Car Depreciation Can Cost You More Than $3000 in Your Next Car Purchase!
When you look at factors such as repairs, maintenance, gas, and insurance, most, if not all drivers, will agree that buying and maintaining a new (and expensive) car certainly dents the pocket!
New Cars Are Expensive to Maintain
As a matter of fact, the average of owning a vehicle while maintaining its costs can cost a whopping $8,849 a year. This average was derived from a yearly study carried out by AAA. When viewed from a mileage perspective, it would mean costing about 59 cents for every mile.
This means that you drive slightly under 15,000 miles on a yearly basis.
That being said, AAA comments that the largest expense that originates from purchasing a new vehicle is normally unknown for most drivers.
According to the spokesperson for AAA Northeast, Mr. Robert Sinclair, the depreciation of a car constitutes nearly 40% of all the costs associated in purchasing a new vehicle; coming in at about $3000 every year.
New Cars and Rapid Depreciation
In fact, as soon as you purchase a new car and drive it out of the automotive shop, it begins to depreciate.
Sinclair advises that one of the secrets to ensuring that your depreciation rate remains relatively low is by keeping the car for longer periods of time, while ensuring that it is well maintained. Additionally, if possible, you might consider purchasing a pre-owned car that still had its quality.
Hence, if you’re in the process of car shopping, you’ll have to analyze a myriad of factors such as the duration that you plan to own the car, the rate that you’re willing to finance the car, and as usual, the purchasing price of the car.
Statistics: Used Cars Versus New Ones
Keeping this in mind, by maintaining a pre-owned vehicle in optimum condition, you’re bound to experience lower costs with time.
In fact, the idea has become highly popularized in America. So much so that over 39.3 million used car purchases were made in 2017. This is a noticeable increase of about 1.8 percent from 2016, as per the results that were availed by Cox Automotive.
As expected, this resulted in a reduction in the number of new car sales by 2 percent, falling to 17.1 million.
In addition to that, the sale of certified pre-owned cars, rose by 1.6 percent in the last one year. As you know a certified pre-owned vehicle is one that normally had a warranty coverage as well as a vehicle that is just coming from a recently owned lease. This reduces the issues that accompany the purchasing of a new car.
That being said, one has to bear in mind that President Donald Trump’s tariffs on new car purchases are yet to be enacted and implemented.
Hence, the thought of higher prices on new cars might result in a surge in the demand for used cars in prime condition even more!
In fact, this year, it is estimated that the number used cars to be purchased will be around 39.5 million in the United States. While used vehicles are expected to fall to roughly 16.7 million this year, according to statistics released by Cox Automotive.
That being said, there are other reasons why you should buy a used car over a new one.
You Can Buy Any Model from Any Year
There’s no doubt that the price tag for a car that’s recorded some mileage is much cheaper than a new car from the dealership.
Apart from that, when you purchase a new car, there are usually a few models released every year.
On the other hand, when it comes to used cars, you have the ability and freedom to shop around for whichever model you desire, and make a purchase.
Additionally, in a bid to dazzle and entice customers, new cars are usually fitted with a number of gadgets and features which you will pay for, but you won’t even have to use!
An Opportunity for Lower Insurance Rates
Auto insurance rates for new cars can surge through the roof, especially if you happen to purchase a luxury car. That’s because new luxury cars are more susceptible to theft, fraud, and the replacement of expensive spare parts in the event that an accident occurs.
On the other hand, most used cars have cheaper insurance premiums because of their mileage. Additionally, most used cars tend to be popular cars, whose spare parts can easily be found, and thus, a cheaper insurance premium.
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