Go to a local car dealership, enter the showroom, open the door to one of the vehicles on display, and breathe deeply. Ahhhh, new car smell. Intoxicating, isn’t it? Alluring to the point that you’ll spend, on average, about $13,500 in order to obtain it.
That’s right. According to Kelley Blue Book, in 2015, Americans spent, on average, more than $33,500 on new vehicles. Meanwhile, J.D. Power reported that in the 2015, the average used vehicle cost just over $20,000.
That new-car smell sure is an expensive air freshener.
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Of course, there are other reasons to buy a new car. At the same time, it makes plenty of sense to buy a used car, and not something vintage like that cool Volkswagen Thing pictured above. We’re talking about lightly used vehicles, the type J.D. Power describes when it claims that in 2015 the average used vehicle was 4.3 years old and had 51,554 miles on the odometer.
First up on our list of the 6 best reasons to buy a used car is the most obvious one: saving money.
1.) Save Money
You will save thousands of dollars by purchasing a used car. In fact, based on the data cited above, you’ll spend $13,500 less by choosing the average used car instead of the average new car. Why is this? New cars depreciate, and fast.
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Sign the paperwork for a brand-new car, drive it off the lot, take a ride around town, and then return the car to the dealership. It isn’t a new car anymore. It is a used car. And because it is a used car, it is worth substantially less than you paid for it just an hour prior. After three years, Consumer Reports says your new car will be worth just 54 percent of what you paid for it, on average.
This is not true of all vehicles. For example, as this article is written, used Toyota FJ Cruisers are worth a far greater percentage of their original value than the typical used car. At the opposite end of the spectrum, in a nation awash in cheap gas, used Nissan Leaf electric cars might as well be free.
Beyond the issue of depreciation, you’ll pay less sales tax on a used car, insurance for a used car costs less, and in many states it is cheaper to register a used car than it is a new car. The thing to remember is that these savings will ultimately be spent on a used car’s higher maintenance requirements.
Remember the 1970s, when cars like this old Ford LTD rusted apart within a decade? For something like that to happen to a modern automobile would require monumental abuse by a vehicle’s original owner.
Today’s cars, trucks, SUVs and vans simply last longer. By the middle of the summer of 2015, according to IHS Automotive, the average car driving on American roads had reached a record high of 11.5 years of age. The auto industry think tank also predicts that by 2020, the number of 12-year-old vehicles still in operation will rise by 15 percent.
Clearly, modern vehicles are built to last longer than ever, which means you can save thousands and expect a long service life from a used car.
3.) CPO Programs
Thanks to low payments, leasing is increasingly popular with new car “buyers.” Experian Automotive reported that during the first part of 2015, more than 30 percent of new vehicles were leased rather than purchased.
Most leases are written for 3-year terms, and include restrictions related to mileage, vehicle maintenance, and condition. Due to these restrictions, people must take good care of the vehicle or face expensive fines at the end of the lease. When the lease term is up, the car is returned, and the returned vehicle must find a home. Typically, that car’s new home is the dealership’s certified pre-owned (CPO) lot.
Off-lease vehicles are usually perfect for CPO programs, which essentially guarantee a used car buyer a vehicle in “like new” condition. Cars sold through CPO programs have low mileage, they’re well cared for, and all maintenance is up to date.
However, some vehicles that find their way into CPO programs are not off-lease vehicles, and they’re not lightly used trade-in models. Rather, they’re pulled out of daily rental car fleets. You’ve rented a car before. You know how they’re treated. You don’t want one of those.
Good thing you can always run Vehicle Identification Number (VIN) check to obtain a vehicle history report.
4.) Vehicle History Reports
Carfax and AutoCheck are the two biggest providers of vehicle history reports, and it is absolutely essential to obtain one when buying a used car. Using the vehicle’s VIN, either company can obtain a substantial amount of information on a used vehicle. Highlights of the kinds of information contained within a vehicle history report include:
• Number of previous owners
• Previous registration status (lease, personal, fleet, taxi, etc.)
• Accident, flood, repair, Lemon Law history
• Mileage validation
While a vehicle history report cannot identify every possible cause for concern associated with a particular used car, easy access to them certainly adds significant peace of mind when buying one.
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Also, note that one of the many perks associated with most automaker CPO programs is a free vehicle history report for the vehicle you’re considering.
5.) Favorable Financing Rates and Terms
While it is true that you will typically pay a higher interest rate on a loan for a used vehicle than you will on a loan for a new vehicle, historically low rates mean that many automakers can offer attractive financing options for their CPO vehicles.
For example, as this article is written, Volkswagen is providing 2.49-percent financing for 60 months on CPO vehicles sold through its World Auto program. According to Bankrate, this rate is competitive for my area, matching the best 60-month used car loan that I could obtain on my own.
My local dealership has a 2013 Jetta GLI with Autobahn trim in stock, one with just 27,700 miles on it. Through the World Auto financing offer, I’d put $550 down, pay the sales tax and any associated fees, and finance $20,000 for 60 months, getting a German sport sedan for $355 per month. And that’s before price negotiation.
6.) Drive a “Better” Car
Check out this 2014 Audi A4. Sitting on a lot just a few blocks away from the Jetta GLI described in the previous section, this CPO A4 is equipped with Premium Plus trim and Quattro all-wheel drive, and has fewer than 30,000 miles on it. The price is discounted to $27,994, about $12,000 less than a new 2016 would cost.
Not only that, but this Audi is basically priced the same as a fully loaded 2017 Hyundai Elantra Limited or a brand-new Chevy Malibu LT with a leather package. Is the Audi the “better” car? Well, that all depends on how you define “better.” It would certainly be the more “impressive” car as far as what other people think when they see you behind the wheel.
Even if you’re not looking to move up to a premium brand and dealership experience, choosing a used vehicle opens a world of possibilities. Using AutoTrader and its search tool, which provides a number of useful filters, I discovered that there are 4,093 used cars within 50 miles of my house, all priced at less than $20,000 and with fewer than 30,000 miles showing on the odometer.
Buying a used car is riskier than buying a new car, because you don’t know with 100-percent surety where that car has been and how it was treated, and there are no guarantees that significant problems won’t arise before you’ve got it paid off.
What’s that old saying? You don’t get something for nothing? That’s true when you decide to save thousands by choosing a used rather than a new car. In exchange for a healthier bank account, you assume some risk, and perhaps lose a little peace-of-mind.
The good news is that today’s vehicles are better than ever, vehicle history reports can reveal important details about a car’s past, and automaker CPO programs offer a nominal guarantee that you’re getting the cream of the used car crop.