Cars are an expensive purchase just like homes and weddings. If you want a totally new car, it will cost you even more money. A new car may look clean and smell fresh, but is it worth the extra money? Why not save money and purchase a used car?
Used cars have a lot of benefits to them. Not only will you save money on the purchase price, but there is less depreciation to worry about and a lot of cheaper rates for insurance. This is why used car purchases are better than new car purchases in many cases. But, is a used car right for you? Let's figure this out together.
Below are the 4 benefits of purchasing a used car instead of a new car.
1) Cheaper Cost
It is cheaper to purchase a used car. If you decide to purchase a new car instead, you need to consider how much it will depreciate as soon as you drive it away from the dealership. If you look at the cost of a luxurious 2006 Porsche and an economy 2012 Toyota, they are about the same price. This is all due to the depreciation of the Porsche.
2) Lower Sales Tax
Do not purchase any vehicle until you know the sales tax rate of your county and state. A lot of dealerships add on this sales tax at the end without telling you the amount upfront. Then you will be surprised at how expensive your vehicle is in comparison to the tag price.
There are certain states which only require a sales tax to be charged if you're purchasing a new car. This could add thousands of dollars more to the total cost of the vehicle. For this reason, do some research beforehand and find out if your state does this. If they do, then consider purchasing a used car that has no sales tax charged.
3) Cheaper Insurance
Car insurance rates mostly depend on the vehicle's market value. Since used cars are not worth as much as new cars, you can usually get a cheaper insurance rate for them. As you continue to drive your vehicle, the value will depreciate even more. This could entitle you to a reduced insurance rate over time. Plus, if you lower your coverage on certain things like theft or collision, you'll find it is more cost effective.
4) Slower Depreciation
New cars depreciate faster than used cars. During the first year of a new car's life, it will depreciate by 10%. This doesn't even count the depreciation that occurs when you drive the car out of the dealership.
If you want to avoid this problem, buy a car that is just a couple of years old. They might even come with a pre-owned certified warranty too.
You have a big decision to make when purchasing a vehicle. Whether you're buying a new or used vehicle, consider your financing options too. You should be able to find a suitable deal for yourself.