New cars and trucks often come with top-of-the-line features and attractive finance packages from dealerships. However, buy a used cars are often just as useful for busy families who need a way to get around safely, and the United States car market has plenty of used options available.
Deciding the right option for you isn’t as simple as just looking at the sticker price. The rate at which cars depreciate varies depending on how new the car is, and making smart investments now could help you save money later.
Recent models with few miles on them may have the same features you’re looking for at a huge discount just because someone drove it for several thousand miles already. Car buyers can get better models and save money by narrowing their search to pre-owned cars and partnering with a credit union to get the best interest rates possible.
The top reason for buying a used car is the price difference. In 2019, the average new car cost over $37,000, compared to just $20,000 for used cars. This can easily translate to a hundred dollars per month or more in savings on car payments, especially if you get a great interest rate.
The taxes, registration fees, and car insurance you pay for also add up fast. No matter which insurance company you use, new cars are inherently more expensive to insure than used cars because they cost more to replace. Even if you have plenty of money for a down payment, make sure to price out all your monthly costs and one-time taxes and fees for the car models you are comparing.
New cars begin to lose value as soon as you drive them off the lot. They often lose value faster than you can pay off the loan, resulting in your car loan having negative equity and being “underwater.” If your car loan is underwater at the time of a serious accident and the car is totaled, you may have to continue making car payments because of how much you still owe for it.
Used cars have already lost a significant amount of their value, so you can pay off the loan on them even faster than they lose value. By the time you finish paying off the loan, you may even still be able to sell it for several thousand dollars.
Brand new cars are starting to omit CD players and including fancy features like satellite radio instead. Their new screens and buttons are much more complicated than your old car, which results in a steeper learning curve.
By sticking to a used car, you’ll be able to find something that feels more familiar but still has the upgraded safety features you need. Even a car that’s a few years old will have significant improvements over a car that’s a decade old or more. You’ll be able to shop around for a selection of features that suits you, instead of being stuck with a selection of features you don’t need.
When driving a brand-new car, you may feel a lot of pressure to keep it safe from scratches, dents, and accidents. While driving safely is always important, driving a used car means your car’s value won’t drop as sharply if you scratch it or end up in a fender-bender.
The stresses of damage are even higher with leased new cars. If you damage the outside of a leased car in an accident, you may be able to pay for it with your insurance, but you cannot simply ignore it even if the damage is merely cosmetic. Any spills or damage on the inside of the car may also result in high fees when you return it to the dealership.
With improvements in car data collection and information available online, you can buy a used car with more peace of mind than ever before. You can get a detailed vehicle history report before your car purchase, so you know if it has been involved in a serious accident.
Today, cars can continue to be safe for a long time, even after they have reached the 100,000-mile mark. As long as they are properly maintained and have parts replaced occasionally, used cars drive smoothly with few breakdowns or other problems.
How to Finance a Used Car
A local credit union is an excellent option for financing your used car purchase at the lowest possible rate. Even if you’re paying for part of your purchase with a trade-in, you can use an additional credit union loan to make sure you can afford the car you need.
T&I Credit Union serves the greater Detroit Metro area. Because we’re a non-profit credit union, we are dedicated to serving our members with the lowest fees and rates possible. Our 60-month terms on used car loans give you plenty of time to pay off your new vehicle.
We even offer optional GAP insurance to protect your new or used car from negative equity and cover your deductible in case of an accident. Membership is free, so contact us today at (800) 338-3908 to learn more about our used car financing options.