Many people want a brand-new car, and while that’s perfectly understandable, it isn’t always the right choice. The fact is that sometimes, a pre-owned car makes more sense financially and practically, especially if you don’t have the cash to spend on a down payment and higher monthly payments. At the very least, it’s worthwhile to weigh the pros and cons when considering if a used car is the smarter purchase.
When You Need to Save Money
Do you have a few grand lying around that you can use for a down payment? Do you have another car to trade in? What kind of monthly payment can you afford? You can’t save money if you’re hemorrhaging it every month. You also want to avoid depleting your savings in an attempt to scrape up the money to put down on a new vehicle. Simply put, pre-owned cars cost less. Not only are they less expensive upfront, but the payments aren’t exorbitant.
When You Care About Depreciation
The joke that your shiny new car starts depreciating in value the second you drive it off the lot isn’t that funny — mostly because it’s very true. Your vehicle stops being as valuable as soon as you start to drive it. As you drive away from the dealer, its value drops by approximately 20 percent. It loses an additional 10 percent of its value within the first year. That basically means you just lost your down payment.
With a pre-owned car, your initial investment isn’t nearly as much, and the car you’re buying has already gone through that initial depreciation. Stick to one-year-old pre-owned vehicles. If you can’t find one, then two- or three-year-old cars will do.
When You Need to Save on Insurance
Used vehicles are less expensive to insure than brand-new ones. There’s nothing riskier than a spanking new car, at least not to an insurance rep. By their nature, used cars aren’t as valuable, but that’s no bad thing. It makes them cheaper to insure. Even better, depending on the value of the car, it may be possible to get rid of certain aspects of car insurance with a pre-owned automobile, specifically theft and collision.
When You Need Reliability
Some older vehicles are more reliable than their newer counterparts. They’re built of tougher stuff, if you will. Think about it: there are cars from the 1980s and 1990s that still run like new. They’ve been in accidents, driven through every imaginable type of weather, and endured all sorts of vehicular abuse, but they don’t show it. When reliability and durability are important to you, then a used car sometimes makes more sense.
While there’s a certain cachet attached to a new car, there’s no reason to empty your bank account so that you can keep up with the Joneses by way of the car you drive. Opt for the smart choice, the choice that makes the most sense for you, even if that means driving away in a pre-owned vehicle.