Happy New Year! If You’re Shopping For a New Vehicle

You and I think of new year as being January 1st. But that’s not the new year for vehicles. Their new year is August, so you need to think of this month as being 2018 for their new model year. The factories started building them in March or so and by now pretty much all models from all manufacturers have been shipped to dealers.

Ford is currently running a national television ad that starts with the voice-over of: Is the deal a really great deal? OK, let’s take them up on that question. This isn’t about Ford, it’s just their cute catch-phrase.

There are tons of 2017s for sale, too. Dealers are now on a big push to sell them, because they can’t send them back to the factory to be melted down. They have to be sold.

If you’re buying last season’s clothing, you won’t be very trendy. But you’ll get a great price, and in the world of clothing it isn’t a big deal unless you’re a super-sensitive fashionable teenager. It matters a lot more to your wallet on a vehicle purchase. If you’re keeping it for 10 years or longer, and can pay cash, you may get a great deal, and all you’re missing is some of the 2018 model technology, which really isn’t a big deal.

Keeping a vehicle that long means you’re driving it down to a thousand bucks or so. But if you trade frequently, you’re going to be shooting yourself in the foot buying a 2017. The day you take delivery it’s a year old. So if you’re trading it in two years, you’ve actually got a three year old model and that has a huge impact on the value. That’s the reason over 40% of people who trade their vehicles owe more on their loan than it’s worth.

If you drive it into the ground and can afford a new vehicle, the 2017s could be a great deal for you. Start looking after the middle of September. That’s the month most manufacturers send around 5% of the cost of all 2017s in stock to the dealer to help them with advertising and price reductions. When that money comes through you’ll see the big wave of advertising and that should be your cue to start shopping while the selection is still pretty good. Between now and then, get down to Mosaic and invest the $20 in the Money Tools book and just read the vehicle buying chapter. That’ll turn into a few thousand once you start shopping!

By the way: Consumer Report found the average new vehicle depreciates around 25 to 30% in the first year. Buying a 2017 now when the 2018s are out makes that worse.

And one more thing from Forbes Magazine. It’s their 2017 list of the 12 fastest depreciating vehicles in the first year:

Buick Regal                31.2% or $11,525

Chrysler 300               31.7% or $13,351

Cadillac ATS               31.8% or $6,099

Fiat 500                       31.9% or $11,106

Jaguar XF                   32.3% or $19,996

Lincoln MKZ                33.8% or $14,177

Nissan Maxima           34.0% or $12,469

Mercedes C250          34.3% or $15,247

Kia Cadenza               34.3% or $12,940

Volvo S60                   34.4% or $14,204

Lincoln MKS               34.5% or $16,039

and the fasted depreciating vehicle in the first year is the Fiat 500L at 34.6% or $8,096

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