Choosing between a new or used car is the first step in every car-buying journey. The appeal of a new car is obvious, but there are many benefits to buying used, one of which is the high potential for savings. If you’re in the market for a new car, here are seven money-centered reasons you should choose a used vehicle.
1. Lower Price Tag
The most obvious advantage of buying used vehicles is the lower upfront cost. Not only does this lighten the burden on your wallet, but it can also open the doors to a wider range of vehicle options. By purchasing used, you may be able to afford extra features or luxury models that would ordinarily be outside of your budget if they were brand new.
2. Less Depreciation
New vehicles typically experience rapid depreciation from the moment they’re driven off the lot. A brand-new car will lose up to 20% of its value in the first year alone, which is more than twice the average depreciation rate of a used car. In contrast, used cars have already undergone this initial depreciation, allowing buyers to enjoy a more gradual and stable decline in value.
3. Reduced Fees and Taxes
In most U.S. states, the cost of registering a vehicle is based on its purchase price. Therefore, purchasing a brand-new car will usually require spending even more to register your vehicle. Similarly, taxes on vehicle purchases are calculated based on the vehicle’s purchase price. Depending on your state, you may be able to save a significant amount of money on the fees and taxes alone by purchasing used over new.
4. Lower Insurance Rates
Used cars typically cost less to insure compared to similar, brand-new cars. Because used vehicles have already experienced some depreciation, insurance companies may offer lower premiums to reflect the reduced value. Additionally, used cars may be less expensive to repair or replace after an accident, which also influences the insurance rate.
5. Lower Monthly Payments
Because used cars tend to cost less overall, monthly payments on a used car are relatively low. Lower monthly payments can make it possible to direct more of your monthly income towards other goals, such as savings or reducing debt.
6. Negotiable Prices
The sticker price of a brand-new car is usually set by the manufacturer. On the other hand, car dealerships decide the price of the used cars on their lot. This can give you more room to negotiate as a buyer, especially if the vehicle has been on the market for a while or if there are minor imperfections.
7. Cheaper to Fix
Thanks to advances in technology, repairs for a new car can be more expensive due to the cost of replacement parts and specialized labor. On the other hand, used cars usually have parts that are more accessible and affordable. This can minimize any future repair bills and ultimately reduce the overall cost of vehicle ownership.
Before purchasing any vehicle, be sure to do your research, especially on the many benefits of used vehicles.
