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How to Purchase Your Automobile and Home (12 of 12)
Purchasing Your Automobile
I want to share with you the obedient way to purchase your transportation. Keep in mind that the two most frequently used words in sales are the words "new" and "free?' The first thing you need to settle in your mind is: When does a new car become a used car? You will find that a new car becomes a used car while you are signing your name on the contract of purchase. If you do not believe this, immediately after you have signed all the necessary documents to purchase an automobile, turn to your salesman and ask him to buy your car back. See what he will offer you for it. You will find that depreciation begins to take place before you are ever seated in the car to drive home.
The word "new" has many different meanings. The car is new to you because you have never owned it before. But, financially, it is a used car before you ever drive it home. Technically, you have never driven home a new car; it has always been a used car since the depreciation starts at the purchase.
Please note in the illustration below the depreciation levels for an average $10,000 automobile at today's standards. The depreciation rates applied are those which have been used very recently, by the Hertz Corporation. According to this schedule, should you purchase a new car today, three years from now your car will have depreciated a total of 76 percent and will only be worth 24 percent of its original cost. Therefore, a $10,000 automobile will be worth only $2,400 three years from now.
I personally believe that this schedule is a little severe. Let's assume that you could purchase a new car, keep it for three years, take excellent care of it, keep the mileage as low as possible, and assume that this car will only depreciate 50 percent. This means that you could buy the car for $10,000 and sell it in three years for $5,000. Now, a choice must be made.
If you really desire a new car, you wi ...
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