America is a car-based culture, no doubt about it. We rely on our vehicles to get to work if there is no public transportation, or to get to the grocery store or the mall, or just to get out of town for a while. For young people, getting that first car is a rite of passage, and the media and all the glitzy ad ad campaigns encourage everyone, young or old, to buy a new car.
A new car is a social status symbol that shows everyone that we have income, good credit, good taste, and are as cool as we can possibly be. But a new car is clearly not a good investment, and in today’s economic climate it’s even worse. A new car loses value as soon as it’s driven out of the dealer’s lot, and every mile you drive subtracts a little more – all the while you’re still paying for it – nless, of course, you have paid cash for your new vehicle. For the rest of us, there are ways to hold down depreciation.
Maintenance and use
If you already have a new car that you’re making payments on and you want it to depreciate as slowly as you can, try to drive it as little as possible to keep the odometer reading as low as possible. Try public transit if it’s available, or carpooling to save miles on your car.
Make sure that you are keeping up on the maintenance of your car – and that doesn’t just mean getting the oil changed and the tires rotated. Every new car has a maintenance schedule that has been recommended by the manufacturer. This schedule should be followed religiously, and documented thoroughly by your dealer and you – don’t count on them to keep complete records.
There are other maintenance chores that aren’t on the schedule that you’ll have to take care of, such as keeping the outside of the car looking good and in top condition. Finally, if you’re stuck with a new car and a payment, pay it down sooner if you can so that the value more evenly matches what you owe on it, and keep it as long as possible. Modern cars can last a long time if they are cared for, maintained, and not abused in any way. The longer you have your car, the more value you’ll get out of it over time.
Research your investment
If you are absolutely adamant that you have to have a new car no matter what the cost (within your budget of course), then do your research first before even visiting a dealer. You want to get the car that has the highest resale and trade-in value you can find, within reason. You have to make choices based on your needs and uses, but there are plenty of cars that hold their value much better and longer than others.
Choose your new car from this pool of options, not because of a great financing deal or other incentive. And when you make your decision, put as much money down on your new purchase as you can afford – it will help with your payments and add to the car’s value.
The best advice is not to buy new at all
Of course, the best advice about how to keep depreciation to a minimum is – don’t buy a new car. By overcoming the impulse to have the newest, brightest and shiniest, you’ll save thousands of dollars in the long run, and still have reliable transportation. Buying a used car has never been easier than it is these days, with the Internet and research sources so readily available.
You can find out a car’s history and avoid making a costly mistake. You can choose whether to go for a more recent car or an older one – the newer a vehicle is, the more it will cost, but it might have some warranty left, or at least a good maintenance history.
If you decide to try to buy a decent older car, find a mechanic that will agree to look it over and let you know about any major problems before you buy. In either case, don’t automatically go for the cheapest car – the advice about getting a car with the highest resale value applies to used cars as well. If you want to able to sell it in a couple of years, then the higher its resale value, the less you will have spent on it while you drove it.
Depreciation on an automobile is a fact of modern life – unless you collect antique autos, there is not a car whose value will not decrease over time. The good news is that you can reduce that devaluing process to a minimum, and still have the wheels that you need.