Who Would Pay $50,000 for a $20,000 Car?

November 19th, 2013

Dodge Challenger

Lots of people pay $50,000 for a $20,000 car. Conversely, plenty of other folks happily plunk down $20,000 for a $50,000 car.

The difference, of course, is depreciation.

For the 2014 model year, the average new car will depreciate about 60 percent over 5 years. With the average length of car ownership well over 6 years, that means your new $50,000 car will soon be a like-new $20,000 car.

Whether you’re shopping new or used, it’s a good idea to consider rates of depreciation as you negotiate your deal. Getting a ridiculously low price on a new car will probably mean it’ll quickly lose value, while paying close to MSRP on another car could mean getting a good portion of your money back when it’s time to sell a few years down the road.

Everyone knows that Toyota and Honda typically have some of the highest resale values, but some surprising new entries have made the list. Check out what the Detroit News said yesterday:

The top 2014 cars are Chevrolet Camaro, Chevrolet Corvette, Chevrolet Silverado 1500, Dodge Challenger, Honda CR-V, Jeep Wrangler, Toyota FJ Cruiser, Toyota Tacoma, Toyota Tundra and Toyota 4Runner.

Can you believe that? I’m having a hard time with it, honestly. Well, really I’m just stunned that Dodge and GM vehicles are being mentioned on a list of cars that best keep their value. A quick search of the CarGurus used listings, though, proved the Dodge’s worth: 2009 models are priced at close to $30,000.

Well how about that.

As you shop for a car or truck, your first decision will be to buy new or used. With a $20,000-25,000 budget you could get a well-appointed mass-produced new vehicle or a luxuriously outfitted used car that stickered for close to $50,000 just a few years ago.

Even with a 5-year-old car, you’ll still likely find many of the modern luxuries and technology found in newer cars. What you’ll sacrifice, of course, are a few thousand miles and the peace of mind that buying new offers.

You have $20,000. Will you buy a new car or a used car that once stickered for a lot more?

-tgriffith

Find Used Cars in Your Area at CarGurus

Used Chevrolet Camaro
Used Chevrolet Corvette
Used Chevrolet Silverado 1500
Used Dodge Challenger
Used Honda CR-V
Used Jeep Wrangler
Used Toyota FJ Cruiser
Used Toyota Tacoma
Used Toyota Tundra
Used Toyota 4Runner

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  1. James
    November 19th, 2013 at 17:20 | #1

    If I could find an 08 or 09 Audi A6 for around 20K, i’d get it! Way better than a new Focus or something.

  2. Randy
    November 19th, 2013 at 08:38 | #2

    You’re looking at simple supply and demand. Vehicles like pickup trucks and sporty youth vehicles like the CRV are in high demand so used prices stay high. Cars like Camaro and Challenger are not big sellers but demand is solid, so prices stay up.

    The opposite side of the coin are the cheapos like Chevy Malibu and Chrysler 200 that are sold cheaply in large numbers (and often with big fleets of rental vehicles too.) Those depreciate rapidly because there are so many on the market and they were cheap to start with.

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