Pros and Cons of Buying a Used Car
Buying a car is exciting and strenuous. There are a lot of parameters that need to be factored in before making a decision. It helps to make a list of everything you want in a car to make an informed decision on the make and model that best suits your purpose.
While buying a brand-new car is very enticing, there are a lot of licensed pre-owned cars at much lower prices. You also get good warranties on certified used cars. Read on to find out more…
The pros of buying a used car:
Depreciation on new cars
Depreciation is the amount by which your new car loses value with time. Your new can depreciate as much as 10% in a month of buying it and by as much as 20% within the first year. So, essentially, if you were to decide to return the car to the dealer in 1 month, the dealer will buy it back for 90% of the value you paid for it last month.
You buy a car for $50,000 and decide to return it in 1 month. You’ll end up losing approximately $5,000. In a year, about $10,000. That’s not a comforting thought, is it? After the first year, the car depreciates at approximately 10% every year. so, in just 5 years, the value of this car will be roughly about $20,000, down to 40% of its original value.
On the other hand, if you decide to buy a used car, the depreciated would be much lower depending on the years the car has been running. If the used car is at least 5 years old, it will lose approximately about 10% of its value or $2,000 per year if you bought the car in the example above after 5 years.
Reliability of the car
Cars have come a long way. Nowadays, cars are more dependable and reliable than ever before. Car companies conduct reliability tests and offer continued performance for about 200,000 miles provided, of course, they are properly maintained.
There are a lot of financial institutions readily available in the market that offer great deals for financing a new car. Such institutions incentivize buyers with flexible payment options and cash rebates among other things. Interest rates are also much lower for new cars. Used cars also get financing but at slightly higher interest rates as compared to new car rates. But, it’s a trade-off as you’re financing a much lower amount as the car is used.
Certified pre owned cars
If possible, always go for certified pre-owned cars with proper licensing and certifications. These cars also come with extended warranties and a lot of added incentives. While the cost of such cars is relatively higher than the used cars bought without certification, they offer more reliability and peace of mind.
The cons of buying a used car:
They don’t come with latest features
New cars come with newer technologies and latest modifications that make your driving them safer and more enjoyable. Pre-owned cars are older than the latest new cars and may not have that latest auto parking feature or heated seats etc. Of course, you could install some features that may be available in the off market.
Finding the right pre-owned car
Finding a new car is relatively easier but a used car may not be as easy to find to your specifications and likes. It could be as easy as going to a trusted used-car dealer and finding what you wanted, all in one showroom, but if you decide to go it alone, you may be faced with the harrowing task of going through multitudes of ads and visit to check out the car. Even after you choose a used car, you’ll still have to get a mechanic to check out its condition and ensure that everything is good.
A used car’s regular maintenance cost will be more than that of a new car. Additionally, the new car warranty covers a lot of the cost but the same might not be true for a used car, unless it is bought from a certified dealer. It would be better if you weave in the maintenance cost into your monthly payment to be prepared for it.
The pros and cons of buying a used car are listed in detail above. The final decision rests on you. Weigh your options carefully before you make your decision. Happy car buying!