used cars maintaining value?

[DVM gone riding]

So I just checked my car on NADA (to update my networth profile) I don't do that to often--I have had the car two years now and its retail value is STILL more than I actually paid!

For "value" purposes do you use the clean retail or the "trade in" or the "private party value"??

[ZaireinHD]

having NO idea of NADA- taking a guess!
I would use the value of what my car is in..

I'm thinking the categories you listed would mean to me:
Clean Retail - my vehicle is in mint condition, and has been very well serviced
Trade In - my vehicle has some problems, no major repairs, but could use maintenance, and still looks good
Private Party - yea vehicle needs work

[schildi]

For net worth purposes, I assume our cars are worth $0. Makes is easy, and conservative. Also, it really is in the noise. On extreme days, our portfolio / net worth swings more up / down than the combined value of our cars because of market fluctuations.

Use "trade in" if you want to include it.

[constanz22]

Jul 10, 2011 23:48:24 GMT -5 ZaireinHD said:

having NO idea of NADA- taking a guess!
I would use the value of what my car is in..

I'm thinking the categories you listed would mean to me:
Clean Retail - my vehicle is in mint condition, and has been very well serviced
Trade In - my vehicle has some problems, no major repairs, but could use maintenance, and still looks good
Private Party - yea vehicle needs work

That's not what these categories mean at all...
Clean Retail-What the car would sell for from a car dealer
Trade In-What you can expect to get when trading in you car at a dealer
Private Party- What you could expect to sell the car for to a private person, like with a sign in the window, craigslist, etc.

OP-I tend to use Private Party as the "value" of my car. But, I'm not sure there is really a right or wrong answer. I, too, bought a used car just over a year ago and it's book value is still way more than what I paid for it, even now (it's a Toyota).

[ZaireinHD]

then since the categories mean what they are Retail, Trade in, and private, then the question doesn't make since to me? Schildi is right assume worth $0

[Deleted]

I would use private party. i think it most accurately describes what the car is worth, ie. how much will someone pay you for it.


For net worth purposes, I take the cost of the car and depreciate it over a certain numbers of years, 5 or 6 and that is the value of my car. Right now I have 2 cars worth $0 for net worth, but will be buying a car sometime in the next year or so, probably.

[Gardening Grandma]

I use the "private party" figure because we don't trade our vehicles in. We sell them privately.

I use edmunds.com and kbb.com and average the results. I like to keep tabs on the value since we plan to replace the older one (a 2000 RAV4) in the next couple of years.

[midjd]

I count our cars in our NW because I'm scraping for every penny we can get

I use the low end of private party value, though. I'm reasonably sure all our vehicles would go for at least $2K apiece, so they're valued at $6K total. 2 of them book for $2500 private party and one books for $1800, so I'm probably not too far off.

[Taxman10]

I'd use privat party sale too, if you're going to include it.

[tskeeter]

I have had the car two years now and its retail value is STILL more than I actually paid!

Some interesting things have occurred in the used car field over the past few years. Cash for clunkers removed a lot of low priced used cars from the market, driving up the cost of used cars in general. The credit crunch we have experienced over the past three years has made it more difficult for people to get large loans for new cars, so they are limited to used cars. The additional demand for used cars has driven up the prices. General economic conditions have kept people out of the new car market, increasing the demand for used cars and driving up used car prices.

In addition to the factors that have increased used car demand, there are some other factors that can come into play. The current value/purchase price ratio may be dramatically affected by the make, model, and year of the vehicle. I bought a couple of Chrysler vehicles in early 2007. At that time, Chrysler was discounting prices quite significantly to boost their sales and production volume. This means that the vehicle I bought for $21K in 2007 would cost about $28K - $30K today. A number of car manufacturers offered deep discounts at some point over the past several years, for a variety of different reasons. The other factor is the type of vehicle you are talking about. SUV's and fuel efficient sedans tend to hold their value quite well. For example, one of the vehicles I bought in 2007 was a minivan. Today, it is worth about 41% of what I paid for it, even after the sizable discount. The other vehicle is a Jeep Wrangler. As a small 4X4 SUV, the Jeep is still worth about 86% of the original purchase price.

Combine the effects of your outstanding negotiating skills, deep discounts, type of vehicle, and increase in demand for used vehicles, and you find yourself in an unusual, and enviable, situation.

[Deleted]

For calculating net worth, I never count vehicles. That's just money down the drain as far as I'm concerned as we normally drive until they're dead.

[Gardening Grandma]

After reading this thread, just for fun, I went to Craigslist and looked for cars similar to mine. I found the exact model, same year, even same color as mine with a few more miles than mine. It was priced (through a dealer) for $1000 more than what I had estimated mine to be worth.

[muttleynfelix]

Jul 11, 2011 11:25:24 GMT -5 tskeeter said:

I have had the car two years now and its retail value is STILL more than I actually paid!

Some interesting things have occurred in the used car field over the past few years. Cash for clunkers removed a lot of low priced used cars from the market, driving up the cost of used cars in general. The credit crunch we have experienced over the past three years has made it more difficult for people to get large loans for new cars, so they are limited to used cars. The additional demand for used cars has driven up the prices. General economic conditions have kept people out of the new car market, increasing the demand for used cars and driving up used car prices.

In addition to the factors that have increased used car demand, there are some other factors that can come into play. The current value/purchase price ratio may be dramatically affected by the make, model, and year of the vehicle. I bought a couple of Chrysler vehicles in early 2007. At that time, Chrysler was discounting prices quite significantly to boost their sales and production volume. This means that the vehicle I bought for $21K in 2007 would cost about $28K - $30K today. A number of car manufacturers offered deep discounts at some point over the past several years, for a variety of different reasons. The other factor is the type of vehicle you are talking about. SUV's and fuel efficient sedans tend to hold their value quite well. For example, one of the vehicles I bought in 2007 was a minivan. Today, it is worth about 41% of what I paid for it, even after the sizable discount. The other vehicle is a Jeep Wrangler. As a small 4X4 SUV, the Jeep is still worth about 86% of the original purchase price.

Combine the effects of your outstanding negotiating skills, deep discounts, type of vehicle, and increase in demand for used vehicles, and you find yourself in an unusual, and enviable, situation.

The other thing I heard about used car prices was that during the credit crunch several brands discontinued their Lease programs. Many of those vehicles would be on the market this year.

This is not the year to be looking for a used car. Particularly a small fuel efficient one.

For the OP, I don't count the value of our vehicles in our Net Worth. For one, I don't really worry about our net worth too much and for two one vehicle is a clunker and we would be lucky to get a $2000 for it and while other one has tons of equity in it, (KBB is $25k, loan is $9k) we plan to drive it until it dies (probably 20 years from now since it is a Nissan).

[Plain Old Petunia]

My car has been rising in value lately. I had chalked it up to fuel efficient cars being in demand. I hadn't realized some of the other points mentioned here, such as cash for clunkers and fewer leases in the past several years. Interesting. Always learn something here.

[ejd86]

I use the Kelley Blue Book value for my car in my NW calc... it is not much

[DVM gone riding]

if I assume my car is worth "0" then it doesn't cover the cost of its loan and I have negative net worth. I mean on the same argument would you assume your house is worth "0" I could sell my car this week for more then I owe and since I have another paid for vehicle I wouldn't need to immediately buy another so it has worth.

For some bizarre reason NADA wasn't giving me a private party value so I averaged the trade in vs retail prices. Worked for my purposes. Still I was shocked at how much my car was still worth! I had expected it to drop a good 2k more!

I do plan to drive it into the ground, that is how I justify having bought it, but until I have enough other NW to truly cover the outstanding SL debt I am going to continue to count my car. The only time I have had to justify my "net worth" was when I was upping my disability/life insurance policy--I asked him how he thought that should be calculated and he said just put whatever you want! I knew close to what I was worth since I keep track, since then I have more then doubled

tskeeter I thought about the cash for clunkers thing but my car is upper end not in that category so if some one can get a loan for my car they would be able to get a loan for a new car of some sort. But I am not going to complain!

One reason I was checking was to see if it might be worth "refinancing" the car to get cash out of it to set a different debt to a fixed amount, and it actually appears like that could crazy enough work! Since of course my house is a totally different story then my car and is depreciating at a MUCH faster rate then the car is! So I can't borrow money from that.

[txbo]

All my cars are old, the newest is a 2007 and is valued at $24K. I have a 1999 @ $15K, 1994 @ $31K, and a 1967 @ $14K. I purchased these cars new and keep the ones I like forever. I never include cars or home in my NW.

[jeffreymo]

I check craigslist from time to time to get a feel for what my car is worth. I've noticed that there are a few more of my model for sale than there were 5 or 6 months ago, and the asking prices are quite a bit higher.

So I've driven my car for 6 more months, and added about 7,500 miles and I think I could still sell it for the same amount as back in January.

[midjd]

if I assume my car is worth "0" then it doesn't cover the cost of its loan and I have negative net worth. I mean on the same argument would you assume your house is worth "0" I could sell my car this week for more then I owe and since I have another paid for vehicle I wouldn't need to immediately buy another so it has worth.

I agree. I can see not wanting to bother to calculate it in your NW if it's a negligible amount (kind of like not calculating other minor personal assets - furniture, tools, etc.) but to say it's worth $0 doesn't seem right.

And JeffreyMO, I've found the same thing... I sometimes scour Craigslist to see if there are any other cars like mine, since I want to stick with the same model when mine kicks the bucket. I paid $2K for it in April 2010 and have put about 30,000 miles on it since then, but right now there is not a single Del Sol on the Indy Craigslist for under $3500, and most of them have more miles than mine and/or are in worse condition...

[Gardening Grandma]

" I can see not wanting to bother to calculate it in your NW if it's a negligible amount (kind of like not calculating other minor personal assets - furniture, tools, etc.) but to say it's worth $0 doesn't seem right."

I agree. I think of our NW statement as something that would give the executor a snapshot of our finances, in the event of our deaths. They'd have to deal with the cars and listing them on the NW sheet gives a quick estimate of what to expect when they are sold. (Right now, they total about $36K).

[muttleynfelix]

All my cars are old, the newest is a 2007

Since when is a 2007 old?

[Deleted]

One of the psychological advantages of not including vehicles in my NW, is that I'm much more careful about what I spend on them.

[tskeeter]

I thought about the cash for clunkers thing but my car is upper end not in that category so if some one can get a loan for my car they would be able to get a loan for a new car of some sort.

dvm, I understand your point. But, I suspect to many people, driving a new Neon or Focus is not a desirable as driving a two or three year old BMW. (From a former So. Cal. resident, where it's all about the car you drive.)

The point that I was trying to make is that a number of factors have combined to reduce the number of used cars available for sale and to increase the number of people who may be buying used cars rather than new. When you reduce the supply and increase the demand for almost anything, including used cars, the price tends to go up.