Depreciation Is Spending
Ah, that wonderful, if toxic, smell of a new car. Enjoy it from the showroom to the street; the moment you drive you cute new car off the lot it instantly loses twenty percent of its value. That loss is called depreciation.
Cars that depreciate the most tend to be high end luxury cars or very cheap subcompacts, the very cars most owned by gay men. However, there are many models at both of these levels that hold their value and are consistently regarded as safe and reliable.
Depreciation is a major cost of owning a car. If you pay $30,000 for your new car and it is worth $10,000 in five years your cost of depreciation is $20,000 or $4,000 per year. If you pay $15,000 for your new car and it is worth $2,000 in five years your cost of depreciation is $13,000 or $2,600 per year. Your new car will depreciate over the first five years of ownership after which its value remains static; by the ten-year mark, the car has no significant value..
High mileage is the number one factor in automobile depreciation. Other factors include poor quality, bad design, excessive repair expense and simply that no one likes the car. Ford had the Edsel, Mazda had the RX, Nissan had the Leaf one of the first all-electric cars. Plus, incentives that car dealers love to lure you into the dealership with will depreciate a vehicle very quickly.
Some models that have not held value well are luxury models like Range Rover which though initially sold for $60,000 can now be had for $5,000 because of maintenance costs. Cadillac’s Escalade that sold for $80,000 can be had now for $30,000, not because it isn’t a great car but because it came to market as gas prices sky rocketed. Jaguar fell to dated looks and looses 85% of its value. Mercedes S Class looses 80% probably because of sales incentives on the original purchase and flooding the market with used ones coming off leases.
Less expensive cars are not immune to big depreciation. When Chrysler was in financial trouble, and when Saab went out of business the resale value of their cars collapsed. A Mercury Grand Marquis is worth 80% less simply because the design has not been updated. Subcompacts from Kia and Hyundai, and others like Ford Taurus and Chevrolet Malibu are sold to fleets, which instantly decreases their value because there are so many available.
Depending on the reason for high depreciation some of these models can make excellent used car purchases.
Depreciation isn’t always a big consideration for gays who can be much more influenced by style, but it can be limited by buying the right model in the first place. If you are going to be trading in your car in the next five years don’t buy a vehicle that was created for fleet service, avoid odd colors. Keep your car in good shape and limit your mileage.
Many websites can help you determine the expected depreciation, and the real cost to own a car. You can do some research to see which models are the most reliable. In the end your care of the car, the mileage and the whims of the market will determine how much value your car retains.
Find a car that fits your lifestyle and budget. Know what model you want and how much you expect to pay before entering a showroom. Getting the car that is right for you will allow you to enjoy it for five years and paying the right price for it when new will limit your deprecation after five years.