A discussion that happens from time to time involves the strategic buying and selling of vehicles. That is, the idea of buying and selling a vehicle at specific instants during its useable life in order to minimize costs. This is not something that is discussed often but it is a smart idea to consider if you drive a vehicle.
There are a few costs to consider if you want to buy and sell strategically. They are purchase price, resale price, maintenance costs and warranty. The last two are easy to predict but the former two can be difficult to work with. So, let's discuss some tips.
Maintenance Costs and Warranty
The good news here is that these two costs are predictable. You know when your warranty expires and you know what kind of maintenance will be required (for tips, check here). The general idea is to sell before maintenance gets expensive and before your warranty expires. Conversely, don't pay too much for a vehicle that will soon require new suspension and fluids (maintenance) or a vehicle that has just lost its warranty.
The problem with buying a vehicle brand new is the steep depreciation it incurs during the first 2 to 4 years after purchase. Some cars hold value better than others but, generally, you can leave the new car purchases to the wealthy folks if your main goal is to keep costs down. Do some research to find out how quickly your particular model depreciates and then try to catch it just after the initial drop. If you can't find out how quickly your preferred model depreciates, just plan to purchase it after about two or three years or with about 25,000 miles on it (assuming it's a late-year model).
For bonus potential savings, you should try to look for a vehicle that was leased and is now for sale. With a little luck, you can find a leased vehicle that is around 3 years old for sale on the market. Experts like Lisa Rosenberg say these are the perfect circumstances. Don't be surprised if the vehicle is offered for 25% less than its original price.
You should try to sell the vehicle before its drive train warranty expires. Every vehicle has a different warranty, though. Some warranties are quite short, meaning there is little time between the recommended purchase time and the warranty expiration time. Keep that in mind. If you don't want to sell a vehicle every two years, for the sake of convenience, try to get a car with a better warranty or find out if an extended warranty is affordable enough.
What Does a Good Strategy Look Like?
If everybody bought and sold strategically, our advice wouldn't do you much good because the market would be so competitive. Lucky for you, car ownership is so laissez faire that you can get away with some impressive savings if you try.
There are many factors to consider, from warranty period to residual value to "cost to own." You could estimate the costs of every factor you can think of and make a decision but it might not be worth your time. The simpler strategy is to purchase at around 2 years old and then resell at 5 or 6 years old. That's the window of opportunity between initial depreciation and the secondary depreciation that occurs when the vehicle has aged a bit.
The easiest way to start your vehicle search is to check local inventory online and get free quotes.