7/23/2023 0 Comments Edmunds used car pricesMYTH: BUYING OUT YOUR LEASE IS A BAD VALUEįalse. Now really is the best time to maximize your car's value if you plan on trading it in. That said, 2020 is an exception because we've seen an upward curve in used car values. These are good things to keep in mind when you're looking to either time your trade-in or negotiate with a salesperson in March instead of October. Also, a used car feels more new when it is eight or 10 months away from turning a model year older rather than just two or four months away. There are more buyers in the market early in the year, and dealerships need more cars to feed the demand. Values tend to be higher in the first two quarters of the year, with larger drops in the final two quarters. End-of-the-year sales might be the best time for buying a new car, but the trade-in numbers favour a different time of year. MYTH: WAIT UNTIL THE END OF YEAR TO MAXIMIZE YOUR CAR'S VALUE But when it comes to getting the most money for your trade-in, newer is better. If your older car is in good shape, it will retain value - dealers can often resell older vehicles much more quickly than newer ones. Cars that are more than 5 years old are less likely to reach those figures, even if you went easy on the miles. This remains true even if you racked up the miles. Your vehicle is likely to retain 60% to 70% of its original value if it is only a few years old. What matters more to a dealership? The model year. Even the infamous 100,000-mile mark is not a value-killer as long as the vehicle is in good shape. But according to Edmunds data, there is no major drop-off at any certain milestone. As a general rule, the value of your vehicle will drop slightly with every 10,000 miles you add. Mileage does play a role in a vehicle's value, but not as much as you might think. MYTH: MILES HAVE THE BIGGEST EFFECT ON TRADE-IN VALUEįalse. This depreciation figure is an average among all brands, but as a general rule, luxury vehicles will depreciate faster, while vehicles with higher resale value (a Toyota Tacoma, for example) will be closer to 20% in the first year. On average, a new vehicle depreciates by 30.5% in its first year, 7.7% in the second and 6.8% in the third year, according to Edmunds data. Ultimately, the dealership will plan to sell it for around 4% less than what a new one would go for, he added. That will lead to a further drop of 8%-10%, Arca said. Plus, the dealership will offer you less since the car is no longer new and it needs to make a profit on the sale. If you traded in your vehicle within a week or so, you're losing the sales tax and fees you paid on the car - about 11%. "The first hit on the car is basically immediate," said Richard Arca, director of vehicle valuations and analytics for Edmunds. MYTH: NEW CARS LOSE 20% THE MOMENT THEY DRIVE OFF THE LOT But are they true, especially this year because of new pandemic-related market trends? Edmunds' experts analyzed the most popular car value myths to find the truth behind them. They might involve how quickly a new vehicle depreciates, for instance, or the biggest factor that influences the value of your used vehicle. Ronald Montoya is a senior consumer advice editor at Edmunds and is on Twitter.You've probably heard over the years a number of tips or myths regarding the value of your car. This story was provided to The Associated Press by the automotive website Edmunds. Plus they come with the peace of mind of an added warranty.Įdmunds says: Shopping for a car today can seem daunting, but if you temper your expectations, shop with reputable dealerships and, if possible, plan to order your vehicle, you’ll be way ahead of the curve. They cost more than the average used car, but they’re more likely to have promotional interest rates that are lower than the average APR. Look into certified pre-owned vehicles as an alternative. Tip: If your credit isn’t the best and you’re shopping for a used car, make sure to check with different lenders before the purchase to secure the best rate. This isn’t much higher than a year ago, but the Fed has indicated that it plans to increase rates a few more times in 2022. Used cars tend to have higher rates, and in April, the average used car loan APR was 8%. Edmunds data shows that the average annual percentage rate, or APR, for new financed vehicles in April was 4.7%. In May, the Federal Reserve announced that it had raised interest rates by a half a percentage point, the highest increase in over 20 years. Advertisement Loans will be more expensive
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