depreciation per/mo.

2005 Chevrolet Malibu

 24060

 So...let's make it easy: Just the cars, no tax or anything else, no interest, 60 month term, no money down.  $24k/60 mo. =  $400 a  month. But the Malibu has cost you $110 more PER MONTH, in real money. In fact, these are retail figures, so the numbers will actually be even more dramatic as trade-ins. 

WHAT DOES IT MEAN?

Even though the Malibu is a nice car, a beautiful car, it will never be worth $110 more per month than ANY other car in it's class. IT WILL NEVER BE WORTH $4000 MORE THAN OTHER CARS IN IT'S CLASS. 

Here you can see that the depreciation stays pretty well even between these two vehicles. but you have paid almost $4000 less for the Malibu.

Is the Honda worth $4000 more? Well, the numbers say it is. But is it $4000 better? Of course not! Here is an opportunity to save money on a car purchase. You are spending at least $100 less per month, and the depreciation is going at about the same rate. In this case, the 'deal' appears to be the Malibu.

Where is the "sweet spot"...the point where the depreciation is working to your maximum benefit? Generally it is somewhere between 1 and 2 years for domestics. The NADA and Blue Book numbers may not show this, but it is possible to find certain domestic vehicles at around 50% of original MSRP after one year. This is just too good a deal not to consider. It seems that vehicles that are often used as rentals are especially available after a year or so, and these include such cars as the Malibu, the Impala, Mustang, Grand Prix, G6's , etc.  

These vehicles represent excellent opportunities to take advantage of the way that depreciation is driven not necessarily by quality, but by perception, demand, and availability.

MATH is fun!!