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Buying a new car in 2010? Or will it be slightly used?

Posted by Bill Sluben on September 15, 2009

Ahhhh…that new car smell.  Pretty intoxicating.  However, less of us seem to be getting drunk on it these days.

Seems to be a paradigm shift these days in how consumers perceive their “needs” and “wants” when it comes down to replacing the clunker.  The old (read: pre 2008) mentality was to replace a vehicle every 3-4 years…if not sooner.  And why not?  Credit was easy, unemployment was low, housing values were endlessly appreciating and consumer sentiment was high. 

Fast forward a year and a half and a different outlook and mentality has grown deep roots.  Gone are the days of excess and frivality…ushered in are more pragmatism and caution.  What does this bode for the auto market in 2010?  For starters, longer ownership of the vehicles that people already have.  And when it does come time to replace a vehicle, a look at slightly used vehicles can make a big difference in the hit to the savings account.

Considering most people keep their cars longer than one year, our best and worst residual value lists rank cars by their three-year depreciation values, with data provided by Automotive Lease Guide. Cars with the highest residual value hold 60-70 percent after three years. The worst hold 20-30 percent.  20 to 30 %!!!  That could translate into a $10,000 resale value after one year on a truck or SUV that cost it’s owner $50,000 to purchase.

To be fair, there are lots of great deals on new vehicles to be had…and the advantage to owning a new vehicle generally means more of your service repairs covered under warranty.  But the significant cost savings of purchasing a slightly used vehicle is hard to pass up in this economy.

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