The Advantages and Disadvantages of Buying a Used Car

Car Key with Used Tag
 

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 price

Probably 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 hit

The 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 premium

Not only do used cars cost less, they're usually always less expensive to insure.  
 

A lower tax rate

In addition to a lower price tag and lower insurance costs, used cars bring lower tax rates.
 

A record of reliability

Brand 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 history

Unlike 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 rate

Believe 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 markup

Dealer 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 car

Compared 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 bill

Repair 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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