Buying a car is perhaps only second to your home as the most important investment you’ll make in your lifetime. There’s so much riding on making the right choice. Along with the considerations that come with it, you’ll have more than your share of ‘umming and ahhing.’
It’s only natural for you to have reservations. It’s your instinct that is designed to help you make the most informed decision without consequence. It’s those same instincts that drive people to the safer, albeit much more costly, bet of buying new. This is a crying shame. While there is still some risk attached to buying used cars, by and large the market is far more reputable than it was even ten years ago. Here’s why buying used could make much more sense to you from a financial perspective.
The main consideration that people fail to take into account is that there’s more to the cost of a car than just the price tag. There are the running and maintenance of the vehicle. The associated fees and subsequent depreciation. The taxes, the insurance, and the ever-increasing fuel prices. Buying a brand new car (minus a few exceptions) is always more expensive than buying used, and not just in terms of up-front cost. Have you accounted for the 20% hit in value your car will take the very second you leave the dealership?
What about the sales tax? Most states subject the purchase of new goods to a one-off tax. As with the interest on your mortgage, this is empty money. It’s not going towards the product you’re buying, nor into the pocket of the seller. It’s just there; floating around aimlessly with no benefit to you or your trader. Used cars, however, escape this sanction. That means the money you save can instead be put towards the renovation work you’ll inevitably need to undertake. But hey, at least you see something in return for your money.
New cars are also often heralded for their top of the range features. They’re modern and, as such, benefit from all the latest technology. What a dealership won’t tell you is that the charge for these additions outweighs what it would cost you to upgrade these features for yourself. It’s the oldest trick in the book. Offer a vehicle with all the bells and whistles, and the customer will get all starry eyed and hand over whatever you tell them it’s worth. If you decide you absolutely cannot live without the rustproof coating all of a sudden, don’t fall for it. It would be cheaper to have the work done yourself at a reliable auto shop.
Sure, there’s a certain pride to be found in buying a new car. And if you can afford to, why not? But when a bottomless pit of money isn’t an option for you, you’ve got to make smarter buying choices. Don’t be fooled: the higher prices of new cars isn’t down to the product you’re getting in return. By and large, you’ll have nothing to show for your money but a care rapidly declining in value.