Good info.
So your saying that the longer you keep a car (aka, the more you have paid off), the better off you are as far as trade ins go? (generally speaking.)
Twice as important if you finance than if you pay cash. picture a brand new cadillac CTS. you pay 36,000 for it
yr 0 27,000 - 7000 walk off the lot depreciation
yr 1 24,000 - 5000
yr 2 20,000 - 4000
yr 3 17,000 - 3000
yr 4 14,500 - 2500
yr 5 12,500 - 2000
the numbers could be off by a bit, but thats the general "flow" of them, much more first year, and after 3 years it starts to get closer to level loss of value year after year. Where it gets worse is that in your loan of 5 years, the first year you are hardly paying anything against principal, its mostly interest.
$700/mo payment, 36,000 loan at 6%, about $2000-3000 down payment for tax, tag, etc
balance
yr 0 36,000
yr 1 29635.09
yr 2 22877.60
yr 3 15703.32
yr 4 8086.55
yr 5 0
these are exact numbers from a calculator
but you can see that until year 3 you don't break even. It can be a little better on a used car if you pick it up at the right sort of price, you may break even before the end of year 3, but its really very individual car to car at that point.
So real world best bet for most bang for your buck is to buy 2-3 year old cars from a private party, and take only a 4 year loan on them, plan to keep them for 6 years. This way if you decide to change them sooner (or have a life even that requires you to change them) you minimize your loss. When my wife DECIDED she NEEDED a 7 passenger vehicle with the birth of our 2nd kid, I ended up needing to write a $4,000 check to get out of her prior car and into this one, and it was already 3 years old.... but she went from a lincoln LS to a kia minivan as part of the punishment for forcing me to do that