When buying a vehicle, one of the biggest questions buyers are faced with is, whether should you buy a new or used one. Buying a pre-owned vehicle can be the perfect option for many drivers. According to Kelly Blue Book, the average cost of a new car is around $47,000 for 2022. With prices soaring everywhere, buying a used car could help keep some of that hard-earned money in your pocket.
Choosing a vehicle from the pre-owned lot can be a big money saver compared to new car purchases. The sticker price will be lower compared to a new vehicle, but the savings start to add up on other costs like insurance, depreciation, and various fees. According to Experian, in the first quarter of 2022, the average monthly payment for a used vehicle was $503. New car payments were reported at more than $640, for a saving of at least $100 on payments alone.
Vehicles depreciate in value over time. Luckily, most of the depreciation happens when the car is brand new. A brand-new car depreciates 20% when it is first driven off the lot. Another 10% will be lost during the first year for a total depreciation of 30% after the first year of ownership. This translates to a much more stable loan-to-value ratio for a used model.
In most instances, the insurance is based on the value of the vehicle. A used car typically has a lower cost for coverage even after factoring in things like your age, credit score, driving history, and such. Insurance rates aren’t always consistent, so be sure to shop around to get the best rate. Some states even allow used cars to carry liability-only coverage.
Dealership fees at the time of sale will vary from state to state, but in most cases, the fees for a used vehicle are significantly lower than those associated with a new car purchase.
Another advantage to the lower costs associated with a used vehicle is you might be able to get more car than you could afford if you bought it new. This year’s luxury GT model may be out of your price range, but last year’s model might fit your budget. A used model with all the bells and whistles may be more appealing to you than this year’s base model at the same price.
With modern technology, purchasing a used vehicle doesn’t have the same stigma as it did ten years ago. Vehicles can now be researched by their VIN online through companies like CARFAX and AutoCheck. These sites give you the vehicle's service record and driving history as well as details if a vehicle has been in an accident.
AIf buying a used vehicle still makes you nervous, consider the dealership’s Certified Pre-owned (CPO) program. Although programs may vary, the CPO program offers cars that have been thoroughly inspected and meet a manufacturer’s established standards to be certified. CPO vehicles carry some form of guarantee against defects much like a new car warranty. If you’re ready to buy a used vehicle around Dallas, Fort Worth, or Plano, get approved for financing with Stanley Automotive Finance Enterprise or S.A.F.E.