You’re in the market to buy a vehicle. The first question you probably ask yourself is if you’re looking to buy new or used.
While buying a new vehicle comes with several benefits (think “that new car smell”), the reality is that there are many more benefits when you buy used.
In this article, we’ll take a look at the many benefits of buying used vs. new. By the end, you’ll have your mind made up.
Let’s dig in.
- Used Cars Save You Money
Did you know that, on average, used cars are priced nearly 50% lower than new cars?
That’s a big deal. You’ll be able to get shorter financing terms and pay the vehicle off much faster than a new car. This saves financing fees.
The average car owner buys a different vehicle once every six years. When you pay $15,000 for a used vehicle instead of $30,000 for a new vehicle, you’ll be able to afford a lot more on your next purchase.
Or, your next vehicle can be another $15,000 used vehicle, in which case you’ve created a two-for-one special.
- Far Less Depreciation
It’s a well-known fact that a new vehicle significantly depreciates the moment you drive it off the lot. But the depreciation might be more severe than you thought.
On average, a new vehicle immediately depreciates by about 11% as soon as you make the purchase. That means that a $20,000 new car you just bought is now only worth $17,800. What’s worse, the vehicle continues to depreciate as time goes on.
When you buy used, the majority of the depreciation has already been shouldered by the previous owner. In fact, it’s possible for a used vehicle to gain value.
Edmunds.com provides a True Cost to Own tool that’ll give you details about how quickly a vehicle will lose its value. Check it out.
- Thoroughly Inspected and Certified
When you’re buying used, make sure you shop Certified Pre-Owned vehicles. These vehicles are like-new and come at a great bargain. If a vehicle is Certified Pre-Owned, it means that it’s been refurbished, inspected and certified by the vehicle manufacturer or another certifying authority.
You can rest assured that the vehicle is of the highest quality.
Even better, Certified pre-owned cars and trucks typically come with an extended warranty for further buying confidence. You could also get special financing along with additional benefits.
A new car only tells you one thing: that the vehicle is new. You won’t know much more than that when you buy it.
- More Affordable Insurance Premiums
Have you ever been in an accident with a new vehicle? What happens is that the insurance only pays out what the vehicle is currently worth. This leaves a financial gap between what you paid for the vehicle vs. what the vehicle is currently worth.
Of course, insurance companies provide gap insurance to cover the difference. But gap insurance doesn’t come for free. In fact, it can be quite expensive.
When you buy a used vehicle you won’t need to worry about investing in gap insurance. The bulk of the vehicle’s depreciation has already occurred. If you get in an accident and the vehicle is totaled, the insurance payout will be at or near the amount of your loan.
- Cheaper Registration Fees
In the majority of U.S. states, the amount of your annual registration fee ties in directly with the model year and value of your car. Generally speaking, you’ll pay the highest registration rates within the first three years of your vehicle’s manufacturing date. The rate levels off after five years.
When you buy used, you’ll save hundreds of dollars in fees over the lifetime of your car.
It Makes Sense to Buy Used
Even if you’re looking for that new car smell, remember that the best long-term buying decision you can make is buying used. It’s responsible and you’ll be happy you did.