The Advantages of Buying Used
For Colorado drivers in the market for a new car, there’s good news: modern vehicles are reliable and can often go well over 100,000 miles without major problems. This means you’re safer buying a “gently-used” auto today than ever before. Plus, you’re likely to save significant money on your investment.
According to Kelley Blue Book, the average price of a used car is around $20,000 and the average new car costs more than $37,000. Initial sticker shock shouldn’t be your only concern – a brand new $30,000 car depreciates by about $6,000 the moment you drive it off the lot.
According to the National Automobile Dealers Association, the average adult will own 13 cars throughout their life. Thanks to NerdWallet crunching the numbers, that if you swap cars every three years, you’ll eventually spend nearly $130,000 more buying new cars every time.
In addition to paying less for the actual car, you’ll pay less in sales taxes and registration. Colorado drivers should be particularly interested in possiblelower insurance costs. According to Forbes, Colorado is the third most expensive state to purchase a vehicle. Taxes and fees in Colorado average nearly 14% of the purchase price.
Know Before You Buy
Once a vehicle has been driven under real world conditions for a few years, there’s more user information available. If a particular car is prone to expensive issues or doesn’t hold up well in a crash, owners are likely to chat about it online. Even though new cars are subjected to rigorous performance tests, the best driver experience data can come from the hundreds of thousands of people who have been driving that model for a while.
Used Car Disadvantages
You’re Relying on Honesty
Buying a used car can be a double-edged sword. On one hand, you’ll have tons of real-world feedback about performance and issues for any particular car. Hiccups can arise when it comes to finding specific details about the actual car you’re interested in purchasing. Luckily, services like CarFax can show previous reported incidents. You can pay a mechanic to give the car a once-over before making the purchase, but unless the seller kept meticulous maintenance records, you have to trust what they say.
A Tougher Financial Sell
Financing a used car almost always requires money down, although if you have good credit, you may be able to finance without a down payment. Interest rates are generally higher for financing a used car. This is because the financial institution is taking on more risk. Used car customers may also default on loans more frequently than new car customers, and the overall value of the car is murkier, due to the vehicle’s unknown history.
Buying from a private party rather than a used car dealer may save you money, but if the transmission breaks on your ride home, you won’t have any recourse – in addition to having any sort of warranty. Plus, if you need to finance, buying from a private party makes things trickier. Although financing is still possible.
Even at dealerships, used cars are often sold as-is. Unless you get a factory-certified pre-owned vehicle, which generally drives costs back up, you’re unlikely to benefit from any existing warranty.
You May Miss Out on Recalls
When purchasing a used car from a dealership or a private seller, be sure to ask about issued recalls and if they’ve been addressed. Legally, a dealership can’t sell you a new car with open recalls, but they can sell you a used car with open recalls.
Once you’ve purchased a used car, make sure to register it with your local dealer, so you’ll receive any future recall notices.
You’re Responsible for the Paperwork
Actually, if you buy a used car from a dealership, they will probably file the paperwork for you. But if you buy from a private party, you’ll be responsible for registering the car and completing all the paperwork.
In Colorado, registration fees are related to both the age and weight of the vehicle, so it can be slightly complicated. Here’s a checklist to help you make sure you have your paperwork in order, when you’re doing it yourself.
Adventures in Buying a New Car: The Good Stuff
A new car is like a blank slate. You know exactly how the car has been treated and maintained because you’re the only one who’s cared for it. And often, you can purchase exactly the car you want. Even if a dealer doesn’t have the perfect color or amenities package on the lot, they can usually order it for you from the factory.
New Car Comes with a Warranty
Without a doubt, one of the biggest advantages to buying a new car is that it comes with a warranty. If you have problems early on, the dealership or manufacturer will usually fix the issue for free. This can bring a car owner peace-of-mind – something you can’t measure in dollars!
All the Bells and Whistles
Technology changes quickly these days. If you want the most fuel-efficient car and the latest in safety or connectivity features (like in-car wi-fi), you may want to buy new. It might take three or four years for used cars with these same amenities to show up on lots in your area. And by that time, there may be newer, shinier tech out on the market.
Incentives and Depreciation
Auto dealerships work hard to make new cars as attractive as possible for everyone – and that includes incentives like cash-back or no down-payment. In addition to appealing deals, interest rates on new car loans are often lower than those for used cars. If you’re financing a car and have excellent credit, it may actually make financial sense to buy new.
Some car brands and models depreciate faster than others. If you do your research before buying a new car, you may not lose as much money to depreciation.
Buying New Does Have Disadvantages
The disadvantages of buying a new car can usually be summed up in two words: cost and depreciation.
Regardless of whether you buy a new or used car…