When we think of selling our car to buy another one, one of our first questions is, How Much Is My Car Worth? However, that is just the beginning of a complicated but necessary process. Throughout, we keep asking ourselves – and others – many important questions, such as what should be the make and model of the car that I get?
But all of that takes a figurative backseat until you have made the most important decision regarding your purchase. Should you buy a used car or go for a new one? Have you already made your choice? If not, then stop and read this article before deciding.
Buying a new car has many disadvantages
Rate of Depreciation
One of the biggest disadvantages that you would come across if you buy a new car is how much money you’d be losing! We aren’t even talking about the fact that new cars are more expensive than used ones. We mean the depreciation that your new car will face in value just in the first 2-3 years. That is money that you will never get back.
The depreciation during the first few years of ownership can lower the value of a new car by as much as 50% or more! If you are buying a used car, you won’t be facing the same problem. That’s because the original owner has absorbed the major part of the depreciation cost.
Moreover, the car make and model you choose will also have an effect on the rate at which it depreciates. So, are you ready to waste your money on a new car? Don’t forget to check the residual values when buying it then!
New cars don’t age well
Say, you splurged extra to buy the latest model of a new car. It looks amazing and makes you feel the same way when you drive around in it. However, there is another disadvantage besides the rate of depreciation that you may not have considered. It takes automakers almost a year to switch engines for the later cars or alter their design. Fast forward a year and what do those alterations spell for you – problems!
Did you forget about the sales tax?
Think back to all the new car ads that you have watched. How many of them highlighted the sales tax that applies to new but not used cars? It makes no sense for you to spend so much on a new car when you can get the same functionality out of a used vehicle.
When buying a new automobile, you have two options to finance your purchase. Either you have enough money stored away to make it happen, or you do it on a lease. There is one big issue with the latter option. You won’t be the owner once your contract is up. At the end of the leasing period, you will be left with two choices. Either buy out your own car as you would have bought a used car or start a new lease!
If you intend to take a loan to buy your car, there could be a hitch or two down that route as well. For instance, to qualify for a loan, you must have a relatively impeccable credit history.
Buying used cars has many advantages
Buying a used car doesn’t necessarily mean you’d end up with a useless machine. Most of the later models that don’t have many miles on them are virtually new. Therefore, you will have many trouble-free miles of driving to look forward to. Modern cars will fare well for at least 100,000 miles; if your used vehicle shows 60,000 miles on the odometer, it is good for at least 40,000 miles more. Besides that, you can keep trading your car every few years or so, and you won’t even know you’re not driving a new one! Finally, aim for a used vehicle that was equipped with a drive-train warranty when new. That would mean the warranty would protect the expensive drivetrain components for 200,000 miles.
Splurge on accessories
Buying a used car would mean you won’t end up spending as much on the vehicle itself. It would leave you with more money to purchase other accessories. Where air conditioning would have cost you extra, now you will have the cash to spend on it.
Lower insurance premiums
A used car isn’t just a less expensive purchase; it is also less costly to own. By that, we refer to automobile insurance. Think of an insurance premium as the price your insurer would have to pay to replace your car in case of theft, accident, or other damage. Since new cars cost more, it would stand to reason that their owners will be paying higher insurance premiums as compared to someone who owns a used vehicle.
Cons of buying used cars
Like every decision, buying a used car has both advantages and disadvantages. Now that you know how much you stand to benefit from such a purchase, it is only fair that you know its cons too. A used car usually doesn’t come with any guarantees. You won’t know if the machine you are spending your hard earned money on will run for twenty years or just the next five.
Does that mean you should drop the idea of buying a used vehicle and simply purchase a new one? Not at all! Before you sign on the dotted line, have the car inspected by a mechanic you trust. Better yet, purchase from a dealer who has a good reputation. Once you have bought it, make sure your car will stay in the running by replacing the old tyres, transmission flushes, brakes, etc. with new ones!
Whether you finally purchase a new vehicle or a used one is something that only you can decide. Just remember that the advantages associated with a used automobile far outweigh the disadvantages of buying it. If you are comfortable with the financing options, want to save on sales tax, and can spot the amenities of your choice in a used car, why not just enjoy the ride!