Buying your first car is an exciting milestone! While some opt for a shiny new vehicle right off the dealership lot, purchasing a used car can be a savvier financial decision for first-time car owners. Here are 7 great reasons why getting a previously-owned auto may be the way to go.
1. Used Cars Cost Significantly Less
Obviously, the main allure of a used car is the lower price tag. Given that new vehicles depreciate by 20-30% in their first year alone, purchasing a gently used car a couple of years old can mean massive savings. This makes used cars ideal for high school or college grads just starting out financially. By spending less on your wheels, you’ll have more money left over for other post-academic expenses.
2. Insurance Tends to Cost Less
Insurance coverage is mandatory for drivers, and premiums are partly based on the value of your automobile. Since used cars have depreciated, insuring them costs substantially less than insuring a brand-new vehicle. A lower insurance payment takes some of the sting out of those annoying monthly bills.
3. Certified Pre-Owned Cars Come With Warranties
While used cars were once a riskier gamble reliability-wise, certified pre-owned (CPO) vehicles have changed the game. CPO cars have passed rigorous inspections and come with extended warranty coverage to give consumers peace of mind. Many CPO warranties are comparable to those of new cars, meaning you can get virtually the same protection for less money.
4. You Avoid That Steep First-Year Depreciation
We mentioned it already, but the initial post-purchase depreciation of new cars is steep. A new car can lose 20% or more of its initial value in just one year. With a used auto, the first owner takes that big depreciation hit. You get an almost-new car for a significant discount over the showroom models. That means you can recoup more money later should you sell it or trade it in.
5. You Can Get More Car for Your Money
While buying used means no fancy brand-new auto smell, it does allow budget-minded buyers to afford a higher-end make or model. Thanks to the lower used pricing and slower depreciation, you can step into that luxury sedan or souped-up sports car that might be out of reach if you could only look at new. More car for less money? Yes, please!
6. Interest Rates Tend to be Lower for Used Cars
These days, borrowing money for a new vehicle often means double-digit interest rates. Meanwhile, used car interest rates currently sit around 5-9% at most banks. Since the overall loan amount is also lower with a used automobile, opting for a previously owned one can save buyers hundreds in interest expenses over the loan term.
7. You’ll Learn the Art of Auto Ownership
Buying a used car for your first set of wheels eases you into car ownership gently. An older car may occasionally need repairs and maintenance. Learning your way around basic auto fixes is an invaluable experience for any new driver. Additionally, driving a used car means less stress over minor dings and scratches from everyday mishaps. While buying new is exciting, purchasing used makes the most financial and practical sense for first-time auto owners.