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The benefit of buying it is that you can drive it well after it's paid off. Leasing and trading up all the time means you're constantly making never-ending paym

The benefit of buying it is that you can drive it well after it's paid off. Leasing and trading up all the time means you're constantly making never-ending payments. It's not that hard to sell your car when the time comes to get rid of it.

ricardobeat 5y ago
Those never-ending payments are covering depreciation. Unless you keep your car for 10+ years and it’s one of the rare models that holds value after that, you’re not much better off buying it.
- Retric 5y ago
  That calculation ignores transaction costs. Selling every 10 years is cheaper 9 years. 9 years is cheaper than 8 years etc. Eventually starting over is cheaper, but that’s usually at 15+ years when facing a major repair.
- amf12 5y ago
  Eh, that depends. Typically car depreciation is not linear. Depreciation is higher in the initial years and the % depreciation reduces each year. Buying a car, keeping it for 5 years and selling it off might be cheaper than leasing a new one every 3 years.
- throwawayboise 5y ago
  Buying 10 year old cars that are nearly fully depreciated is where you save big money. You can get a dependable car for a few thousand dollars, and even if it needs more repairs than a new car you still come out money ahead especially if you can do small repairs yourself.
  - quickthrowman 5y ago
    > Buying 10 year old cars that are nearly fully depreciated is where you save big money. Not in my experience. You either pay in depreciation or in maintenance, there is no escaping car expenses. A 10 year depreciated car may need a timing belt/water pump, possible head gasket issues, possible transmission issues, etc.
    - Retric 5y ago
      What messes with the perception is people buy used cars they could never afford new. An apples to apples comparison is what that same car would have cost new not simply what someone can afford because it’s new. A nice new BMW SUV is likely to depreciate 30k in 5 years, but that same car is extremely unlikely to need 30k of repairs if bought after 10 years and kept for another 5. More critically you’re also paying dramatically more in sales and property taxes.
      - rdtwo 5y ago
        An older bmw could easily cost you 3-5k a year in repairs . Couple that with lesser but still substantial depreciation and you might find it too be a lot more expensive than you thought.
        smileysteve 5y ago
        Anecdotal. But I haven't spent $5k in repairs to my 17 year old bmw in the 10 years I've owned it. I do budget for $1k a year though.
        rdtwo 5y ago
        You are in the bmw sweet spot I think. Newer ones have even more complex and expensive parts but reliability isn’t better and access is difficult
        rconti 5y ago
        But they've been saying that as long as I've been buying used BMWs (20 years). It's just a way of conveniently saying "you'll be wrong in the future".
        mulmen 5y ago
        My experience with BMWs is that they do tend to have ridiculous flaws, like the main bearing problems in the E90 M3s and the V10 M5s, or the fuel pump issues on the E90s in general. But BMW will set them right. The reality is BMWs just have a lot of stuff on them and so it is a numbers game. Things are going to break. Cars are a hostile environment. This is compounded by the fact that it is a BMW. I expect everything to work. If it was a used Corolla I may not complain as much about the seat mechanism not working perfectly every time. Additionally BMW also expects the car to work perfectly and the car is eager to tell you any time something is abnormal. This creates something of an illusion of unreliability. An old Toyota also has a lot of problems, you just don't notice until you go looking. And finally, dealers are predatory. They take advantage of the reputation of BMWs as expensive unreliable cars and sell unnecessary services, which perpetuates the expensive/unreliable reputation.
  - throwaway0a5e 5y ago
    Buying whatever is unfashionable and just a hair older than whatever lenders will finance is where the value always is. Of course both of those are moving targets to some extent.
  - smileysteve 5y ago
    This. I drive a bmw 3 series. It retailed for $41k in 2004. I bought used in 2011 for $11k. It's now worth about $4. I still drive it, my maintenance costs are minimal, about $250 a year (I do it myself)
    - mulmen 5y ago
      Did you mean to write $4k? Because I will absolutely buy your 2004 BMW 3 series for $4.
      - smileysteve 5y ago
        lol, yee, yes i did mean $4k; and no, hard enough to even get me to consider selling for a newer car, much less for its value or less.
- lelanthran 5y ago
  > The fact that cars depreciate seems like the best reason to "rent" them. Last I checked, the average age of cars in the US is 13 years. on average you are going to be better off buying. The number of people who, after an item is paid of, go out and replace it immediately are the same people who are bad with money anyway, so it makes sense that those people think it's financially better to rent.
- mcguire 5y ago
  Depreciation is not a cash flow.
deleted 5y ago
[deleted]
rdtwo 5y ago
It’s not that simple. Sometimes the lease is a better deal if you fall into the correct mileage band or if a manufacturer over estimates residual value. This happens a lot for fast depreciation luxury cars that aren’t a as popular or low end economy cars that manufacturers are dumping.

ricardobeat 5y ago

Those never-ending payments are covering depreciation. Unless you keep your car for 10+ years and it’s one of the rare models that holds value after that, you’re not much better off buying it.

Retric 5y ago
That calculation ignores transaction costs. Selling every 10 years is cheaper 9 years. 9 years is cheaper than 8 years etc. Eventually starting over is cheaper, but that’s usually at 15+ years when facing a major repair.
amf12 5y ago
Eh, that depends. Typically car depreciation is not linear. Depreciation is higher in the initial years and the % depreciation reduces each year. Buying a car, keeping it for 5 years and selling it off might be cheaper than leasing a new one every 3 years.
throwawayboise 5y ago
Buying 10 year old cars that are nearly fully depreciated is where you save big money. You can get a dependable car for a few thousand dollars, and even if it needs more repairs than a new car you still come out money ahead especially if you can do small repairs yourself.
- quickthrowman 5y ago
  > Buying 10 year old cars that are nearly fully depreciated is where you save big money. Not in my experience. You either pay in depreciation or in maintenance, there is no escaping car expenses. A 10 year depreciated car may need a timing belt/water pump, possible head gasket issues, possible transmission issues, etc.
  - Retric 5y ago
    What messes with the perception is people buy used cars they could never afford new. An apples to apples comparison is what that same car would have cost new not simply what someone can afford because it’s new. A nice new BMW SUV is likely to depreciate 30k in 5 years, but that same car is extremely unlikely to need 30k of repairs if bought after 10 years and kept for another 5. More critically you’re also paying dramatically more in sales and property taxes.
    - rdtwo 5y ago
      An older bmw could easily cost you 3-5k a year in repairs . Couple that with lesser but still substantial depreciation and you might find it too be a lot more expensive than you thought.
      - smileysteve 5y ago
        Anecdotal. But I haven't spent $5k in repairs to my 17 year old bmw in the 10 years I've owned it. I do budget for $1k a year though.
        rdtwo 5y ago
        You are in the bmw sweet spot I think. Newer ones have even more complex and expensive parts but reliability isn’t better and access is difficult
        rconti 5y ago
        But they've been saying that as long as I've been buying used BMWs (20 years). It's just a way of conveniently saying "you'll be wrong in the future".
        mulmen 5y ago
        My experience with BMWs is that they do tend to have ridiculous flaws, like the main bearing problems in the E90 M3s and the V10 M5s, or the fuel pump issues on the E90s in general. But BMW will set them right. The reality is BMWs just have a lot of stuff on them and so it is a numbers game. Things are going to break. Cars are a hostile environment. This is compounded by the fact that it is a BMW. I expect everything to work. If it was a used Corolla I may not complain as much about the seat mechanism not working perfectly every time. Additionally BMW also expects the car to work perfectly and the car is eager to tell you any time something is abnormal. This creates something of an illusion of unreliability. An old Toyota also has a lot of problems, you just don't notice until you go looking. And finally, dealers are predatory. They take advantage of the reputation of BMWs as expensive unreliable cars and sell unnecessary services, which perpetuates the expensive/unreliable reputation.
- throwaway0a5e 5y ago
  Buying whatever is unfashionable and just a hair older than whatever lenders will finance is where the value always is. Of course both of those are moving targets to some extent.
- smileysteve 5y ago
  This. I drive a bmw 3 series. It retailed for $41k in 2004. I bought used in 2011 for $11k. It's now worth about $4. I still drive it, my maintenance costs are minimal, about $250 a year (I do it myself)
  - mulmen 5y ago
    Did you mean to write $4k? Because I will absolutely buy your 2004 BMW 3 series for $4.
    - smileysteve 5y ago
      lol, yee, yes i did mean $4k; and no, hard enough to even get me to consider selling for a newer car, much less for its value or less.
lelanthran 5y ago
> The fact that cars depreciate seems like the best reason to "rent" them. Last I checked, the average age of cars in the US is 13 years. on average you are going to be better off buying. The number of people who, after an item is paid of, go out and replace it immediately are the same people who are bad with money anyway, so it makes sense that those people think it's financially better to rent.
mcguire 5y ago
Depreciation is not a cash flow.

deleted 5y ago

[deleted]

rdtwo 5y ago

It’s not that simple. Sometimes the lease is a better deal if you fall into the correct mileage band or if a manufacturer over estimates residual value. This happens a lot for fast depreciation luxury cars that aren’t a as popular or low end economy cars that manufacturers are dumping.