subject: Car Depreciation Can Be Depressing [print this page] Car Depreciation Can Be Depressing Car Depreciation Can Be Depressing
o I really want a brand new car?
The newest models are on the showroom and the shine and smell of a brand new car is very tempting! But the days of buying a brand new car every year are gone. People are much smarter car buyers and they are getting much more aware of how much it costs them to get that brand-spanking-new vehicle home. The loss of value when you drive off the lot is called depreciation. Depreciation is the decline in a car's value over the course of the time you own the car. It's something new-car buyers dread.
A new car or truck loses thousands of dollars of value as soon as you drive it home. This is easily 20% to 25%. Why is there such a steep curve? When purchasing the car, you paid a retail price, as soon as you drive off the lot, the car is worth its wholesale price, the amount a dealer would be willing to pay for a car (if you turned around and tried to sell it back) Also the sales tax, other taxes, tags and fees you have paid at the time of the new car purchase are lost.
Over the first year some cars depreciate at a rate as high as 35%. KBB.com (Kelley Blue Book) says that the average car loses 65% of its value in the first 5 years. Since car loses 15 percent to 20 percent of its value each year. A 2-year-old car will be worth 80 to 85 percent of its 1-year-old value. A 3-year-old car will be worth roughly 80 to 85 percent of its 2-year-old value.
Before you decide on buying a brand new car consider if you might be just as happy with one that is 1-2 years old, still has the features and looks of s new vehicle but someone else has taken the big hit on depreciation. If you are uncertain about the Used Car market and don't feel you have the expertise to research the slightly used car market, consider hiring an Auto Broker to help you. They are up to minute on both new and used car appraisals and value.
If you buy a new car, plan on keeping it for a long time. This is one of the best ways to get your money's worth out of a new car.
