Trade in or sell my 00 sL1 ?

[747ken]

I'm thinking of buying a 2001 LW200. With the 0% financing, this might be the time to buy. I may trade in my 00 SL1 (it's already paid off), but I 'm afraid I'll take a beating on its value, as it has 58k on it.
Does anyone know where I can find the dealership trade-in and "street" value of my SL1? Would I be better off selling it myself?
Thanks, Ken.

[Three Rings]

www.nadaguides.com and www.kelleybluebook.com are where you can find the value info for your car. Kelley also shows the amount deducted for your mileage.

[spencerb]

I find Kelly's to be a little high on the retail price. Also check www.carprices.com and www.edmunds.com

You WILL take a beating. It is not wise to trade a one or two year old car.

I wouldn't get a 2001 L series. The 2002s offer many new features and improvements. The 2003s will have an exterior redesign. Wait for 2003.

As for the low rates, I have a suggestion: Don't buy something just because it's on sale. Yes, you will SAVE lots of money, but you will SPEND thousands to make the upgrade.

[GoKyu L300]

Spencerb: Ok, since you brought it up, I have to ask....I'm planning to trade in (or more likely sell privately, cos I can get more for it) my 2001 L300...I know that as of right now, it still isn't even a year old yet (anniversary date is October 3rd), but....

You said that it's not smart to trade in a 1 or 2 year old car. But if I were to keep it longer, it just depreciates even *more*...The sooner you sell it, the more money you can get for it. I mean, that sounds obvious to *me*...

If I kept it for say 3-4 years, I'd be lucky to get $16,000 retail for it. I can sell it now for at least that much to the dealer (actually a little more...I think KBB was like $16,500'ish), and the original retail price was $21,014 before taxes. I think my case is not very common - wanting to trade so soon cos I'm interested in getting a 5 speed, *not* because I'm tired of the car.

So I just have to wonder why it's a bad idea to trade/sell so soon...you'll certainly get the most possible money for it.

-Bryan

[spencerb]

You have to factor in time.

A car depreciates, but you don't realize the depreciation until you sell the car (the same with any possession, stocks, houses, etc.). If you sell it today for $16,000, you will have a realized depreciation of $5,000 for your car. Assume your car is one year old, and that means you spent $5,000/yr to own that car. That's about $416 a month in depreciation.

Say you keep your car for ten years. In ten years, your car will be worth about $3,000. That means your depreciation on your L300 would be about $1,800/yr, or $150/month.

If your car is worth $16,000 now, then next year it may be worth $14,000. Keeping it an extra year only cost you $2,000 more in depreciation.

My last car, an Accord, lost about $5,000 in value over five and a half years. The car was six years old when we got it.

Depreciation is not a linear function; it is close to exponential. That means that a car depreciates heavily at first, and then it levels off.

If you trade your car every year for a new one, in ten years, you will lose $50,000 in depreciation! If you only buy two cars over that same time period, you will lose only about $22,000.

To try and simply answer your question, think of this. Your current car is used, and it will depreciate slower than the new car you could buy today. As your used car is further in the depreciation curve, it will lose less value over the next few years than a new car.

This all assumes that you are buying $21,000 cars.

Buying a new car is RARELY a wise financial decision. New cars lose a lot of value, and used cars offer similiar advantages at a much lower cost. Think about the guy who saves $5,000 on a dark blue 2001 L300.

[747ken]

Spencerb, wait for 2003? Hey, I want a LW now! Anyway, my SL1 is just too darn small to carry around anything. From reading this message board, seems like the LW's are a great car.

[Harry]

Size is why I got the LW200. It is surprisingly roomy, especially for back seat passengers. Don't know what kind of cargo you carry but if it's baby stuff, the large wagon does the job taking a couple of carriages/strollers, high chair, play pen, bags of clothes etc., toys with room to spare. On another occasion I had 3 full-sized coolers and at least 15 folding and stacking lawn chairs in there, a yard party on wheels

I got a 2001 and think it is great! I'm not that big on ABS/TC and side curtain bags so I was glad to be able to save the money on those features. I got a 2001 auto for the price of a 2002 manual. The automatic is great, it stops really well, rear drums or not, and Michelin tires give me excellent traction in torrential downpours without a computer deciding what I want to do when starting and stopping.

[spencerb]

Originally posted by 747ken
Spencerb, wait for 2003? Hey, I want a LW now!

But isn't that what America is about: Get what we want when we want it!

My advise still stands. The 2003s are supposed to be out early (March-April). Seven-Eight months is a short time to wait for a vehicle that you'll drive for many years. Personally, I would be bothered if I had the old body style. Missing the new one by just a few months would be harsh to me. However, you are certainly entitled to you opinions on styling issues. This is just MY opinion. I am partially swayed by the fact that I don't like the current L styling.

You may want to wait until pictures of the 2003 models surface. I would expect a spy photo to show up online any day now. I know of Saturn employees at the retailer level who have seen photos of the 2003 L.

I wonder if any 2001 Camry buyers are kicking themselves for not waiting on the 2002 Camry. However unappealing it may be now, it will become the styling baseline soon.

[BobL]

The incentive financing will be a 2 edged sword for you. On the good side, it will make your new purchase easier. On the bad side, why would anyone in their right mind buy a 2 year car with 8% financing when they can get a new one at close to 0%?

Only way would be if the 2 year old car were priced extremely low. Thus, trades should be low too in line with this.

Perhaps you can find a private party willing to pay top dollar for the 00, but I'd not hold my breath on it.

Bad, bad time to trade relatively new cars IMHO.

[747ken]

Well, you folks have given me something to think about. Perhaps I will wait for 2003 photos since, to tell you the truth, I'm not that crazy about the 2001 LW styling either. My favorite wagon styles are the SW2's. But their cargo capacity isn't much more than a sedan. At the time, I didn't think it was worth the extra $2k+.
Speaking of Camrys, a guy at work just bought one yesterday.
As much as I tried, I never could get him interested in a LS.
He wouldn't even go to a dealership to check one out.
Sad to say, but I have a tough time getting anyone interested
in Saturn.

[spencerb]

Originally posted by BobL
The incentive financing will be a 2 edged sword for you. On the good side, it will make your new purchase easier. On the bad side, why would anyone in their right mind buy a 2 year car with 8% financing when they can get a new one at close to 0%?

Only way would be if the 2 year old car were priced extremely low. Thus, trades should be low too in line with this.

A rule of thumb is that after three years, a car loses 40% of its value; after six years, 60%. I did a little interpolation, and estimated that a two years old car loses 30% of its value.

A $20,000 car, then, would be worth $14,000 after two years. For 48 months, payments are $341.78/month at 8%, for a total of $16,405. Assuming no trade-in.

A new $20,000 car at 0% is obviously a total of $20,000 paid after four years.

At the end of four years, your used car purchase is now six years old and worth $8,000. Total spent ($16,405) minus that equity equals $8,405 spent on interest and depreciation.

You new car is worth about $11,000 at the end of four years (assume 55% depreciation). That equals $9,000 spent on interest ($0) and depreciation.

In this example, only $595 was saved by buying the two-year old car. This example assumes you sell your car purchase at the end of four years. Additional years kept will yield additional savings for buying the two-year old car (the new car still has a chunk of depreciation left, whereas the used one doesn't have too far to go). Numbers assumed are conservative; actual real-world scenarios could sway the advantage or disadvantage several thousand dollars.

To answer your original question, many people in their right minds would buy a two-year old car. Not everyone finances. Taxes are cheaper on the cheaper used car. People may not qualify for the 0% financing. Some do not have the money to spend on a new car.

This example makes many, many assumptions. No repairs, accidents, and perfect market conditions. The numbers are conservative, as I stated.

[BobL]

Of course, as you said, it depends on the credit score of the buyer and the fact that the 2 year old car will be out of warranty quicker. In fact, unless the car discussed here had extended beyond 50K, it's out of warranty right now.

Repairs, in that case, are an unknown.

True, generalities don't fit all folks. Thanks for the thoughtful analysis.

Bob