Should you buy a used car?

Prateek Wadhawan
Est. Reading Time 2 mins

Buying a used car could save you money. Here are a few benefits of buying a
used car.

Slower depreciation

A new car depreciates, or loses value, as soon as it leaves the dealer’s lot. In
fact, it could lose 20% or more of its value within the first year, depending on the
make and model. This might not matter to you if you plan to own the car for a
long time. But if you finance your car and plan to sell it in the next couple of
years, you may find that you aren’t able to sell it for enough to cover what you
owe on your car loan.
Used vehicles generally don’t depreciate as quickly as new vehicles do. After the
first year, depreciation of used cars can slow to around 9% to 12% each year for
some models.


Lower cost

Here’s the big one: If a brand-new car is worth about 20% less after the first year,
why not buy a car that’s almost brand new and potentially save some money?
While many people don’t immediately sell a car after buying it, you can often find
vehicles that are just 1 to 2 years old. If you go this route, you might pay less for
the car — and might save on auto insurance, too. Lower-priced cars are typically
less expensive to insure.


The benefits of a large down payment

Depending on your financial situation, you might have a better chance of getting
approved for a lower-cost used car loan, especially if you’re able to put down a
large down payment. Without a hefty car down payment, getting approved for a
loan that covers the generally higher cost of a new car can be difficult, especially
if you have lower credit scores.

Car Buying Tips

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