Here’s a list of the do’s and don’ts brought to you by OfferMORE, a family owned company located in Pinellas County, Florida which has been in the car sales business, buying and selling cars for over two decades.
“Never buy brand new”
We’re sure you’ve heard this before and bottom line, it’s not always true. As you read, keep in mind this information is coming from a company that sells zero new cars each year. “We have nothing to gain by telling you ‘it’s okay to buy new’, under the right circumstances” says Ryan Kashtan, who has over two decades in the car sales business.
If you’re in a rush, jump down to our three part questionnaire to see whether buying new or used is right for you. From the financial aspect to knowing the value of ‘piece of mind’ we will be covering all the benefits and pitfalls of the option to buy new or not.
Why the phrase “never buy new” has become so popular
When you buy a zero mile car, the moment you drive it off the lot it has technically had a ‘previous owner‘. Before that point, regardless of the fact that it may already have fifty miles on it from test drives, it was a ‘New Car’. Once a vehicle has a previous owner its value drops by estimated 5%, immediately (according to ConsumerReports. From there, over the course of the first year of ownership the value depreciates, on average by 19%. Hence, if you spend 30,000 on a new car, after the first year you will have a lost $6,000 via depreciation.
When does buying brand new make good financial sense?
Once a car model has become a year old and dealerships are stuck with these old, new models they may actually bring the sticker price down as low as 25% off the MSRP. At that point, the price of the car is low enough that the depreciation over the first year is negligible to the similar rate that a used car purchase would incur.
Advantages of buying a new car
Although the CarFax might state that a used car has never been in an accident there is really no way to be 100% sure of that. Having a professional bodyshop look over the car and engine to determine with absolute certainty that the car has never been in an accident could cost up to $1,000 as such an inspection would entail taking apart a large amount of the vehicle. Reason being; not all accidents are reported to insurance companies which register the accidents on large databases where reports like CarFax look and check the VIN for accident reports.
More New VS. Used Car Purchase Considerations:
Brand new vehicles are less risk for dealerships to grant warranties on as the dealership knows the new car has not been driven hard or had previous mechanical issues. Most auto brands also offer manufacturer warranties for new cars which do not always transfer with the title when sold second-hand.
If you want piece of mind, knowing that your car is brand new and will need much less maintenance over the course the first few years, a new car purchase may be warranted. If you’ve had horrible luck with used vehicles and the cost to fix them has caused extreme stress, the new car purchase is warranted for the health benefits alone.
On the flip side, you can always have a good mechanic look over and drive a used vehicle pre-purchase to verify the condition of the motor. Downside to this method is the cost. Doing such an inspection right will take the mechanic a few hours to undertake. This could cost a hundred dollars or more and in the event the mechanic finds an issue with your (to-be new) used car, you still have to pay him for his time.
Used cars, especially five years or older will generally have much greater maintenance costs within the first year of ownership. If you are on a budget we recommend cars like the Toyota Camry or possibly a newer used Kia which often have a remaining bumper to bumper warranty up to 100,000 miles.
You may be surprised to find that newer cars often come with lower interest rates. The dealership will make more on the grand total of the sticker price on a new car. Oppositely, the sale of a used car, where their profit margin is smaller they counteract this loss by driving up the interest rate to make the sale more profitable. Used car sellers also know that they are more likely to find buyers whom have lower credit scores and are used to paying higher interest rates.
When it comes to the other primary financial factors, the used car purchase wins the race as new cars come with higher taxes and insurance rates.
At the end of the day, the better option really comes down to a few factors:
- Is the car model you want available on car lots at a reduced rate for model clearance?
- Can you find a used car in excellent condition and is the car owner or dealership allowing you to take the car to a mechanic to have it inspected?
- Is the piece of mind you have when buying brand new worth the cost of acquisition?
Cash is king when buying a new or used car
Whichever car you decide to buy, new or used be sure to take cash with you for the downpayment. Cash? That’s right, or check, but a solid downpayment is the best ammo in for your car buying arsenal as dealerships LOVE immediate cash flow.
How to easily turn your used car into cash
Ready to sell today?
If you live in the Pinellas County, FL area and are ready to sell your used car today, contact OfferMORE to sell fast for more.