You’re heading to college, so it’s time to get a car of your own, but as a young person who has their whole lives ahead of them, managing your finances responsibly is also imperative. Buy a new or used car, what’s better?
The associated fees, subsequent costs, and losses in value (i.e. depreciation) of a new vs. used car add up to thousands of dollars over the first few years of new car ownership. On the other hand, a ‘slightly-used car; one that’s only around two years old, and has less than 30,000 miles on it, can help you keep cash in your pocket without sacrificing quality. We’ve listed some facts about buying a new vs. used car below to ease some of your worries.
Buying New vs. Used Car
1. Used cars have a lower price tag and go through less depreciation
A new car loses thousands of dollars in value the moment you drive it off the lot. This is why used cars are better bargains. It’s also why you can buy a 2007 Porsche for the price of a 2011 Honda.
Would you rather be the original buyer, and lose a LOT of money, or the second buyer, who saves that much? If you buy a car that’s one or two years old, it will still depreciate, but you will lose less money less quickly. And you’ll avoid that big initial hit that the previous owner took.
2. Sales tax on new cars
Every ad for a new car glosses over the tax issue. Many state laws subject new cars to state sales tax, but not used cars. In Georgia, for example, if you buy a used car from a private seller, you won’t owe any sales tax at all. Comparatively, the sales tax that dealers have to add to the price of a new car can be thousands of dollars. Don’t underestimate the savings, and research your state’s laws on the subject before you make a decision.
3. Lower registration fees
In most states, the rate of your annual registration fee is based on your car’s value and its model year. The rate is highest in the first three years and then levels off after five years. If your state has similar rules, you can save about a thousand dollars by avoiding the new car registration fees and buying one that is at least three, or better yet, five years old.
4. Useless extras on new cars, cheaper features on used cars
Another disadvantage of buying a new versus used car is how the new car salesmen will try and sell you on installing additional dealer options. These additions will be expensive and won’t add a dime to the car’s resale value.
On the other hand, when you buy used, you may not get every feature you want, but you certainly won’t end up paying extra for things you didn’t ask for. When you search for specific features that you do want in a used car, you’ll pay far less than the original owner did.
5. Dealer fees
As if paying $500 for rustproofing isn’t bad enough, dealers hit new car buyers with shipping charges, destination fees, and ‘dealer preparation.’ When you buy a used car, you will have to visit the DMV to pay tag, title, and registration fees, but you won’t deal with any nonessential fees or costs that dealers try to add to a new car.
New cars smell great, but how much is that scent really worth? It’s better to save your money after graduation and go for a used car instead of buying a brand-new one. Drop-in at any Car Factory dealership in South Florida, or surf through all the used cars on our website. You can also call us at 786-406-6234 for any inquiries!