There are several advantages to buying a used car versus a brand new one off the lot from a dealership. Buying a new car might seem enticing because of its immaculate condition, endless options and the fact that no one has ever driven it before, but you can save yourself lots of cash by opting for a used or pre-owned car.
Pre-Owned vs. Certified Pre-owned vs. Used
Used and pre-owned essentially mean the same thing. They are terms used to describe cars that have been previously owned by someone else when you go to buy it. You will find these terms used at dealerships or smaller, independent shops.
Certified pre-owned is a term used by dealerships to describe vehicles in their inventory, most often late-model, that have been inspected and certified by a qualified authority. This means that technicians at the dealership do a thorough multi-point investigation into every component of the car – the engine, transmission, mechanical components, the electrical, the interior and they evaluate it. The standards they use will differ from brand to brand; for instance, Toyota’s inspection procedure differs from BMW’s methods. Based upon this inspection, they assess the price and overall value of the car and determine a price to sell it for. Oftentimes, certified pre-owned cars include some kind of warranty for parts and service, again depending on the vehicle type.
One of the biggest positive elements to not buying a new car is you avoid the dreaded depreciation, the thing that no one at the dealership wants to tell you about. A brand new $30,000 car that’s bought and driven off the lot loses 20 percent of its value immediately, and some models lose up to 30 percent of its value in the first year. There is still depreciation to consider with used cars, it’s just much less severe. Consider this:
- You buy a new car for $30,000 and sell it three years later for $15,000. The depreciation is $15,000.
- You buy a used car that’s three years old for $15,000, then you sell it for $10,000 a few years later. The depreciation in this case in $5,000.
Modern cars last much longer between maintenance appointments than they used to. Oil changes, tire rotations and brake service are routine tasks that every car needs, but today’s used cars can travel many more miles between services. Many are quite reliable and can go for well above 100,000 miles, some brands more than others.
A huge benefit to buying used is the money you can save. Your registration fees, insurance rates and used car loan amount will be much lower compared to what you would pay for these same things with a new car. In general, the entire cost will be less expensive than a new car, which means that as a buyer, you can step up to a more luxurious model with more options while staying within your budget.
Although purchasing a used car can be tricky and requires a lot of research to find a reliable model, you can enjoy several important benefits when you choose to buy a pre-owned vehicle instead of a new one.