Cost of Ownership (COO)
Your total net loss on a car. This is not your car payment. This is what you really pay for a car and the most important number to look at.
For a purchased car, here’s the calculation: total purchase price (total cash upfront or all your monthly payments combined) – maintenance costs – sale price.
For a leased car, here’s the calculation: total monthly payments + upfront costs.
Depreciation
Cars lose value in the form of time depreciation and condition depreciation. Cars depreciate simply because new variants enter the market, pushing the older values down.
Cars depreciate faster with time than mileage.
Once cars reach the end of their time depreciation, condition depreciation takes place.
Exposure
The potential risk and loss for your car purchase.
By utilizing advanced car economic principles, you can calculate a data-based prediction of exposure on your next car purchase.
$5k Price Blocks
The dynamic where used cars slot into their respective $5k price blocks ($0-5k, $5-10k, $10-15k, $15-20k, etc) all the way up until $100k where it goes into $10k price blocks.
Compression Zone
When the value of a car is pushed down by the gravity of depreciation but held up by all of its older variants from the bottom of the market, natural compression zones of pricing are made.
$10k Glass Ceiling
The biggest compression zone in the used car market due to new cars starting in the $20k range and having 30 model years of cars existing in the used car market.
The Sandwich
The art of assessing a car’s exposure by looking above it (newer variants with less miles) and looking below it (older variants and more miles).
By looking at what pushes the value of your car down and what holds it up, we can find massive opportunity to buy or sell.
Leasing
When we finance through a contracted, predicted amount of depreciation in return for usage.
Leases are the net effect of three variables working together: residual value (predicted depreciation), money factor (interest), and capitalized cost (sale price & discounts).
Financing
When we borrow a loan from the bank to pay a car off in exchange for interest; a form of leverage.
Follow an amortization schedule to see how each payment affects your principal.
