Riding the Depreciation Wave

There are two points in a car’s depreciation cycle that when timed right can give you a ride with very cheap, if not zero, car payments. The first is buying a car that is one to three-ish years old. We all know the adage, drive a car off the lot and five thousand duckets just went out the tail pipe, probably more. So unless you have to be that guy, let your pants ride a little lower and have someone else take the depreciation hit.

The next step is to time the product cycle. Most cycles are somewhere around three to eight years. Honda is pretty set at rolling out redesigned models every five. Mercedes-Benz brags about taking seven to complete the new C-Class. Two of that was used testing the door hinges. Apparently, they started with four fat guys weighing 350 each before finally whittling it down to a product endorsement that serves absolutely no purpose.

Anyway, buy a car with relatively low miles in the middle of the product cycle and you can drive the car for another year or two and see very little depreciation. I’ve even met a women that claimed she made money on no less than four cars using this same method. Other advantages are cars of this age usually run maintenance free, expect for wear items, and many times are still covered under warranty.

The second point in the depreciation cycle is when a used car price bottoms out and the market price holds steady. This usually happens around 10 to 15 years after launch. Check the want ads, that’s code for ebay, and talk to your local car club to find the price point bottom. If you’re like me and always on the hunt, you could probably line up several cars that are holding price steady.

I rode the second wave with my ’93 Miata LE. Mind you this is after wiping out on many waves before. I bought the LE, which was 1 of 1500, black with red leather, for $5,500 from the original owner including the hard top. I sold it 26,000 miles later for $5,250 and still have the $1,000 hard top. Pats on the back all around. What’s that? What did I pay to maintain it? Crafty are you with your questions.

1993 Mazda Miata LE. One of 1500 made, this limited edition came with red leather, premium stereo with speakers in the seats, ABS, BBS wheels, Bilstein shocks, power window & mirrors and other cosmetic touches.

Well, I took the hit in some uncommon areas for such a reliable car. $700 to diagnose and repair a heater core leak that shorted out the ECU. And another $700 for a clutch that broke when a piece lodged inbetween the pressure plate and the disc. But if I sell the hard top and do the math against the miles, I come out pretty even Steven. Time to throw a twenty out the window.