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Device hoarding is costing the economy. (lemmy.world)
submitted 9 months ago by [M] to c/latestagecapitalism@lemmy.world
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[–] -3 points 9 months ago (3 children)

Not doing that either, but from what I understand after two years cars get you the most bang for buck. So economically it makes most sense to trade it in after two years for a new one. But of course you'll need to keep doing so to keep that *advantage "...

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  • [–] 18 points 9 months ago (1 child)

    from what I understand after two years cars get you the most bang for buck

    If you mean buying a two year old car, maybe. If you mean buying a new car every two years as implied by the previous commenter, absolutely not. Cars lose a ton of value in the first couple years.

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  • [–] 3 points 9 months ago

    Pretty sure he means after 2 years it gets a lot harder to sell. So they're selling at the moment when they've had a "new car" longest.

    Not saying it's a good idea, just that there's a logic to it.

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  • [–] 8 points 9 months ago

    It only works if you paid for the very first new vehicle in cash. Save up for 2 years and cash out the subsequent vehicles as well. Then the numbers pencil out.

    If you to take a loan out it's fucking stupid.

    After 2 years at 10k miles per year, historically you have lost 20% or so of the value of the car. With a 5 year loan you have paid the principle down to around 63-64% of the original value.

    This means you can trade in the car for more than what you owe on the loan. The difference is a partial or total down payment on a new vehicle.

    Lenders strongly encourage this behavior. Due to the amortization schedule 2/3rds of the interest is paid during the first 2 years. So people who do this with loans are always paying the highest intereston their vehicle.

    The best thing to do finacially is to buy a car with 20-30k then run it for as long as possible. Once the cost of a common major repair is more than the value of the car, get another low mileage used one.

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