I have a 2001 Ford F150 Super Crew pickup sitting in my driveway and I plan on having it for a while longer. While a 14-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 $3000 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. You can avoid paying sales tax and other dealer fees by buying your vehicle from a private seller. You'll also want to get a pre-purchase inspection done at a reputable auto repair facility and be sure to have them check the engine compression by doing a cylinder leak-down test. This test can save you thousands of dollars in repairs and will tell you if the cyclinder rings are wornout or you are leaking compression through the cylinder head.
Readers: Have you ever purchased a used vehicle? What advice would you give someone thinking about buying a used car?