Fighting Depreciation With A Car Loan

by: Peter Kenny

What do you think is the most expensive aspect of owning a new car? You might answer gasoline, insurance, new tires and you would be wrong. The greatest expense to owning a new car is depreciation. Depreciation is the single most expensive part of car ownership. When you are thinking of that new vehicle, when you are thinking of that new car loan, think about depreciation as well.

If you are not sure what depreciation is, it is the difference between what you pay for the vehicle and what you can sell it for later on. The amount of depreciation varies wildly from one vehicle to the next, and it also changes with the mileage on the vehicle.

It is generally considered that for an average, intermediate sized vehicle, depreciation will amount to 32 percent of the total cost of ownership over 128,500 miles. That is the normal life expectancy of a vehicle.

Depreciation becomes an important factor when you are choosing a new car depending on how soon you intend to trade it off for another one. If you are only planning to use the vehicle for a short period of time, a year or two, depreciation will be more important to you. Vehicle depreciation is usually greatest in the first few years of the vehicle’s life and then it begins to level off with time.

Mileage and age are just two of the factors that can affect the resale value of your vehicle. Here are some more that you might find interesting.