Thursday, May 12, 2016

Make Sure Your Teen Appreciates New Car Depreciation

New Car Losing Market Value

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.

Good talk.

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