Buying a New Car vs. Used: What Is Going To Be Most Cost-Efficient?
Posted by admin at 2 May 2019, at 10 : 32 AM
If you are in the market for a new car, then it can be pretty enticing when you think about buying a new car. But if that is what you are planning to do, then it is a good idea to take a cold, hard look at how much it will cost you to buy a brand new car, and how much it could cost you buying a used car.
Here are some of the facts: on average, people will own over ten cars in their lifetime. And again, on average, each costs around $30,000, according to reports. And if you think about the life of those cars and if they were bought when they were a few years old, rather than brand new, it could mean a pretty hefty saving over a lifetime. The real way that you save money on used versus new cars is through depreciation, which can happen in a big way during the first year of a car’s life.
Depreciation
Now, depreciation might be a new term to some, but it is a good idea to really understand what it is all about. Once you understand just how much depreciation can cost you, it will help you to save money for the rest of your life as you’ll look at things a little differently. There are claims that your new car loses value as soon as you buy it. And that can be true. In a couple of minutes and the time that you first drive it, a new car could lose around 20% of its value just like that. After the first year, as mentioned above, it could lose as much as 30% of its value. It isn’t something that you’ll notice right away, of course. But it does make a difference when it comes to trading in or selling that car.
Here is how depreciation can be seen in both new and used cars. In a new car, you buy the car for around $30,000 say, and then sell it three or four years later for $15,000. The car has cost you $15,000 (half in this case), in depreciation. When you look at a used car, and you buy the same car but one that is three years old. That could mean you buying the car for $15,000 in this instance. Then, three or four years later it could mean that you are able to sell it for around $10,000. So in this instance, the depreciation cost to you is only $5,000. So you really have to decide what is more worth it; the new car that is brand new and can be seen as better over all, or the car that will depreciate less? When you know what matters the most to you, it will help you to decide what kind of car you want to be looking for.
Used Cars
If you think that you want to be going used car shopping, then you can get some really great deals. And it is time to let go of the used car stigma, that you are just getting someone else’s junk. Sure, there can be super old cars to choose from. But there will be some that will be one or two years old, so you can get a modern and up to date car if you want to.
Through the technology that we have these days, cars are more dependable than ever at the moment. Many cars can really rack up the miles without needing any major repairs. You may think that getting a used car will mean more maintenance than with a brand new car, but the truth is that all cars require maintenance from time to time, such as oil changes, new tires, and so on. Cars are being built better, though, so you can go for longer in between needing these checks. So don’t just write off used cars just because you think they’ll be more work.
Advantages to Used Cars
* Did you know that you are likely to be able to get lower car insurance quote when you have a car that is worth less? So a used car, as we know from the depreciation chat above, will be worth less, so an insurer wouldn’t need to payout as much if something did happen where you’d need to make an insurance claim.
* There are reduced costs to registering your used car each year, and the cost goes down each year too.
* You will be saving money, so it leaves you the time and chance to get saving for the next car up that you want. So you can move onto bigger and better things if required.
* A used car can cause a little less stress than a brand new shiny car. If you get a scratch on it, for example, then it might not be as big of a deal as it would be with a brand new car that is spotless.
* There is also the advantage of knowing exactly what has happened to the car, such as bodywork or repairs, though that will only be if the previous owner(s) kept the records.
Advantages of a New Car
Most things with new cars are going to cost more, that is clear and easy to understand why. But there are still some advantages to buying a new car. A few of them are:
* It can be quite simple and straightforward to shop for a new car. You know exactly where it has been (nowhere), and it will be perfect to the manufacturer’s specifications. You don’t need to get a second opinion such as a mechanic friend, as it hasn’t been used. You will also have a clearer idea of what a new car is going to cost you. Haggling for used cars can be tricky.
* If you are buying a used car from a private seller, then it needs to be bought with cash outright, as a private person like you or I, isn’t going to give you a credit deal. So with new cars and buying from the manufacturer, you are likely to have more financial options and better interest rates than just getting a loan to cover the cost of a used car with a private seller.
* When you buy a car right from the start, you can choose what the car comes with. So you can choose things like new comfort features, performance-based features, as well as tech like built-in sat navs. You may get things like this with a used car, but it won’t be guaranteed.
* A new car is a little likely be more reliable than a used one, although barely used (such as one or two years old is likely to be fine). If something should go wrong, then new cars car covered under a manufacturer warranty, so that is some peace of mind, for sure.
* There can be a bit of prestige with a new car, so the ‘brag-ability’ factor could be a selling point for you.
Depreciation is something that can be a real pain with cars, as they can’t really even be considered an investment purchase. So to minimize the impact of depreciation, you should look to buy cars that are better at holding their value. If you still aren’t too sure whether you go new or used, then you could use something like a car loan calculator to see how much less your payments would be each month if you chose to buy used instead of new.