Buying A New Car

[Gringoboy]

Hey Mr Cheese, thanks for the very useful info.
We want to change our car to something newer and Adri has often spoken about this 'cooperative' or lottery to which you refer and I have always eyed it with suspicion and her reply has always been 'it's very popular over here', which left me scratching my head a tad.
As my dear Mum used to say, 'if it looks too good to be true, it probably is...'.
Whichever way we do it we'll be seeking guidance from my father in law who works at a Mitsubishi dealer and he's been dealing in cars for more than 40 years and knows all the pitfalls.

 

[Jaredberryman]

Jared,

Lot's of great comments in your post. However , your statement that cars do not depreciate , and actually increase in value is simply not true. In the short term , say first year of ownership , they do go up , depending on model and availability. All cars eventually do depreciate , although at a much slower pace then seems reasonable. I am simply surprised at the asking price of used cars .

Perhaps based on inflation , and slow depreciation , there is a long , say , break even point.

Thanks for an informative post.

I'm sorry, I didn't mean to say they don't depreciate. I meant to say as an investment that is accessible, over a short period of time, a vehicle depreciates less than, say, Argentine pesos. Also, tomorrow the pesos may be taken from your bank account or replaced by another currency if it's not in the bank. I was just simply pointing to the fact that that is why it is considered a quasi-investment by Argentines. It's better to have something, rather than risk having nothing...is the thinking. At least you have something to show for your money. I was trying to point out that working class individuals here are usually not silly with their money--because they have less of it. Of course that's not always the case....

 

[Gringoboy]

Surely anything depreciates less than the ARG Peso?
Which is probably why everyone buys hard goods like TV's etc on their cards.

 

[PhilipDT]

I always learned in Mom's Basic Money Class that you never finance a depreciating asset. Houses? Yes. Cars? No.

It seems to me that financing here might be a good option if one expects the value of the Peso to drop. You'd be paying a fixed Peso-rate every month but the actual value of that payment would be dropping (against the Dollar). This only works if you make your money in Dollars. The 30% still seems like a huge hunk of drywall to try to swallow.

If the choice is between buying a depreciating asset outright or financing it, you should always finance it rather buy it if the oppourtunity cost is greater than the cost of financing.

 

[Rich One]

There's a difference between gaining value in pesos vs gaining actual value. The purchasing price is often lower than the selling price... But with inflation and depreciation, value is always lost.

The selling price here is higher than the purchasing price. Usados go up all the time. For this reason the value of insurance GOES Up to replace the car...!!

 

[cbonanni]

As an investment , and means to have secure savings , new cars are a reasonable savings tool. Better than pesos by far. Just check out all the new trucks on the road in the interior after the soy harvest.

 

[erian]

My Argentinian 'family' here were saying that nobody should buy second hand cars for a while here in BA because of the water damage due to the recent floods. Dealers will fix them up, make them tick and hide the long term water damage to the engine etc. Obviously not all dealers do that but it's worth keeping an eye on if anyone is looking at second hand cars!

 

[Crema Americana]

My husband has been saying the same thing.