4 ms·

maybe $300-400/mo for the car itself. This is true only if you ever own a car white it is under financing and it loses its full value over the course of the lo

by albedoa 14y ago

maybe $300-400/mo for the car itself. This is true only if you ever own a car white it is under financing and it loses its full value over the course of the loan. Edit: unless you were simply dividing the cost of the car over the number of months you'd be driving it and you already factored value retention into that number, in which case either you don't need to worry about money anyway because you are rich or there are much better ways for you to better manage your money!

philwelch 14y ago
So buy it cash, $12,000 figuring a 10 year depreciation. That's still $100/mo, and probably a lower end car than you'll drive with Zipcar. I'm breaking even assuming even a free car, though.
- albedoa 14y ago
  Sure, and that's a $36,000 difference over those ten years. It's much easier to break even when you make that change :D
- jonknee 14y ago
  A $12,000 car will need to be maintained and over 10 years you're likely going to have a lot of repair costs. Zipcar builds that maintenance in.
unreal37 14y ago
A car is going to lose some value every month no matter how you finance it or pay cash. So it's safe to assume a few hundred a month for depreciation for a newer model car like Zipcar provides.
- albedoa 14y ago
  Of course, see my edit. The $300–400/mo is more than a tad on the high side though.
  - muzz 14y ago
    Rule of thumb is on average 15% of the value per year, or roughly 1.2% each month. $300/mo would be depreciation on a car worth $25000, which is in line with the value of a new-ish Honda Accord
    - albedoa 14y ago
      That's not how depreciation works. If the rule of thumb is 15% per year, then it is 15% off of the remaining value, meaning a new-ish Honda Accord would be worth about $9,400 after six years (about $216/mo). Whereas if you take 15% of $25k off every year, the car would be worth nothing after about six and a half years. We know that's not true.
      - hhw 14y ago
        It depends on whether you are using the straight line or declining balance method. In this particular context, the 15-20% rule of thumb for cars does refer to declining balance, which does reflect the market value of cars more closely. If it were straight line though, you could just have a predetermined residual value for a specific useful life of the asset, and then depreciate the percentage of the difference from the original value and the residual value each year. You can also easily have depreciation where the residual value is less than the fair market value at the end of the asset's useful life or stated period though. You can never perfectly predict the residual value after all, but that's what capital recovery, or gain on disposal are used to describe.
      - dredmorbius 14y ago
        That depends on how you depreciate. Straight line would give you a fixed monthly amount. Financial types prefer declining balance (% loss per year) as it front-loads the decrease in value (providing front-loaded tax benefits).
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by albedoa 14y ago

philwelch 14y ago

So buy it cash, $12,000 figuring a 10 year depreciation. That's still $100/mo, and probably a lower end car than you'll drive with Zipcar. I'm breaking even assuming even a free car, though.

albedoa 14y ago
Sure, and that's a $36,000 difference over those ten years. It's much easier to break even when you make that change :D
jonknee 14y ago
A $12,000 car will need to be maintained and over 10 years you're likely going to have a lot of repair costs. Zipcar builds that maintenance in.

unreal37 14y ago

A car is going to lose some value every month no matter how you finance it or pay cash. So it's safe to assume a few hundred a month for depreciation for a newer model car like Zipcar provides.

albedoa 14y ago
Of course, see my edit. The $300–400/mo is more than a tad on the high side though.
- muzz 14y ago
  Rule of thumb is on average 15% of the value per year, or roughly 1.2% each month. $300/mo would be depreciation on a car worth $25000, which is in line with the value of a new-ish Honda Accord
  - albedoa 14y ago
    That's not how depreciation works. If the rule of thumb is 15% per year, then it is 15% off of the remaining value, meaning a new-ish Honda Accord would be worth about $9,400 after six years (about $216/mo). Whereas if you take 15% of $25k off every year, the car would be worth nothing after about six and a half years. We know that's not true.
    - hhw 14y ago
      It depends on whether you are using the straight line or declining balance method. In this particular context, the 15-20% rule of thumb for cars does refer to declining balance, which does reflect the market value of cars more closely. If it were straight line though, you could just have a predetermined residual value for a specific useful life of the asset, and then depreciate the percentage of the difference from the original value and the residual value each year. You can also easily have depreciation where the residual value is less than the fair market value at the end of the asset's useful life or stated period though. You can never perfectly predict the residual value after all, but that's what capital recovery, or gain on disposal are used to describe.
    - dredmorbius 14y ago
      That depends on how you depreciate. Straight line would give you a fixed monthly amount. Financial types prefer declining balance (% loss per year) as it front-loads the decrease in value (providing front-loaded tax benefits).

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