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So it’s time for you to get a vehicle and you can’t decide if you want a new or used car. Well, there are a lot of factors to consider.
Used cars hold their value well these days and can be a very reliable choice for many consumers. But new cars have their own benefits. They offer more robust financing packages and make shopping much easier.
There are so many more things that you should consider before you make your purchase, keep reading to learn more.
Depreciation for a New or Used Car
Whether you buy a new or used car, their value is going to go down over time. The term for this process is depreciation.
You’ve probably heard that new cars lose a large portion of their value as soon as you drive them off the lot. And by the time you’ve had the vehicle for a year, it could have lost as much as 20% of its sticker price value.
The reason you don’t realize you’re losing so much value is that it doesn’t become apparent until you go to sell your car or trade it in. Let’s compare the depreciation of a new car to that of a used car.
If you buy a car for $30,000 then you might sell it three years later for $15,000 if you’re lucky. That means that over that time, that vehicle cost you $15,000 just by depreciating.
Let’s compare that with buying the car after it’s already three years old. Say you go to a used car lot and buy the three-year-old car at $15,000. At the same rate of depreciation, three years later you will be able to sell it for $10,000.
That means that the used car’s depreciation only cost you $5,000. That kind of savings over a lifetime of car purchases can add up to a significant sum.
Getting Past the Stigma
For many years buying a used car was seen as taking on someone else’s headache. But today, cars are built differently and that same advice doesn’t hold true.
Cars that are on the road today have never been more dependable. In fact, many vehicles get well over 100,000 miles before they need any major repairs.
All cars are going to require regular maintenance like tire rotation, oil changes, and minor brake work. But the car’s on the road today go further between visits. From tires to brake pads, everything seems to be lasting longer than before.
Advantages of a Used Car
We have already established that used cars are a better value when it comes to depreciation. But your savings won’t end there.
Used cars have lower car insurance rates. This is because a car with less value is cheaper to insure for collision and comprehensive coverage. If you buy your car outright, then you can even consider dropping your collision insurance to save some additional money.
But if you drop your collision coverage, be careful. If you are in an accident, you will have to pay for all of the repairs to your vehicle out of pocket or get a new one.
In addition to more affordable car insurance, registry renewals for used cars are usually cheaper. This depends on where you live.
Advantages of a New Car
While used cars cost less, there are a ton of advantages to buying a new car as well. First of all, new car shopping is much easier. You don’t have to worry about evaluating the vehicle’s condition or bringing along your own mechanic.
Since all new cars of that model are created equal, it can be easier to figure out what you should pay for a vehicle when you look at new cars. You may still have to negotiate a bit, but you will be able to know that you are paying a competitive price for the product as advertised.
Financing a New Car
Automakers like to offer incentives to lure new buyers to their brand. They may come out with deals on holidays offering cash rebates or no payments for the first few months. These can be great if you don’t have a lot of money right now but know that you will be able to make the payments soon.
New car loans also carry better interest rates so you can take that into consideration with the depreciation of the vehicle. Although the difference isn’t much, when it comes to interest you always want to pay as little as possible.
Is Leasing an Option?
If you want a new ride with the latest technology, then leasing can offer you a good option, rather than buying a new or used car. If you have good credit, then you can usually get a pretty good rate for the lease.
But there are other things you need to consider when you are thinking about a lease, like how much wear and tear you are going to put on the vehicle. Keep reading to learn more.
Benefits of a Lease
If you have $2,000 or so for the down payment on a lease, then you can be looking at monthly payments of around $200 for many of the latest car models made by popular car brands like Chevy, Ford, Kia, or Hyundai.
That means more money in your pocket on a monthly basis because your car payment would be much higher if you purchased the ride.
Also, if you lease, then you can always upgrade again down the road. If you like to keep up with the latest technology, then leasing may be for you.
Downside of a Lease
The biggest downside of a lease is that at the end you don’t own the car. You have nothing left to show for your years of on-time payments.
But beyond that, you have to consider the mileage restrictions and fees for excess wear and tear. If you are going to be driving your car long distances, then leasing isn’t going to work.
Finding a Quality Used Vehicle
More Helpful Information
If you found this information on new or used car buying helpful, you should check out our other articles. We have information on topics that range from beauty and wellness to technology and business.