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Back in the mid 90's....... Posted by Mike Lynch [Email] ![]() ![]() In Reply to: Lease programs contributing to high depreciation..., James D, Thu, 24 Jun 2004 13:08:33 Members do not see ads below this line. - Help Keep This Site Online - Signup |
Back in the mid 90's many predicted that the used car market would be flooded with off lease vehicles and severely depressed. It hasn't happened as I see it. The rising price of new vehicles has held up the market for used vehicles.
Every manufacturer has their own brand of Certified used cars and that has further lifted the market. Many offer special financing on their CPOs like Saab used to, my 2000 9-5 Aero is at 3.9%, some BMW's are 1.9% now.
And leasing penetration is down all around. 0% has stolen a lot of the thunder, as has the rising real estate market with home equity loans. My local credit union has a 3.75% a.p.r. banner plastered on their window.
Many folks, like James D probably, scratch their heads and wonder how and why people buy or lease new cars. Why would anyone take that depreciation hit and spend all that money. These folks by used and CPO.
Other folks wonder why anywone would drive an old car when the deals on new cars and the new cars themselves are so fabulous and so safe. Plus there is free maintenance, full warranty, no tires, brakes and other items to worry about, safety upgrades, and just the shear pleasure and security of having a new car!
And in my experience a used car depreciates just as fast and just as much in real dollars as a used one. If you buy a 3 year old off lease car for 60% of it's orginal value in another 3 years you'll lose just about the same amount in depreciation as the first owner, except the first owner got the benefit of the "new" part of the car.
So you spend $18k for a 3 year old car with 50k miles that costs $30k new, the owner only got $15k in trade. You drive it another 50k and now it's got 100,000 miles and is worth only $3k (if that) in trade. Who's car depreciated more? Who got the better deal?
The original guy leased his for $269 with $3k down. The $18k guy put $3k down, financed $15k for 60 months for $275ish and then 3 years later when the car has 100k miles he's $3-5k upside down still.
posted by 63.197.222...
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