used. Very, very few are bought as collector's items to be stored for later sale. For that reason, they depreciate as they get used up, and the depreciation is worst the first 2-3 years of the vehicle's life.

My grandfather (RIP, grandpa) was a new car dealer his whole life, and he always said that the smartest and cheapest way to own cars was to find a good 2-3 year old, low mileage one and drive it until the wheels fell off. Let somebody else pay the first couple years depreciation, and after you acquire it, use it up, until it starts costing way too much to keep on the road.

Into the bargain, of course, the more they cost initially, the steeper the depreciation those first couple years. This is because no matter what the make and model or how it is equipped, the end of their useful life, they are all worth the same $1,000 or so as a beater.

I am in the buy a 2-3 year old truck crowd however my opinion maybe changing.
I'm afraid I'm wearing them out too fast. I keep my trucks until they are worn out .My last F-250 had 240K on it. I hoping to get 300K out of my current truck. I have 175K now.
I'm starting to think a 1 year old truck with 10-12K is ideal for me. I save the depreciation and pick up mileage in the long run.

My philosophy since I was a teenager in the 50’s has always been to work the window between the max depreciation and the big repair costs. In that era an engine lasted about 100k miles and an AT about 60k miles. So to get the most car for the money I bought a 2 yr old car and sold it when it was about 4 years old. For the cheapest total costs you bought new and kept it for at least 10 years.

I’ve since gotten away from the 2-4 year thing; I buy new and keep a vehicle until the wheels fall off or the repair costs get serious. My oldest vehicle is a ’73 Bronco and the newest a 2003 car. My TV is a 2001 and my TT an '89. So unless one keeps vehicles a long time I still think working the window is the way to go.

I gave 30k for mine new and now it is worth maybe 8k.
So cost is under $150/month :)

If you keep your vehicles until the wheels fall off or become too expensive to maintain it really doesn't matter if you purchase new or used. You will get more usable years out of a new one so the initial higher depreciation is a wash.

I am picky about how I want my vehicle equipped. Most of them have a load of stuff I don't want, and often are missing the tow package I do want. Add in the fact that I've had horrible luck with the two used vehicles I've bought in my lifetime, and one can see why I buy new. But I usually get from 150,000 to 240,000 miles on each one before I get rid of it.

My next one will have a Mopar lifetime extended service contract, and I hope to drive it until it's darn near worthless.

In many cases, depreciation(of the RV and/or TV) is the biggest single expense for RVing and the daily average depreciation is probably more than the campground fee, fuel, food, etc. Estimate the 8 year depreciation of any fairly expensive RV and divide by the number of nights one is likely to spend in it. Ouch!

If you like Rving never do the math! Most folks look at the payment but forget that the new depreciation will often be that much or more doubling the cost per month to own it. After five years it is worth half of new. Rving has a lot of family values that cannot be easily assigned a dollar value, but being inexpensive is not one of them when purchasing new.

jmtandem wrote:

In many cases, depreciation(of the RV and/or TV) is the biggest single expense for RVing and the daily average depreciation is probably more than the campground fee, fuel, food, etc. Estimate the 8 year depreciation of any fairly expensive RV and divide by the number of nights one is likely to spend in it. Ouch!

If you like Rving never do the math! Most folks look at the payment but forget that the new depreciation will often be that much or more doubling the cost per month to own it. After five years it is worth half of new. Rving has a lot of family values that cannot be easily assigned a dollar value, but being inexpensive is not one of them when purchasing new.

Very well stated! :)

I paid 40k for my new family van (check...I am in the process of paying 40k for my van). There was a used 2009 Town And Country that was the same color as mine for 14k.

But it wasn't what we wanted. We didn't buy a new van as an investment, we bought it as a tool, and we will use this thing till it's dead. The last thing I am worried about is depreciation.

I'll never Forget Robert Kiosaki's quote

"Assets pay you
Liabilities take money from you"

Pretty simple. Lol

Thanks!

Jeremiah

I found the savings in buying a 2-3 yr old truck to be minimal. Around 5k with about 60k miles. Not chump change but by going new I get exactly what I wanted, 0k on the odo, better finance rate, and I know how it's been treated and maintained. Also the new car smell hasent worn off ;)