When you buy a new car you are guaranteed that your cars value will depreciate. As soon as you drive it off the lot. You are also guaranteed that insurance; licensing and taxes are going to cost you a bundle.
To make things worse most people who buy new cars finance them. Ask any financial adviser if he thinks it’s a good idea to finance something that is going to depreciate in value and see what he says.
The average person is going to spend around $300,000 of their hard earned money over a lifetime on new cars. That’s a lot of money to me. Could you retire sooner if you didn’t spend that $300,000? I know I could.
How long is a new car new? Until you drive it off the dealers lot, that’s how long. As soon as that new car leaves the lot it is now used. You can’t turn around a month later and sell it back to the dealer for what you just paid. Your new car has now lost about 20 percent of it value to the dealer. That’s $5000 on a $25,000 car.
Here is why. Car dealers are in business for one reason. To sell cars for a profit. So if you sell you car back to the dealer he needs to turn around and sell it again for close to what you just paid. So for him to make his profit he would have to give you less. Otherwise he won’t make his profit. So if his average profit is $3000 he is going to offer you $3000 less than you just paid plus the expenses he think he will have, like advertising and handling charges.
If you are going to buy a new car anyway then pay cash. Your car will depreciate just as fast, but you will save thousands in financing charges.
That’s what a friend of mine does. When he buys a new car he pays cash and then starts saving for his next car. He then proceeds to drive the wheels off that car. He keeps his cars a real long time. That’s the only way to buy new cars.
The average new car loses over 50 percent of its value in the first four years according to the industry standard NADA used car guide. That’s just one of the reasons why I love used cars.
It is possible to buy used cars so cheap that you won’t even have a car payment. Which is another excellent reason for buying used cars.
David Zamora has been buying and selling used cars since 1976. In fact, he has never purchased a new car. David has been involved in internet affiliate marketing since 2003. You can see his website here acmeinformation.com/ acmeinformation.com/
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