There are two cars in our driveway, a 2012 Prius C and a 1969 Datsun 510 wagon. Many people are surprised when I say that the smartest, and most financially savvy car we bought, was our Datsun wagon. While a 44-year old car isn’t for everyone, there are many benefits to buying a used or second-hand car. After reading this, you’ll want to find a cheap car now.
New cars lose their value when you drive them off the lot. Why? Because they’re not shiny and new anymore. This means that if you drive a car past the sidewalk and try to sell it to someone walking down the street, you cannot get the purchase price you paid. By purchasing a used car that has fully depreciated, the value of your car is fairly fixed. If you need to sell your car, you may be able to recoup what you spent.
Due to the aforementioned depreciation, the amount of money you have to pay for a used car is not significant. You can often find a car in running condition with heat/air conditioning that has been reasonably maintained for $2000 or less in the US.
Many people shy away from older cars as the fear of high miles leads them to worry about significant repairs. On the other hand, older cars may offer a do-it-yourself approach for the mechanically inclined. For example, repairs on the wagon require a trip to the auto parts store and a bit of grease on our hands. In contrast, if anything breaks on the Prius it’s at the very least a trip to the dealership, and a very expensive trip if it’s out of warranty.
Auto insurance is not just based on your driving record, it’s based on the cost to replace the car you drive. By driving a cheap car you may find that after you consider your deductible, it doesn’t even make sense to have comprehensive or collision coverage. Your insurance agent could help you save a significant amount every month by running the numbers.
Since a cheap used car can be the financially smart choice, how should you find a cheap car now?
Like any other purchase, decide what your needs are, and eliminate any vehicles that don’t, regardless of how good a deal it may be. Look for cars that have a clean title, have been maintained, get good mileage and are within your budget.
Readers: Have you ever purchased a used vehicle? What advice would you give someone in the market for a used car?