There is kind of a stigma around the idea buying a used car. We tend to think that used cars look terrible and are unreliable. But that’s really not true. There are plenty of ways to make sure you get an amazing deal when buying a used car. And, more importantly, there are plenty of reasons buying a used car is a great idea!
#1 You don’t have to take on debt
One of the most misleading myths of modern life is that there is no escaping a car payment. That’s hundreds of dollars every single month that’s just going toward a debt that will never end. And it will never end because once your new car gets old, you’ll replace it with another new car. The cycle will continue. Every month, for the rest of your life, you’ll be shelling out hundreds of bucks for the privilege of driving.
Buying a used car means you can find something that you can actually afford to pay for upfront in cash. That means no monthly car payments. The total price of a used car cheaper. You won’t be paying any interest on debt. And you will have one less bill to pay every month.
Not only that, but you’ll be able to pay off your debt faster. That’s because that few hundred bucks you would have tossed into endless car payments could be better spent paying off credit cards or student loans!
#2 New cars are a terrible investment anyway
If you read that first reason and thought something like “sure, but a new car is a better investment,” you’re falling for the second myth. That is that new cars are better than used. But the fact is that your brand new car loses 30% or more of its value within the first 2 years.
A new car loses value drastically and there’s no way to stop this. No matter how well you take care of it or how many upgrades you make, you will never be able to sell it for more than you paid for it. You’re losing money. So why go into debt just to buy something that is losing you money?
#3 You can buy a used car that lasts just as long as a new one
When you buy used, the rapid loss of value actually becomes an asset for you. You can find a really great car made within the last couple of years which still looks and performs like new. The difference? Somebody else made the bad decision of buying it new. So now you get to take advantage of the fact that the dollar value has dropped by 30% or more!
This means that if you shop around, you can find a used car that has very few miles on it and absolutely no damage. That’s because the dollar value may sink but the actual use value decreases much more slowly. That is, the car itself will continue to work reliably and efficiently for years even after its cash value has all but disappeared.
#4 You can buy a used car that looks just as nice as a new one
One reason that many people think they need a brand new car is because it works as a status symbol. Imagine pulling up to a company for a job interview in a beat up old VW bug? It wouldn’t make you look very good, would it?
Well, the good news is that not every used car being sold is a beat up old VW bug.
And the better news is that you can still look totally professional and worthy of employment even if your car is a couple years old. So just shop around and focus on buying a used car that still looks respectable and is in good condition.
#5 You can get more of your money back when reselling
The truth is that no matter how you spin it, you’re going to lose money on any car. But if you buy used, the amount you lose is way less. The main reason for that is that you don’t have to pay a single penny in interest. But the loss is also minimized by the simple fact that you already paid a used car price on it.
So, say you buying a used car for $6,000. If you take good care of it, you can drive it for the next 10 years and then sell it for around $2,000 or $3,000. Yes, you’re taking a loss but it’s far less of a loss than if you bought the car new and then drove it for 10 years. Because you would still have to sell it for that same $2,000 or $3,000.
Now, in addition to losing less money when you sell it again, look at how much money you didn’t spend in car payments over those 10 years! Spread across 10 years, that $6,000 you spent works out to about $50 per month. That’s way less than any car payment. If you were to set aside that $50 each month in savings, you would not only earn a little interest but also save up to buy your next car after this one.
One last note on this point: I used 10 years in this example because that’s the average amount of time buyers hang onto a car. But if you are buying at these lower prices, you can actually afford to change up more frequently than that. You could replace your car every 5 years and still be spending way less money on your car than most buyers do!
A Final Word on Buying a Used Car
Car expenses are one of the biggest drains on your budget. You already have to pay for gas, car insurance, and maintenance so why increase the burden by adding a monthly payment to a car loan? You can save hundreds of dollars each month (that’s thousands each year) and drive a car that performs exactly as well as a new one. So there is really no downside to buying a used car!