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Unread 05-27-2016, 02:24 PM   #1
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Default First Time Buyer, Question about Resale Value

Hello everybody!

I am new to this forum. I have never owned a car before and my wife and I are looking to buy a new car.

My wife works for the UN and is lucky enough to receive special pricing on new vehicles from select brands. These brands include the following, and the discount for each is:

Mercedes Benz (20%)
Audi (12%)
BMW (20%)
Volvo (20%)
Volkswagen (12%)

We are a young family with a 2 year old boy and a baby on the way. Despite the fact that we live in Vienna, Austria, where a car is not vital for survival, at this point, we think it is time to go ahead with a purchase.

We are strongly considering the Mercedes GLA 250 4Matic (2016 model). We like it because it is not so big, and in Europe it is hard to find parking for big cars, and we generally like the style of the car. We must buy the car outright and we will get a 20% discount on factory prices. We also receive a tax-free price as my wife is under diplomatic status. The price would be about 26,000 EUR (20% discount and no tax). The regular price would be approx. 33,000 EUR, not including taxes.

My question is:

Can someone help us to calculate the resale value of the car?

My wife will likely drive the car to work quite often, and she works 45km outside the city. We are planning to resell the car after 3 years. As she will be on maternity for 1 year, we calculate the following:

50km x 2 ways = 100 km per day
100 km x 20 working days = 2000 km per month
24 months x 2000 km = 48,000 km.

So let's assume we put 65,000 km on the car during those 3 years.

We will receive a loan from the bank to pay for the car, as financing is not available. We will likely go for a variable rate as interest rates are low now and a fixed rate would come at a premium.

Our theory is as follows:

We put money into the car, paying off the loan, and at the end of 3 years, we resell the car for a price which is not dramatically less than the purchase price, due to the special discount we receive. In a scenario where we see that we can no longer afford it, we are also allowed to re-sell the car after 2 years (not earlier). We are allowed to buy a new car under the same deal every 4 years, if we want.

Of course, we would be paying interest on the loan, maintenance costs, gas and insurance as well, which we understand are not recoverable costs.

Does this make sense? If so, can someone estimate what would be a reasonable asking price? Or do you think this is generally a dumb idea? Or would you recommend a different car for us?

Your feedback would be much appreciated as we are completely lost. Thank you so much for your help!

Last edited by mikenoff; 05-27-2016 at 02:36 PM.

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Unread 05-28-2016, 11:29 AM   #2
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You're still gonna lose money. Not much depreciates like a Mercedes.
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Unread 05-31-2016, 10:36 AM   #3
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every car depreciates rapidly, some do better than others. Usually the more economically priced vehicles depreciate the least percentage wise. The discount they are giving you is consistent with essentially a commission free sale. If you are worried about affording the car long term, buy something reasonable on the used market that has already depreciated that you don't have to finance.

We are mostly US and Canadians here so we may have difficulty helping suggest vehicles but the adage of buying what you can afford is a universal truth. If the financials are concerning on a large purchase, then you probably shouldn't do it.
My rides:
--2012 Chevy Sonic LT hatch back w/1.4 liter turbo w/100k
--2005 Chrysler Pacifica w/175k - SOLD!
--1987 Chevy R10 Pickup w/80k
--1997 4.3L Chevy Blazer w/193k- SOLD!
--1998 Oldsmobile Aurora w/190k - SOLD!

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Unread 05-31-2016, 02:52 PM   #4
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if you want cars that depreciates the least, look at Lexus or Honda.

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