It’s All About the Depreciation
Depreciation is usually the one hurdle new car buyers have to jump through. Just imagine seeing 20 percent of your new car’s value vanish the moment you drive it off the lot and another 10 percent of that value disappear by year’s end. That could prove a bitter pill to swallow unless you plan on keeping your new car for a very, very long time.
With a used car, however, the depreciation damage is already done. That means you won’t have to pay near-sticker, only to instantly lose thousands of dollars the moment you drive away. Not only is the major depreciation over and done with, but used vehicles depreciate at a much slower rate than new cars.
Used Cars Last Longer Than Ever
There was a time when used cars were a gamble, at least mechanically speaking. These days, used cars are seen as just as reliable as their new counterparts. Chalk that one up to decades of steady manufacturer improvement along with cars simply being more reliable and longer-lasting than ever.
Need more proof? According to IHS Markit, the average age of passenger vehicles on the road was 11.6 years as of 2016. In short, more people are holding on to their vehicles simply because they’re lasting longer and have more to offer for long-term owners.
Certified Pre-Owned Programs Exist
Worried about having a warranty?
A Certified Pre-Owned program is your best bet. Nearly all vehicle manufacturers have such programs in place to sell the best of their pre-owned vehicles while giving prospective buyers greater peace of mind. These vehicles often come with strong warranties you won’t find with most used vehicles, plus other perks including roadside assistance and vehicle loaners at no charge.
It takes plenty for a used car to qualify as a CPO vehicle. For starters, it must pass a rigorous multipoint inspection process for flaws, blemishes, and mechanical imperfections. Only the best examples tend to pass inspection, plus most CPO examples are only 3 to 5 years old, at most. That leaves CPO buyers to choose among the cream of the crop for their next ride.
You’ll Spend Less on Insurance and Taxes
Insurance premiums have plenty of variables – age, driving history, location, mileage, and even credit score. However, your car’s value is also a big variable that ultimately affects how much you’ll pay every month. A new car’s value, combined with having extra coverage like comprehensive and collision, could have you paying a pretty penny for insurance.
By having significantly less value than a new car, however, a used car will likely enjoy lower insurance premiums. In some cases, you can even skip adding comprehensive and collision coverage if the vehicle is old enough and you can stomach paying out of pocket for damages. In short, a used car could be a bang for your buck in terms of insurance.
The same goes for vehicle registration taxes. Most states use ad valorem taxes, for example. A used vehicle is more likely to be assessed at a lower value than its newer counterpart, resulting in cheaper registration.
Getting More Bang for Your Buck
Another benefit of buying used is getting more car for your money’s worth. For the price of a new car, you could buy a used car that’s one size larger, giving you more space and/or more seating capacity for your family. In fact, buying used is often a great opportunity to step up to a larger SUV with more generous passenger and cargo room.
You could also buy a used car that offers more features than what’d you find on a comparable new car. Used luxury cars are a definite bang for the buck thanks to their steep depreciation. You might be able to afford a brand-new luxury vehicle, but buying a 3-year-old example gives you the same level of incredible luxury features at a significant discount. The styling is unlikely to change radically from year to year, so you’ll have a modern, up-to-date ride that won’t look out of step with the rest of traffic.