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Should you buy last years model?

Remember when September was when you could expect the new cars to roll off the line? Well things certainly have changed with next years models rolling out in some cases in April. This adds a new card that the car dealer can play. It's called the "Get a Great Deal on a brand new last year model car" and if you're not careful you'll get stung by not paying close attention to what this really means. Here's an arbitrary example, not for any reason other than it just happens to be handy and so I've picked the Toyota Camry. So let's say for instance, the dealer offered you a $500 dollar discount on the "previous years model", is this really a good deal? If you consider the example below, you may want to pass on this deal or ask for a better one.

Cars do depreciate as soon as you drive them off the lot, but when it comes time to trade that model in again, it is going to be considered 1 year older and the value will consequently be lower.

Car Description (The same except for year)

2006 Toyota Camry Sedan 4D Condition Value Excellent $19,380
2005 Toyota Camry Sedan 4D Condition Value Excellent $18,400
Price Difference for comparison when it is traded in: $ 980
Sample Vehicle Details for Camry selected for both 2005 and 2006 is the same:  
Engine: 4-Cyl. 2.4 Liter
Transmission: Automatic
Drive train: FWD
Mileage: 8,000
Selected Standard Equipment
Air Conditioning
Power Steering
Power Windows
Power Door Locks Tilt Wheel
Cruise Control
AM/FM Stereo Single Compact Disc
Dual Front Air Bags
ABS (4-Wheel)

The lesson to this car sale example is this: If the dealer is just giving you $500 to buy last years model, you are losing $480 in the deal. You see, the point is when you trade in a car some where down the road, it is still considered one year older and the value is going to be lower. Telling a story is not going to help one bit in the cars value.

If your ready to do some home work and get some car prices, click here.

The above is just an example and rates of depreciation as well as other factors will have an effect on the actual price differential.


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