Cars That Depreciate In Value The Most


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November 25, 2012 | Filed Under » Budgeting, Personal Finance
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<!-- .content-image -->Depreciation is that moment when you drive a new car off the lot and the car instantly loses 20% of its value. Some cars hold their value better than others. The cars that depreciate the most on automotive lists tend to be high-end luxury cars or very cheap sub-compact cars. However, there are many models at both of these levels that hold their value and are consistently regarded as reliable and safe.

Many things factor into the true cost of owning a car. Depreciation is a major factor. Automotive sources use a basic formula that spans an average five-year ownership of a vehicle to determine its depreciation value. According to a recent survey by CarMax, high mileage on a car was the number one factor in its depreciation. Other sources, such as Popular Mechanics, cite poor quality, bad design, the expense of repairs and sometimes just that the general public doesn't like the car. Do you remember the Edsel? Born from a marketing blitz, the Ford Motor Company created an entire division around the car. It seemed destined for success, but it bombed. Nothing was really wrong with the car. In fact, it had state-of-the-art technology for the era, but consumers hated it.


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Ford isn't the only carmaker that saw the value of one of its models sink like an anchor when it hit the lot. The Mazda RX didn't live up to its hype, and sales of the car dropped. The highly-touted Nissan Leaf, one of the first all-electric cars, left many drivers stranded because its power gauges were incorrect. Depreciation is also a result of the substantial competition in the auto industry today.

"The automotive industry is so competitive these days that you're seeing vehicles being redesigned every four or five years," said Eric Ibara of Kelley Blue Book. "If you see a vehicle that is in its fourth or fifth year and not doing well selling [new] retail, it would tend not to hold its value as well as its competitors."

Plus, those incentives to buy that car dealers love to lure us with will depreciate a vehicle very quickly, too.

Here are few models that depreciate the most.

Luxury Models
Range Rover
This is a staid, timeless SUV that unfortunately used some very subpar electronics in a few model years. Word spread quickly and that new Range Rover that was purchased for $60,000 can be now had for $5,500.

Cadillac Escalade
As the luxury carmaker tried in earnest to create a luxury SUV, gas prices soared and interest in this gas guzzler died. Carrying a sticker price of over $80,000 new, you can pick up a low-mileage Escalade for less than $30,000 today.

Jaguar S-Type
Although there is nothing inherently wrong with the Jag S, its design looks dated. Originally selling for $60,000, models can be found for around $10,000.

Mercedes-Benz S-Class
Oddly, this model has taken one of the worst beatings in the depreciation department, with the ability to lose more than 80% of its value in five years. Again, it is an old, respected brand and even the experts can't figure out why the value has dropped so significantly.

Mid-Size and Compact Cars
Experts warn you away from any carmaker that has financial issues, such as Chrysler and Saab. Values of models from both these manufacturers have plummeted, particularly the Chrysler Sebring and the Saab 9-3.


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The values of the Chevrolet Cobalt and Mercury Grand Marquis drop a staggering 80% after purchase. One of the reasons is that the design of these models hasn't been updated in four years.

Subcompacts from Kia and Hyundai are now being sold to fleets and this instantly decreases their value. Others to avoid are the Ford Taurus and Chevrolet Malibu. Although experts consider the Malibu one of the most improved models, it seems no one wants it, and its resale value has tanked.

Limiting Depreciation
Experts caution that if you are certain you will be trading your car in in five years or less that you do not purchase a vehicle that was created for fleet service. A good example is the Ford Taurus. The aftermarket is littered with them, which drives their resale values down. Also, for those drivers who trade their cars in every five years, don't buy an odd color. Stay with black, silver, white or dark blue. Stay on top of maintenance and limit your mileage. If you intend to keep your vehicle over five years, then depreciation isn't really a factor in your purchasing decision. The biggest decline in value occurs in the first five years. By the ten-year mark, the car has no significant value. Make sure to take all of these things into account when deciding to purchase a new or used vehicle.

The Bottom Line
There is no way to predict the depreciation on a vehicle. Their values drop the minute they are driven out of the sales lot. You can, however, do a little research to see which models are the most reliable. In the end, your care of the car, the mileage and the whims of the public will all determine how much value your car retains. First, find a car that fits your taste, needs and budget like the Chevrolet Monte Carlo. Make informed decisions before you get to the dealer, not while you're standing in the showroom.

 

10 Steps To Buying A Car (Without Getting Taken For A Ride)


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<!-- .content-image -->Are you ready to buy a new or gently used car? It's a big purchase, and can be intimidating at first. So before you get dazzled by the balloons and shiny metal, make sure you follow these ten steps to get the best deal.

IN PICTURES: 5 Ways To Control Emotional Spending

1. Know What You Want
   This may seem like the easy question, but knowing the answer will save you a lot of running around. Think of what function your new wheels will have: are you hauling kids to school? Maybe a minivan is for you. Driving to work? An economy car might be better to save money on gas. You can do your research online by visiting sites like New Cars, Used Cars - Find Cars at AutoTrader.com. (GM's announcement to sell cars online via eBay has many consumers curious - find out how to purchase online successfully in 10 Tips For Buying A Car Online.)
2. Know What You Can Afford
   Make sure you have a set price range before you go shopping. It will keep you from driving and falling in love with cars you can't afford, and having a clear budget will save you time, too. Check insurance rates on cars you're considering, as those can vary wildly. Get prequalified for a loan before you shop. You should always end your deal with a fair sticker price and a manageable monthly payment, but also consider what the car will cost you monthly. Make sure you budget for gas, insurance, repairs and maintenance.
3. Know What Your Trade Is Worth
   If you're trading in your old car, make sure you check the value before you negotiate by going to Official Kelley Blue Book New Car and Used Car Prices and Values and N.A.D.A. Home Page (values can vary, so it's best to prepare with both estimates). If you still have a loan on your trade, find out exactly how much you owe. It's important to know if you start with a deficit (when you owe more than the trade is worth), because you'll have to add that to the cost of your new wheels. Sometimes it makes more sense to drive your oldie a little longer, or sell it privately. (If a new car isn't in your budget, here are some tips to make your current car more fuel efficient. Don't miss Get Smart With Your Current Car.)
4. Check for Rebates or Special Financing Offers
   If you're buying a new car, look up the manufacturer website for rebates and special financing. Remember: those are incentives offered by the car's manufacturer, not the dealer! They don't cost your dealer anything, so there is still plenty of room for negotiation.
5. Check Internet and Newspaper Deals
   Many dealerships advertise a car at a lower cost in the newspaper or on the internet. If you walk into the dealership without the ad in hand, they'll quote you a higher price. Remember that just like supermarkets have specials on certain foods to get you in the door, so do dealerships. Keep your eye on your research and budget; don't let yourself be talked into something else once you shake the salesman's hand.
6. Don't Show Your Cards
   The first thing a dealer will do is ask you a lot of questions, trying to figure out what you're looking for. You should answer honestly - a sales person is there to help - but don't tip your hand too soon. If you know they have the car you want for a good price but you're willing to spend more, don't tell. Be vague if you have to, or give a price range. There's no need to talk numbers until you're ready to buy.
7. Use Ads to Negotiate
   Let's say you've found the perfect car, but you know a dealer across town is selling the same year, make and model for less. Bring the ad. Many salespeople will deal to keep your business. (Find out how you can keep your car running longer for less in Top 5 Money-Saving Tips For Your Car.)
8. Check the Vehicle
   Have your mechanic check the car if it's used. Check the vehicle's history; carfax.com has a VIN check capacity that will tell you if a vehicle has been in an accident or has other suspect history.
9. Be Ready to Walk Away
   If the dealer isn't meeting your needs, won't let your mechanic look at the car or the vehicle history is suspect, walk away. There are other cars and other dealers out there. You did your homework. Don't be taken for a ride just because you fell in love with a car. (If you're looking to buy a car, check out Car Shopping: New Or Used?)
10. Beware of "Extras"
    You're ready to sign on the dotted line, and you find the finance manager talking you into alarm systems and extended warranties, priced at a thousand dollars or more. This is how dealers make their money. Unless you buy a car with a bad history most extended warranties aren't a good deal for you. Think about it: the dealer wouldn't be making any money off these warranties unless the repairs cost them less in the end. Instead of paying for an expensive warranty, budget for repairs.

<!-- .one -->The Bottom Line
Make sure you're an informed buyer, and you'll be happy with your car for years to come.
MCF Member's, post your thoughts/tips on how to buy another car without being ripped `off What do you do ? ?

 

I think its always better to buy a car thats atleast a year old that way u dont take such a big loss, the Edge is still worth more trade in than what it cost