You’ll hear a lot of negative feedback regarding people buying used cars. But you’d be wondering why there are a lot of people that are still buying used cars, knowing that there are a lot of problems that lie ahead of it. You will learn more about such reasons here.
The Basics of Used Cars
Buying used car is a smart way to save money. The new cars’ values tend to depreciate quickly. Thus it loses half of its value in 3 years.
However, there are drawbacks to buying used cars. Even if you are careful in choosing one, there is no guarantee that the vehicle itself is free from problems. Since most of them do not have a warranty, expect to get stuck with often expensive repairs.
Even with the negatives of owning a used car, purchasing 3-to-5 years of used vehicles can give you a net of maximum savings. It means that the aforementioned is the ideal age – which is old enough for any major depreciation to take place, yet not too old wherein problems are likely to happen. There is also that chance that it can still be covered by the warranty.
It isn’t a bad idea to get a warranty for the used car if it doesn’t have one.
Pros of purchasing a used car
Just like it is stated above, the biggest benefit that you’ll get from buying a used car is the cost savings. New cars do depreciate its value rapidly in just the first three years that it is owned. It drops an average of 50 percent compared to its original retail price.
When you buy used, you are letting its original owner absorb most of its depreciation cost. A couple of cars can depreciate quickly compared with the others, which is why it is smart that you pay close attention to the used cars’ residual values when you buy one. When it depreciates quickly, you might be leaning towards buying the used ones.
Another advantage of buying used cars is that you will have to pay a lower fee for insurance. Since cars get older along with the depreciation of its value, they are very easy and cheaper to insure.
Cons of purchasing a used car
One of the disadvantages of buying used cars is that it doesn’t leave you much of a choice when it comes to styles, colors, and options. You are limited to the things that are featured in the market. You might have to shop around for more before you get to find one that fits your preferences.
Another disadvantage is that there is the possibility you will have to make do with a lemon. New cars come with warranties, and most of the used ones do not have one. But this also means that certain used cars possess one. If you are purchasing a late-model used car, it may still come with factory warranty left. You might be able to extend its warranty without having to pay for huge costs for it. This is why when you decide to buy a used car; you need to have it inspected thoroughly by a trusted mechanic before you make the deal.
The last disadvantage is that you are likely to pay a very high-interest rate when you finance it. Most of the lenders charge higher interest rate with the used vehicles. New cars tend to come with financing incentives which are lower percentages, so the latter provides a better advantage in this area.