Unless you’re made of money, buying a used car is a very wise financial decision in contrast to buying a car used. In this article, we will explore 10 reasons to buy a used car, and hopefully, by the end, you’ll come to an informed decision of your own based on our reasoning!
The longer you own your car, the more it will depreciate. Unfortunately, this starts from the minute you buy a new, mint car. Once you try to sell it, branding it as a “used” car, even if used for just a month, will drive down the selling price by thousands alone based on the tag. This means you’ll be losing money just to have a brand new car – and this isn’t very economical unless you are rich and can ignore the cost of anything.
On top of that, each year the car will lose value in the market even if it’s not used and given wear and tear (which will further drive down the value). A car may depreciate by 15% value per year, if your car costs $50,000 then in 5 years, the value of the car will only be around $22,000 – $30,000. This is simply the nature of how the car market works, and you’ll notice similar with smartphones – even though it makes more sense for smartphones due to heavily evolving technology, and doesn’t make as much sense for cars that aren’t really in a heavy evolution period. For example, should you buy an iPhone 6 today, you can get it for a few hundred refurbished compared to close to a thousand it originally sold for. Depreciation is a factor that applies to many products and is something you must research or you will fall victim to, as you will only notice it down the line when you look at the market prices when you are trying to sell or trade your car.
On top of all of that, used cars also have a lower depreciation value (buying from used), on top of a lower starting price. Hence it is more strategic to invest in a used car – it’s the perfect balance between going for newer models but also not throwing your money out of the window.
The 15% figure is just a guide. Many others report figures of depreciation of a car’s value by 40% in its first year, including the AAA. You can always study up on older models of the car you’re looking at. Essentially it will depreciate to half after 3 years.
2. Cheaper insurance
Because the car is cheaper, ensuring it is also cheaper. This is a huge factor for when you’re a new driver or if you’ve been involved in an accident before as your insurance premiums will be through the roof. Even if you don’t fall into other categories, you will be saving money regardless. It also means a used car is a very good gift for a newly qualified driver. Insurance is a very comprehensive process and they will check things such as your credit and ensure you’re someone who will pay up.
Insurance is an investment and a hassle you’re legally required to go through every year, and it is one of the biggest expenses in operating your car annually aside from fuel. Furthermore, registry costs are also cheaper for used cars every year.
In a lot of cases, if you are involved in an accident that is the other parties fault, you make a claim on your insurance. The mere fact you make a claim on your insurance, regardless of fault, can increase your insurance premiums. This is rather unfair and an unexpected expense that many misses – with little logic to it, as it’s expecting you to account for other people’s mistakes and essentially, maneuver perfectly whilst also not damaging anything else to prevent an accident. If the accident is your fault, you will face an even higher spike in your insurance, and in driving it isn’t exactly difficult to make a mistake – it’s fast-paced multi-tasking and requires excellent observation and control.
Many people will prefer to make no claim on their insurance even if the accident is the fault of the other party due to increasing premiums on any claim. They’d rather have their other driver’s details and have them pay them directly for repair costs. However, this is not something you can rely on, as if either party wants to have their insurance handle it (which is safer and something many people think is easier and the legitimate way to handle it without any hassle), it will go through insurance.
A lot of people also opt for the legal minimum, which is third-party insurance. Third-party insurance only covers any damage you may do to other vehicles. This means if you’re hit in an accident, you have to cover the costs without being able to have your insurance, experts, who are not available to help you. Many people opt for this simply because it’s cheaper and they already spent a ton on their car – and in their minds it’s cheaper. But you cannot predict the future, buying a used car allows you to save money and get full cover – it will protect you against all types of collisions, fire (which is surprisingly more common than it should be with cars – even top manufacturers like Telsa fall to this) and theft (which is something difficult to prevent).
3. Manufacturer programs – CPO
In case you haven’t heard of CPO, it essentially stands for certified pre-owned. Most manufacturers have programs and they provide an absolute ton of benefits and ton of savings when going with a used car, that ensures you don’t get screwed over. We’ll take a look at a typical manufacturer like Audi to provide a more balanced picture rather than a perfect one. All information for this is available here.
As you can see from their first point, “With 15 pre-checks, 115 exterior checkpoints, 85 interior checkpoints, 39 engine compartment checkpoints, 36 undercarriage checkpoints, and 18 road-test checkpoints, the Audi Certified pre-owned inspection process is one of the most rigorous in the automotive industry.” That’s just their 300+ point inspection. You aren’t going to get a faulty vehicle that stalls every now and then and gets stuck on a hill.
Many manufacturers provide a lot of coverage (including insurance for the first week or month) and warranty if the car isn’t in the perfect condition promised, which means everything is fully functional and not faulty as a result of a problem you caused whilst driving. Essentially, any pre-existing problems will fall under the warranty and will come at no cost to you for the entire warranty period which is typically a number of years. They can offer this without being shady about it because of things such as the 300+ point inspection which they don’t play around with and get a full, thorough look at every essential component of the car with plenty of testing and standardized processes based on experience from building the car themselves.
CPO is perfect if you’re worried about buying a used car that isn’t as described. It comes with plenty of benefits and assurances that is worth the slight extra price.
4. Happy driving
Should you bump your newly brought 50k car, you’re going to be stressed out of your mind. If you get a fender bender on a 5-year-old car, it’s no problem, you can get it fixed and it’s not going to ruin your week. You’re also going to be more stressed when generally driving rather than taking smooth – and stress doesn’t help you in life, with accelerated aging and your general attitude in life and towards others. Driving does require you to be careful but being stressed won’t help you – it could make you over-reactive. You don’t want to perform an emergency stop on a 50mph road due to an animal on a country road and cause the cars behind you to slam into you or swerve into the other lane with oncoming traffic.
While you may feel happier and more at peace with a completely new car, the last thing you want to be is on over-alert and hyper-vigilant whilst driving which can be many hours of your day. It counteracts the effect/feeling of having your own new fresh car and can completely diminish it.
5. It’s 2018 – cars have progressed
Over the last few decades, cars have progressed heavily. Cars don’t require the tires being changed often, oil checks every other week and brake fluid replaced regularly.
Cars are simply built better and even with idiot drivers and owners, they’re simply in better shapes. A lot of negative discussions have been attached to used cars but this is effectively a carry-over from previous generations. These days you can drive a metric ton of miles before needing to get the car heavily repaired. Whereas cars from the 60s may have lasted 2,000 miles compared to 200,000 miles today. Technology has certainly advanced a lot.
In addition, the cars carry more safety features, warnings, and diagnostics. You aren’t going to miss the warning lights or the computers actually informing you of the faults with the car, for example, faulty brake pads or low fluid levels.
Cars are built to be reliable and last decades. The more modern a car is, the less you have to worry.
6. Test it before you buy it
People selling a used car will either sell very low because they’re looking to sell fast, or they will bargain for a good deal. You’re able to test drive and see if the car is as promised, or if blue smoke starts coming from the exhaust, the car steers to one direction whilst braking, or any warning lights start flashing at the dashboard up in your face!
You’ll also be able to schedule full-scale inspections at a garage of your choice (your choice – so not at his buddy’s garage!) People are more than happy to get their cars inspected unless they’re selling fast or lying to you/have something to hide. If you promise to buy if the garage checks come good, then people will not hesitate to do business with you.
Garages perform multitudes of repairs every single day and for a variety of issues, so they’re able to test literally everything you can think of. For optimal reassurance, try going to multiple garages or go off recommendations provided by friends. This way, you’ll be happy the car is described as it is.
7. Government Records
These days, you simply can’t live under the radar. You can use this to your advantage in pretty much every first world country and easily get government records online from a mere registration plate – which is a huge deal.
No longer can anybody lie to you about the car being perfect, and it’s “never been in a fender-bender”. For example, the National Insurance Crime Bureau operates an online VINCheck free service. You can see if the car’s been stolen or if there have been any reported insurance claims. There are many services out there that you can use to your advantage and ensure you have the upper hand in any deal.
Another great service is the National Motor Vehicle Title Information System which provides you with a report that you can obtain. All insurance carriers, auto recyclers, junk yards, and salvage yards are legally required under federal law to report to this system which is why it is effective.
With factory warranties, lasting 5 or 10 years, interestingly they may still be applicable to the vehicle that you purchase from being used. This certainly adds to the appeal, as a car ages, it can malfunction at no fault of the users – especially if it’s seen heavy usage/mileage.
Be sure to check the warranty policies. This is typically one of the documents that you get as the original owner of the car that you have no reason to throw away alongside the vehicle manual, which can cost 100s of dollars to replace. On top of the warranty provided by the manufacturer you can get warranty from CPO and dealerships, so if you really want it, it’s yours.
[h]9. Even with repairs, it’s cheaper[/h]
You may have to get repairs done in the value of hundreds. However, consider the entire depreciation factor of 50% or more in 3 years. By buying used, you’ve let someone else take the huge hit for depreciation which costs you thousands.
You gain thousands to spend in any manner you wish. This includes operating costs if you don’t have any repairs that may be needed. If the repairs are in the range of a few hundred, you’ll still have saved a lot of money in comparison to buying the car new or the absolute latest newest model.
10. You get to drive off with it
Back 30-40 years ago, most cars would be brand new – not used, as the cars weren’t built to last long. You never brought new cars from a dealership, you brought those privately. These days, three times more cars are sold used over new. Dealerships sell used cars and provide the same experience as buying a new car, as they certify these cars similar to how we talked about the manufacturers do, but all have their own processes. Whilst the processes can be very different, most of them provide warranty and protection – and obviously don’t want to give you a bad deal as nobody wants a bad review, whereas it doesn’t matter much to a one-time private seller who may change the mileage or cloak the service history.
Since many cars are purchased used, new cars often have you waiting weeks for them to actually be built in the factory to your specifications, such as a pink car with a white interior. However, with a used car, you get the keys and get to drive off with it – and for any changes or upgrades, you can do them along the way, rather than waiting weeks. Waiting weeks is also not doable if you need a car to travel to your new job that isn’t easily accessible by public transport, or if you just really need a car to get by.
Buying a used car is something that’s very smart to do and there’s very little reason to buy new unless you’re absolutely and completely aware of the huge depreciation. If you’re adamant, you can get your perfect car built to your specifications. But factors such as warranty and reliability no longer play a part and are simply part of old-age myths that have carried over. Simply be smart and buying a used car is like buying a new car except it doesn’t come with a huge cost of purchasing a new car due to depreciation yearly and having driven the car changing its status to “used”.
We hope the article has been useful and we wish you the best of luck when purchasing your next car.