Why Buying a Used Car Always is Better Than Buying New
Buying a Used Car is Cheaper Than Buying a New Car
Let’s say you buy a new, 2015 Toyota Camry. The sticker price tends to be about $23,000.
How much do you think that car is worth as soon as you drive it off the lot? Does it remain $23K? $22K? $19K?
Here’s the truth, that $23,000 car you just purchased – which you undoubtedly took out a loan on for….$23,000 — is now worth about 19 percent less than it was just a few minutes before. So that $23,000 Camry you just purchase is now worth about $18,630.
That’s not bad, you say. Ah, but don’t forget: you took out a loan for $23,000. You’ve just lost a lot of money on this deal. And that’s even before we take into account the interest you’re paying on the $23,000. By the time you pay off the loan (if you got a three-year loan at 5.17 percent, which Bankrate.com says is the average interest rate on new cars as of April 23), in three years you actually would have paid almost $25K for a car that’s worth just $18K as soon as you drive it off the lot!
If you take out a five-year loan on the car (most people do, today), by the time you pay the car off in five years, you will have paid about $26,000 on the car you “bought” for $23K.
But a used car? Let’s do some happy math.
Let’s say you purchase a 2012 Toyota Camry (Camry L, 4-door sedan). The car has about 48,000 miles on it (which the Kelly Blue Book states is the average mileage for the Camry L, 4-door). Kelly estimates that price that car in the Dallas region is about $15K. That’s a savings of $8K for a car that – at just 48K miles – is fairly new.
For a 3-year loan at 5.17 percent, you’d be paying a bit more than $16K by the time you paid off your obligation. That’s a considerable savings of $9,000, compared to paying off a three-year, $23K loan.
Many used cars are in terrific condition. We mean terrific condition. As in, pretty much “like new.”
Unless you’re purchasing from a private party (which means the selling price probably will be lower, as well), the dealer no doubt will tune the car up, give it new tires, check brakes, suspension, make any needed repairs, etc,, etc., all to entice you to buy his used car.
In other words, he will make his two- or three-year old car “like new.”
If you’re worried that a used car will need repairs sooner than a brand-new car, that is true. But, see above: the dealer has made needed repairs, given the car a tune up, adjusted those things that needed adjusting, and so on.
And it will save you $9,000 over a three-year loan!
In addition, your insurance coverage, taxes on the car, etc. will be less.
Finally, buying a good two- or three-year-old car could well mean you can afford a better car than you could if buying new!
Nine thousand dollars is a considerable chunk of change. Is that new car smell truly worth $9K – or more, depending on the car you buy — to you?
(By the way, most used car dealers have a way to bring back that new-car smell in their used cars. Just saying…..)
If you’re looking for a used car, come to PAACO.com. We make sure every car we sell undergoes a rigorous 70-point inspection by one of our certified mechanics. We also send our cars through a third-party inspection to make sure you’re buying a quality vehicle.
We can also help with financing.
Visit the PAACO location nearest you, or give us a call at 877-810-4555.
Image courtesy of U.S. National Highway Traffic Safety Administration (safercar.gov) [Public domain], via Wikimedia Commons.