New car "math"

[Dodge Doll]

This is the sole reason I will NOT buy a new vehicle: I'll buy one that's a year old, or an ex-lease, but not new.

Buy that vehicle, and slap plates on it.... as soon as it hits a public street, it loses twenty five percent of it's purchase price. That means your $20,000 car is now worth just $15,000, once it's on pavement on private plates.

OUCH.

 

[Buyer]

Yep, and this is why I never buy a new car. Not to mention the fact that a new car still has all its 'bugs' to be worked out-electrical quirks, loose fuses and so on.

 

[MyMotor]

There are benefits though too, in buying a new car. And even if you buy a used car, there are risks-big ones, as the used car may be a total money pit. At least the new car has a warranty.

 

[Fanbelt]

That's not good news. I read somewhere that the value of a car depreciates by 15% every year. So basically the real value of a car on the market is much less than its estimated value?

 

[Dodge Doll]

@ Fanbelt: you got it.

Dealers have access to a series of books, there's three in the series: Red, Blue, and Black. Each has the value of vehicles : one is market, one is loan-ability, and one is the bottom line. They use these books to assign the value to a trade in, and they work from Black Books to do that. The only way you're going to get retail on a trade in is if they're negotiating from a retail price to begin with, and they're experts at juggling the numbers on paper to make it palatable to the purchaser.

Even if you're shown the 'bottom line' from the dealers stock book, which is supposed to be COST.... there's between $500 and $2500 in profit built into that, of which only $150 will make it to the sales rep (if that, most often it's flown as a "house deal" to avoid commission).

 

[hotrodSteve]

That's the reason I won't buy a new vehicle. To me. it's simply not a good investment and the money spent could be used for other things. I usually buy vehicles when they are a couple or more years old if I'm not buying an old hot rod.

 

[LDriver]

This is the most useful information I have read here in the forum today. It reminds me of the government scrappage scheme of £2000 off when you trade in your old car for a new one. This is because wanted old cars to disappear on the roads.