Between 3 years and warranty expiration...

[Bruce Nunnally]

Nothing new here, but after looking at more numbers, it appears to me that between 3 and 4 years is a reasonable cost point to sell a Cadillac and get a new one.

A new $31K CTS (low optioned - you can spend up to around $45K on a CTS if you try much) so far has the following likely "trade-in" value pattern:

12 months: 22-23K; 24 mo old: 18-19K; 36 mo old: 15-16K; 48 mo old: 12-13K. Obviously, private sell will be higher, dealer will offer lower, etc etc but these appear to be representative.

Now, selling at 12 mo (1 year old), the car cost, regardless of downpayment/payments/etc was the money you started with minus the money you ended up with divided by the 12 months. So,

at 12 months around (31k-23k)/12=$650/mo.

at 24 months around (31k-18k)/24=$541/mo.

at 36 months around (31k-15k)/36=$444/mo.

at 48 months around (31k-12k)/48=$395/mo.

at that point the Cadillac would be out of the bumper to bumper warranty, and you have to consider additional cost from repairs, so it gets highly variable. With the 2007+ 100K mile powertrain warranty that might be a reasonable risk anyway til the 5 year point.

So, if you want to drive a new car it appears there is kind of a sweet spot at keeping it 3-4 years, although the longer you keep/drive the car the lower the cost generally will be, unless you have very high repair cost after the warranty expires.

Also obvious to validate that if you BUY the Cadillac at 12 months, or at 24 months and let someone else eat the first years of high depreciation then your cost per month plummets. Combine that with the 6y/100k certified warranty and you get the same 4-5 year life under warranty without the new Cadillac depreciation. Of course you have to find the right Cadillac, it can't be just out, and you have to risk the maintenance/wear of the previous owner, but careful shopping and inspection can reduce the risk there.

I know, some will argue that if you only plan to keep the car for 3-4 years why not lease? But, buying the Cadillac gives an easy option to simply keep the car and keep driving it if you have economic need or just still enjoy that model Cadillac.

[Bill K]

Ya, you gotta pay $ to stay in the new car fast lane.

A twe to three yr. old car is going to cost you appx. half the cost of new. Even if you dont get a warentee you still have a lot of $ that wasnt spent to pay for repairs.

Used lux. cars are usually a good bet comapred to econocars because people usually protect a major investment. For a while, anyways.

I have looked at leasing a number of times and it costs so much more than a used car that I just cant(too cheap) do it. Although it would get a person into a NEW CAR without much $ down. Reminds me of the "rent to own" stores.

[Astrak]

I hate to say it but that is why I buy used, now I couldn't afford a brand new Cadillac, I have around a 15 to 20 thousand spending limit without a loan(I don't like loans) anyways I purchased my current vehicle my 92 Eldorado and it is in perfect condition I maybe spent 3 grand getting it that way after the 2 grand I payed for it but the car looks like new and drives perfect I just can't justify pay ing 60 grand for a car that I can get for 5 thousand I love it.

[WarrenJ]

I'm afraid you'll have to count me among those who will not, or cannot, live in that fast lane of new car ownership.

I love my heated seats during the winter months and in the summer I envy those with the cooled seats I don't have, but I can wait for that in the next purchase. I can say the same thing about a heated steering wheel, but once again, I can bide my time. And the warm-up time keeps me grounded.

Now I've never suffered the calamity of having purchased a "lemon," but maybe I'm just lucky. Buying a luxoboat in good shape and judiciously maintaining it has rewarded me well over the years. I bought my '95 Eldorado for $7,000 and expected to sell it last fall, three years later, for something in the $4,500-$5,000 area. Not too bad a deal if you're willing to overlook the occurrence of Baby's Viking Funeral (okay, ya got me on that one!). Keep in mind, maintenance wasn't a killer.

My siblings drive new econoboxes into the ground every three years and have far less to show for their automotive expenses than do I. And in the mean time, to put it gently, they drove econoboxes.

I view car leasing on about a par with interest-only and A.R.M mortgages: like the lottery, it's a tax on the poor and ignorant. Or soon to be poor (interest-only A.R.M. mortgages should be illegal).

Regards,

Warren

[Texas Jim]

I agree mostly with buying slightly used. Let someone else eat the first year depreciation.

Most of the cars I have bought in the last 20 years have been slightly used. As some of the others mentioned, I also don't like loans or at least not very big ones. Only financed 12 grand on this new one. Plan on having that paid off with in a year. I don't like payments of ANY KIND.

I wanted the '06 because of the pretty extensive updates to it vs the '05. Also for the new body style. The first '06 DTS I bought, was about 5 months old. It had a sticker of almost 60 grand. I bought it for 38,500. Not too bad of a deal. Only had 10,000 miles on it.

When I needed to buy the one I have now .... I could not find a used one like I wanted and believe me I LOOKED, long and hard.

Bought this one new from a Cadillac dealer. The only one in the whole Dallas Ft. Worth area like I wanted. It also has a 60 grand sticker. The '07's were already out, so after some haggling, bought it outright, no trade, for 42 not 60. Maybe not the greatest deal in the world, but not too bad.

Before the warranty runs out on this one, I will go back to the dealer and buy the Cadillac Extended Waranty. The next one .... if there is one, <after all, I am getting on up there in years,> ... will most likely also be used. It will also most likely be from a dealer with the certified 100,000 mile warranty.

[JasonA]

If you're going to BUY new every 3-4 years, why not just lease? One of the main reasons I OWN vehicles, besides buying them used, is because I like to keep them for 10 years or at least 100,000 miles. I'll never put on enough miles to break a lease agreement, but a lease won't let me own one for 5 years. So if you're going to BUY and SELL every 3 years anyway, just lease.

[OynxSTS]

Count me in with the majority here too...

As I've posted before I've bought new and I've bought used...

Nothing bets the feeling of a new car. But buying one makes little financial sense... Your depreciation schedule looks pretty accurate, a new car will loose about 1/2 of its value in the first 2 years. For me that is the sweet spot.

If you crunch the numbers you will find that the only way a new car financially works out better then a used on is if you keep it something like 10 years... This is based on long term maintenance which should be lower on a car that you know has been maintained properly over its life... With a used car this is always the unknown variable.

If you have to have a new car... do it for love... not for money!

BTW for most people Leasing rarely makes financial sense. Leasing only comes out positive if you are using the car mostly for work and you can write-off the interest and deprecation. If you are driving a lease car for personal use, this is a very pricey way to do things.

[Caddynut]

I bought one new car in my life and it will be the last. I purchased my Honda and paid 23,500 for it. Finally after 5 years, got it paid off and did have some problems along the way and just traded it in and got $5,000 out of it and the car was in beautiful shape, just some miles on it. WHAT A DEPRECIATION !! On the other hand, I bought my 92 Seville 5 years ago for $1,950 and have put around 35,000 miles on it and approx. $1,000 in repairs...still have it and it is pretty much still worth what I paid. I have to lean towards slightly used cars.

[JasonA]

BTW for most people Leasing rarely makes financial sense. Leasing only comes out positive if you are using the car mostly for work and you can write-off the interest and deprecation. If you are driving a lease car for personal use, this is a very pricey way to do things.

But if you're going to buy new every 3 years anyway...doesn't it make more sense to lease? I agree -- financially, it doesn't make sense EITHER way, but if you just have to have a new car every 3 years, I see little value in BUYING them.

My parents always bought new cars. They kept them a while, but they always bought them new. They told me that if I took any financial lessons from them, it was to recognize how much money they wasted over their lives buying new cars. I've never bought one new. Probably never will. Our Grand Caravan was the newest car we bought. It was 14 months old, and we bought it for about 55% of the MSRP, or probably about 65% of the actual selling price new.

[Bruce Nunnally]

The lease companies make money by leasing right? So if you buy and keep the car for a similar period and are able to sell for a price similar to the residual value of a lease don't you have to come out ahead?

[JasonA]

Perhaps. I'll admit that I've never even LOOKED at a lease contract...simply because I never go that avenue.