Contrary to Popular Belief, Buying Used Saves you Money in the Long-Run; Here’s How
Not considering about looking at any used cars for sale in NY? Think again — and stop listening to that one friend who swears buying a new car is better for saving money in the long-run. Because the fact of the matter is, it’s not. Is a new car more likely to have less trouble than a used car? Logic tells us, yes, but that doesn’t mean it will be the ultimate outcome. I know plenty of people who’ve had used cars wind up cheaper than owning a new car. How is that possible? Because contrary to popular belief, buying the right type of used car actually saves you money. Avoiding depreciation (when a new car loses value for every year of ownership) alone ensures that, but there are other perks to a used vehicle that let you save money as well.
There are no monthly loan payments to worry about if you buy the used car outright, it costs less to insure, and repairs that need to be done on a used car don’t happen as often as you might think.
You’ll Have to Find the Right Type of Used Car
In order for this to work, you’ll have to find the right type of used car. If not, you’ll end up with one that costs you more money in repairs than what the vehicle was worth. No, it’s not a one in a million shot to find a great used car at a great used price — you just have to know where to look, and how to look at your prospective purchase.
A trusted used car dealership is a good place to start, and avoiding looking at your dream car through rose-colored lenses as soon as you see it on the lot is a good way to not get sucked into a bad purchase. Look for quality, not what you’d prefer. I’m not saying if you want a truck but can only find a good sedan, buy the sedan. I’m talking about petty things when it comes to used car buying — like brand preferences or trim level. The important thing is to find a used car that’s in good condition.
Here’s what you should be looking for on a used vehicle: low miles, proper maintenance, little to no rust issues, a good interior, and a clean vehicle history report, all for a low price. In order to find an extra reliable vehicle, find a model matching this description that has only been owned (and properly maintained) by one person before you.
If you’re having trouble finding this at the dealership, take to Craigslist and see what you can find on there. Make sure to thoroughly inspect the vehicle when you actually see it in person.
Don’t believe these vehicles exist? I’ve owned two like the one I just mentioned above, and can personally say that I have saved a lot of money thanks to those vehicles, which is why I will continue to buy used cars. Look at Consumer Reports and check out vehicles that have above-average reliability, and use that as a starting point if you seem to get lost…Doing so will help you reap the following benefits…
No Monthly Loan Payments
If you find a vehicle like the one listed above, pounce on it like a hungry cat. While they aren’t as rare as you think, it’s still harder to find one than simply buying a new car off the lot.
If you do buy it, and you bought it all in one shot — which is also possible, considering I bought both my used cars upfront — then you’re about to experience pure financial bliss. After paying sales tax and throwing some plates on it, you’ll realize that all you have to pay for is the insurance cost each month. That means, no monthly payments to worry about.
With the average interest rate hovering between 4%-5% for a $30,000 (on average) new vehicle MSRP in 2016, do I even need to explain how much money you’re saving? I bought my latest used car for the price of a downpayment on a new vehicle ($2,500) — even though a downpayment should be 20% on a new car, consumers continue to pay less as the years go on. Regardless, I bought it in one shot and didn’t have to worry about monthly payments to pay back a car loan, with interest. The car before that, I bought for $500 and it lasted me two years.
Combine that with avoiding a good chunk of the car’s depreciation, and you’re saving all sorts of money in the long run.
Lower Insurance Costs
Wanna learn about the cherry on top? Because you can find a good-quality used car for a cheap price, the insurance cost will be next to nothing. Why get top-notch insurance if it’s going to end up costing more than what you paid for the vehicle? That just doesn’t make sense. Instead, you’ll most likely be getting some type of basic coverage so that if someone hits you and they are found at fault, you’ll be compensated.
Actually, the entire registration and insurance process will just be cheaper in general. Since sales tax is based on a percentage of the vehicle’s total price and you don’t need top-grade insurance, you’d be surprised how cheap it will be.
Repairs are More Likely, But Not as Likely as you Think
Yes, repairs are more likely with a used car, but not as likely as you think. Why? Because, if you find a car like the only I described above, then you’ll be doing regular maintenance just like on a new car. Can anything happen with a used car years down the road? Yes — but anything can also happen with a new car. You can’t reduce the risk of something happening to a new car, all you can do is hope that it was built right and doesn’t have any recalls. But with a used car? You are able to control how reliable the vehicle you get, and reduce the chances of needing a major repair during the shopping process with a thorough inspection.
Personally, I think it’s worth the risk — that you’re mitigating — buying a good-quality used car for cheap that’s been properly maintained over its lifetime.
If you’re unsure or not confident in your ability to discern a quality used car off the lot, base your purchase off Consumer Reports’ findings, and get the vehicle inspected by a trusted independent mechanic. Or, bring a friend along who knows what they’re doing. If you buy the right type of used car, you’ll see just how easy it is to save money in the long-run when compared to dealing with the hassle of paying off a new car loan.