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Originally Posted by asr245 Great thread GTO! surely makes me rethink about my plan to upgrade from my 2 yr old wagonR to the awaited GP or I20. |
Selling a two year old Wagon R? You will take a huge depreciation hit, considering that any car loses its value
fastest in the first three years. However, for hrag who has posted right after you, it probably makes sense as a diesel Indica @ 90,000 kms is on the verge of losing its reliability. Atleast most Indica's do a little after a lakh kms. At the end of the day, it is obviously dependent on the car. I don't suppose my Tata Indigo is going to give me reliable service for 2.0 lakh kms. And maybe it makes sense to upgrade for the Alto owner who suddenly see's his work taking him on the highway way too often. For safety alone, he could upgrade to an ABS / Airbag equipped hatch.
There will be exceptions to the rule. But my analysis covers 80%+ of typical circumstances.
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Originally Posted by hrag A car is not just a utility, it is a liability as well. |
Amen to that
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But then, we sometimes harbour this desire for a dream vehicle and when we think we can afford that, all these stupid numbers are discarded. |
Thats precisely why we petrolheads are such suckers! Hell, I'd rather spend money on a new set of alloy wheels rather than clothes for myself.
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Originally Posted by greenhorn Some things , you just cant put in terms of numbers..... Getting married, having kids. |
Now now, don't even get me into the calculation of costs related to upgrading a girlfriend / wife / kid every 5 years
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Originally Posted by Lalvaz Quick question though, what if someone sells his used sedan, say a Ford Icon petrol and switches to a used diesel Skoda, |
Definitely makes more sense (relatively). Say if I were to sell my 5 year old C-segmenter today for 4.5 lakhs and buy another (better) used car for 6.5 lakhs, someone else has taken the depreciation hit on my upgrade. Plus, you are switching from petrol to diesel which could offset part of the upgrade money (Note : With a Skoda? Who are we kidding!)
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Another twist, what if one uses his own funds rather than borrowed funds for the same transaction?
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There is still the opportunity cost, isn't there? The 5 lakh rupees (hypothetically) of your own funds could be invested, instead of being locked into a depreciating liability. Point is, don't upgrade for the heck of it. The modern cars of this era last far longer than the point at which most are sold. If you do upgrade, be aware of the financial implications.
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Originally Posted by vasudeva As noted, upgrade to a newer car makes no economic sense, if the car to be replaced has got only 50-60K and is in good condition. For example, for my old Corsa, loan has been repaid off, car is only 37K old, and so far is low cost maintenance. |
Classic example again! Why sell your Corsa for 20% of how much it originally cost you when she has 75% of its useable life left?
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Isn't this grossly understated for a car that is 5 years old & going on to 10 including cost of service? I'm assuming that you'd be doing a fair bit of running in the car as well?
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Not so much, Suman. I have considered most C-segment sedans before arriving at this figure. Of course, there would always be exceptions to this rule. But a typical Maruti, Honda or Hyundai won't cost you too much for than a lac in upkeep over 5 years. From the 5th year onward. If you must, throw in another 50 grand for the rough users / high-runners. You still save a substantial amount compared to an upgrade.
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That's well said GTO. Can you add another option for people who still retain the old/used car and buy an additional/new one? There are many people out there that just go and buy a new car once the EMI on the current one is over (god save us from those EMIs), while still holding on to the old one for sentimental reasons.
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Another one of my favorite topics : We actually have a
detailed article on the cost of owning a new car.