Used Vs New Cars
Posted by Gail | Filed under Smart Shopper
If you’re in the market for a new set of wheels, will they be new or used?
People are of the opinion that buying new is always more expensive than buying used. While there used to be a huge gap between the prices of new and used, the demand for used cars has shot up, making them scare and more expensive. And since you can’t just use the sticker price as a guide – more stuff breaks on a used car as components get to their best-before dates – if you really want to save, you need to factor all the pieces in.
Common thought has it that buying new means you’re wasting money because the minute the drive the car off the lot, you’re eating the depreciation because your car will lose between 15-20% of it’s value in the first year or so. But the flip side of this is that buying used means you’ll a) be taking on someone else’s driving history on the car and b) reaching the “replace this or that” stage so much faster. Looking for a vehicle with low kilometers is one way to offset the downside of buying use. But knowing which cars have long legs is a big part of the decision.
If you’re shopping for used, make sure you check with publications like Consumer Reports or Phil Edmonston’s Lemon-Aid books to find the highest quality used cars.
Another are where new and used rub up is in the area of financing. With so many new cars offering 0% financing, paying 12% on a used car may wipe out the savings you’ve made “eliminating the depreciation factor” by buying used. If you’re financing, do the math and look at the cost over the life of your loan.
Decide how long you plan to keep your car and amortize the cost, regardless of what you pay, over the life of the car. You should be able to keep a new car for 10 years. If you’re buying used, you have to think about what cars will cost when it comes time to replace the one you’re buying.
Low sales of new vehicles put pressure on manufacturers and dealers to bring prices down by offering rebates and special incentives. Since there has been a trend to keeping cars longer, this trend won’t last forever. Eventually the used market will be exhausted, and that’ll drive demand up, also driving the cost of new cars up.
Using a company like Dealfinder can help take the guesswork out of the used-car decision if you feel like a Christian facing off against a lion in the car-buying arena. Pay a little upfront for some expert advice and you can save thousands.