Back in October 2019, I had decided to sell my Infinity SUV that I had bought in Feb 2016. The car was 3.5 years old at that point in time. When I went to list the car, I noticed the going rate was around $25K. Quick disclaimer – we did have an accident in the car that was professionally fixed; we had to replace a passenger door and repaint some parts. You can’t tell it’s been in an accident by looking at it. Thus I had listed it for $24K or so. At the time, I tried to bury my head in the sand, not trying to remember that I actually had paid nearly $45K all in on the car when I got it new. Yes, I had lost about $21K of depreciation in 3 years, so around $7K a year.
After a few months of listing it and a few people test-driving it, it never sold. After 3 months, it was down to $21K and I was only getting offers of around $19K, which meant I’d lose around $26K if I sold it. As a cheap Asian, it pained me to sell it for that low since selling a new car around the 4-5 year mark is probably the worst time to sell the car since most of the depreciation is front loaded in the first few years.
At the time, I was driving my old beater car to work and run errands. The beater was driving fine; I had no problems with it. The SUV wasn’t driven for nearly 6 months. Eventually I tried to start it one day and the battery died, so I went to get that fixed and started to drive it. Then after a few trips, I realized I enjoyed driving it much more than the beater. After discussing it with the wife and my coworkers who agreed I should TREAT YO-SELF and drive the SUV, I decided to keep the SUV and sell the beater, which sold fairly quickly.
I think what ultimately made me keep it was that a) I felt I was too old and made enough money to drive around the nicer car and b) I figured the majority of the depreciation was gone already and that it’d only depreciate 3-4K annually for the next few years. So what now? I figure I’ll wait for a good deal on a used Tesla Y and buy that in a few years.
Lesson learned – DON’T BUY A BRAND NEW CAR! The sweet spot is definitely a 3-5 year used car in good condition.
I think the real message here is don’t by a new car and sell it after only 3 years.
Could you please elaborate a bit or point me in the right direction of where you’re talking about when you say “I’ve seen some screaming hot deals on Tesla direct…”? FYI, I put a $2500 deposit down on a new Model Y this past fall but am still on the fence as to whether to actually buy one or not.
People search for used cars directly on the Tesla site and sometimes they’ll find a really good deal on one.
I thought you had a Tesla?
I do have a Tesla
I think you made the right choice, Vinh. I am wondering what your thoughts are on buying a used TESLA, either a Model 3 or a Model S (I love the look of the S).
I look online but seems like used Teslas are still way up there. Plus on older ones, I worry about the battery.
Also, what about buying one through Tesla versus on the general used car market?
I’d like to know your thoughts.
I think you should test drive both the 3 and S. I had an S as a loaner and it drives “big” and it seems to be bigger and roomier while the 3 def feels more compact inside. Plus I do the like the ‘newer’ 3 interior with no odometer in front etc.
I wouldn’t worry about the battery too much – it’s supposed to last 10 years and has little degradation. With that said, I think the oldest I’d buy is 3 years. I’d say away from 7 years.
I’ll be in a similar boat as you with the Y – either buy from Tesla used or a 3rd party. I’ve seen some screaming hot deals on Tesla direct, so that’s where I’d look first. I’ll also look on the Tesla 3 or Y Facebook pages – those guys are enthusiasts and take care of their cars more than a ‘random’ and you’ll like get a more upgraded car from them if you went private party. I’d be hesitant in buying used from like a Chevy dealership. Thus, I’d lean heavily on the Tesla site.
I agree and only ever buy cars that are about 3 or 4 years old (but with minimal mileage and with no accident history). That way, you get a pretty new and reliable car that will last a long time, all the while taking advantage of how front-loaded depreciation slashes the cost. And then you can factor in the opportunity cost of getting to invest the money I saved by not buying new. So when I look back now on those decisions to by used, I can get a true picture of just how illogical it would have been to get a new car instead.