The Price is Right!
There comes a time in everyone's life when they need to make that purchase. You know... THAT purchase. This purchase will most likely be the second biggest purchase of your life - outside of your home. It's a purchase which requires extensive research and thought - and maybe approval from a significant other... maybe. That purchase - the auto in stats auto.
This purchase should be fairly straightforward, right? Unfortunately, this purchase has one drawback- its resale value drops significantly. Who hasn't heard the saying "You're going to lose X$ or X% of your car right when you drive it off the dealer lot!"
But does it now and how much is X really?
Is there a way to enjoy this investment and not get your bank account hit like a knockout punch from Joe Frazier?....There sure is. Viola!
This graph illustrates how the average car drops in value compared to it's sticker price over 52 years. Yikes!
But stay calm....StatsAuto has analyzed over 60,000 car transactions to bring the most comprehensiveness information to save you some cold hard cash and give you real insight.
17%. That is the percentage of depreciation to expect in the first year after you drive your brand new car off the lot. For example you just bought a brand new car for $36,650. (That is the average price for a new car in 2016). One year later expect to lose $6230.50 on resale value. WOW!
The savvy consumer would never buy a car brand new simply for this reason.. right? There are few exception's to the case but we will talk about these in a future blog post. So what's is the best age to buy a car in order to retain most of it's value and still have a blast enjoying your investment?
The Graph is simple. The steeper the graph is moving down the more money you lose, and the flatter the graph is moving down the less money you lose. You may notice it goes up sometimes... this is a phenomena we will cover later, a phenomena which we have a very interesting theory for.
At 3 years old your car is over 40% off. So that $36,650 car can now be bought for $21,990. That's a lot less and it's not to hard to find a beautiful 3 year old car.
But, how much could have changed in 3 years? Not much really. In fact the engine, body, and options are most likely all to be the same. For example, European manufactures on average change make major changes(engine, options, body refresh) every 5- 7 years or minor refreshes(the body, and small options) every 2 years.
At 5 years old your car is almost 60% off. So this car that was $36,650 brand new now can be bought for only $14,660. With low mileage and the right options a 5 year old would make anyone happy.
So whats the verdict (Drum roll please)..... You shouldn't buy a new car if you're the average buyer.
The savvy buyer benefits from the StatsAuto deprecation curve.