Usually the most important and costly item you will purchase in your lifetime will be a home to live in. The second most important and costly item will be the various cars your purchase and drive over your lifetime.
Car buyers are faced with a choice each time they begin shopping for an automobile: should I buy a brand new car or a pre-owned car. The decision can be quantified by weighing the pros and cons of both. On the pre-owned side, here are three reasons why buying a previously-owned car is a smart decision.
1. Minimizing Depreciation
The minute you take possession of a new car and drive it off the dealer’s lot, its resale value has dropped by approximately 20 percent. In other words, that $20,000 car is now worth only $16,000 thanks to that insidious work depreciation.
In addition, another 10 percent of depreciation is lost during the first year of ownership. That means the $20,000 car will usually Bluebook for only $14,000 after one year under normal usage.
That’s quite a financial hit. The smart thing to do is to look for a two-three year-old pre-owned car and avoid the huge markdown. Unless you absolutely must have the newest model of the car brand you favor, check out the pre-owned cars from that same manufacturer for a great saving.
2. Getting the Most Bang for your Buck
Say your car budget is $25,000. You can stretch that budget by 20-30 percent by shopping for pre-owned cars versus new ones. A three-year old car that is selling for $25,000 probably sold new for around $36,000. It probably has more extras and is a more luxurious model than the new $25,000 car you are considering. That “dream car” you wanted three years ago with more horsepower, larger seating capacity and luxury styling but was priced out of your range could now be yours as a pre-owned automobile.
Another thing to consider: today’s cars are vastly improved over the automobiles of only a decade ago. Where 100,000 miles used to be the death-knell of a car, today 200,000 miles is not out of reason for a car to last.
In addition, auto manufacturers no longer change style every year like they used to do back in the 1950s through 2000. It’s just not practical due to the high cost of retooling, so that three-year old pre-owned car is probably going to look very similar to the new models in the dealer showroom.
One word new-car buyers dread to hear after they acquire their new automobile is “lemon”. This is the term used to describe cars that have manufacturing defects that adversely affect the performance, safety or resale value of the car.
Occasionally an entire model line might have some sort of lemon defect and the manufacturer will issue a recall to correct the problems at their expenses.
More likely, the new car-buyer is unlucky and ends us with an automobile that is constantly breaking down or needs tweaking on a number of small but irksome issues. Even though the problems are probably covered under a new-car warranty, the frustration and inconvenience of having to take your car in to the dealer time after time can be a real headache. Most of these “lemon” defects will be exposed and corrected in the first year of driving. The buyers of pre-owned cars shouldn’t have to worry about any “lemon” problems.
One thing you do want as a used car buyer is a maintenance history of the vehicle from the day it was driven off the new-car lot. One word of caution: although the car is scratch-free and the engine and transmission sound solid, don’t rely on your eyes or ears or what he seller says to evaluate the condition of the car you are considering buying.
Ask for proof that the car was maintained by looking at the owner’s maintenance record. Check to see if the extended car warranty is transferable to you as the new owner. Even better, if you purchase a pre-owned car from a dealer, you can check to see if the used vehicle has been inspected and meets the strict requirements for certification. In some cases, you can purchase an extended warranty from the dealer that will give you some peace of mind that you aren’t buying someone’s problem car.