Fees, Fuel, and Financing: Pros And Cons Of Buying Used Cars
Tens of millions of drivers go car shopping each year in America.
Most drive away from the dealership in a secondhand vehicle instead of a brand-new one.
The numbers are so lopsided that prices of used cars are on the rise.
According to the automotive data site TrueCar, the price of the average pre-owned vehicle jumped by 5.
1 percent in 2014.
Are these autos still worth the investment? Let's take a moment to discuss their pros and cons.
Pro: Price Generally speaking, a new car is a terrible investment.
Because mint models are subject to accelerated depreciation, they can lose over half their value in the first three years of ownership.
No other asset you are likely to buy is certain to result in such an expensive loss in such a short time, including your home.
It is no wonder only about one-third of car buyers buy new.
Although they often cost more than the depreciated value, since resellers must turn a profit, the average secondhand auto is still a steal.
Shoppers should expect prices of between 40 and 60 percent of the original asking price.
Con: No Warranty Unless you buy a certified pre-owned vehicle, the average secondhand ride will not be covered by the manufacturer's warranty.
As a result, you must pay for any and all repairs out of your own pocket.
This can cost a pretty penny if you get stuck with the dreaded lemon.
On the bright side, you may be able to purchase extended warranty coverage from a third-party provider.
Pro: Extras for Nothing When you buy a new car, you can pay thousands of dollars for added features and upgrades.
But when you purchase an automobile in the secondary market, you often get those extras for free.
At the very least, you will get an enormous discount on features that probably cost the original buyer an arm and a leg.
Cons: Lower Fuel Efficiency The more we drive our automobiles, the less efficient they inevitably become.
Normal wear and tear often take the biggest toll on their engines.
In time, minor mechanical issues combined with dirty components will end up costing you more at the pump.
Although the problem is seldom one you will notice, most used cars lose a few miles of fuel efficiency per gallon over their lifetime.
Pro: Lower Registration Fees When you register any vehicle with the DMV, you will end up paying a fee that is calculated according to the purchase price.
Because pristine autos are generally more expensive, your registration fee should be considerably higher.
Con: Higher Financing Fees As a general rule, it is less expensive to borrow money to pay for a new car than a pre-owned one.
That said, the interest rates on these loans have come down quite a bit in recent years, making it more affordable than ever to get an auto loan for a secondhand model.
Like any major purchase, there are reasons for and against buying used cars.
At the end of the day, however, it is clear that the pros far outweigh the cons.
Most drive away from the dealership in a secondhand vehicle instead of a brand-new one.
The numbers are so lopsided that prices of used cars are on the rise.
According to the automotive data site TrueCar, the price of the average pre-owned vehicle jumped by 5.
1 percent in 2014.
Are these autos still worth the investment? Let's take a moment to discuss their pros and cons.
Pro: Price Generally speaking, a new car is a terrible investment.
Because mint models are subject to accelerated depreciation, they can lose over half their value in the first three years of ownership.
No other asset you are likely to buy is certain to result in such an expensive loss in such a short time, including your home.
It is no wonder only about one-third of car buyers buy new.
Although they often cost more than the depreciated value, since resellers must turn a profit, the average secondhand auto is still a steal.
Shoppers should expect prices of between 40 and 60 percent of the original asking price.
Con: No Warranty Unless you buy a certified pre-owned vehicle, the average secondhand ride will not be covered by the manufacturer's warranty.
As a result, you must pay for any and all repairs out of your own pocket.
This can cost a pretty penny if you get stuck with the dreaded lemon.
On the bright side, you may be able to purchase extended warranty coverage from a third-party provider.
Pro: Extras for Nothing When you buy a new car, you can pay thousands of dollars for added features and upgrades.
But when you purchase an automobile in the secondary market, you often get those extras for free.
At the very least, you will get an enormous discount on features that probably cost the original buyer an arm and a leg.
Cons: Lower Fuel Efficiency The more we drive our automobiles, the less efficient they inevitably become.
Normal wear and tear often take the biggest toll on their engines.
In time, minor mechanical issues combined with dirty components will end up costing you more at the pump.
Although the problem is seldom one you will notice, most used cars lose a few miles of fuel efficiency per gallon over their lifetime.
Pro: Lower Registration Fees When you register any vehicle with the DMV, you will end up paying a fee that is calculated according to the purchase price.
Because pristine autos are generally more expensive, your registration fee should be considerably higher.
Con: Higher Financing Fees As a general rule, it is less expensive to borrow money to pay for a new car than a pre-owned one.
That said, the interest rates on these loans have come down quite a bit in recent years, making it more affordable than ever to get an auto loan for a secondhand model.
Like any major purchase, there are reasons for and against buying used cars.
At the end of the day, however, it is clear that the pros far outweigh the cons.
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