If it’s time for you to purchase a vehicle, you might be wondering if you should buy a new car or a used car. While a shiny new “fresh off the factory floor” car is appealing at first, in the long run, it’s much better to buy used. Let’s discuss the benefits of buying a used vehicle.
Depreciation
It’s an unfortunate fact of life that all cars depreciate in value. If you purchase a new car, it will have decreased in value by at least 20 percent by the time you’ve driven away from the dealership. In other words, if you purchase a new vehicle for $25,000, you end up throwing away $5,000 by the time you get home with your new purchase. If you can buy a used car that is one to three years old, its depreciation rates will have stabilized. This makes it a much better value than a brand new vehicle.
Of course, if you plan on driving your new car until it falls apart, depreciation might not be a concern. However, if you buy a used car and then decide it’s not for you, the stabilized depreciation rates will ensure that you can resell the car and get most of your money back.
Lower Fees
Depending on the state where you live, you may have to pay a higher sales tax rate and higher registration fees if you purchase a new car. If you buy a used vehicle, the base price will be lower, meaning that taxes and fees will also be lower. If you’re financing your purchase through a lender, buying used could also mean that interest rates on your loan are lower.
A lower sticker price, in addition to lower fees, allows you to stretch your dollar even further. You can buy the luxury car of your dreams if you opt for a slightly older model.
Insurance
In most instances, your insurance company will charge you higher rates to insure a new vehicle. If you choose to purchase a used car, not only will your company offer you lower rates, but you may also be able to drop some components of your coverage. Many used-car drivers choose to opt out of collision and theft coverage, meaning they save even more money.
Vehicle History
Before the Internet Age, it was risky to buy a used car. Buyers could never be sure if the previous owner had kept the vehicle properly maintained. However, there are now services available to potential car buyers that let them know about a used vehicle’s history. You can learn everything from the vehicle’s maintenance regimen to whether the car has ever been involved in an accident. Taking advantage of these reports will give you peace of mind and also some leverage at the dealership.
These are just some of the benefits of buying a used car. By doing a little bit of research, you can buy a car that you’ll love without breaking the bank.
Image via Flickr by 401(K) 2013
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