Buying New Car Versus Buying Used: Which Gives Better Value Over Time?
Aug 16, 2018 18:39
The hot question just a short decade ago was whether you should lease a car or buy one. With more people having less disposable income and a shrinking monthly budget, many are now pondering whether it is more economical to purchase a new or used vehicle. There are obvious advantages to both, but in the end, though buying a new car may be more expensive initially, it could save you more money in the long-term.
The advantages of buying a used car
If you are just starting out with a very fixed budget, there are some advantages to buying a used car. The first is obviously going to be your upfront cost. When you buy a new car, even driving it off the lot devalues it. With a used car, however, you are getting a car that is less expensive to finance. Another advantage to choosing a used car over a new one is that the insurance is going to cost you less, meaning that your monthly budget won’t take a huge hit. For many, the prospects of both financing a new car and the expense of insuring it just aren't possible.
What many car owners don’t know is that the first two years of owning a new car is when it depreciates in value the most. This means that a used car will devalue at a steady rate instead of a quick decline, especially if you buy one that is two years or more years old. Finally, cars built within the past decade are simply constructed better than ever before, meaning that they don’t have a limitation on mileage. The life of a newer car is longer than ever before.
A used car often doesn’t have the advantages that make sense over the long term
Although costing more upfront, over the term of a car loan the difference between your monthly payments is going to be very little. Since financing a used car typically comes with a higher interest rate, when you break down the monthly figures it really makes more economic sense to pay the additional cost (if you can) than to pay a higher interest rate. In fact, many car dealers offer incentives for buying new, which include either very low finance rates, or in some instances, 0% APR if you pay it off within a specific time.
When you buy a used car, you may be buying someone else’s problem. Used cars usually come with issues and costs that are unforeseen. Since they already have wear and tear on them, used car owners find that they can be on the hook for expensive repairs or maintenance costs. When you buy a new car, it typically comes with warranties that cover the car buyer for the first several years. That is a huge advantage when you stop to consider how much repair costs can accumulate.
Many Langley used car dealerships also offer something called a “no-lemon policy.” There are some cars that are just poorly built. If you buy new, you have a greater likelihood that you won’t be the recipient of a car that is falling apart or would be in the service station more than it’s out on the road. A used car is your problem from the minute you pay for it. If you’re on your own the costs can be significant, especially if it is a car that has problems from the start.
The money that you must put down for a used car can be considerable. When you buy a new car, you don’t always have to put money down. That means that you aren’t invested right up front. The money you don’t have to put into a down payment can go toward your monthly payments, which is an excellent way to budget monthly instead of paying from your savings and then not having a safety net if something goes wrong.
Lastly, most new cars get better gas mileage. Although the days of five-dollar-a-gallon gas are behind us for now, not having to fill the tank every other day can save you considerably. It is also a greener alternative for those who are worried about the environment.
So it just makes sense to buy a new car!
If you have the option to choose either new or used, in the end buying a new car just makes more economical sense. With finance charges, less risk, and better gas mileage, new may seem like a heavy initial burden to your monthly budget and your finances, but it offers a greater safety net and perks that you simply can’t get when you buy used.
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