Why do personal finance pundits recommend buying a used car instead of a new car?
There is a lot of talk about the issue of buying a new car vs a used car. People give their own opinions and reasons to prove what they think could be the choice for them when making a purchase decision about a car.
I am not sure enough about quality and reliability of the used cars from Europe and the US. However, I strongly believe that you should buy used Japanese cars instead of new ones.
Here are the common reasons people quote for buying a used car instead of buying a new one.
- used Japanese cars cost lot less than the new cars
- used cars have lower insurance
- cars depreciate fastest in the first two years of ownership
- Japanese cars are built better than ever so there’s less risk than before in buying used Japanese car
- Generally speaking, cars are kept in great condition by their owners in Japan
- Many of the car owners in the country do not drive much. So, you could get the best value for a price you pay to buy a used Japanese car
I fully endorse the view that, people with limited resources should buy used Japanese cars vs new cars due tio the reasons cited above.
Things to watch out for when buying any car – new or used
Now, some caveats: First, don’t forget insurance, registration, repair, etc. But remember that a used car has all these things, too–just in different amounts. (In my case, insurance for a 5-yr-old used car would save me about $100 every 6 months…not very compelling.) With a used car, the risk goes up (likelihood of repair increases, resale value decreases). The question is whether the reward of lower payments is worth it. Second, this doesn’t work with all cars. If you’re buying a Dodge Neon, your resale value is going to suck and you’re going to be angry every day of your life.
I expect this post will generate a lot of debate, and that’s cool. Here’s the bottom line: I don’t like when pundits say that buying a used car is the only way to go. It’s not.
Buying a new car can be a smart choice if you pick the right car, negotiate extremely well, and stay disciplined about shopping for insurance, maintaining your car, etc.
Because buying a car is such a big purchase, I’m fine spending a little more money and time up front to mitigate risk and get a great car that will last for a long time. And by being sensible about how long you drive your car for (longer is better), you can get a new car for a great value.
It doesn’t have to be a purely numbers-oriented decision. I love my car–it’s fun to drive and if I had 10x the money, I would still get it.