Buying used cars, as a means to save money is a wise choice these days. The days when used cars meant you were buying trouble are over; because of new technology cars are lasting longer than they did in the past. Today, buying used cars means you can get more car for your money.
There are many good reasons for buying used cars. One of the most obvious is that the used car doesn’t have the large amount of depreciation that comes along with buying a new vehicle. When you buy used someone else already took the big hit of depreciation so you don’t have to.
Let me explain what I mean…
The minute someone buys a new vehicle and drives away from the smiling salesman, the car loses anywhere from 15 to 40 percent of its value. That is a lot of money when you add it up.
Here’s a story that illustrates what can happen to you without you even being aware of what’s going on.
My friend Jay always bought new cars until the light bulb came on and he saw why he was always in so much debt with his cars.
It took him over 10 years to get this.
He bought his first car when he was 18 and financed the entire amount. Back then a new car, loaded was $4,000 dollars. (This was some time ago, just in case you were wondering!) Jay never put his own money into any of the cars because of his good credit.
He believed this was the way to buy cars. Pretty cool, he thought. Drive a new car and never have to come up with any of his own money.
After three years he traded that car in on another new vehicle. He was $1,500 upside down. No problem the salesman said. We can just roll that over into your new car.
So they did.
You can see the pattern here. He traded every two to three years and kept rolling over the negative equity every time he purchased another vehicle. Well the day finally came when he had to pay up all that negative equity. It was not a good day when this realization hit him. He was more than $6,500 upside down over his early car-buying career.
It was at that time that he discovered that buying a used vehicle saved him all that big loss of depreciation on each car. From that day forward Jay has always bought used cars and never regretted it since.
By the way…
Jay has never been that much upside down again on any of his cars.
Another way that you can save money buying used cars is through insurance, taxes and other related fees that come with buying new. Insurance is most often less for a used vehicle than it is for a new car. Taxes and fees are also less on used cars compared to new.
You really do pay for that new car smell. People joke about it… however you can end up paying dearly for that new car smell. Buying used cars gives you the opportunity to choose a car with more options and it is more affordable than a brand new one.