Depreciation is considered by many automobile experts as the largest expenses in the first year of owning your first car.
In case you are not fully aware of, one of the hidden costs in buying a brand new car is depreciation or the decreasing value of the car from the year you purchased it. Both brand-new and used cars depreciate eventually, however, the rate and the speed of depreciation in general hits harder for brand-new cars, especially in your first two years of ownership, and it is always up to the buyer to determine whether the value of owning a brand-new car exceeds the cost of the depreciation.
So now, there is nothing for you think of why a lot of brand-new cars that were recently released a few years ago, ended up in the massive complex or car park of second-hard dealerships with a slashed price that is more than half of its original price when it was first introduced in the market.
Nowadays, brand-new cars sell like iPhones and smartphones as car brands continue to manufacture and release new and innovative models each year giving consumers something to look forward to each year while getting rid of their current vehicles.
The depreciation rate already takes its toll as soon as you drive your car outside the dealership. Depreciation is considered to be the steepest in the first year of ownership, as it tapers down the longer you are getting hold of that car. In the first three years of owning that car, a brand new car will make it 45 percent lesser in its value because of depreciation according to consumer reports, and this rate adds about 25 percent in the next three years of owning the same car, which means, once you decide to trade that car in for a brand-new one after six years, you should expect that its value is not what expected it to be.
On average, used cars likely lose up to 15 to 20 percent of its value over the long haul, compared to the higher depreciation rate of brand-new cars, no wonder a lot of people in the United States nowadays consider used cars as their top choice.
There is a fair significance when it comes to depreciation due to mainly a reflection between the wholesale value and the retail price. If you want to buy a brand-new car from a dealer, you pay for the retail value, and when you drive it off the dealership’s lot, the car is no longer brand-new, and it can only be sold at wholesale value, that is who depreciation works. The difference between the retail and the wholesale value is always within a thousand dollars.
When it comes to considerations, brand-new cars you should always treat brand-new cars to have a large drop-off value compared to used cars, but when you can score something in return for that price drop, as brand-new cars are always under warranty for a long period of time from the dealership as a perk for the first owner, while there is no history of damages and being worn out compared to used cars.
However, used cars nowadays are more durable and cost-friendly to consumers because of depreciation as more and more brand-new vehicle owners frequently trade in their car annually to avoid a bigger depreciation cost and try out the brand-new models available. For quality used cars, check this link sell my car Hayward.