Smart Reasons to Buy Used Cars
You might feel jealous if you buy used cars and your friends drive showroom-new vehicles. Strategically buying used cars can be a wise financial move. Instead of envying the shiny new SUVs of your friends, make them jealous of your healthy bank account. You can increase your financial stability by buying used rather than new Lum’s Auto Center.
Avoid depreciation
Imagine you have just bought a car. A small down payment has been made and you have committed to making monthly payments for the vehicle. The vehicle’s value drops by around one-third as soon as it is driven off the lot.
This scenario can be viewed in concrete terms. You would have $18,000 if you paid $21,000 and made a $3,000 down payment. Your car is worth only $14,000. You owe more than the car is worth before you drive your new car into your driveway.
It may not seem like much, but being “upside down” on your car loan might be a problem. However, if you are involved in an accident and your insurance company gives you only the value of the car, you could end up owing thousands. You could be at risk of significant financial loss by buying new cars rather than used cars.
Increase Savings
The dealer may have a new or pre-owned car for sale. The new car can be purchased for $20,000, or you can buy a pre-owned vehicle for $12,000. Experts agree that the pre-owned vehicle is better.
You’ll pay $21,000 if you buy a new vehicle at $20,000 and finance it with 5 percent interest. Then you will own the car for free and clear. You’ll pay only $12,600 if you finance the vehicle used at the same interest rate. By purchasing a second car, you could save $8,000. You could save more on car insurance premiums because you would likely pay the car off faster.
This would allow you to not only get your car faster but also save money each month and use it for something else. These savings can be used to pay for big expenses like a house, a child’s college tuition, or they could be used to buy a boat or luxury vacation. You can also use the money to save for retirement or pay cash for your next car.
Many people claim that they buy new cars because they are afraid that the used vehicles could have problems. Ask your mechanic to inspect a pre-owned vehicle prior to you buying it. This will give you some assurance. You can also ask your dealer to make sure that the vehicle is certified. You may find that your new car is more attractive than the one you are considering.