Wednesday, June 13, 2012

Piston Slap: Starting the Game All Over Again?

Dave writes:

Sajeev,
I'm a sales rep for a corporate auto supplier in the Detroit area. I currently drive a 2008 Dodge Magnum SXT that I put around 5000 kms per month and currently has 165000kms. Bought it as a lease back with 30000kms in 2009 and it's completely paid off.

My question is – Do I drive the Magnum for another year, putting the mileage up over 200000 and far reduce the residual value or do I trade it in on a low mileage Explorer, Flex, or Durango and start the process over again getting more cash value for the Mag. There's no real reason to dump the Magnum – It's in fantastic shape and aside from regular maintenance and some front end suspension work, hasn't emptied my pockets.

Just looking for another point of view and some insight into what the residual value over time and mileage looks like for the situation.

Thanks,
Dave

Sajeev answers:

When a man (or woman) loves a car, that car must be driven. Losing several hundred dollars in value is no biggie, this prolongs the need to restart that monthly payment game. Given the condition of your Magnum and the (lack of) wear associated with lots of (implied) highway commuting in your career, I suspect you have no need to get back on the Debt Train for years! Plural.  Enjoy it!

I couldn't care less about residual value. The Magnum will always have a buyer: this ride has a loyal wagon following, even if the cargo area is compromised from that roof line. More importantly, it has already passed the rough part of the depreciation curve.  If this Mopar was a late-model Audi–and you hated it–my tune changes accordingly.

Not losing hundreds in value is no reason to start the game all over again.  We need more reason than that.



from The Truth About Cars http://www.thetruthaboutcars.com




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