In their quest to own a ride, many buyers overlook one crucial factor, and it ends up ruining the entire experience. They mistakenly think of a car as an investment or an asset. But vehicles depreciate, some more than others, but all shed some of their value with time.
The depreciation rate is especially high in the brand-new cars. They shed as much as 50 percent of their value in the first three years. Such developments highlight the need to approach the process with a bit of caution.
Pick a car as you would an investment
If you were shopping for an investment plan, you wouldn’t pick one whose value declines by half in three years. The same case applies to buying a car. While it might not seem obvious but the rate of depreciation drops sharply after the first year.
A 5-year-old car boasts a 63 percent decline in value. Therefore, buying a car that is about three years old makes more financial sense when you’re looking to get the best bang for your buck. After two years, you can dispose of it, and register a negligible loss of 13 percent.
Consider the cost of ownership
One key appeal of a new car is that it is relatively maintenance free given its new condition and warranty. However, in addition to the hefty asking price, you have to contend with expensive insurance premium and pricey interest on car repayments.
For starters, you can save up to $11,000 by opting for a pre-owned car as opposed to buying the same make and model while new. Similarly, a don’t buy a workhorse when a small vehicle meets your needs.
You’ll only end up spending more on fuel, insurance, maintenance without getting the best value for your money.
Buying a pre-owned car makes an excellent choice for people looking to get the best bang for their buck. With the impressive used car prices here in Raleigh, you can ensure a smooth car owning experience.