This calculation was shared by a LYN forumer some time back which ive tweaked to suit.

Very often, we always focus on the resale value of a particular model while ignoring the start up costs and monthly loan repayment costs. This tabulation will show you why cars with lower resale value may actually be a cheaper. This is of course assuming maintenance costs are similar.

Peugeot 407 Premium 2.0L

Purchase price (2008) = $136,888
Downpayment = $13,688 (10%)
Interest rate = 3%
Tenure = 60 months (5 years)
Monthly loan payment = $2,361
Total loan paid = $2361 x 60 = $141679
Total paid for car = $141679 (loan) + $13688 (dp)= $155,367
Resell car 2013 (after 5 years) for $70k (49% loss)
Total loss (after 5 years) = $155,367 (what you paid for) - $70,000 (what you get) = $85,367


Toyota Camry 2.0L

Purchase price (2008) = $154,990
Downpayment = $15,499
Interest rate = 3%
Tenure = 60 months (5 years)
Monthly payment = $2,673
Total loan paid = $2,673 x 60 = $160,414
Total paid for car = $160,414 + $15,499 = $175,913
Resell car 2013 (after 5 years) for $100k (35% loss)
Total loss (after 5 years) = $175913 (what you paid for) - $100,000 (what you get) = $75,913

For simplicity, let's assume service/maintenance costs are equal. Thus, after 5 years, a Peugeot 407 vs Toyota Camry:

407 has HIGHER total loss
$85,367 (407) - $75,913 (Camry) = $9,454

407 has LOWER start-up cost
$15,499 (camry) - $13,688 (407) = $1,811

407 has HIGHER monthly positive cash flow through lower installments
$2,673 (camry) - $2,361 (407) x 60 months = $ 18,720


SUMMARY

This clearly shows that although the Peugeot 407 has RM 9,454 lower trade in value after 5 years but it gains a total of RM 20,531 from lower start up costs and lower monthly loan installments.

Thus, buying cars with lower resale value isnt actually a poor financial decision. So i think with this, we should not allow resale values to govern our choice of vehicles. Safety, value for money, specifications and maintenance costs should take precedence.

What do you think?

Repairs, spare parts and maintenance?

If you plan to sell it after 2-4 years then maybe resale value can consider.

but if use 5+ years resale value doesnt matter anymore

talking about resale value of a car is like talking about how beautiful your wife was when you married her

could u put also inspira 2.0P & kia k5? i'm interested to know oso la... but, maintenance cost is also the biggest headache..

U gotta choose cars which have been on the road for some time in order to make a logical comparision. Pointless comparing cars which are new. I think 3 years would be the minimum period in which to compare which is why the Peugeot 407 was chosen i guess. But feel free to make other similar comparisons.

inspira is near to 3 years iinm

k5 is new... so cant compare la? ok noted.

Yup i guess so. Maybe compare against the previous gen Civic?

civic 2.0
inspira 2.0
* merc c200

nice bro, especially they way you present your calculation.

Peugeot 407 Premium 2.0L
Purchase price (2008) = $136,888
Resell car 2013 (after 5 years) for $70k (49% loss)
Total loss (after 5 years) = $136,888 (what you paid for) - $70,000 (what you get) = $66,888


Toyota Camry 2.0L
Purchase price (2008) = $154,990
Resell car 2013 (after 5 years) for $100k (35% loss)
Total loss (after 5 years) = $154,800 (what you paid for) - $100,000 (what you get) = $54,800

If you bought both the car by "cash", it obviously show which car has good resale value.

Off course you may argue that no one buying car by cash but to the matter of fact it does happened.

You may have comparing the wrong segment or value, you should have compare the 407 with Altis not camry and then you will have totally different answer.

We can't have a scenario for every circumstance. So we'll go with the norm or general scenario. There are ppl who buy cars cash but those are rare and few. Its not always based on affordability. Car interest rates are low so it makes sense to take a loan but ensure the extra funds are earning a better return elsewhere. Sadly, many ppl take car loans to increase their affordability.

An accountant or any one from finanical discipline will argue it will be a bit more greater diffrence in having the Pug407 over the camry because of present value of the same dollar over the future value over the following 5 years. Hence the cost of fund/interest rate will need to be factored in

using your argument,

407 's higher total lost of $9,454 can actually be smaller due to 9.5k 5 years later is actually not worth the 9.5k of TODAY, in real calculation, it 'll be may be 9k only or even lesser depends on inflation rate

407 has LOWER start-up cost
$15,499 (camry) - $13,688 (407) = $1,811 since this is calculated in present day value, so this part is ok

407 has HIGHER monthly positive cash flow through lower installments
$2,673 (camry) - $2,361 (407) x 60 months = $ 18,720

again this need to factor in the yearly cost of fund, so the value of 18.7 k could be higher slightly and may well be over RM20k (of Today cash )

So conclusion is taking Pug 407 is better since

20+1.8 -9 = 12.8k

Money wise it looks right (as long as the maintenance cost is the same, but if they are not and IF Pug costing more than Toyota tallo maintain and repair, than the difference will be smaller, nevetheless 12.8k is a very good buffer.

Overall, nice piece of work there

Isnt the 407 a D segment? Well, why dont u provide the calculations then?

508 is what segment if 407 is D segment?

I'm a bit bias to woengx2 statement that if buying the car by cash the calculation is going to be different. For me, personally I'm choose to buy car by cash as well if my cashflow is not so tight.

407 is D segment then 508 is E segment lar !