Do Car Values Decrease At The Start Of A New Year

Does the value of used cars appreciably change on January 1st?

This is actually a complicated question/answer and depends where you live as much as anything. At one time in the UK the registration plate, denoting the year, changed on August the 1st. So sales in june and July were artificially low, then a big boost in August, so used cars were affected by both the plate and the actual year of registration. Further compounded by the model year of the vehicle in question. Consider the value of a convertable or soft top car will be depressed in the cold winter months, while the 4x4 will be higher than normal. Plus there is any extras fitted, either as a manufacturer option or as an approved extra, or non approved?But the basic answer is no, after Christmas money is often in short supply and car or motorcycle sales are low, picking up as the weather improves and of course so do the prices.

How much does a new car lose in value when you drive off the lot?

It is really impossible to tell and a great deal of it depends on what you paid for the car. If you got a great deal you may not loose to much, an average deal you will likely loose some, you paid sticker price and you are feeling the pain.There is not a ton of data for Just after you drive it off the lot. However on average you can look at a 10% loss in value (that is value not drop from what you paid) within the first 30 days you own it. On average in the first 12 months you will loose 20% of the initial value and then it will keep dropping around 10% a year after that (this is drop from the end of one year to the start of the next).Some cars will fall faster, such as you buy some new fad bar (Pontiac Aztec may ring a bell). Options also can cause the value to drop faster. Fully loaded cars will drop in value much faster since those expensive options on the new car are often not really desired in the used car market and may only minimally add to the value of a vehicle (especially things like super expensive wheels etc… The flash stuff that looks good but not a functional item).This is why purchasing s 2–3 year old used car is often a good idea, it has hit most of that depreciation curve from being new and still has many good years left in it.

Are car lease prices lower towards the end of the year before new models are due to come out?

Car lease prices typically come down around the time next year’s models come out, and anytime afterwards. This can happen due to a dealer willing to make less profit to reduce leftover inventory, or because his manufacturer is offering incentives and rebates.However, price is not the only factor when looking at a car lease. One of the other major factors is residual value, the expected resale value of a vehicle at lease-end. Since previous year’s model’s resale values decrease when next year’s models appear, lease residual values also decrease, which by itself would mean higher monthly lease payments. Technically, last year’s models are still brand new cars with the same MSRP, but they become one year older from a resale perspective.So, although lease prices come down (good), residual values also come down (not so good), which means there’s a kind of balancing act going on. If the price decrease doesn’t more than offset the lower residual value, it may not be a good lease deal.That said, dealers’ car companies usually chip in to help sweeten lease deals on last year’s models. They can offer lease bonuses, loyalty bonuses, artificially boosted residual values, and reduced interest rate (money factor) . These special deals are offered by dealers but can be found on car company web sites in the main menu under the heading, “Current Offers.”By the way, new car models can come out just about any time during the year, not just the end of the calendar year.Although it’s possible to get some great deals on last year’s models, it may not be possible to get exactly the color or features you want. It depends on whether dealers have significant leftover inventory — significant enough that it provides a variety of choices. Some dealers will have plenty of inventory, others may not.To better understand the relationship between price, residual value, and the other factors that determine lease cost, I suggest you visit my web site at LeaseGuide.com and, in particular, the section that explains the standard lease payment formula.

How do car dealers manage the depreciating car values sitting on their lot?

When a dealership purchases a vehicle (new or used) that vehicle becomes “inventory” to the dealer and the value of the vehicle remains at the “purchased price” regardless of time.For example, if my dealership purchase a vehicle for $30,000 it would remain at $30,000 with no depreciation ever factored.When the vehicle is sold, the dealer would either experience a profit or loss. I.e. if I sold the vehicle for $31,000, I made a $1,000 profit. If sold for $29,000, I lost $1,000.If a company (not another dealer) bought the vehicle, it would become their asset and depreciation would apply.