If you’re planning to buy a vehicle, one of your most important decisions is whether to purchase a new car or a pre-owned model. While almost everyone loves a shiny new car, there are compelling reasons to consider buying a used vehicle. For anyone who’s undecided, here’s a look at how buying a used car can save you money.
New Cars Experience More Significant Depreciation
While almost all cars depreciate in value as they get older, the magnitude of the decline varies. When you buy a new car, most analysts agree it loses at least 10 percent of its value the moment it leaves the lot. That’s a steep and quick loss in value. If it’s important to you to own a new car, the immediate depreciation doesn’t mean much. But it means a great deal to budget-conscious consumers.
If you’re concerned about your car losing value, it’s best to buy a used car with fewer than 50,000 miles. It will have plenty of life left in it, and you can purchase it for significantly less than you would have paid when the car was brand new. Unlike cars from a decade ago, modern vehicles have better systems that are designed to last longer. That means many pre-owned vehicles have a higher level of reliability than you might expect.
Some Used Cars Have Warranties
Many pre-owned vehicles that are less than three years old may still be covered under the manufacturer’s warranty. If there’s a mechanical problem with a system that’s covered by the warranty, you can take the car to your local dealership and have it fixed at no charge. Not only does this give you peace of mind, but it also gives your budget some relief since not all repair costs are your responsibility. For those who strongly prefer a warranty on their used car, many dealerships offer certified pre-owned vehicles that have the backing of a warranty.
Insurance Companies Offer Lower Rates
Insurance coverage for used cars is almost always lower than coverage for new vehicles. What’s the reason for the lower price? Many insurance companies base their rates on the value of the car. Because used cars have a lower value than new cars, they’re cheaper to insure.
Many States Have Lower Registration Fees
In some states, the cost of vehicle registration is tied to the car’s sale price. This is another instance in which the lower price of a used car saves you money. When you transfer the title and register the car in your name, expect to pay less than you would if you had to register a new vehicle.
When you buy a used car, be sure to check out the condition of the tires, brakes, and other parts. While a pre-owned vehicle promises a lower sticker price, you may have to invest in upgraded some of its parts. Even with the need to purchase some new parts, you’re still likely to come out ahead financially if you buy a used car rather than a new one.