Saturday, April 12, 2008

Buying An Automobile

When considering the costs associated with purchasing a new vehicle - insurance, maintenance, loan interest - don't forget to factor in depreciation. You won't find it on the sticker price, nor will you be billed for it. You may not even notice it until the time comes to sell your car. Still, depreciation can cost you big money over the years.In the first year you own a new car, the vehicle may lose 20 percent of its original value due to depreciation.

By the end of the fifth year, your vehicle's value drops by an average of 35 percent.It's not only vehicle buyers who pay the price. Depreciation also affects the cost of leasing as well because leasing payments are based in part on what a vehicle will be worth at lease-end.

The more a vehicle depreciates, the less value it will have at lease-end. So, you could lease a vehicle with the same sticker price as your neighbor's leased vehicle but pay a higher monthly lease payment if your vehicle depreciates at a faster rate.You can't stop depreciation, but you can lessen the impact it will have on your wallet. Here are a few points to consider:Some makes and models depreciate faster than others. Accurately predicting depreciation is difficult because so much depends on a vehicle's continuing popular appeal. But you can get a rough idea how much your vehicle will depreciate.

Consult a "blue book" or other pricing guides to find out how well previous years' models have held their valueThe pace of depreciation levels off after five years. Hanging on to a vehicle for at least that long minimizes the impact of depreciation on the overall cost of ownershipIt's smart to pick options that will appeal to the next buyer. Vehicles with air conditioning, automatic transmissions, sunroofs, and convertible tops tend to hold their resale value better. Lesser known models, "luxury" or "limited edition" models, and vehicles with odd colors or features tend to depreciate faster.

Vehicles that change dramatically in style from one year to the next tend to lose resale value faster. Last year's model quickly becomes outdated and loses its attraction to potential buyers. Choose a vehicle from a manufacturer that makes only subtle style changes each year.

Depreciation can deal a substantial financial blow to the owner of a new vehicle. But it can work to your advantage if you're in the market to buy or lease a used vehicle. A vehicle model that depreciates considerably in its early years may be an excellent deal as a used car.To-Do's Before Buying a Vehicle, automakers continue to woo would-be car buyers with generous rebates and low interest financing on many popular trucks and cars. Many local dealerships depend on redeploying troops to make their business successful. Generous as these incentives are, they should be used only after careful consideration of financial obligations and goals.If you're contemplating the idea of buying a new car, consider postponing your purchase until you're comfortable enough with your finances to save regularly in addition to paying your other bills on time. You may also want to give some serious consideration to buying a late-model used car. It will be just as reliable as a new car and will cost much less.

Information obtained from www.ccuky.org

God Bless,
Cassie

No comments: