Why Buying New Is Sometimes More Affordable Than Used
Buying a used vehicle often seems like the cheaper solution, but that is not always the case. It can be a good solution if your need for a vehicle is short-term, but, in the long-run, you could end up paying a lot more for a used vehicle than you would had you bought something new at a dealership.
So, what factors into the cost of a used car? Let's take a look.
The Cost of Maintenance
The average vehicle will cost about $1,400 to maintain up to 25,000 miles. After that, the cost of maintenance spikes quite steeply up to 100,000 miles, tapering off slightly after hitting that mark.
In the long-run, some vehicles require more maintenance than others and are more expensive to repair. Still, you might end up buying a 'lemon surprise' (a model known for being good but, in this particular instance, has bad parts).
These days, automakers are offering buyers incentives for purchasing new vehicles. Free maintenance is one of those incentives. Sure, the cost of a new vehicle seems high at first. But, when you factor in the cost of maintenance for a used vehicle versus free scheduled maintenance on a new one, a new car could be more affordable in the long-term. Throw in the trade-in value that you might get on your existing car, and that new car price might end up much lower in the end.
Interest Rates Differ on New and Used Vehicles
Buying a used car off a lot can be pricey when it comes to insurance rates. You can have good credit and still get slapped with a lofty interest rate from a lender. Why is this the case?
Used cars are viewed as having more risks than new vehicles since lenders know the conditions of new autos. They don't know for certain what condition a used vehicle is in. They can also predict depreciation values on new cars more easily than on used ones. In other words, a new car's future resale value is easier for lenders to predict, so they feel more comfortable with giving buyers lower interest rates.
Keep in mind that the lower your credit score, you're likely to see a higher interest rate on your vehicle, new or used.
Buying a used car might seem like a smart choice right now, but will it still be so in a year? Considering the fact that interest rates and maintenance costs can both be higher on used vehicles, buying a new car from a dealer can be a smart choice in the long-run. What do you need to do to find out if a new car is a better option for you? The answer is simple: Stop by (Dealer Name). We will appraise your trade-in, discuss your options, and hopefully help you drive away looking good in a new car!