Car Depreciation

Why Throw Money Away on New Car Depreciation?

Thinking about buying a new vehicle? Think again. According to the experts at Kelley Blue Book ®, in three years that new car could depreciate by as much as 73 percent of its value. At best it will retain a mere 62 percent of its value after three years.

Car depreciation is the dark cloud hanging over new car purchases. While most cars depreciate by 15 to 20 percent of their value each year, the first year tends to hurt the most. In fact, the two-minute drive off the lot can cost some owners up to 15 percent of their new vehicle's value. This instant loss reflects the difference between the wholesale price – what the dealer pays – and the retail price – what you pay.

If you're a car buyer unwilling to throw away money on car depreciation for that new car smell, consider buying a high- quality, late-model vehicle. These used cars will give you cost-saving benefits above and beyond the car depreciation. Some of the benefits of buying a used car include:

  • Lower purchase price.
  • Lower registration and license fees: these fees are usually tied directly to the value of the car, so a less expensive car means less money you pay at the local DMV.
  • Lower insurance premiums.
  • Less depreciation: when you buy a late-model used car, the previous owner has absorbed the steepest portion of the car's depreciation cycle.

Don't let that cloud rain on your car buying experience. Purchase a used car and retain more of the value of the car you buy, Retain more of the value of the car for yourself.