While there are benefits to buying a brand new car, it might not be the smartest financial choice. Before you think a car with only 10 miles is the better deal, here are three arguments why you should never buy new!
You’ll Pay More
Buying a great car does not have to complicate your financial life! If you have good credit and you’re able to qualify for a new car loan with no hassles, banks may compete for your business and offer the best rate possible.
But even with low-rate auto financing on a new purchase, a new car will be more expensive than an older version of the same car. Not only because of the higher sale price, but you’ll also pay more in other areas. Brand new cars can have higher insurance premiums than used cars as well.
Faster Depreciation and Negative Equity
It’s kind of a trap, but new cars depreciate faster than used vehicles. The sad reality is that the average new car can depreciate as much as 19% in its first year! What does this mean for you? To put it simply, if you buy a brand new car without a down payment, or if your monthly loan payment isn’t high enough to compensate for depreciation, you could end up owing more than the vehicle is worth.
Negative equity isn’t the worst thing to happen if you plan on keeping the car until it’s paid off. But if you’re the type of person who trades in vehicles every two or three years, negative equity can increase the cost of your next vehicle. Say a dealership gives you $19,000 for your trade-in, yet you owe $22,000, the $3,000 difference doesn’t just go away. You have to pay it when the dealer tacks the negative equity onto your next car loan. So instead of a sale price of $27,000 for your next vehicle, you end up financing $30,000.
On the other hand, if you skip the brand new car and buy a vehicle that’s one or two years old, you’ll be able to get the car at a price that’s more comparable to its actual value, and possibly avoid an upside-down loan.
You Get More for Your Money
Since cars depreciate rapidly within the first year, buying used is an opportunity to get more for less!
For example, you can buy used cars that are less than a year old and save thousands of dollars! Here at Dallas Lease Returns we have great quality, used vehicles that are in perfect condition! Most are just a couple years old and we even offer used luxury brands! It’s like buying a brand new car, without the brand new price tag.
In summary, buying used is the way to go! It saves you money in the present and future, and is also the most practical method. To browse our inventory, visit our website!