Cheap Cars: When A Good Deal Isn't
McLean, Va. (5/14/13)--The 10 cheapest cars in America rarely overlap with the best-selling. Given Americans' abiding love of a good deal, that finding can seem surprising until you look at how vehicles are priced.
Instead of settling for a car that might not suit your needs, a better plan is to get pre-approval for a low-interest loan from your credit union and negotiate a better price for the car you want. Find out the dealer's cost for the vehicle, and then negotiate to no more than 2% more than the invoice price, before applying any rebate.
Also worth considering is the total price of the financed car. Depreciation is the single biggest cost of car ownership, and a cheap car will depreciate faster than a more expensive one. This spring Kiplinger.com, the online personal finance magazine, compiled the 10 cheapest 2013 cars to own, factoring in depreciation, financing expense, and other often hidden costs to compile a five-year total cost of owning a vehicle.
According to Kiplinger, the Nissan Versa remains the least-expensive option. Based on a market price of $12,615--which is the average transaction cost and includes rebates--Kiplinger estimates you would lose $7,199 to depreciation and pay $721 in interest with a five-year loan at 2.76% and a 15% down payment. Factor in fees and taxes, insurance, maintenance, fuel and repairs, and Kiplinger assesses the true five-year cost for buying the cheapest new car in America at $27,405. The editors figure you can recoup the cost of the car, minus depreciation, at the end of five years.
For related information, read "Find the Best Low Cost, High Value Car" and "The Best Cars for Stages of Your Life" in the Home & Family Finance Resource Center.
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