Difference Between A New And Used Car

Difference Between A New And Used Car

A new Car can really excite the buyer and everyone loves that new Car smell. However, it is important to know that whether it is worth the extra costs. Buying a used car is a smart move as we are going to discuss next. Also, we will discuss the expert’s opinion whether Buying new or leasing makes sense.

Buying A New Car

Difference Between A New And Used Car
Difference Between A New And Used Car

To buy a new Car is a fun experience. The new Car you are going to buy will be a shiny, trendy, and will have that great “new Car” smell. However, here you also get stuck with a Car that is definitely worth less than you paid for it. When you bought a new Car, its value will drop down as much as you drive it. Your new Car may lose 75% of its value after 4, 5 years.

Auto Loan Owes More Than The New Car Price

With an Auto Loan, you owe more than the Car is worth. If you buy a new Car with an Auto Loan, this depreciation means that you will be “upside down” on your Loan. If you do so, you will be required to pay about $250 a month for five or more years on a Car that is worth only half of what you paid for it. However, not all cars depreciate at the same rate. A well-known Car like a Mini Cooper will probably hold its value better than a common Car like a Honda. If you are interested in Buying a Car, try to do some research through a company to compare the depreciation rates.

Benefits Of Buying A New Car

Besides complications in buying a new car, it has some advantages, too. When you are Buying a new Car; the Auto Loan rates will be slightly lower than when you buy a used Car. Usually this difference is between 1-4 percent and amounts to a few hundred dollars in Loan savings which is much lesser than you would save by buying a used car instead. Nevertheless, if you have excellent Credit, you can qualify for a 0% Auto Loan offer from the dealership. These offers are only applicable on new cars, thus you can have a good deal with.

What About A Used Car?

Buying a used Car, you are avoiding the initial the exciting drop in value. No matter whether it is just a year old or used for a couple of years. This depreciation is normally between $3,500-8,000 during the first year.

You can save at least $4,000 just by Buying last year’s model of the exact same Car. The interesting thing is that you can use your savings to upgrade to a fancier Car. For instance, a brand new Toyota can be about the same price as a two year old BMW. These used cars often come with warranty programs that are equal to what is offered with a new Car.

Additionally, the used Car market is a much safer than it used to be. Research, vehicle reports and online pricing services suggest that selecting a used Car is likely to become one’s true dream.

Car Leasing Program

Car Leasing Program

Another option for a Car buyer is to lease a CarCar leasing programs allow you to rent a new Car for two to five years. With this program, you are not going to get the Car on a Loan base. Actually you make an agreement with an automotive Leasing company or local Credit union. Here you are required to agree to pay the lease monthly, keep the Car insured, and take care of the vehicle till the end of the lease term. At the end of your lease, you will have to return the Car and pay for any damages or mileage occurred. You can also buy the Car or trade it for a new Car at the end of your lease term.

Leasing Is A More Affordable Short Term Option

With Car Leasing you are actually paying the amount that the finance company expects the Car to depreciate. Therefore, when you lease a brand new $25,000 Car that is estimated to drop in value $8,000 in four years, you will pay $8,000 in lease payments. Now compare to the rates you would pay for Buying the $25,000 Car immediately, thus Leasing is the most easiest and affordable short term choice.

With Leasing You Pay Less Now But More Over Time

When you are going to lease a Car, you will have to pay less now but more over time. By Leasing a Car, you consider more financial risk than those who buy a new or used Car. If you are really interested in Buying the newest cars in the market, then Leasing will best suit you than Buying. However, in the long run, Buying used Car has always been a better choice than Leasing or Buying a new one.