Cars are an amazing feat of technology. They provide us with the ability to travel far distances in relative comfort and have allowed us to expand our horizons and visit places and people we otherwise may not see. But they are also a major life expense and are most often worth a lot less than the sticker price the minute you sign the purchase agreement.
While there isn’t much you can do to prevent that depreciation (usually around 9% in just the first minute of ownership and 20% in the first year) there are some cars that you may want to avoid buying due to just how fast they depreciate in value.
BMW 7-Series – Beautiful, luxurious, and a fantastic driving machine. But with an average price of about $73,000, these are expensive cars. A 2005 745i with just 45,429 miles on it is now worth less than $20,000 and comes with expensive repair bills. As a comparison, a 2005 Honda Accord is still worth around $10,000 but cost just $22,000 when new.
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Range Rover – Nice to look at but a bear to repair. Over the years they have had all sorts of electronics issues and a new $60,000 Rover can now be had for about $5,500.
Mercedes-Benz S-Class – Popular Mechanics found a 2008 S500 with 86,000 miles for just $33,000, far below its retail price of over $120,000. A 2000 S430 with 102,460 miles – which sold for more than $75,000 – sold for $4,250 on eBay. The S-Class can lose more than 80 percent of its value in just 5 years.
Cars Used by Rental Companies – When a car becomes a fleet car for a rental car service, its value plummets. Buyers don’t really want their own personal car to be associated with inexpensive rentals, so they tend to avoid buying them. Want your car to retain some value? Don’t buy a model used almost exclusively by Hertz or Budget.
According to Edmunds, the average new car loses 11 percent of its value the moment you drive off the lot and after 5 years is worth just 37 percent of what you paid at the dealership. To cut your losses in advance you may want to stick to a car that retains more of its value such as the Mini Cooper and with colors that are always in fashion – black, silver, and white.