Car Depreciation Is Not Your Friend
Can you afford to lose this much money?
How to save and avoid car depreciation?
- For the car you plan to purchase, know the value of a slightly used model. You can do this by looking through any online auto listing site and simply search for one model year less than the car you are looking at. Doing this not only gives you some options, but it also shows how much the car you are thinking about buying is worth in approximately a year.
- Know the incentives and the dealer costs. Smart car buying is about having knowledge. The more you know about the car you want to purchase the better deal you can get. If you know a particular car model is worth a lot less in one year, chances are the dealer knows that as well. Cars that do this tend to have larger sales to entice shoppers to buy new vs. used. If you can’t find any dealers that are willing to close the gap, buy used.
- Do some simple math! An SUV like the Nissan Armada can cost you $46-50K brand new for the fully loaded version, but a simple search shows that a slightly used Armada can run between $31-38K for the same fully loaded version depending on miles. Buying a new Armada can cost you more than $10K in the first year of owning that car. That is a steep price to pay.
Other cars like a Toyota Tacoma don’t see as large of a drop. Sometimes if you are lucky you can actually find late year models that are new for the same price as the used ones. It all depends on how patient you are and the timing of incentives.
If you are going to buy new, understand that gap, do everything you can to close it, and if you can’t then buy used.
Lastly, understand how to calculate financing and lease offers. It gets confusing, but knowing how much the financing is going to cost you is helpful when you are comparing rates for a new car vs. an old car.
Here are some posts we wrote about financing
Good luck and happy car shopping!