Buying a new car is exciting because you can avoid hefty repairs for at least five years after purchase. However, if you have in mind the cost depreciation and other factors, it is far more affordable to find used ones instead.
According to statistics, an average person tends to own thirteen cars during their lifetime. National Automobile Dealers Association (click here to visit their official website) states that the average cost of each vehicle is approximately $30 thousand.
You probably did not know that buying a used car is a more significant money saver than finding the new one. The main reason for that is the common sense that brings depreciation of value as soon as you step on the gas pedal.
Let us start from the beginning.
The Reality of Depreciation
The best way to understand why buying a new car is the worst thing that you can do is by following the depreciation. Remember that you will be able to save hundreds of thousands of dollars over your lifetime if you avoid buying new and opt for used ones instead.
You have probably heard that the new cars tend to lose their value for 20% as soon as you step on the gas pedal.
Yes, that is the fact. In a single minute, a car that you purchased for thirty thousand dollars will lose six thousand the moment you start the engine and drive towards your household.
That is not everything, because, by the end of the first year, the overall depreciation will hit 30% from the initial price, which is nine thousand dollars. That happens due to wear and tear mileage, and first year of use.
Therefore, if you wish to resell the car during the first year after purchase, you have to say goodbye to nine thousand dollars. Consequently, you will not be able to return your investment, which means that you will lose money the moment you buy a new car.
As soon as you enter this website, you will understand the difference between used and new vehicles.
Let us compare the expenses you will make by buying new versus the used vehicle. When it comes to a new car, you will purchase it for thirty thousand dollars, and in the next three years, you will be able to resell it for half of the price you gave.
The loss will be $15 thousand due to depreciation. On the other hand, if you purchase the same car, which is three years old, you will be able to buy it for $15 thousand. In the next three years, you will be able to sell it for ten thousand dollars.
Therefore, the overall depreciation will be only five thousand when compared with fifteen. Of course, some people would say that driving a new car has its benefits. You will have brand new bells and whistles, and you do not have to take it to the repair due to its brand new state.
However, it will affect your pocket in the long run.
Used Cars Are Not Bad As You Think
Back in the day, people had the stigma that buying used cars meant that they had to purchase the vehicle with numerous potential issues. That is so far from the truth. When we are talking about a used car, we are not saying that you should buy a vintage old-timer.
Instead, you will get the vehicle with a short history up to five years old. They have depreciated from the initial price, so you will be able to get them for a lower price tag than new ones.
At the same time, they may feature the manufacturer’s warranty as well as the ability to act as the new car when it comes to reliability.
Advantages of Used Cars
- Reliability – Most cars made after 2010 are more dependable than the ones made before. Therefore, they can quickly achieve more than a hundred thousand miles without any significant repair.
- Maintenance – Of course, you have to conduct regular maintenance to reduce the common issues that may happen. We are talking about frequent oil changes, brake jobs, and tire rotations. However, generally, you can quickly drive the cars much farther before going to the maintenance visit. Since the brake pads and tires feature the latest technologies, they can withstand longer drives, which means that you can rest assured by using them.
- Lower Car Insurance Rates – It is understood that when you purchase a car worthless, you will need less money to insure it. Therefore, you can easily purchase comprehensive and collision coverage to protect yourself against potential problems. In case something happens to you, the coverage will handle all issues, which is an important consideration when compared with high premiums you would have to give for new cars. You can learn more about car insurance by checking out this site: https://www.investopedia.com/terms/a/auto-insurance.asp.
- Cheaper Fees – Finally, you will be able to reduce your overall expenses as well as fees such as registry renewals and many more.