Pros and Cons of Buying a Used Car
Yes, you can save a lot of money buying used, but you may not be aware of all the downsides which may affect your decision.
Advantages to Buying a Used Car
The biggest advantage to buying used is the cost savings. New cars depreciate heavily during the first 3 years of ownership - dropping by an average of 50% compared to the original MSRP.
When buying used, you're letting the original owner absorb most of the depreciation cost.
Some cars tend to depreciate a lot quicker than others, so it's smart to pay attention to the residual values when buying a car. If it depreciates quickly, you should really lean towards buying used.
The other advantage is that you will typically have to pay less for insurance. As cars get older (and the value decreases), they're simply cheaper to insure.
Disadvantages to Buying a Used Car
One disadvantage to buying a used car is you won't have as much choice when it comes to colors, styles, and options. You're limited to whatever is on the market and you may have to shop around for a while before finding one you like.
Another big disadvantage is the possibility of being stuck with a lemon. Unlike new cars, most used ones don't come with a warranty. If you're buying a late-model used car, it may still have some factory warranty left - in which case you can always extend the warranty without incurring huge costs.
This is why it's very important to get a used car thoroughly inspected by a mechanic before buying.
A final disadvantage is that you'll have to pay a higher interest rate when financing. Most lenders simply charge a higher interest rate on used vehicles. New cars will often come with financing incentives as low as 0%, so they definitely offer an advantage here.
If you really want to save some serious money and have peace of mind, it's usually best to buy a 3 to 4 year old used car and apply the savings toward the purchase of an extended warranty.
Each week, I'll keep you up-to-date on the latest car deals and news that might affect your purchase. This includes...
- Best Rebates, Incentives, and Lease Deals
- Latest Car Buying Scams and Tricks
- The Best & Worst Time to Buy a Car
- Which Cars You Should Avoid