If your goal is saving money, buying a used car rather than
a new one can save you big bucks in several ways.
New cars typically depreciate about 20 percent when they are
driven off the lot. Most cars will lose another 10 percent in value during the
first year. That's a 30-percent loss in value during the initial year of
ownership. A $30,000 car loses roughly $9,000 in value during that period. You
can avoid that hit by buying a one-year-old used car. One-year-old used cars
are hard to come by, but it's becoming easier to find two- and three-year-old
used cars.
A key factor in determining the cost of car insurance is the
value of the car. Because a used car has less value than a newer version, the
cost of insurance should be less. As with car insurance, the fee that states
charge to register a car is often based on the car's transaction price. Many
states are increasing registration fees in an effort to generate more revenue.
Buying used is an effective way to stunt those increases.
Stretching your car-buying dollar is another benefit of
buying a used car. You can buy more car by purchasing used rather than new. You
may not be able to afford that new luxury car you've lusted for, but one that's
two or three years old may fit your budget.
Companies such as Carfax and AutoCheck produce vehicle
history reports. Based on the car's vehicle identification number, or VIN,
these reports provide an array of valuable information including verification
of the mileage and whether the vehicle was ever declared a total loss by an
insurance company. Consumers worried about a used car's potential hidden
problems can also buy a certified pre-owned car. Certified pre-owned programs
vary from manufacturer to manufacturer, but in essence, certified pre-owned
cars are vehicles that meet a manufacturer's established standards and carry
some form of guarantee against defects similar to a new-car warranty.