There is something undeniably nice about buying a brand new car. From the new car smell to the mileage clock reading 0000, it is just a great feeling. Unfortunately, buying a brand new car is expensive, and often, you end up losing a whole lot of value just by driving it out of the showroom. With the average person owning over 12 cars throughout their lifetime, and with the cost of a new car averaging $32,000, this can add up to nearly $140,000 dollars during your life. When you factor in the fact that the average person has at least one accident throughout their time driving, and consider the potential financial damage of your car accident lawsuit going to trial, the costs of car ownership are ridiculously high.
A great way to save massively on this cost is to purchase older used cars. When you realize that cars lose around 20% of their value upon purchase, which is $6000 dollars, if you are buying a car at the average cost, it is a hard pill to swallow. What’s worse is that not only do you lose 20% upon purchasing your car, in the first year of a car’s life, studies show that your car will lose another 10% of its value. This means that after just one year of ownership, you have potentially lost $9000 dollars on your investment in a new car.
In the past, people were wary of purchasing used cars because of the problems that tend to come with them. This is an old stigma, and with today’s much more reliable motors, used car engines are practically bomb-proof for the first 100,000 miles or so. When you buy a used car, the cost of a full service, new tires, oil, and a full mechanic check should only be around $500-700 dollars. When you are getting your car for $9000 less than it was brand new, it is a massive saving.
One of the other advantages of a used car is lower insurance premiums. As the car is worth less than it was when new, the cost to insure it should also drop.
That isn’t to say there are no advantages to buying a new car, however, because there are. When you buy a new car, lots of showrooms offer some great incentives to get you to take the plunge. If you are looking at financing your vehicle, often the rates for buying a new car, are slashed. This means that over the term of your loan, you might actually pay less for a new car than if you bought a slightly older model.
New cars often come with guarantees and warranties that protect the car from any problems for the first few years. That means that if your car has a serious problem that could cost thousands to repair, the showroom or manufacturer will cover the costs.
At the end of the day, choosing whether to buy a used car or a new car is going to depend on your needs and personal situation. If you have the money upfront, the scales tip in favor of buying a used car, if you are looking to finance your vehicle, perhaps a new slashed rate car would be the best option.