Are you planning to buy another car? Are you leaning toward purchasing a new car, or a used one? Most people begin their driving adventures with used cars. In fact, it’s common for us to start off as teenagers owning secondhand or hand-me-down vehicles. (For one thing, they are less expensive to purchase!) But perhaps, now that you’ve landed your dream job, you’re excited to make the plunge and become the first-time owner of a new vehicle! If so, read on…

Unlike an investment that increases with age (most property, houses, stamp collections, fine antiques, etc.), making an “investment” in a new vehicle is the total opposite. In fact, your new car depreciates as soon as you drive it off the lot. That’s right! Its value is instantly slashed.

Three key factors come into play when determining a car’s actual depreciation value: purchase price, current age of vehicle, and the time the vehicle was owned. In fact, if you purchase a new car at $30,000 and drive it off the lot, your car’s value will have dropped by almost $2,700. (Gasp!) And there’s more. After just four years, your car will be worth less than half of its value. (That’s $14,700, in this case.) And after five years, your “investment” is worth about 37% of what you initially paid for your new car at the dealership. What’s the message? Simply put, don’t ever expect to get much money back for your vehicle.

Think of your car like a piece of exercise equipment. No one pays top dollar for a 6-year-old used treadmill that lacks a heart rate monitor, has a slightly-crooked belt, and wakes the neighbors when walked on. (If you’ve ever tried to sell such a machine, you may have actually had to pay people to take it!)

Of course, not all cars depreciate at the same rate, but the example mentioned above is close to the norm. So if you can handle being a second owner, perhaps a safe, affordable (but still snazzy-looking) two or three-year-old model would suit both you and your wallet the best? Of course, “new” is always an option, if you can afford it, but is it necessary? Ask yourself this question, and do the math the next time you’re deciding on purchasing a new or used vehicle.  Think your current vehicle may get you by with minor repairs? Perhaps the car you drive now is still the perfect one for you!  Want an expert opinion?  Bring your car to MOTEC Auto Care Clinics in San Diego for a free consultation. Why pay for something that will depreciate when you can fix up what you already have, for less?