Shoppers should consider slightly used cars

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Used car lot

Car shoppers might do well to look at slightly used, late model cars rather than new. Photo Credit: Sebastian Bollard/Wikimedia Commons/CC-BY-SA

Many dream of the day they can finally afford to buy a car brand-new, and there are plenty of reasons to do so. However, those who want to shave a little off the price tag may want to consider slightly used cars.

Most of the benefits at lower cost

Part of the appeal of buying a brand new car is the knowledge that the car has a long life ahead of it. It’s also a status symbol; buying new shows that someone is secure enough to not have to buy a used car.

However, there are some reasons to consider slightly used, late-model cars rather than new, especially for the budget-minded shopper.

Depreciation depression

One disincentive downside to buying new is the depreciation. According to Edmunds, up to 11 percent of the value vanishes once the car leaves the dealership. By five years into the car’s life, it can lose up to 37 percent. However, the worst depreciation occurs in the first three years, after which the value declines at a far slower rate. Depreciation depends on model, mileage and other factors, but cars about three years old with low mileage (less than 30,000) can be had for much less. Some will still be under warranty and some car makers have “certified” used car programs, which means used cars are kept to stringent standards.

Paying less for about the same

According to MSN, a used model can cost 25 to 40 percent less than brand new. If the car has fewer than 50,000 miles on it, it could still go up to 100,000 miles or more without needing major repairs if it continues to be properly cared for.

The other good news, according to AOL, is that taxes and, more importantly, insurance rates are also going to be lower. In fact, according to personal finance blog MoneyCrashers, some states won’t require any tax at all on used models. Used cars also don’t have destination, shipping, or “dealer preparation” fees.

When buying new makes sense

Sometimes, it make sense to buy new. Some models, if less than one year old, barely cost any less than new. Also, the interest rate on a loan can make it so that you’ll have to pay more in total for a used car than a new car.

One’s future plans make a difference as well. If a person intends to trade the car in a few years, a new car will get more than a used one. The depreciation will be worse, but the trade-in value will still be higher. If one intends to drive the car until the wheels fall off, buying a slightly used car from a brand known for reliability for a few thousand less than new is a good choice.

Sources

Edmunds

AOL

MSN

Moneycrashers


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