Cars are purveyors of freedom and independence.
When you own a car, there’s no place too far, no time too early or too late. You simply get behind the wheel and drive off to wherever you want to go.
And so it’s easy to see why a whopping 88 percent of Americans own a car. If you’re looking to join this lot, you can either buy a brand new ride or a used one.
Which way to go?
In this article, we’re sharing the advantages of buying a used car.
Friendly Price Tag
Cars are big-ticket items. Besides a house and perhaps a speedboat (if you’re an aquaphile), a car is the most expensive purchase you’ll ever make.
When shopping for a car, you’ll quickly realize that new rides carry hefty price tags — $34,000 on average. If you don’t have a healthy bank account, you’re priced out of the market.
And if you’re bent on buying new, your only option is two go in for bank financing, but this might not be a smart idea. Considering that a record 7 million Americans are three months behind on their auto loan payments, there’s a chance you could end up in debt and your car repossessed.
The good news?
Used cars are cheaper, averaging about $13,000.
You’re probably thinking, “$34,000 vs. $13,000. This is a hell lot of gap. What gives?”
Sure, used cars come with a level of uncertainty and the shine has faded. If you’re not keen, you could buy a used vehicle that’ll fall apart quickly, but if you’re a savvy buyer, you could end up with a quality used car.
The moment a new car leaves a dealership showroom, it embarks on a relentless depreciation sprint.
In fact, automotive experts say most new cars lose more than 10 percent of the value within a month after you drive off. If you bought a $50K car today, you’d be lucky to get anything more than $45K if you were to resale it after a month!
The car will keep losing value for about five years, shedding off 15-20 percent every year. It’s only after the fifth year when the car’s value will hold relatively steady.
Unless money isn’t one of your worries, it’s clear buying a new car isn’t a savvy financial investment. Buying used is the better value for money, since there’s only so much value a used car can lose.
If you bought a quality five-year-old car at $15,000 today, you could drive it for another five years and its value would still be in the $10-$12K region. Reselling it means recouping a significant chunk of your initial investment.
You Can Skip the Sales Tax
Almost every state charges a sales tax on new cars, ranging from 3 to 8 percent of the vehicle’s cash price. This makes an already pricey car even pricier.
But when it comes to buying a used car, the rules vary from state to state.
In Georgia, for instance, you don’t have to pay any sales tax when purchasing a car from a private seller. So if you live in or plan to move to a state that doesn’t impose sales tax on used cars, this is a good opportunity to save money on car expenses.
Another area you could save money on is registrations fees – but again this depends on your state. Some states charge more to register a new car, while others have a sliding scale. The older the car, the lower the registration fees.
Lower Auto Insurance Premiums
Did you know the age of a car has a direct influence on its insurance premiums?
If you’re an automotive newbie, you’d be forgiven for thinking older cars attract higher insurance premiums because they are more prone to mechanical issues and even accidents.
On the contrary, it’s new cars that command pricey insurance premiums. These cars have greater values, meaning an insurer would need to fork out large amounts to compensate a client in case the car is stolen or totaled. To cover this risk, they charge higher premiums on new cars.
After spending a significant amount of money purchasing a car, the last thing you want is to keep spending lots of money on it. A used car saves you this headache – at least from an insurance viewpoint.
Quality Used Cars Aren’t Hard to Come Buy
The #1 worry of a person in the market for a used car is quality and reliability.
Buying a used car involves vast amounts of hope and trust. Although an experienced mechanic can do a thorough assessment of a used car and point out faults, you’ll still want to hope that the previous owner took good care of it. If they didn’t and you buy it anyway, expect to make countless trips to the repair shop.
Fortunately, finding a quality pre-owned car is not as hard as it was back in the day. Today, there are dealerships that have built solid reputations around selling quality used cars. This dealership is an example of a place you can find a wide inventory of used cars in perfect condition.
Buying from a reputable dealership instead of a private seller also protects you from being a victim of used car scams.
Enjoy the Advantages of Buying a Used Car
As much as we all love shiny new things, sometimes it makes financial sense to pass them over – especially when it comes to automobiles.
Having fleshed out the advantages of buying a used car, there’s no doubt you now have a good handle on why buying new isn’t necessarily in your best interest. With a used car, you’ll save a lot more money and end up with an asset that will hold its value for a long time.
Stay tuned to our blog for more useful tips and hacks.