Why do people trade in their cars so quickly?

[Contrarian]

I'm buying a new car, cash down, in September. Someone advised me to take a walk around some car yards near Langtrees which I did and I was stunned!

To my amazement one car yard had cars that were barely three years old and had done something like 80,000km and were already being sold as second hand! With a $2,000 trade in, that car would be very attractive indeed. Unlike the 80s where the going rule was, unless you were lucky, you never bought a second hand car because you'd end up buying someone else's problems.

I bought my Hyundai 2nd hand and it's been going very well for 10 years considering it was already 5 years old when I bought it. Admittedly I send it regularly for servicing and had to do a major repair on it once but that's not bad for a 15 year old car. So why do people change their cars so quickly and early?

One person said that these cars were imports from countries like Japan which have incentives for people to change their cars ever few years. Perhaps.

Another said that these used to be fleet cars which were swopped regularly as part of the deal but I find that hard to believe.

Any comments, ideas anyone?

 

[wr3xr]

Heaps of leased cars that get upgraded after 5 years but i reckon once a car gets towards 100K kms its going to start costing money.

Also people like to have new toys and the new models are usually nicer, better looking, safer, faster etc..

I

 

[Contrarian]

Well, so many cars these days have 5 year warranties. But I take your point. As for people trading in every few years for nicer models - I didn't realize so many people still had money to throw away.

 

[wr3xr]

I dont think they have the money, more the fact that they are still happy to be in debt for a car?

Guess most car loan terms are also 3,5 and 7 years so people just pay off their loans and start again

 

[Jennifer1993]

A car has become an expendable object, just like other things in life.

 

[Contrarian]

Legend has it that this guy learnt all he did from watching Perth's best car dealers![video=youtube;VZWX2Q6UaAU]http://www.youtube.com/watch?v=VZWX2Q6UaAU[/video]

 

[Langtrees VIP Perth 3]

Don't men value themselves on the car they drive. If its aged a bit trade it in. I know a lot that do the same with there wives

 

[wr3xr]

Heh, if only it was that easier to upgrade to a better model wife

 

[Langtrees VIP Perth 3]

Haha marriage licenses should have a yearly renewal date

 

[Driver Harry]

Heh, if only it was that easier to upgrade to a better model wife

It's a called a shotgun divorce olice:

 

[svengali]

Best buying is a low mileage used car - 10 - 20,000 on the clock with plenty of manufacturer's warranty left. You get a nearly new and reliable vehicle which won't cost you much outside of normal maintenance at around $10k off the new price.

"Bombs" with 80k plus on the clock may still be all right but that is around the time the palsies of age start to show and the little things like batteries, alternators, radiators etc start falling apart and costing money and off-road time.

Buy a newie and all the stamp duty and on-road costs evaporate the first time you turn the key. I know, you don't have to "pay" depreciation as an out-of-pocket expense, but it is the biggest cost involved in running a car and saves its bite until trade-in time. The mugs who buy new and trade in after a year really take a bath every time they trade in unless they are fleet owners with special deals.

 

[Perth boy]

A lot of people will trade before the kms get to 80k or while the warranty still has a bit left.

My last car I brought new and sold it 18 months after with 45k on the clock. It just didn't suit my needs.

 

[homer]

It's due to easy money. Every man and his dogs or cats can get finance.

And manufacturers updating and pushing out new models, every so often.

Then there is govt fleet cars and those on high income using novated leases. Every 3-5 years they get to drive new cars, so there are plenty of nice 2nd cars about.

In saying that, I bought my car brand new in 2005 and still driving it. I don't see the need for a new car. Ok, I am in the lower part of food chain, disposable income is not aplenty.

 

[Contrarian]

I'm thinking of buying a new car as a treat for my birthday. I've never OWNED a new car before - driven many new ones which came as part of my income package. It is an extravagance even though I'm paying cash and not taking out a loan - every financial advice book says you shouldn't borrow money for an asset that doesn't appreciate or unless you need to impress corporate clients to win business.

I've an ABN which might make it more sense to lease/finance one however. Early days yet but am just stunned at how quickly swop cars.

 

[Mile High]

I am with Svengali, from a cash outlay, virtually new car, manufacturers warranty and low maintenance, buying a car around a year old with low kms makes most economic sense.

My current car was just under a year old, 16,000kms on the clock and I paid two thirds of the new car list price.

Contrarian, if you have a company look into the tax benefits of buying the car through the business, you might be surprised at the benefits.

 

[Dallas]

Haha marriage licenses should have a yearly renewal date

This isn't such a bad idea, I think if that was the case my ex wouldn't have renewed about 5 years ago and saved a lot of pain! Plus the Government could charge stamp duty whatever that is

 

[Rochelle]

I don't think I will ever buy a brand new car. Cars don't hold their value and you can get a nearly new one for half the prize of a brand new one. So what's the point?
I usually get quite attached to my cars and drive them until they fall apart. And I do have a soft spot for older cars to start with. The newest model I have driven in Australia was a 1991.
So why do people do it? Because they can..........
Same with every thing. Take the iphone 5.......why buy an iphone 5 when your iphone 4 is still working?

R.xxxxxxxx

 

[homer]

Your a sentimental at heart, Rochelle. I am the same. I don't trade in old stuff for new just because they are old. I just run it down...lol

 

[Rochelle]

Very true, Homer. I guess it has a lot to do with my up-bringing. I spent a lot of time at my granny's place and she was one of those women who could make a lot out of nothing. Waste was one of the deadly sins. Guess it is/(was in most cases now) a survival behaviour, a left over from WWII.......how to survive on nothing and how to appreciate every item you got.

R.xxxxxx

 

[aussie_single34]

I don't like new cars
Sure some of the refinements make them nice to drive but they have no style
I'm an old car guy and I like my hotrods and steel bumpered classics and street machines
Of the 7 cars in my drive my newest is my daily driven 1984 Hilux
Its not fast , comfortable or a chick magnet... but its reliable and thats what matters to me
Even after 310 000 kms

 

[homer]

Well said, Rochelle. Waste minimisation is my philosophy but I am no scrooge. I will splurge happily on necessities.

 

[Bambi]

depresion(spelt wrong) of value if you claim your car on tax its best to keep upgrading