How will your car purchase affect your bank account now and into the future?
There’s something magical about that new car smell. But, how much are you willing to pay for it? Let’s explore the advantages of purchasing a used car versus a new car, and then you can decide if the new car smell is worth thousands of dollars.
Before you go shopping for a quality used car, truck, or SUV, read the following advice backed by sound financial thinking.
Maybe that new car smell isn’t what you really want. Maybe it’s the sweet scent of currency; dollars in your pocketbook. The fact is, by choosing an average used vehicle instead of an average new vehicle, you’ll save thousands of dollars. Likely $10,000 or more, according to U.S. News & World Report.
Exactly how “used” are we talking about? J.D. Power claims the average used vehicle is 4.3 years old and has approximately 51,500 miles on the odometer. Of course, not all used cars, trucks, or SUVs are equally made or treated the same by their owners. But, in general, these are considered lightly used vehicles.
Keep in mind, too, that you may pay a slightly higher interest rate for a used vehicle than you would for a new vehicle.
Depreciation Happens Fast
You’ve likely heard the old story: as soon as you drive a new car off the lot, it’s value depreciates by thousands of dollars. Well, that’s pretty accurate!
Sign the new car paperwork, drive it around the block, and return. Well, that’s a “used car” now. And, its value dropped by about 20 percent, again according to U.S. News & World Report. And, after three years, that new car depreciates enough to be worth around 47 percent of what you paid new, according to Consumer Reports.
There are other costs of car ownership to consider, as well. By buying a used car instead of new, you’ll pay less sales tax. Now, consider car insurance, which is based on the value of the vehicle. Because a used car has less value, you’ll pay less to insure your used car.
Cars, trucks, vans, and SUVs built today last longer than ever. The numbers prove it: the average vehicle driving on U.S. roads is 11 ½ years old, a record high. And, IHS Automotive predicts that by 2020, the number of 12-year-old vehicles will rise by 15 percent.
So, you can save thousands of dollars and get extended life from a vehicle because of improvements in modern quality. A used vehicle may have more maintenance required. Then again, it may not. It all depends on the particular vehicle and how the previous owner treated it. And, if the used car is only one or two years old, many potential issues could be covered by a comprehensive warranty.
Buy More Car
When you consider a used vehicle, you can afford to purchase something you normally would not when looking at new vehicles. Here’s an example: you may see a 3-year-old Audi A4 with 30,000 miles for the same price as a brand new, fully loaded Chevy Malibu LT. Do some exploring on Kelley Blue Book and see for yourself.
Most people would rather drive the Audi A4 (personal taste can change your viewpoint, of course). Yet, that’s not a financial decision you could even consider for a new Audi. You can consider it when used car shopping. Your world of possibilities is wide open.
Plus, with carmakers not redesigning models every year, a 3-year-old Audi doesn’t look much different than the current model.
“Nothing is free,” they say. When you decide to save thousands of dollars by choosing a used car, truck, or SUV, you’re assuming some risk for a better bank account. What can tilt the odds even more in your favor is to go used car shopping at a reputable, ethical, and honest used vehicle dealer.
Still craving that new car smell? You can buy air fresheners that give you exactly what you need. Yep, the olfactory wizards at Little Trees® keep them reasonably priced, too.
disclosure: While I was compensated for this post, I wanted to make sure all content was relevant to my readers.