Used Car Finance

Working out the Kinks

Sometimes, when you purchase a new car, it’s no guarantee of dependability.  Although it should be years before any costly repairs need to be made, some cars begin to exhibit problems shortly after getting them home.  For an unlucky few, the new car spends more time in the shop than in their garage. In worst case scenarios, a real “lemon” keeps going back for more repairs.  Even though it’s under a full warranty, the inconvenience of finding alternative transportation, while the new car is in the shop, gets old really quick.

Some motorists prefer to purchase cars that are only a year or two old.  If properly cared for, they still look and feel like a new car; they have relatively low mileage; it’s still covered by a warranty for major repairs; and, all the bugs that might have plague the first owner are now a part of history.

Saves a Lot of Money

The wisdom of buying a used car, for many drivers, is simply that it saves so much money.  Even if the car still looks and drives like brand new, the biggest period of depreciation happens within the first year.  Thus, the new owner has a vehicle with all the perks of a new automobile, without spending so much money for operational expenses like:

•     Insurance

•     Tax and License

Both of these are expenses required by law that every driver must have, before getting behind the wheel of a car.  Insuring a brand new car, especial for a first time driver, may be almost as expensive as the car payment itself.  If the owner has a loan, the lender will require proof of insurance.  If the motorist does not carry insurance, he/she defaults on the loan; the bank will take action to make sure their investment is protected.  

Even if you are among the lucky few has been saving for years, in order to pay cash for a new car, you will still want full-coverage.  In the event of an accident, you will also want to protect your investment.

Fortunately for those that understand the wisdom of buying a used car, they can save a significant amount on their monthly premium, even if the car is still like brand new.  Insurance costs are not solely dependent on the motorist’s driving record, although a good one does reduce costs.  It’s also based on the value of the vehicle, if the owner has full coverage.  In the event the car is totaled, the insurance company will be responsible for giving the owner what is was worth.  The money is then used to pay off the lender and purchase a different means of transportation.

In addition to saving on the monthly cost of insurance, drivers that understand the wisdom of buying a new car will be rewarded, when they have to pay the tax and license for their newly purchased vehicle.  Depending on the state sales tax rate, the value of the car, and any other licensing fees, the privilege of driving on public roads can be pretty expensive.  Even if the vehicle is only a year or two old, these costs are lower, because the initial price of the car was cheaper and licensing fees a generally based upon the make, model, and year of any given mode of transportation.

Easier on the Budget

Of course, the wisdom of buying a used car is very apparent, when it’s time to start making those monthly car payments.  Depending on the make and model of the vehicle, some people are paying almost as much for their car each month as they pay in rent.

The real wisdom of buying a used car is the month-to-month savings.  In many cases, the terms of the loan are not as long, so the car will be paid for in a timelier manner.  In addition the payments are not such a hardship on the household budget.

So, if you assume the best and safest ride is a brand new car.  You may want to think again. Many savvy motorists will confirm that there is a lot of wisdom in buying a used car.