What is Your Car Really Worth?

There is much more to a cars value than what it will bring at trade in or sale. A vehicles value is in its use. Every time you trade vehicles, it costs you. Fixing up and maintaining the car you have is almost always a better move financially than replacing it, Even if this means spending more on the vehicle than it is technically “worth” on the used car market.

These days driving is a necessity. If you want to make a living you must go to work. If you want to go to work you must drive. If you drive, it will cost you money, so you must go to work.

Sounds kind of like a mouse on a wheel doesn’t it?

But unless you’re wealthy, it’s a wheel ride we all have to take. We just hope that sooner or later we’ll have enough money to step off that wheel.

For most people a car is their second most expensive investment, followed only by a house. But the sad part is, when you consider how much money is lost to depreciation and operating costs of vehicles over a person’s lifetime, transportation is the biggest financial loss they will likely ever incur! Ouch!

As I mentioned before, to a degree there is no way around this. There is however ways to greatly reduce these losses so you can step off the mouse wheel sooner. The answer is to look at the bigger picture. Here’s how it works.

From a financial standpoint, vehicles are an expense not an investment. This is a fact that has been blurred by car salesman and the lending industry who hold the Kelly Blue Book value as the Holy-Grail of a vehicles worth. But financially speaking, vehicles are not “worth” anything, they costs you money. The only worth a vehicle has is in its use. If you resell it, all you’re doing is recouping some of the money you already spent.

Then the question is when your car gets some miles on it, are you going to trade in that vehicle for whatever it’s “worth”, plus a lot more cash on a newer one? Can you hear that wheel spinning?

Cars depreciate. When you spend money on them, sooner or later you will lose that money. The only thing you’ll have to show for it is the years of use you got out of that vehicle. To keep your car on the road it will more than likely take more money than the vehicle is technically “worth”, but it will take a lot more money to replace it.

There have been several customers over the years who have caught on to how this works. They decided rather than spending 15 to 30K on a newer used vehicle or 20 to 60K on a new one, they would rather take good care of the vehicles they have. Sure, at times they might need to sink a few thousand into their car for maintenance or repairs. While the Kelly Blue Book may not give that vehicle a standing ovation, without car payments that customer’s bank account sure is looking better these days. Sounds like smart finance to me - for whatever that’s “worth”.