5 Reasons Why Buying a Used Car is the Smart Choice
In today’s tough economy, purchasing a new car just doesn’t make sense.
The average cost of a brand new car is around $20,000, and that’s if you pay in cash. Experian estimates that the average cost of a loan for a new car is closer to $31,000.
But it’s not just the initial outlay that will cost you big bucks – buying a new car has other long-term financial repercussions as well.
Here are five reasons why buying a used car makes more financial sense.
1. Greater Variety
In the United States, around 350 new car models are released every year. But that number seems insignificant when you consider the tens of thousands of used cars that are on the market.
There is a huge selection of used cars to choose from at King of Cars Texas – you can pick the exact make, model, and color you want. And the best part? You don’t have to fork out for expensive new features that you don’t need.
2. Minimize Depreciation
As soon as a new car is driven off the showroom floor, it depreciates by as much as 20 percent – and it will continue to depreciate in value by another 10 percent within the first year – that’s a total depreciation of 30 percent in the car’s first 12 months.
To put it into perspective, say you buy a new car for $30,000 and keep it for a year. It will lose a staggering $9,000 of its value during that short period. By buying a used car that’s two or three years old, the car will retain its resale value.
3. Reduced Insurance Costs
When it comes to how much you’ll pay for auto insurance, the value of a car is the main deciding factor. So, it makes sense that a used car will cost much less to insure because it will cost less to repair or replace.
Newer cars utilize newer technology – for instance, a bumper that’s five years old will cost less to replace than a bumper on a new car because of advanced technology like sensors. That’s why insurance providers drive up the prices of insurance for new cars to protect themselves from potentially expensive damage claims.
Furthermore, a loan on a new car may require you to purchase additional coverage, like collision and comprehensive plans – which will make your monthly premiums significantly more expensive.
4. Lower Registration Fees
Like auto insurance, the value of the car will dictate how much you’ll have to spend on registration and other fees. Many states determine the cost of registration based on the age of the vehicle, and some may also require you to pay excise taxes.
If your car is more than two years old, you’ll save a significant amount on government fees.
5. More Value for Money
By purchasing a used car instead of a new one, you’ll get more bang for your buck. Because a car’s value depreciates so dramatically in the first year, you may be able to afford the car you want in a slightly older model.
Nowadays cars can run for 20,000 miles, so the idea that you must purchase a brand new one for maximum reliability is a myth. Technology has progressed in leaps and bounds – new safety features are helping cars last and retain their value for longer.
Another thing to consider is that auto manufacturers aren’t redesigning their cars every year. This means that there are only small differences between new makes and models and their slightly older counterparts.
Why spend more money when you can have essentially the same car for a whole lot cheaper?