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Buying Used Cars Makes More Financial Sense

Although an obvious benefit to buying used cars can mean a less expensive purchase and cheaper monthly note, it is really the additional benefits of what can be done with those potential savings that can be life changing.

The Depreciation Factor

Most people already know that when it comes to buying a car, new or used, there are certain inherent risk factors involved, namely depreciation. Depreciation is the decrease in value that a car loses over time, and can vary depending on the make and model of the car. Depreciation of a vehicle starts the minute the car is driven off of the dealership lot.

Like it or not, depreciation comes with the deal; there’s no way around it. However, the only real way diminish the impact on your wallet is to either buy a car that has a traditionally high resale value, which requires a good bit of research on your part, or you can simply scale down your purchase to something more affordable, liked used cars. Bear in mind, by waging your bets with a vehicle that you believe has a high resale value, there is still a certain degree of depreciation that will ultimately affect the value of that vehicle.

Does Your Decision Have More To Do With Status?

For some, buying a new vehicle may have more to do with status than it does necessity, which ultimately affects the ability to make a practical decision. Financial experts strongly advise against financial decisions like this, especially ones that involve highly depreciative items. If need be, take a step back and examine the true nature of your intent in purchasing a new vehicle. Perhaps doing so can help you eliminate the desire to impress with something you truly cannot afford.

What You Should Consider Instead

The best way to demonstrate the additional benefits of what can be done with potential savings is to give an example. If you were to purchase a new car for about $50,000, depending on the depreciation of that car, you could be looking at a vehicle with a value of less than half of what you paid within a couple of years, although you may have barely made a dent in the repayment on the loan. In the housing market, this is what is referred to as upside down, meaning you owe more than the property, or, in this case, more than what the vehicle is worth.

Instead, what you could and should do is consider buying used cars. First of all, you already know that a pre-owned vehicle will cost a lot less than the $50,000 new one previously mentioned. If you were to consider the difference of purchasing used cars instead of new models, you may find that the savings could be a tremendously beneficial in helping you reach some other financial goals. Specifically, if you bought a $25,000 pre-owned vehicle with say a $250 monthly car note instead of a $500 monthly car note, you could take the difference of $250 each month and put those funds towards something else, like an investment that could contribute to your financial security.