By The Numbers: Used Luxury Cars
It has become common knowledge that cars lose value the moment they are driven off the lot. Yet, every single day, people run out to dealerships, sign on the line, and suffer an immediate loss in value. Oftentimes, the moment people drive off the lot, they are already in debt for more than the vehicle is worth, which is equally terrifying and saddening. It’s no wonder that many financial experts strongly recommend pre-owned vehicles as an alternative to the poor investment associated with new car ownership. Interestingly enough, this paradigm is amplified in the luxury car sector, with many luxury vehicle models reaching a depreciated level far more rapidly than other vehicle sales. While that may not seem totally surprising to you, the actual cost of new luxury vehicles may actually shock you.
Crunching the Numbers
As stated before, nearly everyone knows that value is lost the moment a car is purchased, and that cars depreciate in value far more rapidly than other large assets, yet still people buy new luxury cars regularly. However, taking a look at the actual math behind a luxury car purchase can change that picture quite rapidly. Take, for instance, the purchase of a moderately mid-range new luxury vehicle purchase of $90,000. Let’s examine what happens over the course of 5 years to your vehicle:
With a loan amount of 90,000 dollars for a standard five-year loan at an interest rate of 3.25 percent, the purchaser will actually pay back a value of 97,632 dollars at the end of the five years. Not too terrible, until you consider that means a 1,627 dollar car payment monthly, and a greatly depreciated vehicle at that time. How depreciated?
Upwards of 75 percent. That’s from the purchase price, not the owner’s purchase price of over 97 thousand,leaving the owner with a vehicle worth 22,500 dollars. Meaning that over the course of the 5 years, while making a 1,627 dollar monthly payment, the owner lost a total of 75,132 dollars in total value. As the owner makes a 1,627 dollar monthly payment, they are losing an additional 1,252 dollars in value. This brings the total cost of financing a 90,000 dollar luxury vehicle to 2,879 dollars. And that’s with a relatively low interest rate.
Put Away the Calculator
If you’re looking for a luxury vehicle, consider an affordable pre-owned vehicle instead. The best part about luxury vehicles losing their initial value so rapidly is that the second owner ends up with a fantastic deal on an amazing piece of machinery. Consider how small the difference is between today’s vehicles and those of only a few years ago, then ask yourself if it’s worth close to 3,000 dollars a month.
If you’re interested, then pay us a visit at our convenient Fort Collins dealership. We’re sure that our friendly staff and host of affordable luxury vehicles will help to easily find what you’re looking for.