Thursday, May 18, 2006

Off topic - Used cars


I'm 37 years old. When I was growing up in the midwest a car would typically be rusted after 5 years and rarely make it to 100,000 miles. My dad always believed it was best to buy a new car so that you wouldn't have to worry about reliability. It was a valid philosohy. We've come a long way. Yes, a car may cost more in inflation adjusted dollars, but think of how are expectations have increased and how much better cars are today.

I bought a 5 year old BMW 328i 5 years ago. It's now 10 years old and has over 130,000 miles. It's still a solid vehicle with a strong engine. No rattles, no rust. Even oil has gotten better. You'll never appreciate just how slippery synthetic oil is until you run over a bottle in you driveway. It's like an asphalt ice rink in the summer.

So I just bought another used car. The amount of quality used vehicles seems to be quite high. In fact, you might argue that the market is flooded with them. I bought a 2002 BMW X5 3.0 loaded with 34K miles. 8K mi/yr. ... that's nothing! It was $50-55k new and the equivalent today is $60k. I paid $25.5k so do the math. A 4 yr old vehicle (w/ less than 3 yrs worth of miles) for less than 50% of the original cost. What a great way to save $35K and get a very desirable ride!

It really seems that your used car dollars are going a lot farther than they used to 10 and even 5 years ago. Yeah, I'm a value shopper (hey, I'm saving for the house fund!) but I won't sacrifice quality.

--- added 5/22
There have always been a lot of nice cars here in CA. But the last year or two in particular it seems that there are soooo many expensive new cars. Do you think it has anything to do with "paper gains" and HELOC's? The owner of Bimmer Clinic told me the used market was flooded right now. I guess that makes sense. People trading in their x-pensive lease cars for the new hotness would create a large pool of very nice low mileage vehicles. God Bless them.

5 Comments:

At 7:49 AM, Blogger John Doe said...

Did you buy it from someone in the credit industry? We have a ton of those here in OC that are for sale. The subprim market has all but dried up ala Ameriquest.

 
At 2:12 PM, Blogger InfidelSix said...

Ha! Actually bought from a part-time Realtor! About 3K under blue book trade-in.

 
At 12:07 AM, Blogger BitterRenter said...

About 3k OVER low book trade-in (22k), which is what dealers pay - a decent deal, but not a smoking deal.

http://www.kbb.com/kb/ki.dll/kw.kc.ucp?kbb.CA;;CA079;&93449&;445883&;;uct;&5;BT;X2

With the used car values available in LA, it AMAZES me anyone would pay for new. Rule of thunb: 2 to 4 y.o. old high-end autos, less than 50k miles, priced at 40% of new. Buy new? WHY?

 
At 11:16 AM, Blogger InfidelSix said...

Bitter,
Thanks for the comments. Are you a dealer? Here are (the trade-in) values I get when including the options for my zip code (91208):

Excellent
$28,425

Good
$26,935

Fair
$24,370

This vehicle is a hair below flawless. I'd rate it as excellent. But even if it was only "good", I'm still happy. I try to shoot for the trade-in value. I totally agree with you though that it makes very little sense to buy new.

 
At 1:48 PM, Blogger BitterRenter said...

Bravo to you then!

That was a sweet deal when all the options are accounted for. No dealer here, just a Dad with 3 teenagers, two of whom turned 16 in the last 18 months with the third turning in less than a year. Tends to focus one's mind on how to get the best value!

Cheers.

 

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