Discover the amazing feeling of driving a Volkswagen car


Deciding to buy a new or a used car

What do you really get from a new car? Well,the balance due on the loan. In
there’s that new car smell. (It alsodealer’s terms, you’re upside
comes in a can.) And the sticker in thedown. And you’re vulnerable. Should
window, which tells everyone you just boughtyour car be involved in a serious accident,
a new car. (Are you really that desperate forand the insurance company decides it’s
approval?) And don’t forget the fun ofa “total loss” –
looking through the driver’s manualit’s been totaled – your payout
for the first time to learn about all thosefrom insurance will be less than what you owe
knobs  and  buttons.on the loan. You’ll get a check from
your insurance company, but you’ll
Monthly  Paymentsstill owe money out of pocket to pay off the
car  loan.  Ouch.
You’ll also get a monthly reminder of
your shiny, brand-new car: a payment notideNow, that’s a worst-case scenario. But
for your car loan. The average price of a newkeep in mind that no matter how good your
car passed $30,000 last year and is headedexperience is with a new car, it will be
even higher. Do you have $30,000 in cash toexpensive. There aren’t just the
buy a new car? Or $20,000? Neither do I.new-car payments with which to contend.
Lower price is the most important and mostThere’s new-car auto insurance. Lots
immediate  benefit  of  buying  a  used  car.more than insurance on a used car. That
renews  every  year.
Depreciation  is  Not  Your  Friend
Other  New  Car  Expenses
New cars depreciate. Their price is always
going down. The moment you drive off theSome carmakers will void parts of the
dealer’s lot in that new car, itwarranty if you don’t have your car
probably loses 10 percent of its value. Someserviced at the dealership. There may also be
lost as much as as much as 20 percent.other dealer incentives you don’t get
That’s an immediate loss of $6,000if you haven’t had the car serviced at
– on average. Some cars will incurthe dealership. I made the mistake of taking
greater initial depreciation. The personalmy car to the dealer recently for service.
finance experts say to buy appreciating(My daily driver is a ’98 Audi A4 1.8T
assets – like houses, whose long-termQuattro.) The labor rate was $114.98 an hour.
value is likely to increase – andThat’s right -- $114.98, not $115.
lease  depreciating  assets,  like  cars.Somehow that made it even more galling. I
mean, that’s more than I pay my
There’s a hidden danger in all thattherapist. (Who knows – maybe
depreciation. Most new cars lose a lot ofmechanics will soon start working 50-minute
their value in the first year. Then, thehours and taking the entire month off to go
depreciation curve flattens out, and the carto  the  Hamptons.)
loses value more gradually. But you’re
paying off the balance of your car loan withThe point is, you’re locked into a
the same monthly payment over the life of thehigh-cost  structure  with  a  new  car.
loan. So the loan balance decreases in a
straight  line.Used cars are cheaper – and
they’re cheaper to maintain.
The  Danger  of  Being  "Upside  Down"That’s especially true if you buy a
carefully researched, thoroughly inspected,
During that high depreciation period, theready-to-drive used car.
market value of the car could be less than



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