When you’re shopping for a car, one of the first decisions you have to make is whether to buy new or used. There are pros and cons to either option, but these days, it typically makes more sense to buy used.
Why? Well, now that rising inflation and a potential recession are in the daily news reports, you probably don’t care to make a big purchase that you might regret.
A new car is an unnecessary expense when you could acquire a used one for a fraction of the price. But that’s not all. Here are six more benefits to buying a used car.
1. Slower depreciation
New cars depreciate as soon as you drive them off the lot. By the end of the first year, they’ve already lost 20% to 30% of their value.
Once a few years have passed, however, the rate of depreciation slows down a lot. Thus, if you buy a car that’s already a few years old, you’ll be getting more bang for your buck.
2. Lower insurance costs
Used cars also tend to entail lower auto insurance premium costs. That’s because insurance is based on the value of the car. The lower the car value, the less insurance has to cover.
If you worry about your car loan exceeding the vehicle’s value, consider getting gap insurance. That way, you can be certain you’re covered for the full loss and not just the current value of the car.
If you ever get in a serious collision with the vehicle you’ve purchased, be sure to consult an experienced auto accident attorney. That person can help you file your insurance claim and make sure you get the best results.
3. Lower sales tax
The sales tax on a used car tends to be lower than for a new car. That’s because used cars are cheaper (so there’s less to tax) and some states don’t collect sales tax for used cars at all.
Check your state’s sales tax rate (it’s usually somewhere between 4% and 7%), and then investigate whether there’s an exemption for used car sales. You might be pleasantly surprised.
4. Lower registration fee
On top of saving on sales tax, purchasing a used car will save you money on car registration fees, which are based on the vehicle value and model year. Usually, they’re highest in the first three years and level off after five.
Thus, for example, registering a used 2010 Volkswagen Jetta will be cheaper than registering a brand-new one. Check with your local Department of Motor Vehicles (DMV) for exact title, tax, and registration fees.
5. Fewer dealer add-ons
When you buy a new car, many auto dealers will try to upsell you on extra features such as anti-rust coating or mats. You can usually get such upgrades much more cheaply from an after-market seller.
When you buy a used car, you avoid upsells on extras, many of which are items you probably don’t want anyway.
6. More environmentally friendly
Nearly a quarter of a car’s total carbon emissions are produced when it is manufactured and shipped. By acquiring a used car, you are not adding to the amount of CO2 you put into the atmosphere, which is better for the environment.
There are a lot of good reasons to buy a used car rather than a new one. But if you remain skeptical about buying something that’s older, ask to take the car to a mechanic to get it assessed. Most sellers will allow this. If they resist, that could be a warning sign.
Alternatively, you can opt to buy a certified pre-owned car. These are used cars that have undergone an inspection and been reconditioned to factory standards.
So they’re close to new. The car manufacturer may even offer a warranty that guarantees the car’s excellent condition.
Take time to evaluate a used car before you buy. There are many factors you could weigh so you can be happy with your decision.