Need A Car?  Should You Buy New or Used?

One of the worst investments you will make in your life is to purchase a car.  Whether you lease, buy new or used, the vehicle will never be worth as much as you paid for it.  With this being said, you can minimize the amount of money you will lose on this purchase by purchasing a used vehicle.

New Vehicle

New vehicles are great!  They come in the color you want, with the options you want, with close to 0 miles so you know it has not been mistreated, no dents, and can forget that new car smell!  What’s not to like?  Right?  Besides paying top dollar for something that will never be worth what you are about to pay for it.  Before the ink dries on the paperwork and once you drive off that car lot you can expect to lose thousands of dollars!  Although a lot of auto makers have large rebates on their vehicles, you have to decide for yourself and your situation “is it worth it?”  If it is, take a look at True Car and see what others paid for that same vehicle.  This site also allows you to search for your ideal vehicle and puts you in contact with dealerships will honor the posted prices.

Leased Vehicle

The same goes for a lease vehicle that can also be classified as a long term rental.  A lease usually requires a few thousand dollar down payment or deposit but offers a more manageable payment than purchasing.  This also allows you to have a brand new vehicle at “cheaper” than brand new price/payment and to get a new vehicle at the end of the lease term because you have to turn it in.  Leases do offer tax benefits for business owners.

A lease is not always as straight forward and has limitations such as mileage and overall condition when you go to turn the vehicle in at the end of the lease.  These can cost you more money.  Oh, one more thing, you walk away at the end of the lease with no cash reimbursement which would classify it as a rental!

Used Vehicle

The best thing about used vehicles is that you do not take the initial loss like you take when buying new.  For example, I purchased my vehicle when it was three years old.  The car had less than 50,000 miles on it and was in great overall condition.  I was able to purchase the car for less than half the original sticker price!  Purchasing this vehicle with 50,000 miles was more than worth paying less than half the sticker price to me!

A new vehicle depreciates much faster than an older vehicle.  Once a vehicle hits a certain age the depreciation of the vehicle slows.  This allows the vehicle to retain value.  Vehicle type, make, mileage, and demand depends upon the resale price and how quickly the vehicle depreciates.  These reasons mentioned are why I now purchase used vehicles.

Use The Rebate Or 0% Financing

This can be a difficult question to answer.  A lot of people that purchase cars plan on keeping the vehicle for many years but a lot of unforeseen circumstances can change that plan.  Vehicle accidents, totals, just get tired of it and need the vehicle for a different purpose are just a few reasons.  If you chose 0% financing and you end up on the market for a new vehicle before the financing is up, you will lose the rest of the money the money you were meant to save.  I always choose the rebate price that allowed me to always get the maximum towards the vehicle, no matter what happens.

Unfortunately, no matter what vehicle you buy and when you buy it, it will never be worth as much as you paid for it whether it’s new or used.

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