Read THIS Before Buying Your Next Vehicle
You’re finally ready to take one of the biggest financial leaps we can make in personal finance. The acquisition of a new vehicle. You’ve done all your research. You’ve checked every car buying website known to man. You’ve scoped out all the deals at the local dealerships. You’ve been swooned by every car salesman in a 50 mile radius. Congratulations. All of those things are important, but this may be your most important stop yet. So buckle up.
Our natural impulse is to want a NEW car. I mean, come on. You’ve worked hard for this. Why not get the car that just rolled off the assembly line? Well, there is one BIG reason. Depreciation. Depreciation is a reduction in the value of an asset with the passage of time, due in particular to wear and tear. In the case of new cars, that “passage of time” is 10 seconds, and that “wear and tear” is about .1 miles on the odometer. In other words, it takes place as soon as you drive off the lot.
Whenever you drive your brand new car off the lot, it depreciates as much as 11% instantly. Vehicle depreciation is actually the single greatest expense in owning a new car. After just one year, your vehicle will depreciate to ¾ of its original price tag… and after 3 years? Almost half. If you would like to check out the affect depreciation has on your car’s value, go here.
Well none of this seems fair! Quite frankly, it isn’t. However, car dealerships have to make money, so this is the reality of the situation. But, Fear not, you’re not doomed to drive that old minivan until the wheels fall off! That’s what Centsei is here for.
Call me crazy, but I don’t want my asset depreciating to half of what it’s worth now in three short years, so it’s time to start talking about solutions. Luckily, you won’t even have to leave the car dealership to avoid this cruel fate, you’ll just have to look in a different section. That’s right, we’re talking about a USED CAR (Or truck, or van, or jeep, we’re not prejudiced here).
When you buy a used car that is 3 years old, the previous owner has already paid nearly half of that vehicle’s depreciation. If you buy a vehicle that’s a little older, you’ll save even more. If you do a little basic arithmetic… as if there is such a thing… you’ll see that buying the 3 year old car can save you us much as 25-30% in the lifetime of the vehicle.
Now, there is one other option, leasing. I consider myself a fan of most things Dave Ramsey preaches, and let’s just say he refers to it as a “Car Fleece”. He explains it here, and I would advise against ever leasing a vehicle under any circumstances.
If you’re into things like keeping more of your hard earned money, I believe the best option consumers have available to them is to purchase a used car. There is one more hurdle you’ll have to cross before driving off the lot though, how to purchase your newest toy. I will address this topic in a later post! Thanks for reading, and keep visiting for more information that will empower you to take control of your money!
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