Why Buying Used Cars is a Better Decision than Buying New Ones?
The feel of a new car! The smell of a new car! The pride of owning one! All of these are emotions we would all feel, but are they reason enough? If you can swing the price of a new car or do not mind the high interest rate on your loan, you should consider feeding your emotions and feeling that excitement. But, if you are investment savvy, happy with something as good as, or nearly, new you should consider buying a used car. More often than not the second option provides better value for money, especially given the current economic climate and the era of rising inflation and the resulting higher prices.
Here are a few reasons which make used cars the clear winners when pitched against new cars. Leaving the obvious price factor aside, buying a used car is smart because:
You let someone else tackle depreciation
Most new cars depreciate at a rate of between 15% and 20% in the first year alone, with some models losing as much as 30%. You usually lose around 11% to 12% as soon as you drive your new car off the dealership’s lot. If you paid $25,000 for your new car, you would lose between $2,750 and $3000 of value the moment you left the lot and as much as $7,500 in that first year. Depreciation does start to gradually slow down, but you can still lose as much as 20% in the second year and another 10% to 15% in the third year. On that $25,000 car you could lose as much has $13,100, or more than half the original value, in the first three years. Ouch! This makes waiting to purchase a car until its third or fourth year a very good financial decision. Most financial advisors state it takes at least 2 years for you to break even on what you owe on the car and what the car is worth. Until then, you’re under water in the deal.
You can get more with what you have
Depreciation in the first couple of years has a big advantage when you buy a used car. As the depreciation accumulates, the prices are slashed. So much so that, using the same money you would have paid to buy a new car, you could get a better and bigger used car. So, for the price of a new sedan, you could get a used SUV. For the price of a new car with a basic option package, you could get a used car with a top-level trim package. You may end up with seat warmers, smart infotainment, a sunroof, and 4-wheel drive, all of which you were sacrificing in your new car.
Avoiding new car glitches
Almost all new cars come with at least a few annoying, inconvenient glitches. Some end up being full-on lemons. By waiting to buy a car until its second or third year, someone else has had to deal with all those issues and you end up buying a good, solid, stable vehicle that will likely be mostly worry-free.
Taxes, registration fees, and interest all get slashed
The government charges taxes based on the net purchase amount of your car. Similarly, the registration fees are also a certain percentage of the price you pay for your car. And then there is the loan amount, whose interest is decided based on the credit you take and the amount you finance. If you are buying your new car completely with the help of the bank, the total rate will shoot up. With used cars, however, the net price is lower which, in turn, reduces your payment and the amount of interest you ultimately pay. You save all the way around.
You lose out on nothing
Take any parameter other than emotions that you get while buying a new car and buying a late-model used car is the better financial choice. On top of that:
- Manufacturer’s warranty – you still get it on a used car if the vehicle is being resold during the original coverage period and with mileage below the original warranty limit.
- Insurance policy – most models will have lower premium rates on used cars because the replacement and repair value has been reduced by the depreciation.
- No prior damage – with reputable used car dealers like Happy Auto Sales, the vehicle’s history or prior damage will never be an issue.
- Shine and roar – cars are long-term products; they do not lose their mettle in a matter of a few years. So really, what do you lose when you buy a used car?
Shopping with the best used car dealer in Greer, you are sure to get the make and model you want, in perfect condition, and your vehicle won’t seem like a used car. You save a lot of money in the process and have a happy car ownership experience. So, think how great you will feel having bought the car you want, that satisfies your transportation and emotional needs, at a price that your budget will love. Be it financially, aesthetically, and even emotionally, used cars make a lot of sense.