Should You Buy A New Or A Used Car? |
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Winston Takeda
17 October 2012
Going shopping for a new car is a lot of fun. Sometimes people head out the door with only a vague idea of what they want, and then come home a couple hours later with a brand new car that completely blows away all their expectations. Other times, people scour newspapers, the Internet, and various periodicals looking for the precise vehicle to match their precise specifications.
Of course, somewhere along the line, you've got to make a choice. Do you want to buy a new car, or would it be better to buy a used car? For some people, this isn't a choice at all. There are several folks who always buy a new car. They couldn't think of doing it any other way. They buy a new one, get a three to five year loan, pay it off, drive it for maybe a couple more years, and then trade it in for a new one.
Then there are folks who would never buy a new car in a million years. They don't see the reason. After all, if you do your homework, and shop around, you can find a used car for a significantly lower price than a new car. In fact, there's been several studies that show people who are more financially astute, and save more money over the course of their lives, always buy used cars.
But what if you're on the fence? What if you don't know which you want? It can help to understand the benefits of each. That way, you'll be able to make a more informed decision.
Some of the benefits of buying a new car are obvious. After all, a new car is a new car. Nobody has ever driven it before. It comes with a generous warranty. You don't have to worry about taking care of it, other than changing the oil every few thousand miles. Plus you'll get a lot of positive social attention, especially if it's a higher end model. To be sure, the advantages of a new car are obvious, and clear to everybody.
Getting a used car, on the other hand, is a lot more work. You've got to do more work shopping around. You've got to know a bit about cars and how long they last. You've got to understand the mechanics enough to figure out if it's a good deal or not. And you'll never have that "new car" feel when driving it around.
But the main benefit of a used car is you'll save tons of money. A new car can set you back thirty or forty grand. A used car, on the other hand, can be had for five or ten grand. If you buy a different car every five years, that's a difference of up to $140,000 over twenty years. If you start buying cars when you're in your twenties, you could have saved up that much by the time you're in your forties. And if you invest this wisely, it's not out of the question to have a very nice retirement in your sixties or even late fifties.
So which is more important to you? A nice ride now, or a lot of money in the future?