Buying a used car instead of a new one is a great way to save money. However, purchasing a used car is always a bit risky. You don’t know how the vehicle was driven or maintained. If you are not careful, you can even end up with an ‘expensive’ lemon.
Wait. What? That’s right.
Luckily, this is not true for all vehicles. There are a lot of used cars that are really good and really last a long time.
Below are 3 factors to consider to help you pick the best-used car for your money.
Brand Name, Bad Name!
So you have saved up $10,000 and want to purchase a used vehicle. You have a choice between a fancy high-end brand name and run of the mill vehicle. Well, guess what? A $10,000 Mercedes-Benz S500 is ten times more likely to breakdown than a $10,000 Honda. So while you might be inclined to go with the lavish luxury choice, realize that you will likely end up dishing out a ton of money immediately after getting that Mercedes-Benz, BMW or Porsche. A modest Honda or Toyota will go a long way before you have to spend money on repairs.
This is true because $10,000 is likely 10% of the original price of the high-end vehicle whereas it is 50% of the economy car. As such, the difference is between a vehicle that was run to the ground vs one that was merely used. We recommend you save up, go the economical route, buy the Porsche later on once you can afford a new one.
Brand name vehicles also typically have more costly parts. So when it comes time to do repairs on that BMW you are definitely going to spend more than on that Kia or Nissan.
Timing is Money!
Most vehicles depreciate the most during the first one or two years. Typically once a new vehicle is sold it loses a few grand in value. Afterward, over the next few years of use, the value keeps dropping relatively quickly but kind of slows down eventually. Of course, all vehicles depreciate in value unless they become rare collectibles but there is an optimal time when to buy a used vehicle.
The odds are if you purchase a 3-year-old vehicle and keep it for 3-4 years you will have the lowest cost of maintenance and repairs, and you will be able to sell it for a relatively high price. Effectively, your annual cost of ownership will be the lowest. If you buy too soon the vehicle’s price might be high and will keep dropping quickly. If you buy too late the vehicle will likely begin to require more costly repairs. So timing is ideal in the mid-range.
Choices, Choices – Everyone Loves Choices!
Pick the vehicle that stands out in a good way. While you might not care if your vehicle is green or has two doors, the next buyer might really care. So pick a vehicle that is most versatile and appeals to a wider demographic of future buyers. A pretty looking vehicle will always sell for more than a boring looking one. A vehicle with convenience amenities will always sell for more than one without such amenities.
Of course. you might have to pay a little more when buying a popular vehicle but in the long run, you will also recover more when selling it. Of course, if you find a vehicle that is heavily discounted because it has a bad color and bad options, and you do not mind it at all, then you should buy that vehicle. However, if you are paying nearly average market price for a vehicle then you should aim to buy the best looking one.
Wrapping Things Up…
While a used car can be a good option for those who want to save money on their car purchase, buyers still need to make smart choices. There’s a lot to look for when buying a pre-owned vehicle, but there are some ways to help you choose the right one.
Keep these tips in mind when purchasing a pre-owned car and you’ll save money in the long run.