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Monday, January 21, 2008

Online Car Buying

Online Shopping Soars, New-Car Values Drop If the idea of saving thousands of dollars is more thrilling to you than that new-car smell, you'll find your heart's desire in the used car market. A wider pool of quality used cars, and progress in Internet search functionality, have vastly changed the buying experience. In 2007, roughly one in four buyers of late-model used vehicles relied on an Internet vehicle locator or online classified ad service to find the auto they purchased. That's a 44 percent jump over the previous year, according to a study by J.D. Power and Associates. And there's no beating the price. "People don't think of depreciation as an out-of-pocket cost, but it is," says Philip Reed, senior consumer advice editor at and author of "Strategies for Smart Car Buyers." "There's a steep drop off in [value] in the first year, and 30 percent depreciation by the end of the third year." For example, Edmunds looked at the Lexus GS 430 and GS 450. "The first-year depreciation on the new car is $14,000; if you bought a two-year-old model, the depreciation is $3,000 in the first year of ownership," says Reed.

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