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.
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.
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.
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.