The Cost Analysis of New vs. Used Cars
Posted Wednesday, Aug 16, 2023
It’s no secret that buying a used car can save you thousands of dollars and it can have an overall positive impact on your finances for years to come. Low auto loan rates, affordable insurance, and thanks to advanced technology, longevity are all reasons to consider a used car over a brand new one.
Every financial expert will agree that the real benefit of buying a used car is being able to avoid depreciation. A new car will easily lose as much as 50% of its value (depending on its make and model) in the first few years of purchase. But you still have to make regular payments on the original price of the car. This means you, as the owner of the new car, are practically throwing money out the window.
Here’s a quick comparison to look at.
The depreciation factor for a new car: Say you buy a used car for $50,000 and proceed to sell it for about $20,000 in five years. During this five-year period, the car has cost you $30,000 in depreciation. That’s money you could have put in your savings account.
The depreciation factor for a used car: Say you bought the same car on the used market for about $20,000. Five years later you could sell it for $12,000. So, the used car only cost you $8,000 in the same time period.
Given the rate at which new cars depreciate, why bother going for a brand-new car when you can reap the exact same benefits with a used car?
This doesn’t mean we’re against the idea of buying a new car. If you believe that depreciation is not a major factor for you when buying a new car, then by all means, you can buy new. However, if you have plans to eventually sell the car and upgrade to a new one without having to shell out too much cash up front, then buying used is probably a better idea.
Both new and used vehicles are equally dependable.
The risk of a used car breaking down several decades ago was a very real problem. However, fast forward to the year 2023, and technology has increased the longevity and durability of used cars.
In terms of reliability, used cars have never been more durable than they are today. It’s not uncommon for some used cars to go for over 150,000 miles without ever requiring major repairs.
With that said, all cars, even luxury models decked with every convenience and safety feature, will require regular maintenance. Things such as tire rotation, brake jobs, oil changes, and others must be done based on the manufacturer’s recommendations. It should be noted that today’s cars can go for much longer without scheduled maintenance. This also applies to brake pads and tires.
Lower Insurance Premiums for Used Cars
For obvious reasons, the profit driven insurance businesses try to minimize their risk. It doesn’t get any riskier than insuring a brand-new car with expensive replacement parts and servicing. Things become worse for the insurance provider when a brand-new car is completely totaled, and they have to replace it.
However, used cars are worth a lot less, which means they will cost less to insure per month. This is especially true if you buy both collision and comprehensive coverage.
Buying New Does Have its Advantages
This article isn’t about bashing new cars but to make the reader aware of the specific advantages that both new and used cars may have.
And if there’s one thing that you can be sure of with new cars, it’s the warranty. A new car’s warranty is practically untouched and you don’t even have to pay extra. In fact, the best warranty is one that originally comes from the manufacturer. It is certainly possible to buy a used car that still has its original warranty intact but finding one may not be easy and such options may be pricier.
At Allin Cars, we can help you find used cars that specifically align with your budget and preferences, including warranty.
Another advantage of buying new is that you can choose the right combination of options for the car including interior and exterior colors. And since a new car is practically untouched, it hasn’t been involved in any accidents or mistreated. It comes with a relatively clean history that mostly includes the time it spent around the dealer’s lot.
And of course, a brand-new car will come with the latest gadgets packed inside. This includes navigation interfaces and multimedia - all of which are constantly improving and getting much better. So, if you have a penchant for the latest tech features, then going with a new car may be a good option.
However, this doesn't mean that used cars are far behind. In the past few years, convenience and safety features have become extremely standardized across mainstream cars. And chances are, your used car will come equipped with every standard safety feature including tire pressure monitoring and stability control.
It is also worth noting that vehicle safety laws are becoming more stringent as the technology improves. So if you want to take advantage of the latest security features, then going with a new car may be a better option.
The Sheer Variety of Choice with Used Cars
The number of used cars in the US is mind bogglingly large. In fact, just in 2022 alone, over 38.6 million used cars were sold in the US. The global market for used cars is set to reach $2.6 trillion by 2031.
If there’s anything that these numbers indicate, it’s that you will never run out of options when buying a used car. For many motorists, searching for a used car is like going for a treasure hunt. You never know what you may find lurking in an unassuming used car dealership.
So, if you’re looking for hidden gems of the used car market, check out Allin Cars and get the best possible deals both in terms of pricing and reliability. Click here to learn more.
