Economics

The main automobile manufacturers in the United States car market have flooded the market with so many cars in the last few decades that purchasing new cars is increasingly offered many incentives to a buyer. This effectively lower the cost a buyer would have paid for a new automobile, and the net effect is the increase in rate of depreciation in the automobile industry.

Typically, those who prefer buying used cars put much emphasis on the reduced prices born by an automobile that has been on the road for some time. Within the first year upon the purchase of a new motor vehicle, its market price depreciates on an average of 30 percent. For example, a motor vehicle with a showroom price of 30000 dollars would cost around 20000 dollars after just a few miles on the road. This is making many people prefer buying used cars that new cars while at the same time lowering the price of new cars.

Depreciation should be a consideration while a person is making a decision on whether to buy a new car or a used car. For one, it is important that the buyer decides on how long he or she is going to maintain ownership of the car. If the buying is just for a period of time, then the best decision is to buy a used car since its depreciation will be lower as compared to a new car after the same time or mileage on the road. However, if I was intending to buy a car that I was going to keep for a considerably longer period of time, I would prefer going for the quality and guarantee of a new car at a slightly higher price.