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.