There has been an ongoing conversation about the economics of used vs. new cars since the invention of the horseless carriage. Frugal people tend to cite statistics like “You lose 40% of the value of the car when you drive it off the lot!” which may or may not be made up. In any case, there is an argument for buying a used car versus new, but it’s probably not as cut and dried as you might expect.
Most 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 really like new cars shuffle them 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 once a year. Most people will be convinced to buy used at this point, and that wouldn’t be a bad idea, but there are still some more arguments for buying new.
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 or 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.
Contrary to popular stereotypes, cars are getting better. 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, like many available with J.D. Byrider, 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.
At this point in history, the argument for buying a new vehicle is getting pretty scant, unless of course you just want a brand new car because you like brand new cars. In that case, you are free to do as you wish, but you probably won’t be able to make a case for it based on frugality.
For everyone else, used is the way to go. Look around for deals, but don’t feel too bad about buying something almost new. 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.