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:
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?
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