[vaksel]

with cars you can just buy them used and sell them before they depreciate too much. Buy a 3 year old car, keep it for 1-2 years, then sell it. (if that's still too rich for your blood...get a 5 year old car and keep that for 2 years)

Just look at the cars as the cost to own...not actual price you pay.

So even if a car depreciates 20% in that time period, you can still drive something decent.

A $10,000 used car...will depreciate $2,000 or $1,000/yr or $83/mo

$83/mo is a small price to pay to have a reliable car that's just 3 years old.

And if you want something better...

A $40,000 used car...will depreciate $8,000 or $4,000/yr or $333/mo.

$333/mo is nothing, and a $40,000 car started off its life as an $80,000 one.

And that's if you hold the cars for 2 years....if you sell them within the year...you can sell it for the same price you paid for it.

[run4yourlives]

Wouldn't it be easier just to lease?

The big thing your entire calculation leaves out is the time it takes to do this transaction every couple of years, because there is no way a dealership is going to give you the money you are looking for...

I'd rather do something else with my time to be honest.

[vaksel]

leasing costs way more.

cars lose the most value in the first 3 years. So in those 3 years, you'll lose 50% of the car's value. Since leasing is basically just covering the cost of depreciation...you end up on the hook for the biggest loss in the car's life.

when you buy used and sell in the next 2 years, you only lose ~20%.

+ with leasing you are limited to 10-12K miles per year.

remember, for this thing we are talking about getting the best bang for your buck, while still getting something decent.

i.e. I'm leasing a CRV for my mom(don't want her to deal with repairs etc). It costs me $262/mo...so over 3 years it will cost me $9,432.

At a 20% loss...that same $9,432 loss...would have been the same as if I've gotten a used $47,160 3 year old car, then sold it 2 years later at a 20% loss.

A $47,160 3 year old used car would have been a $70-90K new car.

Some alternatives(used eBay with the buy it now and low miles):

Original MSRP is inside the ()...but with most of these cars you can add another 10-20% for options.

  2009 BMW M5($83,000)
  2009 Audi S5($60,000)
  2009 MB CLS550($71,000)
  2008 MB SL550($105,000)
  2008 MB CLS65 AMG($94,900)
  2008 Audi RS4($70,000)
  2008 Porsche 911($82,000)

Now which would you rather drive...a CRV...or any of those.

Yes your time is important, and you have to add that into the calculation.

[carguy1983]

If you own a business the lease is tax deductible, which knocks about 33% of the cost out of the picture.

[vaksel]

only if you use the car exclusively for the business, and have a separate car that you use for your personal stuff.

+ I heard that deducting car leases is a huge red flag for the IRS.

[replax]

While your calculation is correct, you do not include a rather important fact. Owning a car which you intend to sell in a couple years is a risk. Even though the cost of ownership of a $100k car and $40k car might not be much, it will turn out to be significant at the moment you crash it.

Which will then inevitably lose you the full value.

[fr0sty]

"Which will then inevitably lose you the full value."

Not even close. Insurance will reimburse you for the loss (minus a deductable).

[replax]

I have to admit that I don't know about the situation in the US, but in Europe you generally will not get your full car reimbursed if you drive it against a wall. Unless you have some disgustingly expensive car insurance of course...

[vaksel]

it takes a while for carfax to receive info...so you flip it the moment you get it out of the body shop, you shouldn't be affected by it

but a lot of times the crashes don't affect the value that much...not many people actually use carfax.