• Dec 8, 2007

We've all seen the ads in the newspaper or in commercials that say you can get a new car with zero money down and only $299 per month. Quick math tells you that even after taxes and destination, you're only paying about $4,400 the first year to own a brand new car. A recent study by consulting firm Runzheimer International shows that a new car will cost you considerably more in overall operating costs. At 15,000 miles per year, the cost of insurance, gasoline, fees, depreciation, and maintenance can drive the overall cost near $20,000 per year.

The 2008 Cadillac STS was tops in this year's test, costing buyers $19,537. The Lexus LS460 was close behind at $19,372. Big vehicles cost quite a bit also, with Ford's E-350 XL SuperDuty tallying a $16,543 bill followed by the Chevy Tahoe LS 4x4 at $15,789. There were some relatively low cost vehicles as well, with the first year costs of a Toyota Corolla CE coming in lowest in the test at $7,933 and a Ford Ranger XL pickup that hits $9,929. If these numbers seem high, it's because the highest liability in a new car balance sheet is depreciation, and new cars can lose thousands the day they're driven off the lot. Every mile on the odometer brings the resale value lower, and if your new car carried lots of incentives or it's a rental car favorite, its residual plummets even further.

[Source: The Car Connection]



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  • 21 Comments
      • 7 Years Ago
      Wait 10 years and that 2008 CTS is going to become more economical to own than a 2018 Corolla...

      Wait, scratch that... Everybody go out and buy your new cars! I need someone to take that depreciation hit for me...
      • 7 Years Ago
      If they had only been "honest" enough to do the math for the second and thrid year of ownership.
      • 7 Years Ago
      Porsche Boxster, 40k miles, 40% of the retail price. Anyone? I'd love to get a $30,000 discount. Depreciation on that car is almost $1/mile, not to mention service.
      • 7 Years Ago
      I bought my last car new and got a pretty good deal so I won't complain, but I think it's the last time I'll buy new again. I see so many great deals on 1 & 2-year-old cars that have less than 20K miles on them. Hell, they're not even broken in and they cost about 2/3 or less the price of new. There's no reason to buy new when cars can easily last 150K miles if you just take care of them. My brother recently bought an '06 PT Cruiser. Now I don't like Cruisers but my brother does and it had about 16K miles on it and cost $10,500. It was a steal, even if it is a Cruiser. If he gets only 100K miles on it he's still way ahead of the game.
      • 7 Years Ago
      "Big vehicles cost quite a bit also, with Ford's E-350 XL SuperDuty tallying a $16,543 bill followed by the Chevy Tahoe LS 4x4 at $15,789."

      Take into account the fuel costs on those and I'm not surprised.
      • 7 Years Ago
      Do your research, buy a nice 2 year old car with low miles.. My car sticked for 21,000, in 04.. I bought it in 06 for 11,200, with 22k miles.. The original owner paid the depreciation for me.. I got a brand new car with a little bit of wear and tear.. And who has to know I didn't buy it new?
      • 7 Years Ago
      This article hits the nail on the head! It is rare that we consider the total cost of car ownership. You get a great deal at the dealer's, but then you get soaked by insurance costs. And then there's the maintenance and running costs. It all ads up, and clearly some cars are better than others in this respect.
      • 7 Years Ago
      Yeaaa! Poor people like me win! I can't afford all those new cars, and have to drive junk. Look at all the money I'm saving!!
        • 7 Years Ago
        Exactly my feelings this morning. Atleast this way i can feel good about driving a 91 maxima instead of an 08 CTS.
        • 7 Years Ago
        +1

        I find current new car prices insane.

        When will people learn that a car is *not* an investment, but a continuous expense?

        Please, people, research used cars. Almost all of them depreciate so fast, you can get a really good deal on a 1, 2 or 3 year old model.

        Used cars FTW!
      • 7 Years Ago
      If you can afford it, get a new car. Life's too short to wait years to drive a car lol
      • 7 Years Ago
      I have always looked at TCO and calculated full costs. The story is completely different for Honda and Toyota - it makes no sense to buy them slightly used, because they cost same or more than new (Certified).
      • 7 Years Ago
      Well... Seeing how gorgeous that STS is in that picture makes me wish I had 20k to burn a year.
      • 7 Years Ago
      The only reason that the STS costs that much to own is depreciation. Cadilliac overprices it by so much (an STS can cost $10k more than fully loaded competition), so the value of the car ends up dropping fast. That makes the STS a great car to buy used. In fact, 06 fully loaded models can be had for a little over $30k, when they stickered new at almost $70k, letting you pay around 1/2 the sticker price. This is a typical GM depriciation percentage, except, the car loses more value overall cause it costs more. On the other hand, STS's (and most other GM's) are great for 2nd buyers, as they cost so little to maintain and insurance rates are lower cause you bought it used.
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