In today’s economy, everyone is looking to be smarter with their money, saving where they can and spending on the things that matter most. But let’s face it – most of us are not financial experts and trying to be financially savvy can be a full time job.
Let us help you out with one major decision: buying a car. No matter what car you choose, it is going to be a big expense and a purchase that you will have to live with for a long time. One way to ensure that you get the most bang for your buck is by choosing to buy a used car.
For starters, used cars are cheaper that new cars; that’s a given. But there are several other reasons why buying used is a fiscally responsible decision.
A big one is depreciation. You’ve probably heard of new car depreciation but you might not know exactly how it affects you financially. On average, a new car loses 30% of its value within the first two years of ownership. That means that if you decide to sell your car after only two years of owning it, you will only be able to sell it at 70% of the original cost. That is a huge loss for such a new car.
Why is that? Well, you have to consider the difference between retail and wholesale pricing. A new car is sold at a retail price, meaning the dealership has added extra fees to the MSRP. When you trade the same car in, it is purchased at wholesale price, which is only the raw value of the car. The result is that you receive much less when you sell your new car.
However, this kind of retail/wholesale difference benefits used car buyers. You don’t have to worry about this drastic depreciation because the previous owner has already experienced it. When you go to buy the used car, it will hold much more of its value over the span of ownership. Plus, it will cost less.
In addition, used car buyers can avoid a lot additional charges that are added to new cars. For example, dealerships add delivery charges since they had to go to the trouble of getting the car on the lot. Not so with a used car. Plus, banks often offer lower insurance rates and better loan terms on used cars.
So there you have it. Are you ready to start used car shopping now? We at Dick Dyer Toyota have a full selection of used cars to choose from – check them out right on our website! And feel free to contact us for more information or to schedule a test drive!