Best First Car to Minimise Depreciation - Budget $20k

stevenmo on 23/03/2022 - 12:05
Last edited 23/03/2022 - 17:48 by 1 other user

Hi guys looking for some advice as I really have no knowledge on this topic.

Going to buy a first car budget $20k (can stretch it further) in Sydney, don't need anything fancy, looking for a hatch back or sedan. Main goal is to probably drive the car around for around 5 years and then hopefully resell and not lose that much money in the process. Also trying to factor in how different cars have different insurance rates.

Looking at a Toyota Camry or Corolla, is there any recommendation from you guys? Mainly want to make sure I buy the right car so when I resell it I can lose the least money.

Thanks guys.

Edit 1. definitely going to be buying a used car shoudlve clarified . Is it risky to buy from a priv seller off car sales or gum tree ? How would I make sure they’re not selling a dud ? Do I have to take it to a mechanic ?

Also seems like a lot of people r saying teslas depreciate less ? Anyone have any thoughts on purchasing a brand new base model Tesla (whatever one is the cheapest) around 60k I think ?

Edit 2. Seems like a lot of you guys think that EVs are gonna be mass adopted soon. Would this be next 5 yrs? 10 yrs ?

add on: alot of people seem to say buy a 5-10 year old car as those have already gone through the most depreciation. Are there any major safety drawbacks on these older cars? Tbh not pick and would insuring an older car be cheaper ?

Automotive

Comments

  • life is suffering on 23/03/2022 - 12:08
    +11

    Toyota corolla

    • Mokr on 23/03/2022 - 12:26

      Is about 30k new

      • May4th on 23/03/2022 - 12:47
        +2

        just about any car is 30k new nowadays, gone are the days of 20k driveaway i30s. buy second hand will further flatten the depreciation curve

        • spackbace on 23/03/2022 - 13:57

          buy second hand will further flatten the depreciation curve

          1yo Corollas are over the price of new ones… Buying used currently won't flatten the depreciation curve, you'll actually increase it (unless it's a write off ;) )

          • May4th on 23/03/2022 - 14:23

            @spackbace: technically you would only be buying used for more than new if there is no supply of a new car or facing long delivery delays, unobtainable means there is no comparison ;)

        • [Deactivated] on 23/03/2022 - 16:30
          -1

          A friend recently bought a brand new MG Core for $18k. Crap car, but cheap for being new
          https://mgmotor.com.au/offers/
          Automatic Transmission
          15" Alloy Wheels
          8" colour touchscreen with Apple CarPlay
          4 Speaker audio system
          Rear View Camera

      • Mr Haj on 23/03/2022 - 13:02
        +6

        OP didn't specify that the car had to be new…

        • stevenmo on 23/03/2022 - 17:49

          i think that buying used is a rlly bad financial decision as cars loose value as soon as they are driven off the lot ?

    • innov on 24/03/2022 - 09:39

      Bought the 2015 model new $23k and had a look at on carsales with similar milage and it came to $17.5-$18K. Obviously propped up by COVID pricing but I'm actually surprised how well it's held up.

  • popsiee on 23/03/2022 - 12:11

    Seriously I think your `^ed in 5 yrs with the future fuel cars having much more momentum in that time with your depreciation .
    Even the current cars that have performed on that front will not keep it up .

    • Mr Haj on 23/03/2022 - 13:06

      You think fuel will be more expensive in five years? More electric cars on the road, improvements in fuel efficiencies, time to re-establish supply chains (if we're still not buying from Russia). I think overall there will be LESS demand for fuel and MORE supply.

  • deme on 23/03/2022 - 12:22
    +8

    Used

    • ESEMCE on 23/03/2022 - 12:49
      +2

      Yeah this…
      Don't spend $20k on a car if you're worried about depreciation, spend $5k or $10k.

      • dust on 23/03/2022 - 12:52
        +2

        Unfortunately used car prices are also nuts at the moment.

        • ESEMCE on 23/03/2022 - 13:09
          +1

          (yeah, that's why I added $10k)
          Even so, you're almost guaranteed not to lose as much money in depreciation…
          The depreciation curve flattens right out once you get under $10k.
          Even if you lose 20%, it's only $2k. When a $20k car (which will probably lose more than 20%) will lose at least $4k.

  • Hithere on 23/03/2022 - 12:26
    +1

    No one knows how much individual cars will have depreciated in 5 years.

    Whatever you buy, unless it's a barn find, it'll be worth a lot less in 5 years than it does today.

    Just buy what you like and can afford and worry about it in about 4 years 11 1/2 months.

    • netjock on 23/03/2022 - 13:39
      +1

      Isn't there an article saying if you sell your Tesla after 5 years it is cheaper than an ICE even with a loan due to the high retention value.

      here is the article, pay $63k up front, get $57k back after 5 years

      • altomic on 23/03/2022 - 15:16

        but Tesla battery after 5 years ….

        • netjock on 23/03/2022 - 17:10

          Pretty good from all reports

          here is an article

          As with all technology it gets cheaper so in 5 years what guarantee is there the price of the Tesla is not $53k and the difference is $63k - $47k (the $6k gap) which is now $16k loss (25% depreciation).

          None EV owner here.

      • Euphemistic on 24/03/2022 - 08:58

        It’s all well and good to say they retain their value while EVs are rare. In 5years time there will be a lot more in the market. Supply and demand says they’ll be cheaper when supply is higher.

  • Drakesy on 23/03/2022 - 12:34
    -4

    An EV
    Or at a bear minimum an SUV

    • dust on 23/03/2022 - 12:52
      +15

      Like a grizzly?

    • [Deactivated] on 23/03/2022 - 12:53
      +2

      but what if it's a bull market?

      • Drakesy on 23/03/2022 - 12:55
        +1

        Maybe a Ford Bronco or Taurus in that case ;)

        Yeah my spelling needs some work

        • [Deactivated] on 23/03/2022 - 12:56
          +1

          I see what you did their.

        • Stewardo on 23/03/2022 - 13:02
          +1

          Maybe a Aventador
          Bronco is a horse

          • MS Paint on 23/03/2022 - 13:09
            +1

            @Stewardo: You're both just talking bulltish

          • Drakesy on 23/03/2022 - 13:33
            +1

            @Stewardo: Camry come to the conclusion that i'm in over my head on this one

    • freefall101 on 23/03/2022 - 16:52

      Make sure it has the bear necessities too, good warranty, decent mileage, some fancy ants, honey, a pawpaw…

  • baronorder on 23/03/2022 - 12:39
    +1

    Honestly just buy what suits your needs in the price range you have - likely something used given your budget.
    Anything that you buy that doesn't run on electrons should be viewed as an "own it until the wheels fall off or it becomes cheaper buy an EV that suits" kind of proposition rather than getting anything back resale time.

    Given current world events and fuel prices I would say that the optimum used vehicle would be a blown XB GT Falcon Coupe with a sawn off shotgun and a dog as accessories…

  • Mr Haj on 23/03/2022 - 13:13

    How big? XR6 Falcons (FG) are pretty nice but getting a bit older now. Don't think you'd find an SV6 Commodore (VF) for under 20k.
    If you want something smaller it would be hard to ignore Toyota Corolla or Camry. Hyundai i30 might be worth considering.
    Anything 2nd hand will have already had a decent amount of depreciation. I wouldn't buy anything with over ~120,000 kms on the odometer.

  • mitt on 23/03/2022 - 13:20
    +2

    Either buy a second hand car in ok condition for $10-15k or so & accept the few k loss it will depreciate or buy a bomb, drive it till it dies & accept the unreliability.

    I bought a bomb for $500 off a family friend & it lasted me 2 years with minimal maintenance. Only issue is the aircon broke but I just accepted it as the cost of paying almost nothing for a car & never repaired it.

    Eventually it died & I sold it to a scrappie for $200.

    $300 for 2 years, good deal.

    • Mokr on 23/03/2022 - 13:29

      What car model

  • theHMASfriendship on 23/03/2022 - 13:23
    +5

    None of the suggested comments will have a high yield.

    I suggest you invest at least 80k into your first car. You can’t afford not to. Particularly cars featuring an AMG badge to maximise the yield of this investment.

    • spackbace on 23/03/2022 - 13:58
      +2

      Just make sure you check under the bonut

  • Keplaffintech on 23/03/2022 - 13:28
    +6

    If your main goal is avoiding depreciation, find a car that has already depreciated significantly. so 5-10 year old.

    Also, consider what will depreciate when EVs become more popular and commonplace. My theory is that economy ICE cars will suffer the most, as EVs will just be better on running costs such as servicing and petrol. I think that 'performance / fun' ICEs will hold up better over time, as people will still buy them for the novelty, and care less about the running costs.

  • netjock on 23/03/2022 - 13:33
    +4

    You'd probably want to minimize running costs rather than depreciation.

    10,000kms a year. 4L difference per every 100 kilometers would 400L which is $800. Over 5 years if $4k.

    Also cost to service. European car vs a Toyota would probably be $200 - $400 per year difference for servicing which would be another $1500

    Also check insurance too. Might be $200 difference between models due to insurer risk perception.

    $5k - $6k cost to run over five years on a $20k car is quite significant.

    • Euphemistic on 23/03/2022 - 17:22
      +1

      4L difference in fuel? Not comparing similar cars at all then. That’s the difference between a full size SUV and a hatchback. Difference between a new Corolla and a 5yo one would be more like 1l/100

      • netjock on 23/03/2022 - 22:21

        Current corolla sedan is rated at 6L and hybrid at 3.5L. there is 2.5L on the official numbers. The current corolla sedan is same size as last gen Camry.

        In the secondhand car market for 20k you can get an older commodore or falcon or a younger corolla / Yaris with different fuel efficiency and maintenance cost. Assuming size is the trade off.

        Only thing fixed for OP is price ceiling.

        You seem to be fixated on size like most people in this country. Bigger ain't always better.

  • MrtheMoonbear on 23/03/2022 - 14:25
    +7

    If you do end up going with the Camry, just remember to factor in the cost of the box of tissues for the rear parcel shelf.

    • netjock on 23/03/2022 - 15:05

      OP needs to make sure it is $1.30 not $1 for box of tissues.

  • Euphemistic on 23/03/2022 - 15:27
    +1

    Half your budget or less to minimise depreciation. A$10k car in 5years might be worth $5k, a $5k car might be worth $2-3k, but a $20k car will likely be worth $10k

    Pick a popular corolla sized Japanese or Korean hatchback. Eg Mazda 3, lancer, i30.

  • cashless on 23/03/2022 - 16:00
    +1

    Why buy a car just to minimise depreciation?
    Surely there's some fun to be had in life too?

    • stevenmo on 23/03/2022 - 17:47
      +1

      hey saving money is fun !!

  • brad1-8tsi on 23/03/2022 - 16:09

    Used Hilux, Commodore or Falcon ute. Preferably manual

  • Jason Genova on 23/03/2022 - 16:15
    +6

    Anyone have any thoughts on purchasing a brand new base model Tesla (whatever one is the cheapest) around 60k I think ?

    lels, all of a sudden your budget increased by $40k

    i think you havent got a clue what you are doing, or even intend to buy a car

    • netjock on 23/03/2022 - 17:12
      +1

      It is called lifestyle inflation. You got $20k but you see other people living $60k lifestyles so you try to meet that. Uber that Tesla! Elon is promising once FSD works that $60k Tesla will be worth $300k as a Robotaxi.

    • stevenmo on 23/03/2022 - 17:42

      you could be correct it was just a hypothetical. I can pay for a tesla outright atm but im pre sure it would be smarter to buy a 20k car and invest the 40k. ur thoughts ?

      • Euphemistic on 23/03/2022 - 20:50
        +3

        No one should buy a $60k car for their first car.

        • netjock on 23/03/2022 - 22:27
          +4

          Balance sheet of mum and dad says otherwise

        • 82norm on 24/03/2022 - 08:57

          No, 100k.

      • netjock on 23/03/2022 - 22:30

        If you got 60k and 40k isn't invested then already something wrong no? If you invested it earlier this month you'd be 10% up by now.

  • plmko on 23/03/2022 - 18:53
    +1

    No there's no stock anywhere still and used cars are all over priced. As soon as supply issues with new cars is solved those used cars will drop like a rock.

    So really if it's a falling rock it may as well be a brand new one so at least your tears can roll off that grin of yours.

  • Euphemistic on 23/03/2022 - 20:56

    Are there any major safety drawbacks on these older cars?

    That’s going to depend on your risk rating. IMO a couple of airbags and ABS make a car pretty safe. IMO these are the two biggest leaps in safety in the last 30 years. Anything more than that and it’s nice to have but not necessary. Some people think that the safety structure has improved so much that they wouldn’t risk a 5yo car. Not me, not thousands of other drivers, we’re happy saving $ in purchase price.

    All the latest whiz bang radar cruise, blind spot monitoring, lane keep assist etc just make the driver lazy and less aware of their surrounding because ‘the car will do it for me’ - until it doesn’t work properly and a crash occurs.

    • netjock on 23/03/2022 - 22:26
      +3

      My 2004 car that was 40k new now worth 6k has airbags and abs. Even got traction control. OP would need to look hard to find a car without.

  • BenK-Oz on 24/03/2022 - 07:04

    Driven Toyota's all my life, got a Subaru impreza 2017 last year, love it. In fact go so far to say better than Toyota in inclusions and safety standards. And had appreciated in price!

  • Boogerman on 24/03/2022 - 07:54
    -1

    Nissan Leaf.
    Any internal combustion engine car is going to have significant depreciation as its a potential stranded asset

  • Ade99 on 24/03/2022 - 08:00

    If a first car I would buy an older ICE vehicle so that you can learn to drive, have your first accident. That way the vehicle is already at the end of it's depreciation curve. In a few years, when you have that out of your system, look at the market re ICE vs EV and decide then!

  • Waltervp on 24/03/2022 - 08:34
    +3

    I would also refrain from getting a new car. Especially a first car. Do you know how much it hurts to get your first scratch? The first pole you reverse in? How uncomfortable you will feel driving it? Definitely get a second hand car. I suggest you get one with the most safety features you can get, even if you haven't got a clue what they do. I love the self parking vehicles as reverse parking becomes fun and fast. Dynamic cruise control and autonomous braking are a must, as is Lane Departure warning lights to keep an eye on your blind corner. Especially in city traffic when you need to change three lanes in heavy traffic that little warning light is a godsend.

    Look at some late model mazdas for instance, or the fords (Titanium equipment levels have almost everything).

    Also nice to have hybrid or electric of course, do check them too

  • reactor-au on 24/03/2022 - 10:35

    Double cab utes seem to appreciate, past performance is not a guarantee of future performance

  • CRS34 on 28/03/2022 - 12:58

    Buy Used. 2005-2015 model years approx.

    Toyota: Corolla, Camry, Yaris
    Honda jazz , Civic, accord
    Mazda: 3

    Worth noting that you will be buying with covid tax, and after 5 years theres most probably no more covid tax (hopefully), you will get a lot less than what you paid anyway because of that.

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