Cost comparison: new vs. used car purchases

Nov 03, 2023 By Susan Kelly

While acquiring a brand-new car is tempting, you should consider the long-term savings you'll realize if you go for a used vehicle instead.

According to data compiled by the National Automobile Dealers Association, the typical American will purchase and keep thirteen vehicles throughout their career at an average cost of $30,000. You could save almost $130,000 throughout your life if you purchased all of those automobiles used rather than brand new.

The Unspoken Truth About Buying Cars

You can save a ton of money throughout your life by realizing how automotive depreciation drains your bank account. Some say a car loses 20% of its value when driving it off the lot. You can wipe out $6,000 of its value in one minute on a car that costs $30,000.

Due to usage and wear and tear, that figure may rise to 30%, or $9,000, by the end of the first year. Then why don't you seem to be affected by this massive blow? As the impact only occurs when selling or trading in the vehicle. Compare a brand-new vehicle to a used one that is very similar in every way except for the mileage.

New car depreciation: You spend $30,000 on the vehicle and make $15,000 on the sale three years later. You lost $15,000 in depreciation value on the automobile.

Consider the depreciation of a used car: you buy the same vehicle, but it's three years old. For $15,000, the automobile is up for grabs. If you waited three years, you could get $10,000 for it. You saved $2,500 due to the depreciation of the secondhand car.

Put your preconceived notions about used cars in the past.

People used to joke that buying a used car was like "buying someone else's issues." No longer is the case. Here are two revisions to earlier criticisms about used automobiles manufactured very recently.

Dependability: Automobiles today are more trustworthy than ever before. Some vehicles can travel over 100,000 miles before needing significant maintenance.

Maintenance: Oil changes, tire rotations, and brake inspections are regular maintenance for any car. However, modern automobiles may go considerably further before needing such checkups. You can get many more miles out of your tires and brake pads these days.

Other Pros of Buying a Used Car

It is so evident that purchasing a used car is not only more economically viable but also more reliable. But consider these other benefits:

Cost-effective auto insurance: When the car's value drops, so does the premium for collision and comprehensive coverage. You can reduce your premiums even further by cancelling your collision and comprehensive coverage.

A cost saving is associated with registry renewals: Used-car registration fees have decreased year.

Upgrade to a high-end vehicle: You can shop in a more expensive car class now that you can save 30% or more.

We feel less pressure: What happened to your door? So what? It's not too bad, but it's a major letdown when it's the first dent in your brand-new automobile.

Gains associated with brand-new vehicles

Used automobiles save you money in almost every way, but buying new has benefits.

When looking for a new car, you can: When purchasing a brand-new vehicle, its condition isn't considered because it is just presumed to be flawless. There's no need to have a mechanic look at it. Finding out how much of a new automobile you can afford is simpler, too, even though haggling is still a hassle.

Additional funding sources: Cash rebates are just one of many enticements available from automakers to potential customers. Interest rates for loan purchases of new vehicles are lower. Once you factor in the incentives and negotiate a final price, you'll likely pay thousands less than the scary sticker price.

Superior engineering: Every year, automakers debut innovative improvements to the interiors, engines, and safety systems of new vehicles. You'll have to wait a while for them to show up in secondhand automobiles.

A rare occurrence

The rate of depreciation for various automobiles varies. It's common knowledge that some brands retain their worth better than others. There are situations where the cost of a brand-new car is comparable to that of a used car that is only one or two years old due to low-interest financing and manufacturer rebates.

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