A finance expert-turned-TikToker is imploring people to buy new cars for one, singular reason: car depreciation.
In a TikTok shared on Jan. 6, Humphrey Yang uses the BMW 530i xDrive as an example to prove his point. The car, which comes with driver assistance technology, sells for $56,500, but, as Yang notes, BMWs — like any other car brands — lose their value over time.
“You should never buy it new because, after the first year, it loses 26 percent of its value, and it’s only going to be worth $43,000,” he says.
Yang further explains that cars are depreciating assets, which means that they lose value almost the second they leave any given lot. However, this also presents a great opportunity for potential car buyers to save money.
Citing CarEdge.com, Yang says that, to get the optimum value from a vehicle, it’s best to wait until most of the car depreciation is gone. That usually happens around the fourth year. In the BMW 530i xDrive’s case, that means buyers can save nearly $30,000 if they wait four years to get the car (under the condition that the car model is actually four years old and not the latest model).
“If you want to get the most out of your money, try to buy a car that’s three to four years used with low mileage,” Yang concludes.
Yang’s TikTok has since been viewed over a million times.
“I always do that, never buy a new car,” one person wrote. “Literally, the worst mistake people make buying new cars.”
“Thank you!!!!! I am getting a car this yr and want to make a smart choice,” another added.
For those considering a car, NPR also offers several pieces of helpful advice. Among them? Buyers should get pre-approved for a loan from a lender outside a dealership and not reveal too much when negotiating the price of a car. They should also avoid purchasing add-ons and be cautious about taking on six-year to seven-year loans.
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