Vincentric: Buying a new car too costly
 Sometimes called an "extended warranty", a service contract is a promise to perform (or pay for) certain repairs or services. Although technically not a “warranty” as defined by federal law, service contracts may be arranged at any time and always costs extra. Warranties, on the other hand, ONLY come with a new car and are included in the original price. Vehicle service contracts are popularly referred to as "extended auto warranties" or "extended warranties". Use of the term "extended warranty" or "warranty" on this site is intended to refer to vehicle service contracts and not manufacturer's warranties.
Vincentric, a firm which calculates the cost of owning a car, advises against buying a new car because of their quickly depreciating value. Instead, its cheaper to buy a used car and supplement it with an extended warranty.
As an example, Vincentric used a new 2010 Chevy Malibu. The car retails for $21,825, according to AOL Auto. But it immediately depreciates as soon as it's driven off the lot, and will continue to depreciate over the first year, losing over 40 percent of its value.
Vincentric compared these figures to those of a late-model used car- the 2008 Malibu. This vehicle can be bought for just over $12,000, and will only lose about $2,000 in its first year of ownership.
A consumer may think that money will ultimately be saved in repair costs. But by purchasing an extended warranty on the used car, a consumer can mitigate the cost of repair and ownership.
"It's very difficult to make a financial case for a new car," says Vincentric president David Wurster in comments to the news source.
That new car smell is tempting. But at what cost?
5/5/2010 9:00:00 AM
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