Written By: Patrick B.
According to,“Why Does a New Car Lose Value After It's Driven off the Lot?”, most brand new cars will drop by about 15% to 20% immediately after they are driven off the lot. Brand new cars can not only be insanely expensive but they also don’t hold value well at all. New cars are terrible assets to have because of there history of losing value quickly and immensely. There are exceptions however. If you end up buying a car that may be rare or is more sought out this car may hold value well and may even appreciate in value as long as it is kept in good shape; however this only happens in very rare cases. So what should you do when looking for a new car? Well, there are plenty of other good options that are simple and will save you money as you move forward with a car that is just as sufficient.
One option that a lot of people turn to when they see the outrageous prices at a new car dealership is to buy a car that may have been bought by someone and immediately returned. While this is a huge mistake by the person who returned the car immediately after they brought it, this could be a lucky break for you. According to, “Edmunds: The Worst Financial Mistake a Car Buyer Can Make.”after just two years about 40% of the cars value is lost just from use. When a car is returned to a dealership(even with minimal miles on it, the dealership is forced to lower the price of the car substantially because it is no longer considered “new”. Because of this a car that may only be a few months old may drop in price by $5,000 or more. This is a perfect time to shop for one of these cars because of the extreme drops in price that occur. This is just one instance when buying a car would be a much better idea than to buy a brand new car.
Another option that many people will look at would be simply buying an older used car from either a used car dealership or from an independent seller off a website like Autotrader or Craigslist. Although you may not get the new car like you may have wanted, there are plenty of great options that are not only a much lower price but will deliver a very close performance as the new car you had wanted. There are always going to be people online that have cars they are just trying to get rid of. Because of this cars sold from some independent sellers will tend to be at much lower prices even if they are worth much more. Buying a used car also saves you from losing the original 15% to 20% when you drive the car away because it is already used and won’t lose value for a few extra miles. Not only can you find older cars on these websites and at used car dealerships, but sometimes you can also find new cars that people refuse to sell back to the dealership because of how much money they will lose. Overall this is a great option for most people but is found to be highly beneficial for teenagers and people with less money who want a quality car but can’t afford one. The biggest price dropper on cars is the amount of miles that have been racked on. This can take a car worth $50,000 at one point to a car down to a mere $5,000 dollars because of how many miles have been put on. This may be the perfect car for someone who needs a temporary car that doesn’t need to last long. As you can see this mode of buying cars is highly used.
The last and one of the most popular forms of owning a car is to lease it. You probably see this form of car buying daily while watching tv or even through listening to the radio. Leasing a car is very popular with car dealerships and there are always deals going on in order to make the deal even sweeter. Leasing a car doesn’t always mean the same thing but will most often consist of a deal that either has to do with how many miles are put on the car or a total amount of years you own it. Sometimes it may be a mix between these two and whichever limit you hit first will be when the car is returned. This is a great option for many people because of the combination of low price, a new car, and you can own the car for as long or short as you want without losing much money. Many people choose to go this route because they like change and aren’t a fan of owning the same car for a long time. The only downside to leasing a car is that some car companies may drag you into a deal that you aren’t able to get out of if you dislike the car. Along with this, the price that has to be paid if the car is damaged can be very high. Overall when deciding whether to lease or buy your new car you have to think about your own personal use and which option would best fit your lifestyle. Either way if you are looking for a cheap alternative or if you are just picky and don’t like owning a car for very long, leasing may be the correct form of buying a car for you.Overall buying a new car can be a tough decision but one that can be made smartly and decisively in order for the buyer to save as much money as possible. As you have seen here, there are plenty of ways to buy a car and overpaying for a brand new car isn’t always needed. While there are so many choices for new cars that can be purchased and this can be enticing, you will find that the used car industry is much broader and may offer you something you didn’t know was a better fit for you.
Works Cited
“10 Days That Offer the Best Deals on Used Cars.” DePaula Chevrolet, www.depaula.com/10-days-that-offer-the-best-deals-on-used-cars/.“Lease or Buy?” Buying vs. Leasing | New & Used Nissan Dealer | Champaign, IL, www.obrienteamnissan.com/buy-vs-lease.
“New Used Cars for Sale Near Me- Delightful to Be Able to My Personal Blog, in This Time We'll Teach You with Regards to u...: Good Used Cars, Used Cars near Me, Cheap Used Cars.” Pinterest, www.pinterest.com/pin/803540758489442559/.
Shama, Elijah. “Car Dealers Struggle to Sell 2018 New-Car Inventory to Make Room for 2020 Cars.” CNBC, CNBC, 5 Aug. 2019, www.cnbc.com/2019/08/05/car-dealers-struggle-to-sell-2018-new-car-inventory-to-make-room-for-2020-cars.html.
“Why Does a New Car Lose Value After It's Driven off the Lot?” CarsDirect, www.carsdirect.com/used-car-prices/why-does-a-new-car-lose-value-after-its-driven-off-the-lot.
kathleen_elk. “Self-Made Millionaire: Buying a New Car Is 'the Single Worst Financial Decision'.”
CNBC, CNBC, 11 Oct. 2018, www.cnbc.com/2018/10/11/david-bach-says-buying-a-new-car-is-the-single-worst-financial-decision.html.
It's really interesting that you brought up the differences with buying vs. leasing a car. Your information presented is rather insightful and the extra information on how leasing a car works really brought out the intricacies of the issue. It's very obvious you thoroughly looked into, or drew from knowledge and used that to share with people who may not be as invested with information about vehicles.
ReplyDeleteI agree that customers want to spend more on brand new cars. I also see that prices are outrageous even when a customer returns the car right away. Used cars are the most cheapest anywhere. I've done a car buying activity, and I paid more attention to used cars because it's affordable to my wallet.
ReplyDeleteI found this really interesting and a great insight to the intimidating, intense, and stressful world of car buying. Buying new cars is something my family never did, but that also meant that I never realized so many people wanted a new car. I think that the depreciation of a new car is insane but also makes a lot of sense when you think about it. Even buying a newer used car with only a few miles on it is so much better priced then buying new which is kind of crazy. But I totally agree with a lot of insights that were provided.
ReplyDeleteI definitely agree that you need to shop for a car that suits your lifestyle. However, your argument could have been heightened with a little more statistics about used cars, to show how much better the deal is when buying a used car than a new car. The one statistics that you included was interesting though. I didn't know that when you buy a new car the price depreciates by 15%-20% right when you drive off the lot. In addition, I found it interesting that when a brand new car is returned after only a month of being driven, dealerships have to drop the price by $5,000 or more, because it technically is a used car.
ReplyDeleteIt is really surprising to see exactly how much cars drop in their value after they are driven out of the lot, so your information is very helpful for those who would like to save a little more money on their vehicle purchase. Getting a car that is new, and will grow in value is incredibly rare. As is getting an old car whose value is rising. I appreciated how your conversation on both buying old cars or renting a car. That information is especially helpful not only to me, but to a lot of people who are looking to get a car with their drivers licences.
ReplyDeleteI think that the way you approached this topic was very informative and was really insightful on which car you should buy. I find it crazy how after driving it off the lot, which isn't even a mile, can drop that much value off a car. Very well done.
ReplyDeleteI had no idea that a car would drop that much in value just by driving it off the lot. I think that, for a lot of people possibly buying their first car in the near future, it could be very helpful to realize what you said about how buying a used car doesn't necessarily mean you can't buy a newer model.
ReplyDeleteThis is a great topic and I agree completely, that people should consider the idea to buy used cars instead of new cars when starting out. Of course, I think buying a new car would be great, but to save money and having a car that gets you from point A to point B is the most important part of it all. If you start out and you can find a used car you like, find out if its reliable, and the history of it, then you should be all set. This topic is great for high school students. Some high school students will want to buy their very first new car from right out the gate, but will see that they had used a lot of money on that car. While others will wait and be smart to buy a used car, spend less money, check up on the history, and be in a better spot because of thinking ahead. This is a great topic to talk about, and I'm glad you did so as it is very prevalent to a lot of high schoolers thinking of buying their very first car.
ReplyDeleteI agree that you should be purchasing a car that fits your lifestyle, but there are many other factors to be considered when buying a car. For example, the miles to the gallon, price on repairs, the type of gas the car needs, also the reliability of the make of the car. I found it interesting that the second you drive a new car off the lot the worth of that car goes down 15%-20%, in retrospect to the price of cars, that is a lot of money you will be losing.
ReplyDeleteI didn't realize how much cars depreciate in value. There was a lot of useful information in this post about buying and leasing cars, which is something that we will all need to know eventually. This information can be very helpful for us in the future.
ReplyDeleteThis topic has been very intriguing and there was no way possible that i knew all these things especially how much a car lost in value from driving it off the lot
ReplyDeleteI think that’s crazy that a new car could lose so much value just from driving off the lot, even if it still has little to no miles on it. After reading your post it seems like if you really want to buy a new car, you’re just going to have to accept that your going to lose money on it. For those who don’t want to spend a lot or just want a car for a short amount of time, leasing or buying used is definitely the way to go.
ReplyDeleteIt's definitely surprising to see how much cars depreciate in value. When I think of the car market, I think of buying a car to drive for a number of years before getting another, and I completely forget that certain cars are bought for their value rather than their usage. I'm curious as to see how this side of things is really affected by the most minute details, as investing in a car to sell off is far from a bad idea. However, simple things like how many miles are put on the car and if it's been driven at all can't cover all of it: there must be a lot to do with cleaning and maintaining, as well as knowing how the car works in the event that it must be driven. How long would it be after purchase that these effects would rack up, even if the car wasn't driven? That side of the debate is interesting, and I'd love to hear more about it.
ReplyDeleteThis is a great piece Pat! It is interesting to see how many cars you find that were sold back to the dealership within 24-36 months of initial purchase. I know three of the cars in my household are from that technique alone. There is also another input that can adjust the price which is one's negotiating ability. Some people are better than others but there is a science to getting a lower price for a car.
ReplyDeleteI did not know that new cars can be depreciated by 15%-20% almost immediately. Also, I never thought about buying a car to resell - I had always assumed people buy cars for personal use. I wonder if this resell business would be very profitable. With how expensive new cars are, and how much the price goes down with just a few miles on it, how would the selling price be determined? I feel like the business of buying cars is complicated enough. This post had very good information in it; I will definitely keep these things in mind while buying cars in the future.
ReplyDeleteThis a great topic to talk about, a lot of people get caught up in the brand and the bragging rights of a new car, but fail to understand how much they go down in value, and how stupid of a decision it is. New cars can be good if you're looking for top notch quality but there are many other used cars that have the same features for a lower price. Investing in a car really brings down your credit and it should be based on the value of what the car can do not just how old it is.
ReplyDeleteIn today’s society, everyone thinks that they need to have the newest and greatest technology in everything that they own. This especially includes the cars that they drive. Instead of buying a used car that is around $10,000 cheaper then a brand new car people decide to spend the extra money to get the newest features. Look at phones even. The price of an iPhone drops about $100 as soon as the newest one is released and there aren’t normally a ton of differences. Cars are the same way. There really isn’t much difference between the different cars makes each year. Every now and then there will be a bigger change that takes place and maybe that’s when you decide to buy that new car but is $10,000 really worth it? Just by waiting a year and buy a year older model off of someone who wants the newest deal can save you a ton of money and practically no one is going to know that the car is a year old. I believe that in car buying, buying a used car is a way better financial decision to make as a consumer.
ReplyDeleteThis is a great article on information and the truth about buying a new vs used car. Have you thought about what our GDP would be impacted if more people bought used vs new cars?, how does it effect our economy when people start deciding buying a new car is a far worse investment that a used one that is only a few months to a few years old?
ReplyDeleteI found it very interesting that a car would lose it's value so quickly when it is taken off the lot, and I certainly would have never thought about buying a recently returned car. I feel like car salesmen don't want you to know this in order to have you purchase a brand new car rather than something that is far less expensive. I definitely will keep some of these tips in mind when I purchase a new car and this was a really engaging blog post!
ReplyDelete12/5/19- Pat, I’m not going to say that this was helpful but rather refreshing. As students, we need to think about our future and in our future (probably after college) we will buy a car. I would say that buying/ leasing a car is pretty well know knowledge and so is the depreciation of value as soon as a car is driven off of the lot. The insight of roughly how much a car depreciates and the specific benefits of leasing is great to know. This is a solid piece in the sence of furthering my knowledge on something that I know a bit about.
ReplyDeleteWhile buying a new car can be a nice experience it makes no sense when you could buy a same year model with one owner for several thousand dollars less, My family bought my dads car for almost 7,000 dollars less that the first owner bough it for. With only one owner and 10,000 miles on it the car was practically brand new and still had that brand new fell to it.
ReplyDeletePat, you brought up a lot of very interesting points that while at first we may not think of, we genuinely know deep down. For example, the idea of car depreciation, and how that factored in with "new car price" makes BUYING (not leasing) a brand new car a typically fiscally irresponsible decision - a bad investment, per se. Somebody else also brought up another really good point, where they talked about purchasing a same (or extremely similar) year model with one owner for significantly less money. A friend of mine purchased a used mini cooper - granted with only 126 miles on it... but for close to $6,000 less. This was a very solid blog posting and I am a big fan of your work. Can I have an autograph?
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