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A friend buys a new car every 3 years (when the warranty runs out)

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[OP]
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May 24, 2008
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Vancouver

A friend buys a new car every 3 years (when the warranty runs out)

I have a friend of mine who buys a new car every three years when the warranty runs out on it, he trades it in for whatever value it's now worth, he told me about $7,000.00 less usually. So he's spending about $200.00 a month on the car (financial loss), plus paying for gas, insurance, new tires, deductables, etc.

Isn't there a cheaper way to save money? He seems to be brainwashed that buying a new car every 3 years is saving him a million dollars because the new car has a warranty.

I think he's crazy and just needs to change his lifestyle. Don't you think so?

He's in Vancouver and we have car shares, bike shares, public transit and our local cities are very walkable. He could also rent a car for a day or the weekend if need be, very easily.

I think he's making a bad investment. Do you think the new car warranty is really worth a "million bucks", a lot less stress and hassle for having someone perform all the maintenance for you? (Do new cars even need maintenance? Lol)
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Nov 23, 2005
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Lease is beneficial if you score a great deal on your payments (keeping them low). The hope is that after 3 years you pay less than you would lose on the depreciation had you financed that same car over the same period of time.

You can't compare owning a car to substitute car/bike/whatever share services there are because you can't really put a price on convenience.
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May 18, 2015
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scoobydoo wrote: I have a friend of mine who buys a new car every three years when the warranty runs out on it, he trades it in for whatever value it's now worth, he told me about $7,000.00 less usually. So he's spending about $200.00 a month on the car (financial loss), plus paying for gas, insurance, new tires, deductables, etc.

Isn't there a cheaper way to save money? He seems to be brainwashed that buying a new car every 3 years is saving him a million dollars because the new car has a warranty.

I think he's crazy and just needs to change his lifestyle. Don't you think so?

He's in Vancouver and we are car shares, bike shares, public transit and our local cities are very walkable. He could also rent a car for a day or the weekend if need be, very easily.

I think he's making a bad investment. Do you think the new car warranty is really worth a "million bucks" a lot less stress and hassle for having someone perform all the maintenance for you? (Do new cars even need maintenance? Lol)
There are times when leasing a car makes sens if you get a great deal. In the states because of their rebates people often get electric cars for free. Refer to leasehackr...

Personally I just got a 2016 Cruze Limited for around 18.03 BIWEEKLY for two years after using my gm card points to put 700$ down.
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Apr 16, 2007
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Financial District B…
scoobydoo wrote: I have a friend of mine who buys a new car every three years when the warranty runs out on it, he trades it in for whatever value it's now worth, he told me about $7,000.00 less usually. So he's spending about $200.00 a month on the car (financial loss), plus paying for gas, insurance, new tires, deductables, etc.

Isn't there a cheaper way to save money? He seems to be brainwashed that buying a new car every 3 years is saving him a million dollars because the new car has a warranty.

I think he's crazy and just needs to change his lifestyle. Don't you think so?

He's in Vancouver and we are car shares, bike shares, public transit and our local cities are very walkable. He could also rent a car for a day or the weekend if need be, very easily.

I think he's making a bad investment.
Do you think the new car warranty is really worth a "million bucks" a lot less stress and hassle for having someone perform all the maintenance for you? (Do new cars even need maintenance? Lol)
There's where your mindset fails. A car is nothing more than an appliance and should never be thought of as an investment.

I also lease a new car every 3 years. Why? cause I have the financial means and capacity to do so.
Just because you think transportation-sharing suits you does not and should not be assumed that it's right for everyone else.

So as long as it's not a financial burden your friend should be able to do what he wants, Stop being jealous
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Aug 7, 2011
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I've been thinking about this lately.

My dealer does no cost trade in for me after three years. Basically give them my car, they pay it out and I get into something new with nothing carrying over from the previous car.

Only problem is that always keeps me paying monthly.
Deal Addict
Feb 4, 2008
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scoobydoo wrote: I have a friend of mine who buys a new car every three years when the warranty runs out on it, he trades it in for whatever value it's now worth, he told me about $7,000.00 less usually. So he's spending about $200.00 a month on the car (financial loss), plus paying for gas, insurance, new tires, deductables, etc.

Isn't there a cheaper way to save money? He seems to be brainwashed that buying a new car every 3 years is saving him a million dollars because the new car has a warranty.

I think he's crazy and just needs to change his lifestyle. Don't you think so?

He's in Vancouver and we are car shares, bike shares, public transit and our local cities are very walkable. He could also rent a car for a day or the weekend if need be, very easily.

I think he's making a bad investment. Do you think the new car warranty is really worth a "million bucks" a lot less stress and hassle for having someone perform all the maintenance for you? (Do new cars even need maintenance? Lol)
Sign me up for that. Seems reasonable to always be in a new, reliable vehicle.
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Do your mortgage math correctly!
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Aug 31, 2014
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in Vancouver?

could be cultural - I have some Asian friends who do the same thing because they must 'project' success in their culture groups and networks etc

IMO it's a colossal waste of money.......
Deal Addict
Jul 15, 2009
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scoobydoo wrote: I have a friend of mine who buys a new car every three years when the warranty runs out on it, he trades it in for whatever value it's now worth, he told me about $7,000.00 less usually. So he's spending about $200.00 a month on the car (financial loss), plus paying for gas, insurance, new tires, deductables, etc.
What kind of car depreciates only $7k in the first three years?
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Nov 26, 2015
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If it is $200/month on a car it may even be a better deal than leasing.
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Jan 19, 2007
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Makes only sense if is is tax-deductible expense (registered to legal entity) or reimbursable expense from employer (so you are left with some ops costs)
IMO buying a new car overall is big hit on wealth and leasing is even bigger waste - almost every new car I know loses 50% of it value in the first 3 years on average.

Here's a summary picture
Image

Observe that between 3 to 8 year the fall in depreciation...
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Feb 19, 2010
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bubak wrote: What kind of car depreciates only $7k in the first three years?
That's what I was thinking. A new car is worth 25 or 30% less the second you drive it off the lot. No way that the cost works out to $200/month (I notice that most of the replies have been about leases when the question was about purchasing). Somebody's numbers are wrong.
[OP]
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May 24, 2008
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604nation wrote: in Vancouver?

could be cultural - I have some Asian friends who do the same thing because they must 'project' success in their culture groups and networks etc

IMO it's a colossal waste of money.......
You're right, I think it's a waste of money too, why not just get a used car with a reliable brand and model? My parents have had used cars their whole lives and have never had any major problems, other than the life of the vehicle dying after like 15-20 years.

You're right, this fellow is Asian and he works for a big corporation.
[OP]
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May 24, 2008
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bubak wrote: What kind of car depreciates only $7k in the first three years?
I don't know, that's the estimate he told me. Maybe he gets some kind of right off from his work? He's an "lower level" accountant with a large corporation.
[OP]
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May 24, 2008
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ryan10075 wrote: If it is $200/month on a car it may even be a better deal than leasing.
That's my approximation. I could very well be wrong. He told me after about three years, he's spent about $7,000.00. That may have just been on his last vehicle. I don't know...
[OP]
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May 24, 2008
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Vancouver
ohnabatko wrote: Makes only sense if is is tax-deductible expense (registered to legal entity) or reimbursable expense from employer (so you are left with some ops costs)
IMO buying a new car overall is big hit on wealth and leasing is even bigger waste - almost every new car I know loses 50% of it value in the first 3 years on average.

Here's a summary picture
Image

Observe that between 3 to 8 year the fall in depreciation...
He must be getting reimbursed from his employer somehow... I should ask him. It seems like whatever he's doing, sounds like a good idea to the RFD'ers here. The guy just rents a place and doesn't own yet, but said he will in a few years.
[OP]
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May 24, 2008
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Conquistador wrote: That's what I was thinking. A new car is worth 25 or 30% less the second you drive it off the lot. No way that the cost works out to $200/month (I notice that most of the replies have been about leases when the question was about purchasing). Somebody's numbers are wrong.
Maybe his. Lol. I think he's just trying to show success in his Asian culture and probably isn't giving me the right numbers.
Deal Expert
Mar 25, 2005
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Even a $30k car over 10 years is $250/mo, ex repairs and maintenance. $7k depreciation in 3 years, at roughly 35% means the car is $20k at most. Unless we are talking about a Versa, I have no idea how you only show $200/mo.
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Aug 8, 2012
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Kasakato wrote: Even a $30k car over 10 years is $250/mo, ex repairs and maintenance. $7k depreciation in 3 years, at roughly 35% means the car is $20k at most. Unless we are talking about a Versa, I have no idea how you only show $200/mo.
If you buy a car for $20k cash, and trade it in 3 years later for $13k cash, you could say it "cost you" roughly $200/mo.

$7000 / 36 = $194.44/mo

If it's a more expensive car than that I can't see it dropping only $7k in 3 years. Maybe if it is only driven 1000km/yr :)
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ace604 wrote: If you buy a car for $20k cash, and trade it in 3 years later for $13k cash, you could say it "cost you" roughly $200/mo.

$7000 / 36 = $194.44/mo

If it's a more expensive car than that I can't see it dropping only $7k in 3 years. Maybe if it is only driven 1000km/yr :)
Further to above example, if you constantly do this, you are paying $200/mo forever.

If you just paid $200/mo towards a $20k car you'd be paid off in 100 months or 8yrs 4 months.

Today's cars can last a lot longer than 8 years. If you go just for 10yrs, you are saving 1yr 8months of payments = 20 mo x $200 = $4000.

Now you might have some more maintenance over 10 years on 1 car than you would on 3.3 new cars in the same time period ... but probably not $4k.

You can also stretch that car out to 12 years or more and you are saving $2400/yr for every year you keep it ... even if maintenance cost is $1k/yr (pretty high) you are still saving money.

Saving "millions" on maintenance is a gross exaggeration... and he's wasting "millions" on payments after the time period when his car would be paid off.

If he's using "savings" as an actual justification for what he's doing he sounds misinformed.

If he just wants to spend his money on a new car every 3 years because he likes it, that's a different story and his personal decision. Nobody can tell him he's wrong if that's what he wants to do.

but you CAN tell him he's wrong about saving money, because he's not :)
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ace604 wrote: If you buy a car for $20k cash, and trade it in 3 years later for $13k cash, you could say it "cost you" roughly $200/mo.

$7000 / 36 = $194.44/mo

If it's a more expensive car than that I can't see it dropping only $7k in 3 years. Maybe if it is only driven 1000km/yr :)
That's the math I used and looking at kijiji it appears to be possible.

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