Today’s fantastic family finance article is:
Here’s a conversation you’ll want to have with your teen as those driving years approach.
You: “Imagine we just bought you a brand new car for $20,000.”
Your teen: “Sweet!”
You: “We immediately drive it home from the dealer. How much is your new car worth now?”
Your teen: “Umm… Is this a trick question? We just bought it. $20,000, right?”
You: “Nope. Less than $18,000.”
Your teen: “What?! Where did the $2,000 go?”
You: “Poof! Depreciation.”
Your teen needs to know that’s how new cars roll when it comes to maintaining resale value. Badly. And that’s why your teen isn’t buying one. Not as a teenager, and hopefully not as a young adult either.
The average new car depreciates 10% as soon as it’s driven off the lot. After just 5 years, it will be worth less than half it's original sticker price. Bad deal.
Guess what else is a raw deal with new cars? Insurance. Fees. Both will be more expensive.
Your teen’s new car money mantra: Buy used, or get used.
Get tomorrow’s tip here.