5 REASONS BUYING A USED CAR IS SMART
Buy a used car and save money
If your goal is saving money, buying a used car rather than a new one can save you big bucks in several ways.
“I am a big fan of buying used,” says Philip Reed, Edmunds.com senior consumer advice editor. “I think it’s an extremely important way for a family on a budget to save money.”
Reed says 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. He cautions that one-year-old used cars are hard to come by, but it’s becoming easier to find two- and three-year-old used cars.
Additionally, with the “right” used car, it’s possible for an owner to buy it, drive it and sell it with little loss in equity. According to Reed, depreciation flattens out, usually after a car’s second year when the rate of depreciation dips before increasing again around year five.
Still, Nerad says buying something that is two years old and driving it until you can’t drive it anymore is the most cost-effective way to own a car.