Off the lot automatic depreciation

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I see the comment made often that buying a lightly used (say 1 to 2 years old) vehicle is a better choice financially because of the upfront depreciation that takes place.

Although I generally agree the upfront depreciation is a bear, the statement puzzles me sometimes because of the way some manufacturers (I'm think of my experience with GM specifically) offer heavy rebates up front.

What's a good source (assuming there is one) to measure that upfront depreciation that takes place as soon as you drive off the lot (other than driving that new car back to a dealer a week later and asking about trade in value
smirk.gif
)? Would Nada used values be the best?
 
Only way to come out even is to buy a left over "last years" and beat them over the head with a figure on lost value. There's a lot which goes on in the "back room" when you are dickering including a to the dealer dealer "incentive" to unload an unpopular "last years" which has not sold and which discount they would like to avoid passing on to you.
 
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The only way to do it is shop for a 1 or 2 year old car get pricing, and then price out a new one with discounts and incentives. Every time I have, it hasn't made sense to buy used. The difference becomes greater with luxury cars, but for mainstream vehicles (Civic, Cruze, Equinox, CR-V, Accord, Corolla, Fusion etc.)I don't see a savings.
 
My father in-law bought a new Jeep for $28,500 drive away price. He put 8,000 miles on it and then died. It was 13 months old and I had the original bill of sale and his death certificate. Do you think anyone would bite at $18,000? Not a single offer. Had to take it to a dealer and accept $15,500. That is terrible depreciation.
 
Originally Posted By: WobblyElvis
My father in-law bought a new Jeep for $28,500 drive away price. He put 8,000 miles on it and then died. It was 13 months old and I had the original bill of sale and his death certificate. Do you think anyone would bite at $18,000? Not a single offer. Had to take it to a dealer and accept $15,500. That is terrible depreciation.
Did you let on you were a "motivated seller"?
 
I have the opposite experience-the xB in my sig cost $13,700 new, they're still selling for around $8700 used, & it'll be 10 years old in February! Only $500/year!
 
Not much these days for a car that is bought at the right price. A lot of the time you can buy a car with lots of cash on the hood new that's cheaper than 1 year old used.
 
It varies a bit by manufacturer.

My wife's current car and previous cars were bargains because those particular models suffer serious depreciation.

Our PT Cruiser stickered at nearly $25,000. We got it with 4,000 miles for $15,000.

Our 200 stickered at nearly $29,000 We got it with 2,200 miles for $18,000.

The big surprise was Kia.
Kia is all the sudden-out of nowhere holding its value.
In previous years, you drive off the lot in a Kia and it is immediately half its original price.
A $29,000 Optima with very low mileage was nearly $25,000

Toyota Camry and Honda Accord have long been that way. Ford and GM are better than Chrysler but not as good as Toyota and Honda in depreciation.
 
Originally Posted By: WobblyElvis
My father in-law bought a new Jeep for $28,500 drive away price. He put 8,000 miles on it and then died. It was 13 months old and I had the original bill of sale and his death certificate. Do you think anyone would bite at $18,000? Not a single offer. Had to take it to a dealer and accept $15,500. That is terrible depreciation.


Sorry for his death, but if you buy at a wrong price there's nothing you can do to fix the situation.

The right question to ask is how much a new Jeep for the same design / generation / year sell for right now vs how much you got offered for.
 
Originally Posted By: bullwinkle
I have the opposite experience-the xB in my sig cost $13,700 new, they're still selling for around $8700 used, & it'll be 10 years old in February! Only $500/year!


Good luck on that. Edmunds values it at $3,500 trade-in. $4,500 private party sale. Still $1,000/year is good.
 
One has to consider the used car risk factor. If a new model is $ 30 000, how much should a 6 month old low mileage example sell for..?

Most buyers in that price range will find a way to buy new, and never even consider used.

With new car financing and leasing rates being as low as they are, and the fact that factory finance is readily available to the majority of buyers, why would most people even consider used, unless there was a BIG incentive to do so?

For example, Hyundai currently has zero percent / 96 months on some models...

To sell me your less than a year old car, you're gonna have to almost give it away... otherwise I'll just buy a new one...
 
I bought my Focus for ~12K when it was new - discounted heavily as it was "last year's model". One year in, I was offered $11K on trade.
 
Originally Posted By: splinter
Yup. And most of our vehicles got another year older just last week.
smile.gif


That 'new car smell' is pretty nice though!


What kills me is seeing people smoking in a brand new car -- what a waste!
 
Originally Posted By: HerrStig
Only way to come out even is to buy a left over "last years" and beat them over the head with a figure on lost value. There's a lot which goes on in the "back room" when you are dickering including a to the dealer dealer "incentive" to unload an unpopular "last years" which has not sold and which discount they would like to avoid passing on to you.


+1. Have done this for years. Generally use NADA value. On my 2012, paid $100. over used value for a new 2012.
 
My 1995 Ford Escort stopped depreciating years ago. In fact, the junkyards give more money for cars these days, so it's value has actually increased the last couple.
 
I used to try to explain this to people back when I was in the car business (90's).

Say a new car stickers for $25,000. Dealer invoice may be $23,000 (just using round numbers).deduct rebates, $1500 and dealer holdback (3% of list minus freight, $25K - $600 = $24,400 x 3% = $730).

that gives a true dealer cost of ~$20,770. This doesn't take into account the additional manufacturer to dealer incentives (example, sell 50 new Silverado's and Chevy gives the dealer an additional $1000 per unit in backdoor money).

So now this car that 'lists' at $25,000 can be bought by the dealer for $19700.

How much less does a used car have to sell for than a new one for someone to buy it? say $2000?

Now this $19,700 car has to sell for $17,700 on the lot. The dealer wants to make $2000 on the used car, plus some extra 'lot' and 'recon' fees...so he bids the car for $15,200.

That is how your $25,000 car is worth a little over $15K the week after you drive it off the lot.

Not saying it's right or I agree, just saying that's how it worked when I was in the business. Moral of the story? Don't ever buy new and then try to trade it shortly after.
 
Originally Posted By: WobblyElvis
My father in-law bought a new Jeep for $28,500 drive away price. He put 8,000 miles on it and then died. It was 13 months old and I had the original bill of sale and his death certificate. Do you think anyone would bite at $18,000? Not a single offer. Had to take it to a dealer and accept $15,500. That is terrible depreciation.


This is the crux of the issue "What is that 1-3 year old car worth" t's one price if it's on a Dealers lot among New cars that the dealer also wants to sell (along with possible service and Add-ons) Another if the new owner wants to liquidate the car for cash.

We live in a area that a lot of people retire to. The last two cars we have bought (2 years old) were from newly retired people that decided that they now don't really need two cars.

The above post it accurate, we paid about 60% of the 'New' car price on a car that had been (by the nature of the sale) babied and seldom used.

We post 'Want Ads' for the model car we want and offer a cash price about 2k lower than it would typically be on the lot.
You also get to meet (and size up) the previous owner.
 
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