This infographic shows you the sticker price is not the most important factor when deciding what make and model to buy. Use this as a guide to ensure you make the best decision on what model to buy.
The start of this year demonstrates the problem. Ignoring the weather which was particularly cold, 2014 saw a year-on-year fall in the sales of new vehicles in the first quarter. Many dealers, caught with unsold inventory, have been offering discounts. This reflects the general law of supply and demand. If not enough people will buy at the offered price, the sellers reduce the price. If there’s demand for a limited supply, the price rises. Now ask yourselves. If there’s insufficient demand for these models today, why will there be demand for them as secondhand vehicles when you want to sell in three or more years time? In other words, it’s not unreasonable to assume there will be serious loss of value over the years you will own the vehicle. The current average loss of value over five years is 65%. Yes, depreciation can be brutal. You are losing thousands every year you have the vehicle registered in your name. So before you buy, look at the trade guides on secondhand values to find out which makes and models lose the least.
Or, if you decide to buy secondhand, try to work out which year’s model to buy. You want to aim for the year when the most value has been lost and the depreciation slows. That way, you will limit the amount you lose during your period of ownership.
Now think about the running costs. Buying a model which has an average 35 mpg performance rather than your current vehicle which gives you only 20 mpg will save you thousands a year. Indeed, when you look at the decision logically, it’s worth paying more to buy a gas-efficient vehicle. Although you pay more up front, you will save thousands over the years.
It’s the same when it comes to car insurance. If you do your research, you can save hundreds if not more than a thousand every year on the premium rate by picking a model with the highest safety rating from the NHTSA or IIHS. Again it may cost you a little more, but it pays for itself.
Now think about reliability. Although new vehicles come with a warranty, the longer you keep it, the greater the risk you will have to pay for a major repair. Picking a manufacturer who builds to last reduces the risk of high costs after five years.
In other words, working through this infographic can give you the basis for saving thousands of dollars on your car ownership costs over three to five years.
Brought to you by safecar.info