One of the key elements when it comes to buying a car is value. Often, we spend days, weeks, sometimes months poring over information, looking for the best deal, the best cost and worth for your money. We analyze what each vehicle offers and how it fits into our lives, and we determine the best vehicle for our needs. The second –and arguably more important –element we ask ourselves, is whether we want to buy a new or a used vehicle.
As we’re inundated day in and day out with car commercials on television and radio and targeted with ads across the internet, it might be easy to convince yourself that the brand new car is exactly the one you need. But when we approach the second question, when we’ve convinced ourselves that we want, or worse, need, that brand new ride, we often quickly forget about the first question, especially when it comes to the concept of depreciation. (Don’t beat yourself up. Effective advertising is a helluva drug.)
Losing Money, the Minute You Leave the Showroom
One of the most widely known facts about car buying is that a new vehicle loses value literally the instant you drive it out of the car dealership. You could sign on the dotted line, fire up your brand new, zero-miles car, drive it across the street to another car dealer, tell them you want to trade it in and watch in shock as they offer you up to ten percent less than what you just paid that very afternoon. That’s how much a vehicle can lose in value in its first few days. That number jumps to twenty percent in the first year you own a new car and then ten percent each year for up to the next four years. Meaning your brand new car will be worth sixty percent less than what you paid for it within five years.
Put into numbers, that means a one-year-old $40,000 car is worth around $32,000, whereas that same car in five years can be worth as little as $16,000.
Options For Your Old Car
When trading into a dealer, you might not get what you’d like from your old car but there are plenty of other options that might be a better fit for you. You could sell it to a private person yourself from many websites online. If it isn’t worth much or broken down there are a few non-profits you can donate it to and get a Car Donation Tax Deduction so they can fix it up! If none of those work then a lot of people consider selling to a junkyard. This option might seem harsh but you never know, you could get more cash in your hand that way.
Buy New Used
So why bother with so much value loss? Why not use those percentages in your favor? To do this, the workaround is simple. Buy “New Used.” Buying a used car doesn’t mean you have to go kick the tires on some fifteen-year-old jalopy with darn near a quarter-million-miles on the odometer. You can still get a nearly brand new model year vehicle with all the modern tech and safety features that manufacturers offer at low mileage for significantly less coin than a brand new car. And unlike buying new, used vehicles have already experienced their biggest loss of value.
So before you’ve convinced yourself that the brand new car is the one you need, remember how rapidly that car is going to lose value, dial back the model year one or two years in your search engine, and see how much money you’ll save for an almost new car.
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