New Vs. Used Cars Which One Is Your Choice?
Buying a car is a significant investment; there are several things you should consider before signing on the dotted line. There is a lot of debate about buying used cars as opposed to spending money on a brand new car. Here’s how to decide if a new or used car makes financial sense:
Value For Money:
New cars include manufacturer warranty to cover repairs and other maintenance issues. Depreciation is an important factor that should be considered while buying. Did you know, a new car loses up to 20 percent of its value right from the moment you drive it off the lot? This continues for some years until the depreciation curve stabilizes. Look for cars that are around 3-4 years old – they are more likely to be in good condition and offer better value for money.
Since the value of the car is lower than what you would ideally pay for a new car of the same make and model, you can save on sales tax and insurance premiums. Despite the higher interest rates for a loan on used cars, you get to save money because the loan amount would be low. Use our auto loan calculator to know how much you can afford to pay for your dream car.
Insurance rates differ based on a variety of factors. One of these is replacement value, i.e., the actual money it would take to buy another similar car. For example, if you own a car that’s four years old, the replacement value coverage would be for an equivalent car. The more expensive the car, the higher the protection rate is. Thus, you end up paying less money to insure your used car.
Maintenance and Repairs:
Maintenance costs are difficult to evaluate; they depend on several factors, including the individual ability of the driver. Although a new car is less likely to cause problems, buying a used car from reliable dealers can ensure zero maintenance and repair issues.
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