When shopping for a used car, understanding the vehicle’s value goes beyond accepting the asking price. Indeed, thousands of dollars may be at stake here, money best left in your account instead of lining the pockets of some random dealer. Consider the following hidden tips before you shop for your next used car.
1. Depreciation isn’t always appreciated.
It is common knowledge that new cars lose value the moment they’re driven off the dealer’s lot, typically 10 percent of its value right away. This means a $30,000 new car immediately sheds $3,000 of its value the moment the deal has been sealed and is now worth $27,000 on average.
The initial depreciation is followed by a steady decline that continues for months, even years. That decline typically never ends as time and wear and tear
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Car values are a reflection of popularity.
The average fall in car value is just that — an average. All things considered — age, wear and tear, and maintenance — some models do a better job of maintaining their value than others. This means as a buyer, you’ll pay more for such a vehicle. That isn’t necessarily bad, especially if the vehicle has a reputation for reliability.
Early in 2016, the National Automobile Dealers Association (NADA) examined resale values for 2013 models to determine depreciation rates for three-year-old passenger vehicles, including cars, SUVs, and trucks. The vehicle with the slowest depreciation was the one that is no longer made — the Toyota FJ Cruiser. After three years, it has retained 92.5 percent of its value.
The FJ’s unusually slow depreciation can be attributed to a few points: it was a long volume model, it no longer is produced, and it is prized for its off-road prowess. Coming in second place was the Jeep Wrangler, which retains 75.8 percent of its value. Incidentally, the Wrangler is still made and sells in much higher volumes than the FJ Cruiser. Other models maintaining above average values include the Ford Mustang and Volvo