While buying new cars is enticing, we think consumers should take a cold hard look at how much you could save over time by buying used cars instead.
The average person owns 13 cars in a lifetime, each costing an average of $30,000, according to a report by the National Automobile Dealers Association. If each of those cars was 3 years old, instead of new, you could save nearly $130,000 during your lifetime.
The real money-saver in buying a used car is wrapped up in a sinister-sounding financial word: depreciation.
Depreciation: Car buying’s dirty little secret
Once you fully understand how car depreciation (that will be another blog) sucks money out of your wallet, you’ll learn how to save boatloads of cash over your lifetime. You often hear that a car loses 20% of its value as soon as you buy it. Yes, in just one minute, a $30,000 car will lose $6,000 as you gleefully drive off. By the end of the first year, mileage and wear and tear could bring that to 30%, or $9,000. Why don’t you feel this big hit? Because it takes effect much later, when you sell or trade in your car.
Take a look at two similar cars, one new and one used.
New-car depreciation: You buy the car for $30,000 and sell it three years later for $15,000. The car has cost you $15,000 in depreciation.
Used-car depreciation: Now let’s say you buy the same car, but it’s 3 years old when you buy it. You could buy the car for $15,000. Three years later you could sell it for $10,000. So the used car depreciation cost you only $5,000.
Now, if you’re paying attention, you would quickly say, “But driving a brand new car is much better!” You’re absolutely right. So, if driving a new car is worth an extra $10,000 to you, go for it. But don’t say we didn’t warn you.
Forget the old used-car stigmas
It used to be common for people to put down used cars by saying that it was just a way to buy someone else’s problems. That’s not true anymore. Here are two updates on old knocks against used cars of recent vintage.
Reliability: Cars have never been more dependable than they are today. It’s not uncommon for some cars to deliver more than 100,000 miles before needing major repairs.
Maintenance: All cars require regular maintenance such as oil changes, tire rotation, brake jobs. But you can drive today’s cars much farther in between these scheduled maintenance visits. Even tires and brake pads last much longer than before.
More used-car advantages
So it’s pretty clear that buying a used car is much cheaper and that cars in general are more dependable. But take a look at these other advantages:
Lower car insurance rates. When a vehicle is worth less, it costs less to insure it when you’re buying collision and comprehensive coverage. You can also drop collision and comprehensive coverage, which pay for repairs to your car, and save even more.
Registry renewals are cheaper: The cost of registering a used car goes down every year.
Move up to a luxury car: Because you can save 30% or more, you can shop in a higher class of cars.
Less stress: Got a ding in the door? Who cares? But when it’s the first dent in your new car, it’s a huge bummer.
Check out all of our USED CAR inventory today at JandJautoplex.com and thank you for being loyal part of the J&J FAMILY!!