The Advantages and Disadvantages of Buying a Used Car
Can't decide if new or nearly new is right for you? Take this advice along for the ride.In this section, we list the advantages and disadvantages of buying a used car in an easy-to-follow format. When it comes to determining whether or not a used car is right for you, this advice can help you decide.
The Advantages of Buying a Used Car
A better priceProbably the biggest advantage of buying a used car is the lower price you'll pay for it. Sure, you're not getting a brand new car right off the production line, but you're not paying a premium price either.
A smaller depreciation hitThe minute you drive a new car off the lot, you realize a hefty depreciation hit and your investment — in this case, your new ride — rapidly depreciates within the first few years of ownership. When you buy used, however, the original owner realizes the biggest depreciation so you don't have to.
A lower insurance premiumNot only do used cars cost less, they're usually always less expensive to insure.
A lower tax rateIn addition to a lower price tag and lower insurance costs, used cars bring lower tax rates.
A record of reliabilityBrand new cars might smell great, but there's no way of knowing how reliable, or unreliable, they'll turn out to be. Even though there are uncertainties involved with buying a used car, consumers can familiarize themselves with a used car's history by researching its reliability ratings.
The Disadvantages of Buying a Used Car
An unknown historyUnlike knowing exactly what you're getting when you buy a new car, a used car's history is not so clear. In fact, it could have been in an accident, totaled, damaged by fire or flood, or its odometer could have been tampered with. When it comes to used cars, it's difficult to know the care it received, or the care it didn't, from previous owners.
A bigger interest rateBelieve it or not, used auto loans typically come with higher interest rates. What's more, you can't take advantage of special financing deals typically offered on new cars.
A bigger markupDealer profit margins on new cars are smaller than profit margins on used, which means your pre-owned car buying dollars pay a higher percentage of dealer markup.
An inferior carCompared to new cars, used cars don't last as long and offer less value when it comes to service and maintenance costs.
A bigger repair billRepair and maintenance costs for used cars are usually always higher, due to factors such as age and mileage. What's more, a used car might not have been properly repaired and serviced in the past, negatively impacting its condition in the process.
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