There are several good reasons to consider buying a used car, including ample selection and the improving reliability of older cars. But the main attraction for used-car buyers is still affordability.
Buying a new car is definitely more expensive than buying a used one. In fact, the price spread between new and used is widening. The latest figures available from CNW Marketing Research indicate that the average transaction price, before taxes and fees, on a new car in 2008 was $25,536. The average used car transaction was $8,244 during that same time period. Unless you decide to lease, your initial costs on a new car will be hefty. Financial institutions typically require down payments of about 10 percent on a new-car loan, but it helps to add more. If you pay less money up-front, your monthly payment will be higher. Two other key considerations may tip the balance in favor of used cars: certification programs and new-car depreciation.
Another trend that makes buying used a better option is the proliferation of certified pre-owned programs. The idea started with luxury brands such as Lexus and Mercedes-Benz. Today, most manufacturers have instituted these programs. General benefits of CPO cars include:
Buyers should be aware that they pay more for a CPO car than for a regular used car, but the higher price may be worth it for the extra coverage and the peace of mind they receive.
Once you drive your new car off the dealership lot, its value will drop immediately in your early years of ownership. On mainstream vehicles, expect your new car to lose at least 30 percent of its value in the first two years of ownership.