If you are in the market for a vehicle upgrade, you just might want to consider buying a vehicle that is a few years old. The price will certainly be lower than that of a new vehicle and ownership expenses are often lower as well. A high-quality used vehicle has already taken its most significant depreciation so you should be able to buy a nicer version with more extravagant trappings. Sure, there are shortfalls too. New vehicles often come with lower financing rates but the lower cost of a used vehicle typically offsets that consideration.
When purchasing a used vehicle you should try to find the delicate balance between value and risk. If you are diligent in your research, use common sense, and keep a rational outlook, chances are that you’ll ride away in a vehicle that is both a great value and something of which you can be proud. Here are some factors worth considering.
Twenty-years ago a vehicle with 100,000-miles (on the odometer) was considered ready for retirement. That’s not the case today. By using improved materials, lubricants, and methods in manufacturing, automakers are putting forth a product that is expected to last well over 100,000 or even 200,000-miles without a major overhaul. Late model used cars (less than five-years old) have one-third fewer mechanical and cosmetic issues than vehicles manufactured as recently as 2002.
Late model used vehicles often carry existing manufacturer’s factory warranties. This can lend some much needed peace of mind during tough economic times. With such items as the engine, transmission, and differentials covered by a free factory warranty, you can also be at liberty to make minor improvements and enhancements to your fresh set of wheels. You still need to have any perspective vehicle inspected by a qualified independent technician before purchasing it.
Depreciation, or the “D” word as I like to call it, is brutal as it pertains to new cars. The average new vehicle depreciates to the tune of forty-seven-percent over the first three-years. Ay close attention to the word “average” because some vehicles depreciate more rapidly than others. That translates into a pretty terrifying dose of reality. The average new vehicle that is valued at $27,500 (plus tax, tag, and title fees) will only be worth $14,575 after only three-years. Ouch! On the other hand, the same vehicle will only depreciate about twenty-four-percent over the next three-years. Obviously if you can enter the equation after the first three-years, you can save a bundle of dough. Check out the used car section of BestRide.com for millions of listings on late-model used cars, trucks, vans, and SUVs.
Interest Rates and Insurance
Despite the fact that the interest rate is typically lower on new car loans than used car loans, the initial cost is negligible. When average interest rates, between new and used car loans, vary by less than one-percentage point the monthly payment only ends up being about $10 to $15 more per month. When you figure that insurance is going to cost less for a used vehicle than a new one and the length of the used car loan is normally shorter than the new car loan, it works out to big savings for you.