How a more expensive car can work out cheaper

Disclaimer: This thought-process is entirely based on you retaining the better / more expensive car for a longer period than a “regular” car. But if you still want to change your car every 5 years, this thread isn’t for you.

Ever wondered how & why I keep my cars for so long? It’s simple = I buy the better car, even if it’s more expensive at the start, but retain it for 9 – 10 years (it's very EASY to hold onto a top-class car for longer). Yes, this might work out costlier initially, yet it's cheaper in the longer run. Why so? Read this thread - Depreciation - The Silent Killer.

Thread summary: Buy a 'great' car and use it for 8 – 10 years instead of buying 'good' cars & replacing them every 5 years.

Point #1
Let me start the thread off with an example. Someone I know got a Swift in 2009, then bought a City in 2014 and finally a Creta in 2017 (which he drives now). That is a COLOSSAL WASTE of money in my eyes. He’s taken a massive depreciation hit each time he sold his perfectly-working 5 year old Swift & 3-year old City. Related thread = Keep, upgrade or sell your 5-year old car?. If he were to ask me for a recommendation, I’d have told him to buy a City in 2009 itself! Sure, it would have cost a lot more than the Swift, but in the long run, it would be substantially cheaper than what he did.

Point #2
I’ll give you another example. Let’s say you are planning to buy a WagonR today, and at the back of your head have already thought about a Compact SUV 4 – 5 years down the line. Well, I will tell you to get that Compact SUV instead. Wait if you have to (to accumulate more funds), but it’ll be cheaper than spending 5.5 lakhs on a WagonR today, selling it for 3.25 lakhs in 2024 and buying a 10-lakh rupee Compact SUV then. What’ll work out cheaper for you is spending 4.5 lakhs more on the Compact SUV today and holding onto it for long (I personally prefer keeping my cars for 8 – 10 years). Do the math – it’s very simple and will blow your mind. If you are considering a Maruti Dzire for 10 lakhs today and have a feeling you’ll buy a 16-lakh City after 5 years, I’m going to advise you to buy that City instead. If your financial situation is secure and you are absolutely sure of keeping the car long term, take a longer loan duration (if need be)...but whatever the case, keeping the City longer on a 6 year loan will be cheaper than replacing your Dzire after 4 - 5 years.

Point #3
Added bonus of the above = You’ll be driving a superior car for 8 – 10 years (Compact SUV instead of a WagonR, or a City instead of a Dzire). It’ll inevitably be safer, faster, of higher quality, more spacious, a better handler etc. The real question is = would you rather drive two good cars over 8 - 10 years, or one GREAT car over the same duration?

Point #4
If you buy a superior car today, I can guarantee that you'll keep it for longer. All other factors being the same, you will find it far easier to retain a superb car for 8 – 10 years (versus an ordinary / mediocre car). You know why I happily kept my Civic till she was 8 years old? Because even in 2015, that ‘07 Civic wasn’t outdated at all. In terms of space, power, quality & safety, it met the (then) current crop of cars. My 530d is 6 years old today. Guess what? She is still pretty damn competent, even by today’s standards or if you compare it to the new G30. I’m going to keep her till she is 10 years old, minimum. Take a look at the picture above = a car like the Compass 2.0 Diesel is a keeper for 10 years…the Jeep won’t feel outdated or boring even in 2029.

Point #5
For you to hold onto the car longer, it’s a MUST to buy sensibly and select the right model. Consider the Jetta = Is there any D-segment sedan even today that’s better than this VW? Not in my books. That’s probably the reason Jetta owners are happily retaining their 7 & 8 year old cars (my brother is one of them). The Creta is another example – it might be 4 years old, but it’s still competent by current standards. I don’t think any Creta owner will find his car to be outdated. Again, be sure to choose the right model that will stay relevant for a long time.

Point #6
Ask me and I’ll keep going on & on. I know many 3rd-gen City owners (including so many BHPians) who didn't feel the need to “upgrade” to the 4th-gen City which offered little more than gizmos, in the name of improvements. However, if they'd bought a Dzire then (instead of the 3rd-gen City), they'd probably want to upgrade. Guess who saved money in the long run? The one who bought a City and owned it for a long time (versus the dude who bought a Dzire, and then a 4th-gen City)?

Point #7
Know what else is cool? 7 years down the line, your car will be better maintained too. How’s that? It’s basic human nature. What do you take more care of, from your cupboard? The 600-rupee shirt or the 2,000-rupee one? Fact = the best solution to stop losing cheap 20-rupee Cello pens is to buy a 1000-rupee Cross. Not to forget, a car from a higher segment will usually be built to finer standards + with better quality parts, which means that it'll age slower & last longer. If your car ages well, you will happily retain it for more years.

Point #8
A superior car will also lead to nicer memories because it'll make every drive, outing & holiday that much more special. As BHPians, the drive is as important to us as the destination. Cars are anyway such a fantastic passion to have (unlike alcohol / smoking / gambling etc), so go out and splurge a little bit more.

Point #9
Don’t have the budget for that nicer car right now? Here’s my advice = retain your current car for longer, so your budget increases. Each additional year that you drive your current car, you are saving big bucks & increasing the available funds for your next car. Wait for 2 years or 3 if you have to, save up and increase your budget, but buy a GREAT car! Linking to this MUST-READ thread again Keep, upgrade or sell your 5-year old car?.

Point #10
You’ll also be EMI-free for a longer time. Buy a superior car today and enjoy the additional 5 years of an EMI free life (e.g. years 6 - 10 when you would have otherwise bought a new car). You’ll be out of the vicious EMI circle, considering you'd have paid off your loan in the 3 - 6 year period & are holding onto your "nicer than expected car" for longer. Compare this to upgrading cars every 3 - 5 years and continuously paying car EMIs.

Point #11
A compelling reason to buy a better car today is the changing landscape = downsized engines, shrinking variety of powerful diesels, increasing reliance on electronics, strict emission norms, electric cars etc. are coming our way! Go out and get a sexy mechanically-pure car while you still can.

Point #12
Goes without saying that if you buy a superior car, you'll get higher resale too. Of course, it certainly won’t be enough to cover the entire $$$ difference between a WagonR and that Compact SUV, but it will partially offset the premium for sure.

Point #13
Buy a nice car, keep it for 10 years and you can spend the money / EMIs saved on lifestyle enhancing stuff like doing up your house, electronics, going out more, holidays etc. (this is money you'd otherwise have spent on changing your car at the 5 year mark). My ride is now 6 years old and I intend to hold it for another 4 years, which means I have no automotive down payment or EMI to worry about.

P.S. Want to have your cake & eat it too? That is, a superior model but at the same price? Buy a sweet pre-worshipped car instead - be sure to read our lateral upgrades thread! I'm addicted to picking up 1 - 2 year old "like new" cars for 30 - 40% off their original price (examples 1 & 2).