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The real costs of car ownership

Microsoft IES Logo By Mark Toljagic for MSN Autos of Microsoft IES | Slide 1 of 11

Depreciation

Unlike a house or a Monet painting, an automobile is a depreciating asset, its market value diminishing over time. Depreciation is often the greatest expense incurred in the first five years of new-car ownership. It's the elephant in the room; everyone knows it's there, but nobody wants to talk about it. As a general guideline, a new car's value plunges 20 per cent during the first year of ownership, then 10 per cent annually over the next four. It pays to research which models retain their value better than others, because the differences are significant. While you don't experience it until you sell your car or trade it in, a model with good resale value is still money in the bank. You can skip this painful process by buying a used vehicle; it will depreciation too, but not nearly to the same gut-wrenching degree. The first owner has already taken the initial depreciation hit for you. Advantage: Used.
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