Personal Finance

Why buying new can be better than buying used

We all want to save money. But sometimes paying less means paying more. It’s a reverse twist of logic, but it’s true; by paying a bit more to start with and seeing your money down as an investment, you can save a lot more in the long run. This is especially true when it comes to cars. If you need a set of wheels and think buying an old bomb will get you out of a jam, think again. It actually makes more financial sense to buy new or near new. Here’s why:

You’re covered by protections and guarantees
You can’t buy 100% new cars from private dealers. (Though you can buy near-new, but that’s a whole different story.) New cars come with new car prices, but they also come with new car warranties and new car scheduled servicing. Some scheduled services are free from your manufacturer. Some new cars even have free roadside assistance paid for by the manufacturer. That saves you taking it out with your insurance policy. If something’s not quite right with the car, your licenced motorcar trader will have to remedy the situation.

These guarantees mean lower interest rates
Lenders hate risk and car loans are no different. Lenders see new cars as low risks because they have significant value in them, even after you’ve driven the car off the lot. Older cars lose much of their value and lenders don’t really want to finance them. This results in higher interest rates when taking out a loan, especially a secured loan. A secured loan is a type of loan tied directly to the purchased asset (in this case, a car). Secured car loans have lower interest rates in general, but new cars with high value and low risks means there’s a lot of wiggle room for further savings.

You won’t have rude awakenings
If your used car doesn’t start or you discover there’s damage that you never noticed before, you’re pretty much on your own. New cars are fresh from the factory and don’t have wear and tear on the engine, don’t need replacement parts and they won’t have any prior damage. If something does go wrong with the car’s internals and it isn’t your fault, a manufacturer or dealer warranty covers your repairs. You’ll also get more life out of the car (provided you keep it serviced) when it might be a real gamble if buying used car.

Safety and economy
It’s becoming standard for carmakers to equip Auto Emergency Braking into their new cars. Newer cars have better safety features such as collision detection, curtain and side airbags and other electronic hazard reducing devices. New cars also have innovations in fuel economy such as hybrid drives. Older cars tend to use more fuel and may not have any safety features bar your seat belt.

Credit: Car Click – Search thousands of cars for sale.

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1 Comment

  1. Kristin
    July 21, 2015 at 4:14 pm — Reply

    I’m a firm believe in buying new! I have a 2004 suv that is still going strong today. I purchased her new and have definitely gotten my value out of the car. I am the type of person who would buy new and then run it into the ground!

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