Buying a Used Car is Better Than Buying New, Right?

buying a used car is betterMost cars lose about 50% of their value by the time they are 4 years old. That fact alone might be enough to convince you to buy used for the rest of your life. But there are still some advantages to buying new, not the least of which is the privilege of getting to drive around in a brand new car. Some people who prefer a newer car, trade them in for a new vehicle every 12-24 months. A new car loses its value fastest within the first two years of ownership, so if you can trade it in early, you’ll always be in a new car, and you’ll retain a lot of value on your trade in.

Even so, this requires the driver to pay out several thousand dollars with each new purchase. That’s a lot of money, especially if you’re paying it every couple of years. There are other things to consider however.

For one, there are plenty of warranties that dealers draw up to cover repairs and some maintenance during the first 2-4 years of your new car’s life. You won’t get that with an older vehicle, one which (being older) might not be as reliable as it used to be. New car buyers pay for the intangible benefit of peace of mind. Reliability is a great thing to have in a car, but it’s not totally absent from used vehicles, especially as time goes on.

Cars are more reliable than they were in the past. They’re safer, they break down less, and they’re easier in some ways to maintain. As a result, a car that is only 2 years old might be just as reliable as a new car was 5 or 6 years ago. And you might save $10,000 or more over what you would have paid to buy the car new.

Buying a quality used vehicle, in many cases, is still a better value over buying new. Look around for deals, and be sure to research the vehicles repair history and have an inspection performed by a certified mechanic. Even if your car is two years old, you’ll save thousands over what it cost new, while benefiting from leftover warranties and the superiority of modern design standards.

Stay Connected with The Frugal Toad

Subscribe to our e-mail newsletter to receive updates.

, , , ,

3 Responses to Buying a Used Car is Better Than Buying New, Right?

  1. Troy @ Bull Market 05/03/2018 at 1:30 am #

    My dad said “always buy a slightly used car”. A car loses its most value in the first year – 30%. Then its value falls at a slower and slower pace.

    • Paul Vachon 05/05/2018 at 6:43 am #

      My next car will be used. The key is to pull a carfax, check consumer reports for the repair history, and have a qualified mechanic perform a pre-purchase inspection.

  2. Personal Alpha Investments 07/24/2017 at 1:52 pm #

    Great article. Agree with the durability of cars and how the technological advances give you the same benefits more or less with cars that are 2-3 years old.

    One thing I hate the most about new cars, is how their value drops instantly once its out of dealer’s parking lot. I mean how can asset drop in value that much!
    The reality, it is a liability!

Leave a Reply

CIT Bank Money Market Account