The new car models for 2018 are sleek, shiny, and filled with enticing gadgets — as you’ll no doubt be reminded in a flurry of Super Bowl commercials and Presidents Day weekend sales. But if you’re in the market for a new vehicle, you can save a great deal of money if you buy a used car instead.
It’s much more cost effective to let someone else absorb the big depreciation of market value that new cars experience during their first year. CARFAX, which tracks the histories of automobiles, says that new cars typically lose 10% of their value immediately after purchase. During the first year, the value can decline by another 10%. And on average, new cars lose 60% of their value within five years.
If you buy even a slightly used car, you can save yourself the depreciation new cars experience the moment they’re driven off showroom floors. Economist Eric Tyson, author of “Personal Finance for Dummies,” said buying a used car makes financial sense, especially if you take time to make sure it’s mechanically sound.
“Purely from a financial perspective, if you can get a good quality used vehicle, that is a much better investment,” he said. “As long as you’ve had it inspected and know what you’re getting, it should be a good car for you.”
A certified pre-owned car with one previous owner and less than 50,000 miles will likely have only slightly higher maintenance costs than a new vehicle, said Cal Cook, an investigator for ConsumerSafety.org. “These costs will be significantly less than the difference between the costs of a new and used car, making a strong case for purchasing used.”
Here are nine more reasons to choose a used car over a new one:
You’ll avoid that new-car smell. Some people like the “new car smell” so much that you can buy air fresheners that mimic the scent. What you’re smelling may be fumes from chemicals used in manufacturing your new car’s interior, however. Volatile organic compounds (VOCs) can be found in fabrics, adhesives, plastics, and other things are used in manufacturing, notes U.S. News & World Report. The smell diminishes over time. Research into whether these odors are hazardous has been inconclusive, but if you want to play it safe, driving a used car will help you avoid that new car scent.
You might be able to afford your dream car. Because you’ll pay less for a used car, you could afford to shop in a higher class of vehicles. A Mercedes or BMW that would be out of your price range when new might be affordable to you after it’s been on the road for a year or two. This is the cheapest way to buy the car you always wanted.
You’ll worry less about minor damage. Driving a new car off a dealer’s lot is exciting, but also stressful. Drivers tend to fret over each parking lot ding. With a used car, you can relax and shrug off minor damage as a part of the driving experience.
You won’t get the thrill of driving a cosmetically flawless car off the dealer’s lot, but you avoid the anxiety of discovering minor dents and scratches. “Put a little scratch on the mirror?” asked Brian Corsetti, who restores classic Land Cruisers. “It’s never good, but you’d have a much bigger meltdown if you scratched a brand-new car.”
There’s more information available. Car-buying guides, such as the Kelley Blue Book, can tell you about common or potential problems found in existing models, so you know what the performance and maintenance issues will be before you make a used-car purchase, noted Tyson. In contrast, problems with new cars often don’t show up for a year or two.
You’ll pay less for car insurance. Newer car models generally cost more to insure than older models. One reason is because used cars are worth much less than new ones. If a used car is totaled in an accident, the insurance company doesn’t have to pay out as much to repair or replace it.
Carole Walker, executive director of the Rocky Mountain Insurance Information Association, said another the reason new cars cost more to insure is because of all the electronic gadgetry. “Many newer models are increasingly expensive to repair because of all the new technology,” she said.
Improved manufacturing practices have made used cars more reliable. In the past, many car models began to fall apart before they were driven 100,000 miles. Today’s vehicles are built to last at least that long. That means most late model used cars stay on the road longer. Your chances of getting a used car that’s in great mechanical shape are better than ever.
Your monthly car payments will be lower. If you buy a used car rather than a new one, you’ll likely have a much lower monthly car payment – or perhaps even none at all. That will help your cash flow each month – leaving you with more money to spend on other things or, better yet, to save or invest for big financial goals.
You can check used car histories before you make a purchase. To help used car buyers know what they’re getting, vehicle history reports are available from companies like AutoCheck and CARFAX. They’re based on vehicle identification numbers (VINs) and can be used to verify mileage or determine if a car has ever been totaled.
You’re less likely to buy a lemon. Consumers who buy used cars are less likely to purchase vehicles with manufacturing flaws. Mechanical problems don’t always surface until new models have been on the highway for several years. “Stylish, revamped and redesigned are all great words, but they often come with a myriad of flaws, drawbacks, and headaches that go overlooked until being sold to consumers,” said Trevore Meyer, an Illinois-based financial planner.