Tips for being a Smart Consumer

by Jack

Top reasons to buy a used car instead of a new one:

1. You get more for your money. A new car will lose on average 50% of its value in the first 3 years. That’s a big hit. But, isn’t it more fun to shop around for that just right used car, than to try to budget for the new where you make concessions on upgrades just to fit your payment?

2. Variety is the spice of life and buying used the variety is way more than new. Again, this goes back to shopping is fun.

3. On a new car you have a limited warranty and when it runs out you discover consumer reports says your model has low reliability. But, if you had bought a car 3-4 years, all the reports out are out there and if there was a factory recall you should know about by now.

4. Car’s last long now, so buying a 3 year old car with 50k miles on it should not be a problem, especially if most of these were highway commute miles. Those are easy on a car unlike stop and go city driving.

5. Today we have all kinds of car data reports to show factory recalls and accident history. But, sometimes I have gone looking for a car with accident damage that’s been properly repair, just to get a big discount on price. Accident damage doesn’t bother me at all as long as I know it’s been fixed right and not too severe.

6. Of course your DMV fees will be less on a used car and so will insurance. This savings can be huge over the next 3-5 years.

What most people fail to consider is the time cost of money, this is a big deal! If, for example, you bought a used car for $12-15k off the original sticker price and you keep it for 3 more years, think how much you just saved in finance charges! In the three years you expect to own your used car, typically it will depreciate about $4,000, while new car guy sees his drop $15K in the same period. Huge difference, eh?

Worried about no warranty? You can always buy an extended warranty. But, if the car is in great shape, and consumer reports give it high marks I wouldn’t do it, chances favor you will be just fine.

For me, the bottom line is l like knowing how a car has held up after being on the market for a few years. You can learn a lot from real world testing. Now you have some history that will help you make an intelligent choice and get you the most car for the least money. And remember the day you buy that NEW car and drive off the dealers showroom floor, it’s suddenly just another used car. Think about that and the big bucks you just paid and perhaps the big bucks you still owe the bank.