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?

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.

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

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.

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

Ru born stupid or just acting? I asked him to provide the calculations not because i dont believe but because i dont have the figures myself la. So if he has it then he's most welcome to share and enlighten us. Maybe there really is a difference. U think im gonna go do research for every damn car price ah? Anyway, that calculation was provided by another forumer (which ive clearly mentioned). Im sharing this with everybody to encourage a mature discussion. If u dont think u can offer mature comments then kindly stay out of this thread. And what is that i know which is wrong? I dont see anything wrong in that calculation.

Next time dont just make blind wild accusations. If ure not sure, then by all means ASK!

This post has been edited by cybermaster98: Mar 8 2013, 12:04 PM

Yes i didnt remember who said it first. But i thought it was a good sharing and calculation. Thats why i thought id share it for everyone to take note especially those who keep harping on resale value.

When he posted this a few months back, i immediately saved the calculations on my computer for reference. I was going through my files this morning when i found this and decided to post it.

And your point is?

Its ppl like you who ruin mature threads like this. Can we have some more constructive comments please?

Bro, common la. Im sure u know that i didnt buy my ride in Jan this year rite?

Anyway, i was one of those who thought very highly about resale values too. But after reading many articles i began to understand there are more important factors to consider than just resale value. Hence my decision to leave Toyota after 9.5 years.

1,063 views in less than 4hrs. Not bad eh.

This post has been edited by cybermaster98: Mar 8 2013, 12:47 PM

Haha! Sam Loo! That fellow gone silent now eh? Wonder what happened to him. Well personally i think that was a good calculation you made. Any other calculations you have done since?

Yea especially if u need to buy KR2.

Got one at high floor. But the problem is many trying to get that unit.

Good point!

How ru gonna get same prices? The cars with the higher prices are usually those from Toyota and Honda which is the source of the 'issue' since other similar makes are offering better equipped cars for cheaper prices.

The point of the discussion is not to justify why resale values are low or high. That calculation is an ilustration to show that although a particlar make may have a low resale value in future but when u take into account the initial start up costs and 'savings' on monthly installments, then the poor resale value is sorta evened out. Its not meant to be an all conclusive calculation which is why i put it on a thread to pick your brains. Everybody is free to agree or disagree but do explain why.

Cheers!

Ure the one who is confused. Cash flow means the amount of money you have LEFT which in this case is the excess amount of the monthly loan repayments.

Agreed. Well said.

Yup.