car buying practices (what's your take?)

**slyfox** · September 22nd, 2008 11:55 PM

i'm about to complete payment for my car loan at the end of this year. it's been 3 years and i was amazed at how fast time flies. seems like it was just yesterday when i applied for that loan.

anyway here's my question. when i finish paying for the car, is it a good idea to immediately sell it and buy a new one? luckily kasi mababa mag-depreciate ang nabili kong kotse and that means i'll just have to add a few more to be able to buy a brand new one. and since mejo maluwag naman ngayon i was thinking of investing in one na nga kaagad. is this a good idea?

and let's say after one year nagsawa na ako sa car...since i bought it cash i can easily sell it agad right then buy another one? that way di pa masyadong nag-depreciate yung value. if meron namang sufficient funds (di yung sobra-sobra ha) is this a good idea nga?

hoping for your comments. thanks!

**Gen. Miting** · September 23rd, 2008 03:47 AM

if you have sufficient funds, why not?

**Gerbo** · September 23rd, 2008 08:04 AM

Some points:

1. Financing entails more cost because you additionally pay for the interest which is usually substantial.

2. Depreciation of the car is greatest during the first 3 years.

3. Resale value is usually perceptive in character (esp. brand and model-dependent) and takes a hint on the demand for such vehicle.

Investment-wise, cars generally do not bring in good value.

So, IMO, if you just finish paying the amortization, you like the performance of the car and it is not giving you problems....used it for about 5 years. By then, you will know the actual worth of the car.

Buying a new car also substantially increases cost--mataas ang insurance, LTO registration, CASA-maintainance kasi under warranty---plus another interest rate kon financing route na naman.

Pakinabangan mo muna.

If cash naman, puede agad ibenta kaso meron pa rin depreciation. The moment your car leave the dealership pumatak na depreciation. Instantly 100,000 thousand na rin yan for the first year. So, palugi talaga.

That is why maxim ng car buying: Buy one that you really love. Its the only way you can accept the car's imperfections.

But if money is not a problem, why not? You can basically do what you want.

**shadow** · September 23rd, 2008 08:32 AM

if you have the means, then do whatever will make you happy.

**1D4LV** · September 23rd, 2008 09:18 AM

imho, keep the car first until it reaches its 5th or 6th year. by the time, di ka na lugi dahil mas mataas ang resale value nung oto mo.

tama si Gerbo, financing entails expenses dahil you pay for the interest and the first three years of the car is where depreciation really strikes. pagdating nyan ng 5th year,mabagal na depreciation nya.

**empy** · September 23rd, 2008 09:24 AM

that is a terrible idea. car ownership is very expensive because of the depreciation and the cost of financing. so why would you wait until depreciation finally slows down, and you no longer have to pay interest expense, to sell the car and start the cycle of financing and depreciation all over again?

better to keep the car, enjoy the fact that you still have fairly new transportation without any payments, and try to recoup some of the financial damage from the depreciation.

i once worked out how much my current car has cost me over the life of my car loan, and it was going to take me something like 10 years to break even on the cost of the car, the expense, and the depreciation.

**empy** · September 23rd, 2008 09:24 AM

ampepe double post na naman

**coiter** · September 23rd, 2008 09:41 AM

kung kaya ko magpalit ng car every 3 years, i would. but not thru financing. pero hindi. kaya ang paniwala ko e sagad sa gamit hanggang kaya. then benta for whatever residual value without expecting any 'gain'. tapos bili uli ng 2nd hand hehehe

**slyfox** · September 23rd, 2008 12:42 PM

thanks for your replies. of course funding is still a concern and believe me i'm not one of those with a bottomless bank account. i'm just trying to find the "ideal" turn around for car purchases. i have heard many times before that it's best to sell the car after 3 years of use. i always thought this was the ideal length of ownership for a car. i guess this is primarily because of maintenance reasons. the warranty expires after 3 years plus in my experience may lumalabas na rin na mga sakit kahit pakonti-konti after 3 years. but then again there's that whole depreciation thing. so ano ba talaga ideal? 3 years? 5 years?