(NEW YORK) — Many consumers may not know this, but the largest cost of owning a car is depreciation.
According to new research from the auto price valuation firm ALG, the process begins on day one.
Consider a new car or SUV that sells for $30,000: “On average you lose almost $5,000 literally driving it off the dealer lot,” ALG President Larry Dominique says. “Typically, after three years, the vehicle is worth about half what it was when you first purchased the car.”
Most motorists pay attention to gas and insurance costs but, as Dominique notes, “the number one thing we see with cars over time is the depreciation whether you own that car three years, four years, seven years.”
A nearly new car loses value at a much faster rate than an older vehicle.