Depreciation is one of the drawbacks to buying a new car. The second you drive it off the lot, your brand new vehicle becomes a used car — and its value decreases. As a result, the used car market can be a good place to find your car.
Some benefits of buying used include:
- Price – Buying used may be a cheaper option. Even for cars that have rock-solid reputations for reliability, you typically will save money buying used.
- Wider Selection – When you buy used, you aren’t limited to current models and options.
- Lower Insurance Rates – Used cars typically have lower insurance rates than new cars.
- Mental Worries – A used car has been on the road. It likely has its first scratch, so you won’t have to worry about keeping it perfect.
There are thousands of cars available from three types of sellers:
- Dealers – Dealers usually offer a variety of cars and special programs, such as Certified Pre-Owned cars. Dealer cars also may come with a warranty — a strong selling point because you don’t know where the car has been or who has owned it. Dealers can be an option for finding the perfect used car.
- Private Party/Individual – Buying a car directly from the previous owner can be a good way to obtain a used car. The seller can provide some history on the car and may give you a feel for how well the car has been maintained.
- Public Auctions – There are many deals to be had at public auctions. While buying this way can be more risky, the price is usually the main selling point. There is no dealer to haggle with and only other potential buyers will increase the price of the car. Keep in mind, public auction cars are usually not available for test drives and rarely come with a warranty.
This content has been provided by Practical Money Skills and is intended to serve as a general guideline.